Three states are close to passing legislation that would partly protect banks from lawsuits relating to year-2000 computer problems.
The proposals pending in Colorado, North Dakota and Virginia vary, but each would limit the damages a party could collect should a bank's computer system malfunction in connection with the century date change.
"We think there is potential for abuse of litigation," said Don A. Childears, president and chief executive officer of the Colorado Bankers Association. "With banks perceived as having deep pockets, we're likely defendants."
In all three bills, plaintiffs would be allowed to seek only actual damages, not punitive damages. The North Dakota and Virginia bills would allow suits only from parties that have contracts with the banks, such as customers or correspondent banks.
Legislative proposals to limit year-2000 liability are popular this year. About 25 states have bills pending, and bank trade groups in Washington are behind a new draft of a bill that would protect businesses nationwide.
But the measures in Colorado, North Dakota, and Virginia are furthest along, having passed at least one house in each state. The measures have also received little opposition, which bank trade groups attribute to compromise and avoiding the ire of the powerful trial lawyers' lobby.
"We were quite careful in drafting the bill so as not to be overreaching," said Marilyn Foss, general counsel for the North Dakota Bankers Association. North Dakota's version of the liability bill covers only federally insured financial institutions, whereas the Virginia and Colorado proposals protect all businesses.
Trial lawyers in Virginia, where the legislation has passed both houses and is awaiting the signature of Gov. James S. Gilmore 3d, have been silent on their state's version because it does not bar personal injury or property damage suits, according to a spokesman for the Virginia Bankers Association. Virginia's legislative session will end Saturday.
And Colorado bankers won the support of the trial lawyers when they dropped a provision that would have barred third parties-those without contracts with a bank-from suing.
The bankers, who have been working for more than a year to meet regulators' year-2000 requirements, are also winning the sympathy of lawmakers. North Dakota bankers impressed legislators when they described how they have tested their computer equipment for date-change glitches. They also outlined their contingency plans should problems arise, Ms. Foss said.
Representatives from the three states' Bankers Associations said they have been anxious to protect their members from year-2000 liability in case efforts to pass federal legislation fail. Representatives from the Washington banking lobby met with members of the Clinton administration Tuesday to try to win their support of the draft bill, but the effort is far from final law.
"I'm not convinced anything will happen at the federal level," Ms. Foss said.
Should the federal government adopt year-2000 liability law, the courts would decide whether it or state protections apply in each case, said Gordon Glaza, regulatory counsel for the ABA.
