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Judge dismisses Verizon's £240m Y2k lawsuit

A US judge has dismissed a £240m lawsuit that GTE (now Verizon Communications) filed in 1999 to recoup its year 2000 remediation expenses.

In his ruling, Judge Alfred Wolin of the US District Court in New Jersey said the insurers were not required to reimburse GTE for the money the company spent to repair and test its computers to ward off Y2k problems. 

GTE had claimed that its remediation efforts were covered under the "sue and labour" clause in its insurance policies. This, GTE claimed, allowed customers to file claims to retrieve costs used to protect property in the face of imminent damage. 

As late as the 1990s, GTE's computer systems relied on a two-digit year field to process dates. 

According to GTE, such systems were incapable of correctly processing certain dates, such as the year 2000. GTE claimed its Y2k remediation program benefited the insurers by averting a recoverable loss through the failure of GTE's data processing systems. 

The defendants countered that their policies did not cover certain problems, including the cost of fixing any flaws in the computer systems of an insured. 

Wolin agreed and dismissed the lawsuit without a trial as requested by the insurance companies.

The judge ruled that GTE's Y2k problems were caused by a date field problem in GTE's own computer systems and, therefore, were not covered under its insurance policies. 

"This was one of the longest and hardest-fought Y2k claims, and it finally puts these issues to rest," said William Erickson, who represented Allianz, one of the insurers. 

Verizon said the company was reviewing its options.


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