Number of Y2K Lawsuits Filed in U.S. Courts Less ThanExpected, PricewaterhouseCoopers Report...

NEW YORK--(BUSINESS WIRE)--Aug. 23, 1999--

As of June 30, 1999, only 74 cases, filed both in state and federal courts, can be attributed to the Year 2000 computer glitch, according to a report released today by PricewaterhouseCoopers. Not counting multiple cases filed against the same

"With the exception of insurance cases, we may find that there is a lull in the number of cases filed between now and the end of 1999," said Philip Upton, a PricewaterhouseCoopers partner and author of the report. "The plaintiffs' bar appears to be taking a wait-and-see approach."

However, Mr. Upton cautioned that, "A trend may be developing whereby companies are claiming from their insurers the hundreds of millions of dollars they spent preventing a Y2K failure. Ironically, these cases do not depend on the insured suffering any actual Y2K failures," Mr. Upton said.

The 1999 Y2K Litigation Report uses information generated from PricewaterhouseCoopers' Y2K litigation web site (www.pwcy2K.com) that was created to track Y2K-type cases shortly after they are filed.

The PricewaterhouseCoopers Report reviews Y2K cases filed prior to President Clinton's, July 20th, signing of The Year 2000 Information Readiness and Responsibility Act. Mr. Upton noted, "It will be interesting to see whether the act really has an impact on the number of legal cases being filed in the courts." One key aspect of the new Y2K Act is that it requires prospective plaintiffs to give 30 days notice to give potential defendants the opportunity to rectify a problem. Furthermore, once a defendant proposes remedial action it has 60 days to correct any problems.

The PricewaterhouseCoopers report predicts, that while there have been a few large settlements already, "the damages sought in cases involving actual system failures resulting in supply chain failures and involving multiple companies are likely to be significantly greater than the settlements we have seen so far."

Other key findings in the study include:

Non-compliant product cases dominate - Approximately 65 percent of all Y2K cases are non-compliant product cases alleging a product defect or a possible malfunction. Of the 29 non-compliant product cases filed through June 30, 1999, the most commonly alleged causes of action are fraud, breach of implied warranty, deceptive, unfair trade practices and breach of express warranty.

Shareholder suits show potential for growth - The next largest category of lawsuits is shareholder class actions. To date, 13 percent of all Y2K cases have been the result of aggrieved shareholders suing over corporate statements regarding the Y2K compliance of their products or their ability to provide Y2K remediation services. In the future, shareholder cases are more likely to result from a company's Y2K problems being publicized, resulting in a decline in the company's stock price.

Cases are settling for significant amounts - The range of settlements run the gamut from free upgrades to the Command Systems shareholder suit that settled for more than $5.7 million.

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