Leon Kappelman on Y2K liability limit legislation -- S. 1138

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Date: 99-06-08 16:13:47 EDT From: kapp@unt.edu (Leon A. Kappelman)

Dear John:

I'm writing this in the hope that you will take this matter up with the President, Vice President, and anyone else you think may have the best interests of the whole country at heart. Beside the fact that this bill will not reduce the y2k problem one iota and will instead create disincentives to do y2k work, there are some horrendously bad provisions in the Senate's most-recent version of this legislation. Frankly speaking, I'm amazed how much this bill still mirrors the wish list of those who created y2k, still refuse to be candid about it, continue to profit from it, and have failed to even fix some of their own products. I limit my remarks here to only those provisions with the greatest probability for unintended harm to the US economy or the most egregious protections of wrongdoers. I have tried to suggest corrections/improvements to these problems. Please excuse any misconceptions I may have due to my novice understanding of the legal system.

1. Page 29, lines 11-17; Section 12(a)(2): This is perhaps the most dangerous provision in this bill because it undermines the foundation of our information economy, as well as deceptively excludes what will likely be a major category of y2k-related damages. I addressed this in my April 11, 1999 Congressional testimony. The provision excludes damages to intangible property -- The problem is that in US courts electronic data have typically been considered intangible property. Harm to data should explicitly be included in this legislation as a category of legitimate y2k damages.

2. Page 9, lines 4-6; Section 3,4(B): The definition of "material defect" excludes systems or products that only have problems in "a component of an item or program, that as a whole, substantially operates or functions as designed." This effectively tries to exclude practically everything. Programs are typically designed modularly. Date processing functions are typically contained in one or more of those modules or components. This provision is deceptive, creates unnecessary ambiguity, and would wrongly exclude defective products on this technicality. A far more precise definition of material defect is needed.

3. Page 23, lines 14-21; Section 7(c)(3): Setting aside that these waiting periods extend an un-extendable deadline while customers (i.e., plaintiffs) bear the brunt of the consequences, this provision makes inadmissable the defendant's written statements that got them the extra 60 days extension on top of the original 30 days. This would appear to protect deceptive statements that caused delays and increased damages. It appears to serve no purpose except to protect those who least deserve any protections whatsoever. If the statement was made to get the extension of time to correct, then it should be admissible.

4. Page 28, lines 3 -11; Section 9: This duty to mitigate is a good idea. But "reasonably should have been, aware" is problematic in light of IRDA 1998 and the overall difficulty of getting reliable information. The problem is the excessive ambiguity and continual changes in vendor statements about the y2k status of their products -- Hundreds of changes in these disclosures occur each month and most are excluded as potential evidence already because of IRDA. Thus a customer could rely on month 1's version of a compliance statement, which then changes in month 2; the defendant could use month 2's to show the consumer should have known, but the customer (thanks to IRDA) cannot use the inaccurate month 1 statement as evidence. Take the example of Microsoft's September 1996 Congressional testimony in which they said that all their products were y2k ready or the initial press release for Windows98 which said it had no y2k problems -- both statements were inaccurate, both were later changed, both could be excluded as evidence by IRDA, and both could have been relied upon by customers. A far more precise definition is needed.

There also appears to be an error in line 1 on page 33 (Section 13(b)(3): The phrase "but do not" appears to contain an error but I do not know the intent and cannot offer a correction. The sentence reads "...do not include claims for negligence but do not include claims such as fraud, ...").

All in all this legislation should be vetoed as it works against the interests of the greater good and will harm many individuals, businesses, and our economy. If that is not possible, then at the least the egregious problems described above should be resolved. Thank you for your time and attention to this matter. Keep up the good work!

Best wishes, Leon

PS: In the interests of making others aware of these concerns, I am forwarding this note to several y2k lists. I hope you do not mind, and believe you won't since I know you are a strong proponent of increased information and dialogue concerning y2k.

Leon A. Kappelman, Ph.D. Associate Professor, Business Computer Information Systems Associate Director, Center for Quality & Productivity College of Business Administration, University of North Texas Co-chair, Society for Information Management Year 2000 Working Group Steering Committee, YES Volunteer Corps, International Y2K Cooperation Center Voice: 940-565-4698 Fax: 940-369-7623 Email: kapp@unt.edu Website: http://www.year2000.unt.edu/kappelma/

-- Hallyx (Hallyx@aol.com), June 08, 1999


It is the same old story. The rich and connected rig the laws to their own benefit. A hundred years ago, one of the robber barons (I don't remember which one) said "The public be damned." This remark did more than anything else to propel the reform and anti-trust movements. The likes of Bill Gates and Andy Grove feel the same today. Unfortunately, they have the smarts and PR shills to keep from saying it in public.

-- Mr. Adequate (mr@adequate.com), June 08, 1999.

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