The Economic Loss Doctrine...Y2K Recovery?

Year 2000-related failures may cause many different kinds of problems, but nearly all of them can be described as "economic." Therefore, one may ask whether the so-called "economic loss doctrine" will bar recovery in Y2K-related tort actions. This rule, adopted in some form by virtually all courts, is that damages for pure economic losses are not recoverable in tort actions in the absence of personal injury or property damage [see related Claims story, November 1998, p. 60]. In products liability cases, a substantial majority of American courts have excluded recovery for damage to the "product itself" while allowing actions for damage to "other property." The application of this doctrine in the anticipated Y2K litigation will involve some interesting questions.