[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 738 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 738

 To assure that innocent users and businesses gain access to solutions 
    to the year 2000 problem-related failures through fostering an 
  incentive to settle year 2000 lawsuits that may disrupt significant 
                    sectors of the American economy.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 25, 1999

   Mr. Dodd introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
 To assure that innocent users and businesses gain access to solutions 
    to the year 2000 problem-related failures through fostering an 
  incentive to settle year 2000 lawsuits that may disrupt significant 
                    sectors of the American economy.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Y2K Fairness in 
Litigation Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings, purposes, and scope.
Sec. 3. Definitions.
     TITLE I--PRELITIGATION PROCEDURES FOR YEAR 2000 CIVIL ACTIONS

Sec. 101. Pre-trial notice.
Sec. 102. Alternative dispute resolution.
Sec. 103. Pleading requirements.
Sec. 104. Duty to mitigate.
         TITLE II--YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTS

Sec. 201. Contract preservation.
Sec. 202. Evidence of reasonable efforts.
      TITLE III--YEAR 2000 CIVIL ACTIONS INVOLVING TORT AND OTHER 
                         NONCONTRACTUAL CLAIMS

Sec. 301. Proportionate liability.
Sec. 302. State of mind and foreseeability.
Sec. 303. Reasonable efforts defense.
Sec. 304. Economic losses.
           TITLE IV--CLASS ACTIONS INVOLVING YEAR 2000 CLAIMS

Sec. 401. Minimum injury requirement.
                        TITLE V--EFFECTIVE DATE

Sec. 501. Effective date.

SEC. 2. FINDINGS, PURPOSES, AND SCOPE.

    (a) Findings.--Congress finds the following:
            (1)(A) Many information technology systems, devices, and 
        programs are not capable of recognizing certain dates in 1999 
        and after December 31, 1999, and will read dates in the year 
        2000 and thereafter as if those dates represent the year 1900 
        or thereafter or will fail to process those dates.
            (B) If not corrected, the problem described in subparagraph 
        (A) and resulting failures could incapacitate systems that are 
        essential to the functioning of markets, commerce, consumer 
        products, utilities, Government, and safety and defense 
        systems, in the United States and throughout the world.
            (2) It is in the national interest that producers and users 
        of technology products concentrate their attention and 
        resources in the time remaining before January 1, 2000, on 
        assessing, fixing, testing, and developing contingency plans to 
        address any and all outstanding year 2000 computer date-change 
        problems, so as to minimize possible disruptions associated 
        with computer failures.
            (3)(A) Because year 2000 computer date-change problems may 
        affect virtually all businesses and other users of technology 
        products to some degree, there is a substantial likelihood that 
        actual or potential year 2000 failures will prompt a 
        significant volume of litigation, much of it insubstantial.
            (B) The litigation described in subparagraph (A) would have 
        a range of undesirable effects including the following:
                    (i) It would threaten to waste technical and 
                financial resources that are better devoted to curing 
                year 2000 computer date-change problems and ensuring 
                that systems remain or become operational.
                    (ii) It could threaten the network of valued and 
                trusted business and customer relationships that are 
                important to the effective functioning of the national 
                economy.
                    (iii) It would strain the Nation's legal system, 
                causing particular problems for the small businesses 
                and individuals who already find that system 
                inaccessible because of its complexity and expense.
                    (iv) The delays, expense, uncertainties, loss of 
                control, adverse publicity, and animosities that 
                frequently accompany litigation of business disputes 
                could exacerbate the difficulties associated with the 
                date change and work against the successful resolution 
                of those difficulties.
                    (v) Concern about the potential for liability--in 
                particular, concern about the substantial litigation 
                expense associated with defending against even the most 
                insubstantial lawsuits--is prompting many persons and 
                businesses with technical expertise to avoid projects 
                aimed at curing year 2000 computer date-change 
                problems.
    (b) Purposes.--Based upon the power contained in article I, section 
8, clause 3 of the Constitution of the United States, the purposes of 
this Act are--
            (1) to establish uniform legal standards that give all 
        businesses and users of technology products reasonable 
        incentives to solve year 2000 computer date-change problems 
        before they develop;
            (2) to encourage the resolution of year 2000 computer date-
        change disputes involving economic damages without recourse to 
        unnecessary, time consuming, and wasteful litigation; and
            (3) to lessen burdens on interstate commerce by 
        discouraging insubstantial lawsuits, while also preserving the 
        ability of individuals and businesses that have suffered real 
        injury to obtain complete relief.
    (c) Scope.--Nothing in this Act affects claims for personal injury.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Actual damages.--The term ``actual damages''--
                    (A) means damages for physical injury to any person 
                or property; and
                    (B) includes the cost of repairing or replacing a 
                product that has a material defect.
            (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 is 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; 
                and
                    (B) includes damages for--
                            (i) lost profits or sales;
                            (ii) business interruption;
                            (iii) losses indirectly suffered as a 
                        result of the defendant's wrongful act or 
                        omission;
                            (iv) losses that arise because of the 
                        claims of third parties;
                            (v) losses that are required to be pleaded 
                        as special damages; or
                            (vi) items defined as consequential damages 
                        in the Uniform Commercial Code or an analogous 
                        State commercial law.
            (5) Material defect.--
                    (A) In general.--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.
                    (B) Exclusions.--The term does not include any 
                defects that--
                            (i) has an insignificant or de minimis 
                        effect on the operation or functioning of an 
                        item;
                            (ii) affects only a component of an item 
                        that, as a whole, substantially operates or 
                        functions as designed; or
                            (ii) has an insignificant or de minimis 
                        effect on the efficacy of the service provided.
            (6) Person.--The term ``person'' means any natural person 
        and any entity, organization, or enterprise, including any 
        corporation, company (including any joint stock company), 
        association, partnership, trust, or government entity.
            (7) Plaintiff.--The term ``plaintiff'' means any person who 
        asserts a year 2000 claim.
            (8) 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 U.S. Virgin 
        Islands, Guam, American Samoa, and any other territory or 
        possession of the United States, and any political subdivision 
        thereof.
            (9) Year 2000 civil action.--The term ``year 2000 civil 
        action''--
                    (A) means any civil action of any kind brought in 
                any court under Federal, State, or foreign law, in 
                which--
                            (i) a year 2000 claim is asserted; and
                            (ii) any claim or defense is related, 
                        directly or indirectly, to an actual or 
                        potential year 2000 failure; and
                    (B) does not include any action brought by a 
                Federal, State, or other public entity, agency, or 
                authority acting in a regulatory, supervisory, or 
                enforcement capacity.
            (10) Year 2000 claim.--The term ``year 2000 claim'' means 
        any claim or cause of action of any kind, 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.
            (11) Year 2000 failure.--The term ``year 2000 failure'' 
        means any failure by any device or system (including 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--
                    (A) the failure to accurately administer or account 
                for transitions or comparisons from, into, and between 
                the 20th and 21st centuries, and between 1999 and 2000; 
                or
                    (B) the failure to recognize or accurately process 
                any specific date, and the failure accurately to 
                account for the status of the year 2000 as a leap year.

     TITLE I--PRELITIGATION PROCEDURES FOR YEAR 2000 CIVIL ACTIONS

SEC. 101. PRE-TRIAL NOTICE.

    (a) Notification Period.--
            (1) In general.--Before filing a year 2000 claim, except an 
        action for a claim that seeks only injunctive relief, a 
        prospective plaintiff shall be required to provide to each 
        prospective defendant a written notice that identifies and 
        describes with particularity--
                    (A) any manifestation of a material defect alleged 
                to have caused injury;
                    (B) the injury allegedly suffered or reasonably 
                risked by the prospective plaintiff; and
                    (C) the relief or action sought by the prospective 
                plaintiff.
            (2) Commencement of action.--Except as provided in 
        subsections (c) and (e), a prospective plaintiff shall not file 
        a year 2000 claim in Federal or State court until the 
        expiration of the 90-day period beginning on the date on which 
        the prospective plaintiff provides notice under paragraph (1).
    (b) Response to Notice.--Not later than 30 days after receipt of 
the notice specified in subsection (a), each prospective defendant 
shall provide each prospective plaintiff a written statement that--
            (1) acknowledges receipt of the notice; and
            (2) describes any actions that the defendant will take, or 
        has taken, to address the defect or injury identified by the 
        prospective plaintiff in the notice.
    (c) Failure To Respond.--If a prospective defendant fails to 
respond to a notice provided under subsection (a)(1) during the 30-day 
period prescribed in subsection (b) or does not include in the response 
a description of actions referred to in subsection (b)(2)--
            (1) the 90-day waiting period identified in subsection (a) 
        shall terminate at the expiration of the 30-day period 
        specified in subsection (b) with respect to that prospective 
        defendant; and
            (2) the prospective plaintiff may commence a year 2000 
        civil action against such prospective defendant immediately 
        upon the termination of that waiting period.
    (d) Failure To Provide Notice.--
            (1) In general.--Subject to subsections (c) and (e), a 
        defendant may treat a complaint filed by the plaintiff as a 
        notice required under subsection (a) by so informing the court 
        and the plaintiff if the defendant determines that a plaintiff 
        has commenced a year 2000 civil action--
                    (A) without providing the notice specified in 
                subsection (a); or
                    (B) before the expiration of the waiting period 
                specified in subsection (a).
            (2) Stay.--If a defendant elects under paragraph (1) to 
        treat a complaint as a notice--
                    (A) the court shall stay all discovery and other 
                proceedings in the action for the period specified in 
                subsection (a) beginning on the date of filing of the 
                complaint; and
                    (B) the time for filing answers and all other 
                pleadings shall be tolled during this 90-day period.
    (e) Effect of Contractual Waiting Periods.--In any case in which a 
contract requires notice of nonperformance and provides for a period of 
delay before the initiation of suit for breach or repudiation of 
contract, the contractual period of delay controls and shall apply in 
lieu of the waiting period specified in subsections (a) and (d).
    (f) Sanction for Frivolous Invocation of the Stay Provision.--If a 
defendant acts under subsection (d) to stay an action, and the court 
subsequently finds that the assertion by the defendant that the action 
is a year 2000 civil action was frivolous and made for the purpose of 
causing unnecessary delay, the court may impose a sanction, including 
an order to make payments to opposing parties in accordance with 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.

    (a) Requests Made During Notification Period.--At any time during 
the 90-day notification period under section 101(a), either party may 
request the other party to use alternative dispute resolution. If, 
based upon that request, the parties enter into an agreement to use 
alternative dispute resolution, the parties may also agree to an 
extension of that 90-day period.
    (b) Request Made After Notification Period.--At any time after 
expiration of the 90-day notification period under section 101(a), 
whether before or after the filing of a complaint, either party may 
request the other party to use alternative dispute resolution.
    (c) Payment Date.--If a dispute that is the subject of the 
complaint or responsive pleading is resolved through alternative 
dispute resolution as provided in subsection (a) or (b), the defendant 
shall pay any amount of funds that the defendant is required to pay the 
plaintiff under the settlement not later than 30 days after the date on 
which the parties settle the dispute, and all other terms shall be 
implemented as promptly as possible based upon the agreement of the 
parties, 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 civil action in 
which a plaintiff seeks an award of money damages, the complaint shall 
state with particularity with regard to each year 2000 claim--
            (1) the nature and amount of each element of damages; and
            (2) the factual basis for the calculation of the damages.
    (b) Material Defects.--In any year 2000 civil action in which the 
plaintiff alleges that a product or service was defective, the 
complaint shall, with respect to each year 2000 claim--
            (1) identify with particularity the manifestations of the 
        material defects; and
            (2) state with particularity the facts supporting the 
        conclusion that the defects were material.
    (c) Required State of Mind.--In any year 2000 civil action in which 
a year 2000 claim is asserted with respect 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 in detail 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 civil action, the court shall, on the motion 
        of any defendant, dismiss without prejudice any year 2000 claim 
        asserted in the complaint if any of the requirements under 
        subsection (a), (b), or (c) is not met with respect to the 
        claim.
            (2) Stay of discovery.--In any year 2000 civil action, all 
        discovery and other proceedings shall be stayed during the 
        pendency of any motion pursuant to this subsection 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.--
                            (i) Treatment of evidence.--During the 
                        pendency of any stay of discovery entered under 
                        this paragraph, unless otherwise ordered by the 
                        court, any party to the action shall treat the 
                        items described in clause (ii) 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.
                            (ii) Items.--The items described in this 
                        clause are all documents, data compilations 
                        (including electronically stored or recorded 
                        data), and tangible objects that--
                                    (I) are in the custody or control 
                                of the party described in clause (i); 
                                and
                                    (II) relevant to the allegations.
                    (B) Sanction for willful violation.--A party 
                aggrieved by the willful failure of an opposing party 
                to comply with clause (A) may apply to the court for an 
                order awarding appropriate sanctions.

SEC. 104. DUTY TO MITIGATE DAMAGES.

    Damages awarded for any year 2000 claim shall exclude any amount 
that the plaintiff reasonably should have avoided in light of any 
disclosure or information with respect to which the plaintiff was, or 
reasonably should have been, aware.

         TITLE II--YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTS

SEC. 201. CONTRACT PRESERVATION.

    (a) In General.--Subject to subsections (b) and (c), 
notwithstanding any other provision of Federal or State statutory or 
case law, in any action in which a year 2000 claim is advanced, in 
resolving that claim all written contractual terms, including 
limitations or exclusions of liability or disclaimers of warranty, 
shall be fully enforceable.
    (b) Interpretation of Contract.--In any case in which a contract is 
silent as to a particular issue, the interpretation of the contract as 
to that issue shall be determined by applicable law in effect at the 
time that the contract was entered into.
    (c) Unenforceable Contracts.--Subsection (a) does not apply in any 
case in which 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 effect at the time the contract was entered 
into.

SEC. 202. EVIDENCE OF REASONABLE EFFORTS.

    (a) Reasonable Efforts.--In any action in which a year 2000 claim 
is advanced and in which a breach of contract or related claim is 
alleged, in the resolution of that claim, in addition to any other 
rights provided by applicable law, the party against whom the claim of 
breach is asserted shall be allowed, for the purpose of limiting the 
award of damages, to offer evidence that the implementation of the 
contract by that party, or the efforts made by that party to implement 
the contract, were reasonable in light of the circumstances.
    (b) Impossibility or Commercial Impracticability.--
            (1) In general.--In any action in which a year 2000 claim 
        is advanced and in which a breach of contract or related claim 
        is alleged, in resolving that claim applicability of the 
        doctrines of impossibility and commercial impracticability 
        shall be determined by applicable law in existence on January 
        1, 1999.
            (2) Rule of construction.--Nothing in this Act shall be 
        construed as limiting or impairing a party's right to assert 
        defenses based upon the doctrines referred to in paragraph (1).

      TITLE III--YEAR 2000 CIVIL ACTIONS INVOLVING TORT AND OTHER 
                         NONCONTRACTUAL CLAIMS

SEC. 301. PROPORTIONATE LIABILITY.

    (a) In General.--
            (1) In general.--Except as provided in paragraph (2), a 
        person against whom a final judgment is entered on a year 2000 
        claim 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).
            (2) Exception.--Paragraph (1) does not apply--
                  (A) if the plaintiff is an individual whose net worth 
                is less than $200,000 and the plaintiffs damages were 
                more than 10 percent of his or her net worth, the 
                proportionately liable defendants are jointly and 
                severally liable for any uncollectable amount; or
                  (B) if the defendant acted knowlingly.
    (b) Determination of Responsibility.--
            (1) In general.--As to any year 2000 claim, the court shall 
        instruct the jury to answer special interrogatories, or if 
        there is no jury, 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 persons who have entered into settlements with the 
plaintiff or plaintiffs, concerning the percentage of responsibility of 
that 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--
                    (A) the total amount of damages that the plaintiff 
                is entitled to recover; and
                    (B) 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 paragraph, 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. STATE OF MIND AND FORESEEABILITY.

    (a) Negligence.--With respect to any year 2000 claim for money 
damages, the defendant shall not be liable unless the plaintiff 
establishes, in addition to all other requisite elements of the claim, 
that the actions of the defendant created an unreasonable risk of harm 
to the plaintiff.
    (b) Preservation of Existing Law.--Nothing in subsection (a) shall 
be deemed to create any year 2000 claim or to relieve the plaintiff in 
any year 2000 civil action of the obligation of that plaintiff to 
establish any element of the cause of action of that plaintiff under 
applicable law.

SEC. 303. REASONABLE EFFORTS DEFENSE.

    Except for breach or repudiation of contract claims, as to any year 
2000 claim seeking money damages--
            (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 
        the party 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. ECONOMIC LOSSES.

    (a) In General.--Subject to subsection (b), a party to a year 2000 
civil action may not recover economic losses for a year 2000 claim 
based on tort unless the party is able to show that at least one of the 
following circumstances exists:
            (1) The recovery of these losses is provided for in the 
        contract to which the party seeking to recover such losses is a 
        party.
            (2) If the contract is silent on those losses, and the 
        application of the applicable Federal or State law that 
        governed interpretation of the contract at the time the 
        contract was entered into would allow recovery of such losses.
            (3) These losses are incidental to a claim in the year 2000 
        civil action based on personal injury caused by a year 2000 
        failure.
            (4) These losses are incidental to a claim in the year 2000 
        civil action based on damage to tangible property caused by a 
        year 2000 failure.
    (b) Treatment of Economic Losses.--Economic losses shall be 
recoverable in a year 2000 civil 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.

           TITLE IV--CLASS ACTIONS INVOLVING YEAR 2000 CLAIMS

SEC. 401. MINIMUM INJURY REQUIREMENT.

    (a) In General.--In any action involving a year 2000 claim that a 
product or service is defective, the action may be maintained as a 
class action in Federal or State court with respect to that claim only 
if--
            (1) the claim satisfies all other prerequisites established 
        by applicable Federal or State law; and
            (2) the court finds that the alleged defect in the product 
        or service was a material defect with respect to a majority of 
        the members of the class.
    (b) Determination by Court.--
            (1) In general.--As soon as practicable after the 
        commencement of an action involving a year 2000 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 stated in paragraph (1) is satisfied.
            (2) Orders.--An order under this subsection may be--
                    (A) conditional; and
                    (B) altered or amended before the decision on the 
                merits.

                        TITLE V--EFFECTIVE DATE

SEC. 501. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect on 
January 1, 1999.
                                 <all>