Congress Approves Litigation Limits on Year 2000 Liability

Washington, DC, July 9, 1999 - Both the House of Representatives and the Senate passed legislation that provides protection for businesses against Year 2000-related lawsuits. H.R. 775, the "Y2K Act," was approved by overwhelming majorities. However, the protections of the bill do not apply to any Y2K action that arises under federal securities laws.

H.R. 775 limits Y2K litigation by:

capping punitive damages for companies with fewer than 50 employees at the lesser of $250,000 or three times the amount of compensatory damages,
granting companies a 90-day period to fix Y2K problems before litigation can commence, and
specifying that no company can be assessed damages greater than its proportional responsibility for a failure, absent specific intent to injure or commit fraud.

The legislation also requires claims involving 100 or more plaintiffs or seeking more than $10 million in damages to be filed in federal court. President Clinton is expected to sign this measure.