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TWO LEGAL ACTIONS could greatly limit or expand businesses' liability for Year 2000 losses, depending on how courts rule.
The two cases both seek to draw on important product liability precedents to curb liabilities arising from the Millennium Bug. We hope the courts agree that businesses deserve the same protections from frivolous litigation and unreasonable claims in disputes alleging harm from computer flaws as well as products.
In recognition of the high stakes, two insurance organizations filed amicus briefs in one of the cases, Kumho Tire Co. vs. Carmichael. The briefs urge the U.S. Supreme Court to set the same high standard for the admissibility of expert technical testimony on Year 2000 lawsuits that it imposed in 1993 on expert scientific testimony in product liability cases (BI, Sept. 14).
The second action is a pre-emptive strike by Andersen Consulting, which is seeking a declaratory judgment in a Massachusetts court that it should not be liable for a business' cost of replacing a computer system it installed in 1989 that is not Year 2000-compliant (BI, Sept. 7).
Setting reasonable curbs on such lawsuits now, before the clock winds down, will be pivotal in limiting the flood of litigation that is bound to follow Dec. 31, 1999.
This will assure that, in addition to the high costs incurred in eliminating the computer bug or coping with the problems it causes, businesses are not also saddled with the expense of defending frivolous lawsuits.
In the Supreme Court case, insurers are calling on the court to apply the same restraints it imposed in Daubert vs. Merrell Dow Pharmaceuticals. That 1993 decision was a landmark ruling giving businesses new protection from junk science in the courtroom. In that case, which involved the antinausea drug Bendectin, the court ruled that federal judges must essentially act as gatekeepers, screening the reasoning and methodology of expert testimony before it can be heard. The court later clarified the Daubert opinion and said that district courts, not appellate courts, should serve in this gatekeeper role.
Similar protection should be afforded to the thousands of businesses that are sure to be sued in the wake of losses caused by the Year 2000 computer problem.
In the Massachusetts action, Andersen argues that in 1989, when it installed a computer for retailer J. Baker Inc., the only two options available that met the client's objectives were not Year 2000-compliant. As a result, Andersen questions why it should be accountable for not installing a system that didn't exist.
Andersen's argument echoes the state-of-the-art defense, in which a defendant can show that it provided goods and services in accordance with the state of scientific and technical knowledge at the time, or in compliance with government or industry standards.
We think this defense should clearly be available to consultants that gave professional advice on computers before Year 2000 solutions were available. It will prove equally important to computer and other high-tech manufacturers.
In both of these important cases, the courts have an opportunity to define and limit the boundaries of legal actions brought in the wake of Year 2000 computer losses. Such restrictions will assure that problems wrought by the Millennium Bug do not also spread to our courts and cause our system of justice to crash.