[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 775 Introduced in House (IH)]
106th CONGRESS
1st Session
H. R. 775
To establish certain procedures for civil actions brought for damages
relating to the failure of any device or system to process or otherwise
deal with the transition from the year 1999 to the year 2000, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 23, 1999
Mr. Davis of Virginia (for himself, Mr. Dreier, Mr. Cox, Mr. Moran of
Virginia, Mr. Cramer, and Mr. Dooley of California) introduced the
following bill; which was referred to the Committee on the Judiciary,
and in addition to the Committee on Small Business, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To establish certain procedures for civil actions brought for damages
relating to the failure of any device or system to process or otherwise
deal with the transition from the year 1999 to the year 2000, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Year 2000 Readiness and
Responsibility Act''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The Congress seeks to encourage businesses to
concentrate their attention and resources in the short time
remaining before January 1, 2000, on addressing, assessing,
remediating, and testing their Year 2000 problems, and to
minimize any possible business disruptions associated with Year
2000 issues.
(2) It is appropriate for the Congress to enact legislation
to assure that Year 2000 problems do not unnecessarily disrupt
interstate commerce or create unnecessary case loads in Federal
courts and to provide initiatives to help businesses prepare
and be in a position to withstand the potentially devastating
economic impact of the Year 2000 problem.
(3) Year 2000 issues will affect practically all business
enterprises to some degree, giving rise to a large number of
disputes.
(4) Resorting to the legal system for resolution of Year
2000 problems is not feasible for many businesses, particularly
small businesses, because of its complexity and expense.
(5) The delays, expense, uncertainties, loss of control,
adverse publicity and animosities that frequently accompany
litigation of business disputes can only exacerbate the
difficulties associated with the Year 2000 date change, and
work against the successful resolution of those difficulties.
(6) The Congress recognizes that every business in the
United States should be concerned that widespread and
protracted Year 2000 litigation may threaten the network of
valued and trusted business relationships that are so important
to the effective functioning of the world economy, and which
may put unbearable strains on an overburdened judicial system.
(7) A proliferation of frivolous Year 2000 actions by
opportunistic parties may further limit access to courts by
straining the resources of the legal system and depriving
deserving parties of their legitimate rights to relief.
(8) The Congress encourages businesses to approach their
Year 2000 disputes responsibly, and to avoid unnecessary, time-
consuming and costly litigation based on Year 2000 failures.
Congress supports good faith negotiations between parties when
there is a dispute over a Year 2000 problem, and, if necessary,
urges the parties to enter into voluntary, non-binding
mediation rather than litigation.
SEC. 3. DEFINITIONS.
In this Act:
(1) Actual damages.--The term ``actual damages'' means
damages for injury to tangible property, and the cost of
repairing or replacing defective products.
(2) Contract.--The term ``contract'' means a contract,
tariff, license, or warranty.
(3) Defendant.--The term ``defendant'' means any person
against whom a year 2000 claim has been asserted.
(4) Economic loss.--The term ``economic loss''--
(A) means any damages other than damages arising
out of personal injury or damage to tangible property;
(B) includes, but is not limited to, damages for
lost profits or sales, for business interruption, for
losses indirectly suffered as a result of the
defendant's wrongful act or omission, for losses that
arise because of the claims of third parties, for
losses that must be pleaded as special damages, or for
items defined as consequential damages in the Uniform
Commercial Code or analogous State commercial law; and
(C) does not include non-economic damages.
(5) Material defect.--The term ``material defect'' means a
defect in any item, whether tangible or intangible, or in the
provision of a service, that substantially prevents the item or
service from operating or functioning as designed or intended.
Defects that have an insignificant or de minimis effect on the
operation or functioning of an item, or that affect only a
component of an item that, as a whole, substantially operates
or functions as designed, or that have an insignificant or de
minimis effect on the efficacy of the service provided, are not
material defects within the meaning of this definition.
(6) Person.--The term ``person'' means any natural person
and any entity, organization, or enterprise, including but not
limited to corporations, companies, joint stock companies,
associations, partnerships, trusts, and governmental entities.
(7) Personal injury.--The term ``personal injury'' means
any physical injury to a natural person, including death of the
person. It does not include mental suffering, emotional
distress, or like elements of injury that do not constitute
physical harm to a natural person.
(8) Plaintiff.--The term ``plaintiff'' means any person who
asserts a year 2000 claim.
(9) Punitive damages.--The term ``punitive damages'' means
damages that are awarded against any person to punish such
person or to deter such person, or others, from engaging in
similar behavior in the future.
(10) State.--The term ``State'' means any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Northern Mariana Islands, the United States
Virgin Islands, Guam, American Samoa, and any other territory
or possession of the United States, and any political
subdivision thereof.
(11) Year 2000 action.--The term ``year 2000 action'' means
any civil action of any kind brought in any court under Federal
or State law, in which--
(A) a year 2000 claim is asserted; or
(B) any claim or defense, other than a claim or
defense based on personal injury, is related, directly
or indirectly, to an actual or potential year 2000
failure.
(12) Year 2000 claim.--The term ``year 2000 claim'' means
any claim or cause of action of any kind, other than a claim
based on personal injury, whether asserted by way of claim,
counterclaim, cross-claim, third-party claim, or otherwise, in
which the plaintiff's alleged loss or harm resulted, directly
or indirectly, from an actual or potential year 2000 failure.
(13) Year 2000 failure.--The term ``year 2000 failure''
means any failure by any device or system (including, without
limitation, any computer system and any microchip or integrated
circuit embedded in another device or product), or any
software, firmware, or other set or collection of processing
instructions, however constructed, in processing, calculating,
comparing, sequencing, displaying, storing, transmitting, or
receiving date-related data, including, without limitation,
failure in accurately dealing with or failure in accurately
accounting for transitions or comparisons from, into, and
between the years 1999 and 2000, failure to recognize or
accurately process any specific date, and failure accurately to
account for the year 2000's status as a leap year.
SEC. 4. EXCLUSION OF PERSONAL INJURY CLAIMS.
None of the provisions of this Act shall apply to any claim based
on personal injury.
TITLE I--UNIFORM PRELITIGATION PROCEDURES FOR YEAR 2000 ACTIONS
SEC. 101. NOTICE PROCEDURES TO AVOID UNNECESSARY YEAR 2000 ACTIONS.
(a) Notification Period.--Before filing a year 2000 action, except
an action that seeks only injunctive relief, a prospective plaintiff
shall provide to each prospective defendant a written notice that
identifies, with particularity--
(1) any symptoms of a material defect alleged to have
caused injury;
(2) the injury allegedly suffered by the prospective
plaintiff;
(3) the facts that lead the prospective plaintiff to hold
such person responsible for both the defect and the injury; and
(3) the relief or action sought by the prospective
plaintiff.
Except as provided in subsection (c), the prospective plaintiff shall
not commence an action in Federal or State court until the expiration
of 90 days after the date on which such notice is provided. Such 90-day
period shall be excluded in the computation of any applicable statute
of limitations.
(b) Response to Notice.--Not later than 30 days after receipt of
the notice specified in subsection (a), each prospective defendant
shall provide to each prospective plaintiff a written statement
acknowledging receipt of the notice and describing the actions it will
take or has taken, if any, to address the problem identified by the
prospective plaintiff.
(c) Failure To Respond.--If a prospective defendant fails to
respond to a notice provided pursuant to subsection (a) within the 30-
day period specified in subsection (b) or does not describe the action,
if any, that the prospective defendant will take to address the problem
identified by the prospective plaintiff, the 90-day period specified in
subsection (a) shall terminate at the end of that 30-day period as to
that prospective defendant and the prospective plaintiff may thereafter
commence its action against that prospective defendant.
(d) Failure To Provide Notice.--If a defendant determines that a
plaintiff has filed a year 2000 action without providing the notice
specified in subsection (a) and without awaiting the expiration of the
90-day period specified in subsection (a), the defendant may treat the
plaintiff's complaint as such a notice by so informing the court and
the plaintiff. If any defendant elects to treat the complaint as such a
notice--
(1) the court shall stay all discovery and all other
proceedings in the action for 90 days after filing of the
complaint; and
(2) the time for filing answers and all other pleadings
shall be tolled during this 90-day period.
(e) Effect of Contractual Waiting Periods.--In cases where a
contract requires notice of nonperformance and provides for a period of
delay prior to the initiation of suit for breach or repudiation of
contract, the period of delay provided in the contract is controlling
over the waiting period specified in subsections (a) and (d).
(f) Sanction for Frivolous Invocation of the Stay Provision.--In
any action in which a defendant acts pursuant to subsection (d) to stay
the action, and the court subsequently finds that the defendant's
assertion that the suit is a year 2000 action was frivolous and made
for the purpose of causing unnecessary delay, the court may award
sanctions to opposing parties in accordance with the provisions of Rule
11 of the Federal Rules of Civil Procedure.
(g) Computation of Time.--For purposes of this section, the rules
regarding computation of time shall be governed by the applicable
Federal or State rules of civil procedure.
SEC. 102. ALTERNATIVE DISPUTE RESOLUTION TO AVOID UNNECESSARY YEAR 2000
ACTIONS.
(a) In General.--(1) At any time during the 90-day period specified
in section 101(a), either party may request the other to use
alternative dispute resolution. If, based upon that request, the
parties enter into an agreement to use alternative dispute resolution,
they may also agree to an extension of the 90-day period.
(2) At any time after expiration of the 90-day period specified in
section 101(a), whether before or after the filing of a complaint,
either party may request the other to use alternative dispute
resolution.
(b) Payment of Moneys Due.--If the parties resolve their dispute
through alternative dispute resolution as provided in subsection (a),
the defendant shall pay all monies due within 30 days, unless another
period of time is agreed to by the parties or established by contract
between the parties.
SEC. 103. PLEADING REQUIREMENTS.
(a) Nature and Amount of Damages.--In any year 2000 action that
seeks the award of money damages, the complaint shall state with
particularity the nature and amount of each element of damages, and the
factual basis for the damages calculation.
(b) Material Defects.--In any year 2000 action in which the
plaintiff alleges that a product or service was defective, the
complaint shall identify with particularity the symptoms of the
material defects and shall state with particularity the facts
supporting the conclusion that the defects were material.
(c) Required State of Mind.--In any year 2000 action in which a
claim is asserted as to which the plaintiff may prevail only on proof
that the defendant acted with a particular state of mind, the complaint
shall, with respect to each element of the claim, state with
particularity the facts giving rise to a strong inference that the
defendant acted with the required state of mind.
(d) Motion To Dismiss; Stay of Discovery.--
(1) Dismissal for failure to meet pleading requirements.--
In any year 2000 action, the court shall, on the motion of any
defendant, dismiss the complaint with or without prejudice if
the requirements of subsection (a), (b), or (c) are not met
with respect to any claim asserted therein.
(2) Stay of discovery.--In any year 2000 action, all
discovery shall be stayed during the pendency of any motion to
dismiss, unless the court finds upon the motion of any party
that particularized discovery is necessary to preserve evidence
or prevent undue prejudice to that party.
(3) Preservation of evidence.--
(A) In general.--During the pendency of any stay of
discovery entered pursuant to this subsection, unless
otherwise ordered by the court, any party to the action
with actual notice of the allegations contained in the
complaint shall treat all documents, data compilations
(including electronically stored or recorded data), and
tangible objects that are in the custody or control of
such person and that are relevant to the allegations,
as if they were a subject of a continuing request for
production of documents from an opposing party under
applicable Federal or State rules of civil procedure.
(B) Sanction for willful violation.--A party
aggrieved by the willful failure of an opposing party
to comply with subparagraph (A) may apply to the court
for an order awarding appropriate sanctions.
SEC. 104. DUTY OF ALL PERSONS TO MITIGATE YEAR 2000 COMPUTER FAILURES
AND RESULTING DAMAGES.
There shall be no recovery in any year 2000 action on account of
injury that the plaintiff could reasonably have avoided in light of any
disclosure or other information of which the plaintiff was, or
reasonably could have been, aware, and the damages awarded in any such
action shall exclude any amount that the plaintiff reasonably could
have avoided in light of any such disclosure or information.
TITLE II--YEAR 2000 ACTIONS INVOLVING CONTRACTS
SEC. 201. CERTAINTY OF CONTRACT TERMS FOR PREVENTION OF YEAR 2000
DAMAGES.
Notwithstanding any other provision of Federal or State statutory
or common law, in any year 2000 action all written contractual terms,
including limitations or exclusions of liability or disclaimers of
warranty, shall be fully enforceable, except that--
(1) if the contract is silent as to a particular issue, the
interpretation of the contract as to that issue shall be
determined by applicable law in force at the time that the
contract was entered into; and
(2) this section does not apply if a court determines that
the contract as a whole is unenforceable due to an infirmity in
the formation of the contract under applicable law in force at
the time the contract was entered into.
SEC. 202. DEFENSES.
(a) Reasonable Efforts.--In any year 2000 action in which breach of
contract is alleged, in addition to any other rights provided by
applicable law, the party against whom the claim of breach is asserted
shall be allowed to offer evidence that its implementation of the
contract, or its efforts to implement the contract, were reasonable in
light of the circumstances for the purpose of limiting or eliminating
the defendant's liability.
(b) Impossibility or Commercial Impracticability.--In any year 2000
action in which breach of contract is alleged, applicability of the
doctrines of impossibility and commercial impracticability shall be
determined by applicable law in existence on January 1, 1999, and
nothing in this Act shall be construed as limiting or impairing a
party's right to assert defenses based upon such doctrines.
SEC. 203. PROTECTION OF PERSONS FROM LIABILITY NOT ANTICIPATED IN YEAR
2000 CONTRACTS.
In any year 2000 action involving a breach of contract or a claim
related to the contract, the court shall not award any damages unless
such damages are provided for by the express terms of the contract, or,
if the contract is silent on such damages, then by operation of the
applicable Federal or State law that governed interpretation of the
contract at the time the contract was entered into.
TITLE III--YEAR 2000 ACTIONS INVOLVING TORT AND OTHER NONCONTRACTUAL
CLAIMS
SEC. 301. PROPORTIONATE LIABILITY.
(a) In General.--Except with respect to claims involving personal
injury, a person against whom a final judgment is entered in a year
2000 action shall be liable solely for the portion of the judgment that
corresponds to the percentage of responsibility of that person, as
determined under subsection (b).
(b) Determination of Responsibility.--
(1) In general.--In any year 2000 action, the court shall
instruct the jury to answer special interrogatories, or if
there is no jury, shall make findings, with respect to each
defendant and plaintiff, and each of the other persons claimed
by any of the parties to have caused or contributed to the loss
incurred by the plaintiff, including (but not limited to)
persons who have entered into settlements with the plaintiff or
plaintiffs, concerning the percentage of responsibility of the
defendant, the plaintiff, and each such person, measured as a
percentage of the total fault of all persons who caused or
contributed to the total loss incurred by the plaintiff.
(2) Contents of special interrogatories or findings.--The
responses to interrogatories, or findings, as appropriate,
under paragraph (1) shall specify the total amount of damages
that the plaintiff is entitled to recover and the percentage of
responsibility of each person found to have caused or
contributed to the loss incurred by the plaintiff or
plaintiffs.
(3) Factors for consideration.--In determining the
percentage of responsibility under this subsection, the trier
of fact shall consider--
(A) the nature of the conduct of each person
alleged to have caused or contributed to the loss
incurred by the plaintiff; and
(B) the nature and extent of the causal
relationship between the conduct of each such person
and the damages incurred by the plaintiff or
plaintiffs.
(4) Nondisclosure to jury.--The standard for allocation of
damages under paragraph (1) shall not be disclosed to members
of the jury.
SEC. 302. PROTECTION OF GOOD FAITH EFFORTS TO PREVENT YEAR 2000
DAMAGES.
(a) Defendant's State of Mind as to Year 2000 Failure.--With
respect to any year 2000 claim for money damages in which the
defendant's actual or constructive awareness of an actual or potential
year 2000 failure is an element of the claim under applicable law,
except for a claim based upon personal injury, the defendant shall not
be liable unless the plaintiff, in addition to establishing all other
requisite elements of the claim, proves by clear and convincing
evidence that the defendant actually knew, or recklessly disregarded a
substantial risk, that such failure would occur in the specific facts
and circumstances of such claim.
(b) Injury to Plaintiff.--With respect to any year 2000 claim for
money damages in which the defendant's actual or constructive awareness
of actual or potential harm to the plaintiff is an element of the claim
under applicable law, except for a claim based upon personal injury,
the defendant shall not be liable unless the plaintiff, in addition to
establishing all other requisite elements of the claim, proves by clear
and convincing evidence that the defendant actually knew, or recklessly
disregarded a known and substantial risk, that the plaintiff would
suffer such harm.
(c) Foreseeability.--With respect to any year 2000 claim for money
damages, except for a claim based upon personal injury, the defendant
shall not be liable unless the plaintiff establishes by clear and
convincing evidence, in addition to all other requisite elements of the
claim, that the defendant knew or reasonably should have known that its
actions would cause harm to the plaintiff in the specific facts and
circumstances of such claim.
(d) Preservation of Existing Law.--Nothing in subsections (a), (b),
or (c) shall be deemed to relieve the plaintiff in any year 2000 action
of its obligation to establish any element of its cause of action under
applicable law.
SEC. 303. REASONABLE EFFORTS DEFENSE.
In any year 2000 action involving a claim for money damages, except
with respect to claims asserting breach or repudiation of contract--
(1) the fact that a year 2000 failure occurred in an
entity, facility, system, product, or component that was within
the control of the party against whom the claim is asserted
shall not constitute the sole basis for recovery; and
(2) the party against whom the claim is asserted shall be
entitled to establish, as a complete defense to the claim, that
it took measures that were reasonable under the circumstances
to prevent the year 2000 failure from occurring or from causing
the damages upon which the claim is based.
SEC. 304. DAMAGES LIMITATION.
(a) Year 2000 Recovery Fund.--There is established in the Treasury
a Year 2000 Recovery Fund. In any year 2000 action in which punitive
damages are awarded under applicable law, including this Act, the
entire amount of such damages shall be paid into the Year 2000 Recovery
Fund. Amounts in the Fund shall be used for the assistance of small
businesses, State and local governments, and nonprofit organizations,
that are affected by Year 2000 failures.
(b) Standard for Awards.--In any year 2000 action in which punitive
damages may be awarded under applicable law, the defendant shall not be
liable for punitive damages unless the plaintiff proves by clear and
convincing evidence that the defendant specifically intended to cause
injury to the plaintiff. This requirement is in addition to any other
requirement in applicable law for the award of such damages.
(c) Caps on Punitive Damages.--
(1) In general.--In any year 2000 action, if a defendant is
found liable for punitive damages, the amount of punitive
damages that may be awarded to a claimant shall not exceed the
greater of--
(A) 3 times the amount awarded to the claimant for
actual damages; or
(B) $250,000.
(2) Special rule.--
(A) In general.--Notwithstanding paragraph (1), in
any year 2000 action, if the defendant is found liable
for punitive damages and the defendant--
(i) is an individual whose net worth does
not exceed $500,000,
(ii) is an owner of an unincorporated
business that has fewer than 25 full-time
employees, or
(iii) is--
(I) a partnership,
(II) corporation,
(III) association,
(IV) unit of local government, or
(V) organization,
that has fewer than 25 full-time employees,
the amount of punitive damages shall not exceed the
lesser of 3 times the amount awarded to the claimant
for actual damages, or $250,000.
(B) Applicability.--For purposes of determining the
applicability of this paragraph to a corporation, the
number of employees of a subsidiary of a wholly owned
corporation shall include all employees of a parent
corporation or any subsidiary of that parent
corporation.
(3) Application of limitations by the court.--The
limitations contained in paragraphs (1) and (2) shall be
applied by the court and shall not be disclosed to the jury.
SEC. 305. RECOVERY OF ECONOMIC DAMAGES IN YEAR 2000 ACTIONS.
(a) Limitation on Recovery of Economic Losses.--Subject to
subsection (b), a party to a year 2000 action making a tort claim may
recover economic losses only upon establishing, in addition to all
other elements of the claim under applicable law, that any one of the
following circumstances exists:
(1) The recovery of such losses is provided for in a
contract to which the party seeking to recover such losses is a
party.
(2) Such losses are incidental to a claim in the year 2000
action based on personal injury caused by a year 2000 failure.
(3) Such losses are incidental to a claim in the year 2000
action based on damage to tangible property caused by a year
2000 failure (other than damage to property that is the subject
of the contract).
(b) Recovery Must Be Permitted Under Applicable Law.--Economic
losses shall be recoverable in a year 2000 action only if applicable
Federal law, or applicable State law embodied in statute or controlling
judicial precedent as of January 1, 1999, permits the recovery of such
losses in the action.
SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.
(a) In General.--A director, officer, or trustee of a business or
other organization (including a corporation, unincorporated
association, partnership, or non-profit organization) shall not be
personally liable in any year 2000 action in his or her capacity as a
director or officer of the business or organization for an aggregate
amount that exceeds the greater of--
(1) $100,000; or
(2) the amount of cash compensation received by the
director or officer from the business or organization during
the 12-month period immediately preceding the act or omission
for which liability was imposed.
(b) Rule of Construction.--Nothing in this section shall be deemed
to impose, or to permit the imposition of, personal liability on any
director, officer, or trustee in excess of the aggregate amount of
liability to which such director, officer, or trustee would be subject
under applicable State law in existence on January 1, 1999 (including
any charter or bylaw authorized by such State law).
TITLE IV--YEAR 2000 CLASS ACTIONS
SEC. 401. MINIMUM INJURY REQUIREMENT.
(a) In General.--In any year 2000 action involving a claim that a
product or service is defective, the action may be maintained as a
class action in Federal or state court as to that claim only if it
satisfies all other prerequisites established by applicable Federal or
State law and the court also finds that the alleged defect in the
product or service was a material defect as to a majority of the
members of the class.
(b) Determination by Court.--As soon as practicable after the
commencement of a year 2000 action involving a claim that a product or
service is defective and that is brought as a class action, the court
shall determine by order whether the requirement set forth in paragraph
(1) is satisfied. An order under this subsection may be conditional,
and may be altered or amended before the decision on the merits.
SEC. 402. NOTIFICATION.
(a) Notice by Mail.--In any year 2000 action that is maintained as
a class action, the court, in addition to any other notice required by
applicable Federal or State law, shall direct notice of the action to
each member of the class by United States mail, return receipt
requested. Persons whose actual receipt of the notice is not verified
by the court or by counsel for one of the parties shall be excluded
from the class unless those persons inform the court in writing, on a
date no later than the commencement of trial or entry of judgment, that
they wish to join the class.
(b) Contents of Notice.--In addition to any information required by
applicable Federal or State law, the notice described in this
subsection shall--
(1) concisely and clearly describe the nature of the
action;
(2) identify the jurisdiction whose law will govern the
action;
(3) identify any potential claims that class counsel chose
not to pursue so that the action would satisfy class
certification requirements; and
(4) describe the fee arrangement of class counsel.
SEC. 403. DISMISSAL PRIOR TO CERTIFICATION.
Before determining whether to certify a class in a year 2000
action, the court may decide a motion to dismiss or for summary
judgment made by any party if the court concludes that decision will
promote the fair and efficient adjudication of the controversy and will
not cause undue delay.
SEC. 404. FEDERAL JURISDICTION IN YEAR 2000 CLASS ACTIONS.
(a) Reference.--Whenever in this section an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a section or
other provision of title 28, United States Code.
(b) Diversity Jurisdiction.--Section 1332 is amended by
redesignating subsections (b), (c), and (d) as subsections (c), (d),
and (e), respectively, and by inserting after subsection (a) the
following:
``(b)(1) The district courts shall have original jurisdiction of
any year 2000 action, regardless of the sum or value of the matter in
controversy therein, which is brought as a class action and in which--
``(A) any member of a proposed plaintiff class is a citizen
of a State different from any defendant;
``(B) any member of a proposed plaintiff class is a foreign
state or a citizen or subject of a foreign state and any
defendant is a citizen of a State; or
``(C) any member of a proposed plaintiff class is a citizen
of a State and any defendant is a citizen or subject of a
foreign state.
As used in this paragraph, the term `foreign state' has the meaning
given that term in section 1603(a).
``(2)(A) In a year 2000 action described in paragraph (1) in
which--
``(i) the substantial majority of the members of all
proposed plaintiff classes are citizens of a single State of
which the primary defendants are also citizens, and
``(ii) the claims asserted will be governed primarily by
the laws of that State,
the district court should abstain from hearing such action.
``(B) In a year 2000 action described in paragraph (1) in which--
``(i) all matters in controversy asserted by the individual
members of all proposed plaintiff classes in the aggregate do
not exceed the sum or value of $1,000,000, exclusive of
interest and costs,
``(ii) the number of members of all proposed plaintiff
classes in the aggregate is less than 100, or
``(iii) the primary defendants are States, State officials,
or other governmental entities against whom the district court
may be foreclosed from ordering relief,
the district court may, in its discretion, abstain from hearing such
action.
``(3)(A) Paragraph (1) and section 1453 shall not apply to any
class action that is brought under the Securities Act of 1933.
``(B) Paragraph (1) and section 1453 shall not apply to a class
action described in subparagraph (C) that is based upon the statutory
or common law of the State in which the issuer concerned is
incorporated (in the case of a corporation) or organized (in the case
of any other entity).
``(C) A class action is described in this subparagraph if it
involves--
``(i) the purchase or sale of securities by an issuer or an
affiliate of an issuer exclusively from or to holders of equity
securities of the issuer; or
``(ii) any recommendation, position, or other communication
with respect to the sale of securities of an issuer that--
``(I) is made by or on behalf of the issuer or an
affiliate of the issuer to holders of equity securities
of the issuer; and
``(II) concerns decisions of those equity holders
with respect to voting their securities, acting in
response to a tender or exchange offer, or exercising
dissenters' or appraisal rights.
``(D) As used in this paragraph, the terms `issuer', `security',
and `equity security' have the meanings given those terms in section 3
of the Securities Exchange Act of 1934.
``(4) As used in this subsection, the term `year 2000 action' has
the meaning given that term in section 3 of the Year 2000 Readiness
Act.''.
(c) Conforming Amendment.--Section 1332(c) (as redesignated by this
section) is amended by inserting after ``Federal courts'' the
following: ``pursuant to subsection (a) of this section''.
(d) Determination of Diversity.--Section 1332, as amended by this
section, is further amended by adding at the end the following:
``(f) For purposes of subsection (b), a member of a proposed class
shall be deemed to be a citizen of a State different from a defendant
corporation only if that member is a citizen of a State different from
all States of which the defendant corporation is deemed a citizen.''.
(e) Removal of Class Actions.--Chapter 89 is amended by adding
after section 1452 the following:
``Sec. 1453. Removal of class actions
``(a) In General.--A year 2000 action which is a class action may
be removed to a district court of the United States in accordance with
this chapter, except that such action may be removed--
``(1) by any defendant without the consent of all
defendants; or
``(2) by any plaintiff class member who is not a named or
representative class member of the action for which removal is
sought, without the consent of all members of such class.
``(b) When Removable.--This section shall apply to any year 2000
action before or after the entry of any order certifying a class.
``(c) Procedure for Removal.--The provisions of section 1446(a)
relating to a defendant removing a case shall apply to a plaintiff
removing a case under this section. With respect to the application of
subsection (b) of such section, the requirement relating to the 30-day
filing period shall be met if a plaintiff class member who is not a
named or representative class member of the action for which removal is
sought files notice of removal within 30 days after receipt by such
class member, through service or otherwise, of the initial written
notice of the class action provided at the trial court's direction.
``(d) Definition.--As used in this section, the term `year 2000
action' has the meaning given that term in section 3 of the Year 2000
Readiness Act.''.
(f) Removal Limitations.--Section 1446(b) is amended in the second
sentence--
(1) by inserting after ``has become removable'' the
following: ``, or, in the case of an action removable on the
basis of jurisdiction under section 1332(b), from which it may
first be ascertained, by exercising due diligence, that the
case is one which is or has become removable''; and
(2) by inserting ``(a)'' after ``section 1332''.
(g) Technical and Conforming Amendments.--The table of sections for
chapter 89 is amended by adding after the item relating to section 1452
the following:
``1453. Removal of class actions.''.
(h) Application of Substantive State Law.--Nothing in this section
or the amendments made by this section shall alter the substantive law
applicable to an action to which the amendments made by subsection (b)
of this section apply.
(i) Procedure After Removal.--Section 1447 is amended by adding at
the end the following new subsection:
``(f) If, after removal, the court determines that no aspect of an
action that is subject to its jurisdiction solely under the provisions
of section 1332(b) may be maintained as a class action under Rule 23 of
the Federal Rules of Civil Procedure, the court shall strike the class
allegations from the action and remand the action to the State court.
Upon remand of the action, the period of limitations for any claim that
was asserted in the action on behalf of any named or unnamed member of
any proposed class shall be deemed tolled to the full extent provided
under Federal law.''.
TITLE V--CLIENT PROTECTION IN CONNECTION WITH YEAR 2000 ACTIONS
SEC. 501. SCOPE.
This title applies to any year 2000 claim or year 2000 action
asserted or brought in Federal or State court.
SEC. 502. DEFINITIONS.
In this title:
(1) Attorney.--the term ``attorney'' means any natural
person, professional law association, corporation, or
partnership authorized under applicable State law to practice
law.
(2) Attorney's services.--The term ``attorney's services''
means the professional advice or counseling of or
representation by an attorney, but such term shall not include
other assistance incurred, directly or indirectly, in
connection with an attorney's services, such as administrative
or secretarial assistance, overhead, travel expenses, witness
fees, or preparation by a person other than the attorney of any
study, analysis, report, or test.
(3) Contingent fee.--The term ``contingent fee'' means the
cost or price of an attorney's services determined by applying
a specified percentage, which may be a firm fixed percentage, a
graduated or sliding percentage, or any combination thereof, to
the amount of the settlement or judgment obtained.
(4) Hourly fee.--The term ``hourly fee'' means the cost or
price per hour of an attorney's services.
(5) Initial meeting.--The term ``initial meeting'' means
the first conference or discussion between a client and an
attorney, whether by telephone or in person, concerning the
details, facts, or basis of the plaintiff's claim.
(6) Retain.--The term ``retain'' means the act of a client
in engaging an attorney's services, whether by express or
implied agreement, by seeking and obtaining the attorney's
services.
SEC. 503. CONSUMER'S RIGHT TO ELECT HOURLY OR CONTINGENT FEE
ARRANGEMENT.
(a) Election of Terms.--A plaintiff who retains an attorney with
respect to a year 2000 claim or a year 2000 action may elect whether to
compensate the attorney's services in connection with the year 2000
claim or the year 2000 action on an hourly basis or a contingent fee
basis, except that--
(1) in no event shall an attorney that has been retained on
a contingent fee basis be paid a fee greater than the lesser of
the attorney's hourly rate or rates disclosed under section 505
multiplied by the total number of hours spent by the attorney
in connection with the claim or action or an agreed upon
percentage of the total recovery which does not exceed one-
third of the total recovery; and
(2) in no event shall such an attorney be paid a contingent
fee based on a percentage of a settlement or judgment obtained
for that portion of damages claimed which the defendant offered
prior to, or within 90 days after, the filing of the relevant
year 2000 action.
(b) Additional Limitation.--In no event shall an attorney
representing a client in connection with a year 2000 claim or a year
2000 action be paid a fee greater than the attorney's hourly rate or
rates disclosed under section 505 multiplied by the total number of
hours spent by the attorney in connection with the claim or action.
SEC. 504. CONSUMER'S RIGHT TO UP-FRONT DISCLOSURE OF INFORMATION
REGARDING FEES AND SETTLEMENT PROPOSALS.
An attorney retained by a client shall, at the initial meeting (or
in the instance of an attorney retained before the effective date of
this Act, 30 days after the date of the enactment of this Act),
disclose to the client the client's rights under this title and the
client's right to receive a written statement of the information
described under sections 505 and 506.
SEC. 505. INFORMATION AFTER INITIAL MEETING.
(a) Written Disclosure of Fees.--Within 30 days after the
disclosure described under section 504, an attorney retained by a
client shall provide a written statement to the client setting forth--
(1) the estimated number of hours of the attorney's
services that will be spent--
(A) settling or attempting to settle the year 2000
claim or year 2000 action; and
(B) handling the year 2000 claim or year 2000
action through trial;
(2) the attorney's hourly fee for services in pursuing the
year 2000 claim or year 2000 action and any conditions,
limitations, restrictions, or other qualifications on the fee,
including likely expenses and the client's obligation for those
expenses and stating that in no event shall such hourly fee for
services exceed $1,000 per hour; and
(3) in the case of an attorney retained on a contingent fee
basis, the attorney's contingent fee for services in pursuing
the year 2000 claim or year 2000 action and any conditions,
limitations, restrictions, or other qualifications on the fee,
including likely expenses and the client's obligation for those
expenses and stating that in no event shall such contingent fee
exceed one third of the total recovery.
(b) Consumer's Right to Timely Updated Information About Fees.--In
addition to the requirements contained in subsection (a), the attorney
shall also render monthly statements to the client containing a
description of hourly charges and expenses incurred in the pursuit of
the client's year 2000 claim or year 2000 action by each attorney
assigned to the client's matter.
SEC. 506. CONSUMER'S RIGHT TO TIMELY UPDATED INFORMATION ABOUT
SETTLEMENT PROPOSALS AND DETAILED STATEMENT OF HOURS AND
FEES.
An attorney retained by a client shall immediately transmit all
settlement offers to the client with an estimate of the likelihood of
achieving a more or less favorable resolution to the year 2000 claim or
year 2000 action, the likely timing of such resolution, and the likely
attorney's fees and expenses required to obtain such a resolution. An
attorney retained by a client shall, within a reasonable time not later
than 30 days after the date on which the year 2000 claim or year 2000
action is finally settled or adjudicated, provide a written statement
to the client containing--
(1) the actual number of hours expended by each attorney on
behalf of the client in connection with the year 2000 claim or
year 2000 action and such attorney's hourly rate; and
(2) the total amount of the hourly fees or total contingent
fee for the attorney's services in connection with the year
2000 claim or year 2000 action.
SEC. 507. CLASS ACTIONS.
An attorney representing a class in a year 2000 action shall make
the disclosures required under this title to the presiding judge. The
presiding judge shall, at the outset of the year 2000 action, determine
the appropriate hourly rate, which in no event shall exceed $1,000 per
hour, and the maximum percentage of the recovery to be paid in
attorney's fees, which in no event shall exceed one third of the
recovery. Notwithstanding any other provision of law or agreement to
the contrary, the presiding judge shall award attorney's fees only
pursuant to this title.
SEC. 508. ENFORCEMENT OF CONSUMER PROTECTION RULES IN YEAR 2000 CLAIMS
AND ACTIONS.
A client whose attorney fails to comply with this title may file a
civil action for damages in the court in which the year 2000 claim or
year 2000 action was filed or could have been filed or other court of
competent jurisdiction. The remedy provided by this section is in
addition to any other available remedy or penalty.
TITLE VI--ASSISTANCE TO SMALL BUSINESSES FOR PREVENTING YEAR 2000
COMPUTER FAILURES
SECTION 601. SHORT TITLE.
This title may be cited as the ``Small Business Year 2000 Readiness
Act''.
SEC. 602. FINDINGS.
Congress finds that--
(1) the failure of many computer programs to recognize the
year 2000 will have extreme negative financial consequences in
the year 2000 and in subsequent years for both large and small
businesses;
(2) small businesses are behind larger businesses in
implementing corrective changes to their automated systems-85
percent of businesses with 200 employees or fewer have not
commenced inventorying the changes they must make to their
automated systems to avoid year 2000 problems;
(3) many small businesses do not have access to the capital
necessary to fix mission critical automated systems; and
(4) the failure of a large number of domestic small
businesses will have a highly detrimental effect on the
American economy in the year 2000 and subsequent years.
SEC. 603. YEAR 2000 COMPUTER FAILURE LOAN GUARANTEE PROGRAM.
(a) Programs Established.--Section 7(a) of the Small Business Act
(15 U.S.C. 636(a)) is amended by adding at the end the following:
``(27) Year 2000 computer failure pilot program.--
``(A) Definitions.--In this paragraph--
``(i) the term `eligible lender' means any
lender designated by the Administration as
eligible to participate in--
``(I) the program (commonly
referred to as the `Preferred Lenders
Program') authorized by the proviso in
section 5(b)(7); or
``(II) the program (commonly
referred to as the `Certified Lenders
Program') authorized in paragraph (19);
and
``(ii) the term `year 2000 computer
failure' means any failure by any device or
system (including, without limitation, any
computer system and any microchip or integrated
circuit embedded in another device or product),
or any software, firmware, or other set of
collection of processing instructions, however
constructed, in processing, calculating,
comparing, sequencing, displaying, storing,
transmitting, or receiving date-related data,
including, without limitation, failure in
accurately dealing with or failure in
accurately accounting for transitions or
comparisons from, into, and between the 20th
and the 21st centuries, or during the years
1999 and 2000, failure to recognize or
accurately process any specific date, and
failure to accurately account for the year
2000's leap year status.
``(B) Establishment of program.--The Administration
shall--
``(i) establish a pilot program, under
which the Administration shall guarantee loans
made by eligible lenders to small business
concerns in accordance with this subsection to
allow such concerns to address year 2000
computer failures; and
``(ii) notify eligible lenders of the
establishment of the program under this
paragraph.
``(C) Use of funds.--A small business concern that
receives a loan guaranteed under this paragraph shall
use the proceeds of the loan solely to address year
2000 computer failures, including the repair or
acquisition of information technology systems and other
automated systems.
``(D) Maximum amount.--The total amount of a loan
made to a small business concern and guaranteed under
this paragraph shall not exceed $50,000.
``(E) Guarantee limit.--The guarantee percentage of
a loan guaranteed under this paragraph shall not exceed
50 percent of the balance of the financing outstanding
at the time of disbursement of the loan.
``(F) Report.--The Administration shall annually
submit to the Committees on Small Business of the House
of Representatives and the Senate a report on the
program authorized by this paragraph. Such report shall
include information relating to--
``(i) the number and amount of loans
guaranteed under this paragraph;
``(ii) whether the loans guaranteed were
made to repair or replace information
technology and other automated systems; and
``(iii) the number of eligible lenders
participating in the program.''.
(b) Regulations.--Not later than 60 days after the date of
enactment of this title, the Administrator of the Small Business
Administration shall issue final regulations to carry out the program
established by section 7(a)(27) of the Small Business Act, as added by
this section.
(c) Repeal.--Effective on October 1, 2001, this section and the
amendment made by this section are repealed.
SEC. 604. PILOT PROGRAM REQUIREMENTS.
Section 7(a)(25) of the Small Business Act (15 U.S.C. 636(a)(25))
is amended by adding at the end the following:
``(D) Notification of change.--Not later than 30
days before initiating any new pilot program or making
any change in a pilot program under this subsection
that may affect the subsidy rate estimates for the loan
program under this subsection, the Administration shall
notify the Committees on Small Business of the House of
Representatives and the Senate. Such notification shall
include--
``(i) a description of the proposed new
program or the change to a program; and
``(ii) an estimation, which shall be
developed by the Administration in consultation
with the Director of the Office of Management
and Budget, of the effect that the new program or the change to a
program will have on the subsidy rate.
``(E) Report on pilot programs.--The Administration
shall annually submit to the Committees on Small
Business of the House of Representatives and the Senate
a report on each pilot program under this subsection.
Such report shall include information relating to--
``(i) the number and amount of loans made
under the pilot program;
``(ii) the number of lenders participating
in the pilot program; and
``(iii) the default rate, delinquency rate,
and recovery rate for loans under the pilot
program, as compared to those rates for other
loan programs under this subsection.''.
SEC. 605. SUSPENSION OF PENALTIES FOR CERTAIN YEAR 2000 FAILURES BY
SMALL BUSINESS CONCERNS.
(a) Definitions.--In this section--
(1) the term ``agency'' means any executive agency, as
defined in section 105 of title 5, United States Code, that has
the authority to impose civil penalties on small business
concerns;
(2) the term ``first-time violation'' means any first-time
violation, resulting from a year 2000 failure, of a Federal
requirement regarding the collection of information; and
(3) the term ``small business concern'' has the meaning
given such term in section 3 of the Small Business Act (15
U.S.C. 632).
(b) Establishment of Liaison.--Not later than 30 days after the
date of enactment of this title, the Administrator of the Small
Business Administration shall establish 1 point of contact in the
Administration to act as a liaison between the Administration and small
business concerns with respect to problems arising out of year 2000
failures and compliance with Federal requirements regarding the
collection of information.
(c) General Rule.--Subject to subsection (d), no agency shall
impose any civil penalty on a small business concern for a first-time
violation.
(d) Exceptions.--An agency may impose civil penalties authorized
under Federal law on a small business concern for a first-time
violation if--
(1) the agency determines that the violation has caused
actual serious harm to the public;
(2) the agency determines that failure to impose a civil
penalty would impede or interfere with the detection of
intentional wrongful activity;
(3) the violation is a violation of an internal revenue law
or a law concerning the assessment or collection of any tax,
debt, revenue, or receipt;
(4) the small business concern fails to correct the
violation not later than 6 months after receiving written
notification of the violation from the agency; or
(5) the agency determines that the violation presents an
imminent and substantial danger to the public health or safety.
(e) Danger to Public Health and Safety.--
(1) Waiver of penalties.--An agency may waive any civil
penalty imposed pursuant to subsection (d)(5) if the violation
for which the penalty is imposed is corrected not later than 30
days after the agency provides written notice of the violation
to the small business concern.
(2) Standards for waiver.--In making a determination
whether to waive a civil penalty under paragraph (1) the agency
shall take into account all of the facts and circumstances
regarding the first-time violation, including--
(A) the nature and seriousness of the violation,
including whether it is technical or inadvertent or
involves willful criminal conduct;
(B) whether the small business concern has made and
is making a good faith effort to comply with applicable
laws and to remedy the violation in the shortest
practicable period of time; and
(C) whether the small business concern has obtained
a significant economic benefit from the violation.
(3) Congressional Notification Requirement.--If an agency
imposes on a small business concern a civil penalty pursuant to
subsection (d)(5) without providing the small business concern
with the 30 days to correct the violation authorized under
paragraph (1), the agency shall notify Congress of the penalty
not later than 60 days after it is imposed.
(f) State Penalties To Conform.--Notwithstanding any other
provision of law, no State may impose on a small business concern any
civil penalty inconsistent with this section.
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