The Third Way: Mitigate, Not Litigate Y2K 2000 Beefs

As the first wave of Year 2000-inspired lawsuits begin to trickle in, a group of the largest companies have vowed not to let the litigation grow into a torrent. A dozen multinational corporations, including General Mills, McDonald's Corp., Philip Morris and Bank of America, have signed a commitment to use mediation -- not litigation -- for Year 2000 disputes with supply chain partners and vendors.

Under the aegis of CPR Institute for Dispute Resolution New York), representatives of these companies signed a "CPR Year 2000 ADR Commitment," which obligates signatory companies to offer to negotiate and, failing negotiation, to mediate Year 2000 disputes. The pact does not restrict signatories' legal rights, says James F. Henry, president and founder of the CPR Institute.

However, it remains to be seen if smaller to medium-size companies and developers also sign on to such an agreement. Recently, a suit was filed against Microsoft Corp., alleging that Microsoft "knowingly designed, manufactured and distributed" products -- FoxPro and Visual FoxPro -- with "latent defects in date-sensitive codes," rendering the products "potentially incapable of accurately processing dates beyond December 31, 1999." The suit, believed to be the first against Microsoft, was filed by an individual software developer.

Three related lawsuits against Intuit Software (Mountain View, Calif.) -- alleging Year 2000 compatibility problems in its Quicken personal finance software -- were recently dismissed by the Supreme Court of New York state. Other cases against Intuit are still pending in California. Another closely watched Year 2000-related lawsuits against Windows-based financial software vendor Marcola Software (Marion, Ohio) was recently dismissed by the judge in an Ohio court, while another suit against medical equipment vendor Medical Manager Corp. (Tampa, Fla.) was settled, with the company agreeing to provide free Year 2000 upgrades of its software.

"To maintain productivity, businesses should communicate, fix their systems, negotiate and mediate -- and try not to litigate," adds F. Peter Phillips, vice president of CPR. National trade organizations, including the Information Technology Association of America, the Chemical Manufacturers Association, and the National Association of Manufacturers are all also encouraging their members to sign the CPR Commitment.

"We don't know how big these problems will be or how many will arise," says Henry, "but clearly business wants to resolve them in a businesslike way. Our goal at CPR is to create an international network of businesses that commit to manage Year 2000 business disputes by using options to litigation. Signers of our Commitment will also urge their suppliers, customers, vendors and other strategic business relations to likewise commit to mediate disputes."