Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1111
                                        H.D. 2
                                        S.D. 2

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Judiciary, to which was referred H.B. No.
1111, H.D. 2, S.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill, as received by your Committee, is
to provide protection for persons who make commercially
reasonable efforts to find solutions for potential year 2000
errors in computer systems, and to set standards and provide
guidance as to what steps must be undertaken as part of
commercially reasonable efforts.

     Your Committee finds that there is widespread uncertainty
about what claims may be brought based on year 2000 errors, and
about what acts may provide a basis for or a defense to liability
for such errors.  Among businesses seeking to identify and
prevent potential errors before the immovable and fast-
approaching deadline, this uncertainty has diverted personnel and
resources from the actual process of finding and fixing problems
to documentation of the process in anticipation of future
lawsuits.  Your Committee believes that this measure, by
providing guidance as to what steps should be taken as part of a
commercially reasonable approach to identifying and fixing
problems, will help those with potential year 2000 problems to
focus on remediation of the potential problems in the time

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remaining, rather than predicting the possible bases for future

     Your Committee notes that even when a respondent takes
commercially reasonable steps to avoid a year 2000 problem, a
claimant injured by such a problem may still be able to recover
its out-of-pocket expenses under this measure.  Your Committee
further notes that when a respondent fails to take commercially
reasonable steps, a claimant may seek consequential and other
additional damages.

     Testimony in support of this measure, including a proposed
amendment which incorporated provisions providing limited
immunity to government for year 2000 errors produced by
government computer systems, was submitted by the Attorney
General, the Department of Accounting and General Services, the
Judiciary (relating only to alternative dispute resolution
procedures), Chamber of Commerce of Hawaii, Hawaiian Electric
Company, Bank of Hawaii, Hawaii Credit Union League, the Hawaii
Bankers Association, the Hawaii Medical Service Association, the
Queen's Health Systems, the Hawaii Long Term Care Association,
the National Accountant's Coalition, and Hawaiian Airlines.
Testimony in opposition to this measure was submitted by one

     Upon further consideration, your Committee has amended this
measure by:

     (1)  Clarifying that remediation steps must be implemented
          in a timely fashion to be commercially reasonable, and
          that implementation of remediation steps and compliance
          with any standard data formats are minimum requirements
          for a finding of commercially reasonable efforts;

     (2)  Deleting the exclusion of physical injury claims from
          the alternative dispute resolution procedure, because
          the current procedure does not conflict with the Court
          Annexed Arbitration Procedure;

     (3)  Deleting punitive damages from categories of damages
          that may be obtained only in limited circumstances;

     (4)  Deleting a provision that would prevent joint and
          several liability in a year 2000 claim;

     (5)  Amending provisions describing the effect of a
          respondent's failure to engage in commercially
          reasonable efforts to be analogous to principles of
          comparative negligence rather than contributory

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          negligence, such that a respondent's recovery will only
          be reduced to the extent the respondent's failure to
          engage in commercially reasonable efforts contributed
          to the respondent's injury;

     (6)  Inserting a provision excluding claims against software
          or hardware manufacturers from the provisions of the

     (7)  Inserting a provision barring creditors and credit
          reporting agencies from reporting negative credit
          information about a consumer resulting from a year 2000

     (8)  Inserting provisions from S.B. 1313, S.D. 2, which
          provided limited immunity to government for year 2000
          errors produced by a government computer;

     (9)  Amending the government and private industry provisions
          to remove language specifically excluding a government
          employee's failure to pay a mortgage from the
          governmental limited immunity;

    (10)  Inserting language in the section of the bill dealing
          with government computers to specifically exempt from
          the limitations provided in that section a claim by a
          person injured by a year 2000 problem against a
          software or hardware manufacturer that provided or sold
          a government computer that produced the year 2000
          error; and

    (11)  Making technical, non-substantive changes for the
          purposes of clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Judiciary that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
1111, H.D. 2, S.D. 1, as amended herein, and recommends that it
pass Third Reading in the form attached hereto as H.B. No. 1111,
H.D. 2, S.D. 2.

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                                   Page 4

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Judiciary,

                                   AVERY B. CHUMBLEY, Co-Chair

                                   MATTHEW M. MATSUNAGA, Co-Chair