STAND. COM. REP. NO. 290

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1320
                                        S.D. 1




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

Sir:

     Your Committees on Education and Technology and Commerce and
Consumer Protection, to which was referred S.B. No. 1320
entitled: 

     "A BILL FOR AN ACT RELATING TO YEAR 2000 ERRORS BY COMPUTER-
     BASED SYSTEMS,"

beg leave to report as follows:

     The purpose of this measure is to provide protection for
persons who exercise commercially reasonable efforts to identify
and find solutions for computer-based systems that may be
affected by Year 2000 errors.

     Testimony in support of this measure was submitted by the
Department of the Attorney General, the Department of Accounting
and General Services, the Judiciary, Bank of Hawaii, Hawaiian
Electric Company, Hawaii Medical Service Association, Hawaii Long
Term Care Association, Hawaii Bankers Association, the Queen's
Health Systems, Healthcare Association of Hawaii, Hawaii Credit
Union League, and Kaiser Permanente.

     Your Committees find that the cost of litigating claims
instigated by Year 2000 problems goes far beyond the dollars paid
out to injured persons and to lawyers handling the claims.  There
are extra costs in finding and fixing potential problems, as the
process becomes guided by lawyers wanting to assure that nothing
is said and nothing happens which can be used by a claimant in a
lawsuit.  Resources are taken away from the task of finding and
fixing problems to do documentation and compile evidence of what

 
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went on which can be used in defending against claims.  Once
claims are asserted, there will be a burden on the judicial
system to process and resolve them, and additional time and
resources will be squandered on the preparation and presentation
of the claims and defenses.

     This measure attempts to rein in these effects by:

     (1)  Providing incentives for people to seriously work at
          finding and fixing their potential Year 2000 problems;

     (2)  Limiting the types of damages which are difficult to
          prove and therefore difficult to promptly resolve; and

     (3)  Encouraging the use of non-binding arbitration which is
          designed to result in claims being resolved faster than
          through the courts.

     In addition, this measure recognizes that in finding and
fixing potential Year 2000 problems, what is reasonable for a
large financial services company is not the same as what is
reasonable for a small business.  This measure gives the
arbitrator or court the discretion to consider a company's Year
2000 efforts as a whole, taking into account the sophistication
of the person and the resources available.

     Lastly, this measure exempts consumer claims filed in small
claims court from many of its provisions.  This allows for the
prompt, informal determination of those claims without the need
for consumers to go through the error dispute resolution process.
Physical injury claims are also exempted from the resolution
process, and most will be referred by existing law to the current
Court Annexed Arbitration Program, which has experience in
handling and settling physical injury claims.  

     Technical, nonsubstantive amendments were made by your
Committees to change the formatting of this measure to reflect
preferred drafting style.

     As affirmed by the records of votes of the members of your
Committees on Education and Technology and Commerce and Consumer
Protection that are attached to this report, your Committees are
in accord with the intent and purpose of S.B. No. 1320, as
amended herein, and recommend that it pass Second Reading in the
form attached hereto as S.B. No. 1320, S.D. 1, and be referred to
the Committee on Judiciary.


 
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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Education and
                                   Technology and Commerce and
                                   Consumer Protection,



____________________________       ______________________________
BRIAN KANNO, Co-Chair              DAVID Y. IGE, Chair



___________________________
BRIAN T. TANIGUCHI, Co-Chair

 
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