NCCBI News

NCCBI Presses for Limits on Y2K Liability

North Carolina should follow the lead of Virginia and a handful of other states and adopt a law giving businesses limited liability against excessive lawsuits stemming from Y2K computer problems, NCCBI is telling the General Assembly.

Testifying recently before a House committee, Vice President of Governmental Affairs Leslie Bevacqua said NCCBI will seek a balanced proposal that would not prevent individuals who suffer physical or economic losses as the result of the improper actions of others from being compensated. “But we want to place reasonable restraints on the extent to which those who perform due diligence are exposed to liability for Y2K problems beyond their control,” Bevacqua testified.

Earlier this year NCCBI assembled a working group of members concerned about the Y2K issue. Bevacqua said most businesses in the working group feel confident about their own abilities to weather any Y2K problems, but they're concerned about other businesses they deal with.

“Our members feel that they have taken, or are in the process of taking, the reasonable and prudent steps to protect their particular operations from Year 2000 disruptions. Small businesses, large companies and public agencies are making major monetary and time investments to prepare for Y2K.  

“The basic concern,” Bevacqua added, “is not whether the individual companies will be ready –– most think they will be. The concern is their dependence on other companies and their potential liability basically for something out of their control.”

She said the NCCBI working group found that Virginia, Colorado, North and South Dakota have passed Y2K legislation. About 40 states are considering legislation that would offer some protection, the state Attorney General's office said.

Shortly after NCCBI began lobbying the legislature on the Y2K issue, Sen. David Hoyle (D-Gaston) introduced a bill in the Senate that will accomplish much of what the association recommends. Modeled on the Virginia law, Hoyle said the bill will “place prudent limitations on the potential liability of the state's business enterprises, while preserving the appropriate right of recovery of persons suffering economic losses as a result of another's fault or negligence.”

Under terms of the bill, entitled the Year 2000 Liability Limitations Act, businesses that perform due diligence to prevent Y2K problems in their own computers will benefit from limitations on liability. The bill sets these liability limits:

u A person must have a contractual relationship or an express warranty before having the potential for a Y2K claim.

u There is no liability for damages caused by delay or interruption of performance caused by a third party.

u No employee, officer or director shall be liable in his or her official capacity.

u No person shall be liable for consequential or punitive damages.

u Total damages shall not exceed actual direct damages.

“Litigation is not a Y2K remedy,” Bevacqua told legislators. “We don't want commerce in our state to suffer more disruptions from litigation over Y2K problems than it does from computer foul-ups themselves.”

Meanwhile, the U.S. Small Business Administration will begin implementing a special loan program in a month or so to help small businesses pay for correcting their Y2K computer problems.

The loan program was set in motion with passage by Congress of a law under which the SBA will offer streamlined procedures and expedited processes for obtaining loans.

The Y2K initiative will operate like other SBA programs in which the federal agency guarantees loans business owners obtain from private lenders. In this case, however, the SBA will guarantee up to 90 percent of the loan –– much higher than usual –– and may agree to delay any repayment of the principal for a year.

The loans also may be used to recover losses stemming from Y2K computer problems caused by other entities a company does business with. Because the precise costs of making Y2K corrections are largely unknown, the bill requires the SBA to structure the loans to give small businesses access to loans that meet their current and projected cash flows.

For more information, call the SBA's Charlotte office at 704-344-6563.

NCCBI's annual membership drive, led this year by Mac Everett of First Union, ended last month with 241 companies joining the association. Special recognition goes to board members Kelly King of First Citizens, who brought in 19 new members; Gordon Myers of Ingles Markets, who brought in 16 new members; and Avery Thomas of Thomas, Stout, Stuart, Core & Stuart, who recruited six new members.

Special thanks also go to board members Steve Zaytoun and Howard Johnson, both of Cary, for hosting NCCBI's membership reception there. The March 4 event at the MacGregor Downs Country Club was well attended; already, three of those companies have joined the association.

Myers, who succeeded Everett as second vice chairman, will lead the 1999-2000 membership campaign. “I am pleased to take on this challenge and I am looking forward to working with all the board members to make this our most successful year yet,” he said.

For questions about membership or assistance with recruitment, call NCCBI Director of Development Rosemary Wyche at 919-836-1413 or Membership Director Ann Lee at 919-836-1409.

MEMBERSHIP NEWS: New members since March 11 include: ABB Electricity Metering, Raleigh; All American Moving & Storage Inc., Raleigh; Barnes Farming Corp./Farm Pak Inc., Spring Hope; Beacon Industrial Group, Charlotte; Biogen Inc., RTP; Cabarrus County Schools, Concord; CMH Flooring Products, Wadesboro; Crossnore School Inc., Crossnore; Edifice Inc., Charlotte; High Street Banking Co., Hickory; Hock Development Corp., Durham; Hunt Electric Supply Co., Burlington; Interim Personnel, Greenville; Keystone Corp., Raleigh; McLane Foods, Temple, Texas; Mike Davis Public Relations, Raleigh; Murphy Electric Power Board, Murphy; Patterson Blake Inc., Charlotte; Piedmont Bank, Statesville; Rowan Bank, China Grove; Rucker Realty Co., Greensboro; Spotswood Capital, LLC, Greensboro; Strategic Insights Inc., Raleigh; Thomas Concrete of Carolina, Raleigh; Thrift Management Inc., Wadesboro; UNC Health Care System, Chapel Hill; United Parcel Service Southeast Region, Norcross, Georgia; Well Care & Nursing Services, Wil- mington; Wilkinson Supply Co., Raleigh.