Update: California bill would Curb millennium bug lawsuits

Could governments opt to keep their economies out of the legal peril represented by damages claims for Year 2000 problems? That's exactly the measure the US state of California is considering. Assembly Bill 1710 would prevent consumers from asking courts for punitive damages, or payments for pain and suffering, related to Year 2000 computer failures. Customers would only be allowed to seek compensation related to business lost as a result of the failure, and for the cost of fixing or repairing equipment. Intel thinks it's a great idea.

California state legislators are due to hear a proposed bill tomorrow that would severely limit the amount software makers can be asked to pay in damages for so-called Year 2000 problems.

If passed, Assembly Bill 1710 would prevent consumers from asking courts for punitive damages, or payments for pain and suffering, related to Year 2000 computer failures. Customers would only be allowed to seek compensation related to business lost as a result of the failure, and for the cost of fixing or repairing equipment.

"Some sort of reasonable public policy in this area has to be implemented, or we're going to put our high-tech industry at a severe disadvantage to computer companies in other nations," said Matthew Hargrove, an aide to California Assemblyman Brooks Firestone, who co-authored the bill.

While legislation has been proposed or approved in California, Georgia and Nevada protecting the state from liability for millennium bug glitches, this is the first legislation proposed in the US that would extend such protection to businesses, said Barbara Wheeler, a legislative advocate for the Association for California Tort Reform, which is sponsoring the bill.

The year 2000 problem has inspired predictions of doom and gloom from industry watchers, and stems from the fact that many computer programs were written with only a two-digit date field. When the new century rolls around, it is widely expected, computer systems will read the date as "1900" instead of 2000, and go haywire.

AB 1710's proponents, which also include Intel and the American Electronics Association, say the bill will help stave off an expected avalanche of lawsuits when such problems roll around. In addition, they say, limiting liability claims will give consumers an incentive to make sure their software is ready for the date change.

To qualify for protection under the bill, software makers would be required to provide a free upgrade for all off-the-shelf products introduced after Dec. 31, 1997; to notify registered users that their system may experience problems, and tell them how they can get it replaced or repaired, Hargrove said.

"If they sit on their hands and do nothing, they would not be protected by this bill," Hargrove said.

AB 1710 has stirred opposition, notably from a band of trial lawyers who call themselves the Consumer Attorneys of California. In a press conference last week, trial lawyers said the bill is too broad and gives too much protection to software makers. In addition, they said, passing legislation now would be premature given that the scope of the 2000 problem is not yet known.

Under the bill, businesses and consumers would be unable to claim damages on software products sold after Jan. 31, 1997, unless their contract or warranty with the software maker specifically refers to Year 2000 problems, according to Reed Kathrein, a partner with the New York law firm Milberg Weiss Bershad Hynes & Lerach LLP.

That condition, for the most part, would apply only to large businesses who were aware of the millennium issue early on and drew up their contracts carefully to include appropriate language, Kathrein said.

Only four cases have been filed in the US so far seeking damages over potential Year 2000 glitches, two of which were in the state of California, Kathrein said.

Assemblyman Firestone and the bill's co-author, Assemblyman Jim Cunneen, shot back at the charges made by lawyers last week in a press release, accusing them of exploiting the 2000 issue for personal gain by bringing "frivolous" lawsuits to trial.

If approved, the bill would outlaw repeats of the kinds of class-action lawsuits that have been filed already against a handful of California software makers, including Symantec of Cupertino, California.

Milberg Weiss in February filed a class-action lawsuit against Symantec on behalf of everyone who purchased its Norton AntiVirus software prior to version 4.0, claiming the company is improperly requiring customers to pay US$29 to upgrade to that version.

Symantec officials said at the time that only a small, relatively unimportant part of its anti-virus software will be affected by the date change, and said Symantec should not be required to provide free Year 2000 fixes for every software product it has ever sold. Norton Antivirus Version 4.0 was released in October last year.

If the Judiciary Committee approves the bill it will advance to the state's Information Technology Committee, then on to the full-member Assembly floor, Hargrove said. If it is successful there, the state Senate will vote on whether or not to turn the bill into law.

Firestone is trying to push the bill through before the Senate retires for recess Aug. 31, Hargrove said.

The text of AB 1710 is available online at http://www.assembly.ca.gov/.

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