NCPA - National Center for Policy Analysis

Get Ready For Those Y2K Lawsuits

April 5, 1999

Lawsuits are beginning to pile up against companies which have not prepared their computers to recognize the year 2000. Lawyers are anxious to file suits before Congress passes legislation which might reduce compensation in such cases.

  • In the past 15 months, the number of Y2K-related suits has jumped from three to 78, according to the Gartner Group consulting firm.
  • Most of the suits have been filed by companies and consumers against small and midsize software firms for breach of contract.
  • Some of the suits have been settled, but many class-action suits are being filed with similar allegations against the same companies.
  • Sen. Orrin Hatch (R-Utah), cosponsor of one of the bills under consideration on Capitol Hill, has estimated that suits filed over Y2K issues could amount to as much as $1 trillion unless steps are taken to block frivolous suits.

The bill he is cosponsoring with Sen. Dianne Feinstein (D-Calif.) would establish a 90-day grace period so companies could fix their computers before being hit with a suit. It would also encourage alternatives to suits and cap punitive damages at three times compensatory damages or $250,000 -- whichever is greater.

If the defendant is a small business, the sum would be whichever is less.

Source: Tom Lowry, "Y2K Lawsuits Pile Up Before Limits Set In," USA Today, April 5, 1999.


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