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January/February 1999
Y2K Meets ADR:
Monitoring Y2K Filings Encouraged
Elizabeth Kent and Douglas Van Epps
Rarely, if ever, have courts had such advance warning of potentially calamitous levels of litigation as we now have with the possible deluge of litigation related to Year 2000 (Y2K) computer problem litigation. Some commentators estimate that $500 billion in business costs will be incurred in an attempt to avoid Y2K problems¾and that as much as $1 trillion may be incurred in business delays and attorneys' fees generated from Y2K problems. Many law firms now sport Y2K Divisions, and the number of law firm Web sites offering Y2K legal counsel is growing weekly.
Since only a few lawsuits have thus far specifically identified Y2K incompatibility as the chief claim, the judiciary's assessment of the likely level of Y2K remains in the realm of speculation. However, there are a few steps courts can now take to begin making assessments and to plan for the future. These steps include monitoring Y2K litigation, nationally and locally, and ensuring that appropriate dispute resolution processes are in place to accommodate Y2K litigation.
Of course, for courts the first priority must be to ensure that internal systems will not be affected. Court information officers should be working closely with consultants and/or hardware and software vendors to ensure that the dockets run smoothly and that the integrity of fiscal records will be maintained. At a minimum, courts should ensure that language is added to existing contracts with vendors to ensure negotiation and mediation of Y2K problems that may affect courts' internal functions.
Our purpose is to discuss how courts can handle the Y2K litigation of others. Y2K cases may not be like the mass torts of the past few decades. Although some disputes will allow for easy consolidation, this may not be true for many Y2K cases because they will arise in many different ways, involving diverse parties.
If the legal Web sites offer any clues as to the likely causes of action, courts are most likely to see personal injury claims, product warranty cases, board of director breach of fiduciary duty claims (for non-disclosure of Y2K problems), and contract disputes. Although the traditional litigation track may be appropriate in certain cases, courts should consider whether alternative dispute resolution (ADR) processes might be more appropriate.
Mediation. Mediation is a confidential, structured process through which a neutral person or persons assist the disputing parties arrive at a mutually satisfactory and binding resolution of a dispute. Mediators do not have the power to impose a decision. Instead, they help parties communicate and explore creative solutions to their problems. Mediators keep parties focused on the future instead of dwelling on the past.
Non-binding Arbitration. Court-annexed, non-binding arbitration programs for personal injury cases are commonplace in many areas. Generally, courts refer cases likely to be limited in damages. Arbitrators are often volunteer attorneys or attorneys compensated on a per case basis; honorariums may range from $50 to $300 per case. Usually programs allow either party an appeal to a court, but sanctions and costs may be imposed on a party that does not significantly better its award.
Specialized Courts/Special Masters. Some Y2K cases will be extremely complicated, calling for specialized technological expertise to assist in unraveling complex computer hardware or software issues. Damages may be difficult to calculate, calling for an in-depth understanding of accounting and business practices. A specialized docket may be attractive to litigants, as well as to the judges in the jurisdiction. Panels of judges skilled in Y2K issues could be designated to hear these cases. Alternatively, or in tandem, special masters could be appointed by judges to help resolve complex discovery issues or to make fact findings.
Early Neutral Evaluation. Early Neutral Evaluation is a non-binding settlement technique designed to assist parties and counsel in resolving disputes early, rather than later in the life of a case. A respected neutral with experience in the field serves as the evaluator. After hearing a brief presentation of the evidence from all parties, the evaluator gives a non-binding analysis of the case. The evaluator may then help the parties negotiate a resolution if mutually agreed to by the parties.
Monitoring Y2K
Information technologists, business people, and lawyers all seem to agree that Y2K problems will begin surfacing in the first quarter of 1999 as businesses running two-year budget (or other) projections run beyond December 31, 1999. While it is difficult to gauge at first whether an action is filed as a Y2K dispute, courts should closely monitor whether actions appear grounded in Y2K issues.
Judges, at early scheduling or settlement conferences, can recommend any of the above processes, particularly for cases in which parties to the suit need to continue working together to solve an urgent systems problem. The collaborative mediation process, for example, would help parties focus on immediate solutions better than parties engaged in the adversarial litigation process.
If it becomes clear that Y2K filings will seriously impact the court's caseload and that ADR is required to assist in managing these cases, creating special mandatory programs, such as non-binding arbitration or mediation programs may be the most appropriate response. There are many models the programs could follow, including referral to panels paid by the courts, volunteer panels, and private providers.
It is imperative that courts monitor the Y2K situation in the months ahead. If Y2k litigation does become problematic for docket management, courts may have some months to create appropriate solutions. For some states, creating a new category on complaint filing forms may be viable. Plaintiffs would be asked to note if the cause of action arises out of a Y2K problem. By monitoring the number of these cases, in addition to the number of cases in existing contract, tort, and other categories, court administrators can determine whether there really is a Y2K litigation caseload problem If so, they will have a better understanding of the problem, its potential impact on the courts, and the types of cases that fall into the Y2K category. All of these steps will give decision makers more information to help them best craft reasonable alternatives.
Conclusion
The crystal ball is not yet sufficiently clear for anyone to see what anticipated Y2K problems will mean for courts. But there are steps courts can take to keep current inventory of Y2K disputes and to create processes to facilitate their resolution. At a minimum, courts should closely monitor Y2K litigation nationally to best guide the development of Y2K case management strategies.
Elizabeth Kent is the director of the Hawaii State Judiciary's Center for Alternative Dispute Resolution. She can be reached at (808) 522-6465.
Doug Van Epps is a management analyst for the Michigan Supreme Court and the director of Michigan's Community Dispute Resolution Program. He can be reached at (517) 373-4839.
This article was reprinted with permission from Court Review, Vol. 35, No. 4 (Winter 1998).
