Letter to President Clinton and Vice President Gore Condemning Recent Legislation Limiting Y2K Liability for Corporations

President William J. Clinton

Vice President Albert Gore, Jr.

The White House

Washington, DC 20500

Dear President Clinton and Vice President Gore:

The extent of your betrayal of consumers and small businesses over Y2K liability legislation is shocking.

By capitulating completely to the excessive demands of wealthy high-tech companies, like IBM, Intel and Microsoft, and other business interests for unprecedented special protections from legal accountability, you have compromised the civil justice system and left consumers and small businesses without the state legal remedies that have long protected them.

On numerous occasions over the last few months, senior administration officials have stated repeatedly that the Y2K immunity proposal before the Senate, as well as the House bill, were completely unacceptable and that they would recommend that you veto any such proposal. Given what you have done, future signals from your office to veto anti-consumer legislation is likely to be regarded as so much tinsel — glitter but no substance. When Ronald Reagan threatened to veto a bill, it meant something. Not so with this Administration.

What is the reason for this cowardly performance, given your past statements on the civil justice system? Campaign contributions for the high-tech interests and business lobby? What else can explain your complete last minute reversal on an issue of such importance to the public? What else can explain the word at the highest levels in Congress among Democrats that “Al Gore really wanted this one?”

Once you started to compromise on this legislation in the face of pressure from the business lobby, a total cave-in became the almost inevitable end result. The outline of “acceptable” Y2K legislation delivered to the House and Senate on May 11 by your senior advisors Gene Sperling and Bruce Lindsey suggested that you were ready to make a deal with the corporations that irresponsibly created the Y2K problem, although the letter stated that the Administration wanted some protection for consumers and requirements that defendants make some effort to fix Y2K defects before they could take advantage of liability limits. To your increasingly doubtful allies on Capitol Hill, it seemed then that you were interested in at least some modest attempt at balance and assertions of concern about consumers. Now the pretense that the Administration cares at all about consumers’ interests is laid bare.

As soon as the bill got into conference committee, the Administration’s representatives began to completely give away any and all significant proposals to limit the scope of the bill or protect consumer interests. The instructed saboteurs of the consumers’ interests, Sperling and Lindsey, John Podesta, Sally Katzen, Sarah Rosen and others, made it clear that the Administration was willing to give up almost anything in order to get a bill. The small concessions they were able to convince Senators McCain and Dodd to acquiesce to are next to meaningless and will provide scant protection of consumers’ rights.

It is hard to believe that your Administration is now on record as supporting extreme limits on joint and several liability, limits on recovery of economic losses, federalization of most class actions, limits on punitive damages for companies with up to 50 employees and a “clear and convincing evidence” standard before any defendant — large or small — can be found liable for punitive damages, and complete one-way preemption of state law.

These are the kinds of proposals to limit liability that you have rejected in the past. In 1996, on vetoing the federal defective products protection bill, Mr. President, you articulated your “principles” for federal liability legislation. You opposed arbitrary caps on punitive damages, limits on the joint liability of defendants, one-way preemption of state law. Your administration strongly opposed the federalization of class action lawsuits, as the Judicial Conference did this year regarding Y2K class actions. There is nothing special about Y2K that justifies your total abandonment of these positions.

The corporate procrastinators you are rewarding by supporting their legislation include profitable high tech companies that have known for many years that the systems they were designing and selling could not operate in the year 2000, but year after year, they put off fixing the date code. This continued right through the 1990s. Now, less than a year from the decisive date, they seek legal immunity for their actions, and you are now responsible for the consequences of absolving them at the expense of the all of their customers.

Your actions today have severely compromised our civil justice system. Although the legal effect of this bill may be limited to three years, consumer advocates will be left to deal with its repercussion for a long time to come. While your staff have assured us that they do not intend for this bill to set a precedent for further erosions of state law and consumers’ rights in other bills, their intentions and assurance mean little in the future. It is a very damaging legacy that both you have left.

Sincerely,

Ralph Nader

P.O. Box 19312
Washington, DC 20036

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