Even as President Clinton signed the Y2K Act into law on 21 July 1999 he expressed concerns that unscrupulous defendants could misuse the law. Congress passed the bill in an effort to resolve Y2K related disputes without litigation. These disputes are expected to arise out of the failure of devices or systems to properly transition between 1999 and 2000. The bill also covers devices or systems that fail to properly recognize or process any specific date in the years 1999, 2000 or 2001.

Anticipating a flood of litigation due to the millennium bug, the new law allows defendants notice and remediation periods before the plaintiff may file suit. The law also places limits on damages in many situations, establishes a higher evidentiary standard (clear and convincing evidence) for punitive damage claims, and, in most circumstances, eliminates joint and several liability in favor of proportionate liability. In the case of alleged "bystander liability," plaintiffs are required to prove that the defendant had the requisite state of mind. Specifically, plaintiffs must prove that the defendant had actual knowledge or recklessly disregarded a known and substantial risk that a Y2K failure would occur. Individual consumers and plaintiffs who sue as individuals and have a net worth of less than $200,000 benefit from a policy that allows joint and several liability in some cases.

The President's concern is understandable given all the benefits that defendants gain from the law and the corresponding burden placed on plaintiffs in Y2K causes of action. It remains to be seen whether the law will exterminate a large number of potential lawsuits resulting from the millennium bug. One thing is certain, counsel for both plaintiffs and defendants are now encouraged to argue whether or not each potential Y2K cause of action falls within the reach of the Act.