[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 96 Reported in Senate (RS)]





                                                        Calendar No. 34

106th CONGRESS

  1st Session

                                 S. 96

                          [Report No. 106-10]

_______________________________________________________________________

                                 A BILL

To regulate commerce between and among the several States by providing 
 for the orderly resolution of disputes arising out of computer-based 
problems related to processing data that includes a 2-digit expression 
                          of the year's date.

_______________________________________________________________________

                             March 10, 1999

                       Reported with an amendment





                                                        Calendar No. 34
106th CONGRESS
  1st Session
                                 S. 96

                          [Report No. 106-10]

To regulate commerce between and among the several States by providing 
 for the orderly resolution of disputes arising out of computer-based 
problems related to processing data that includes a 2-digit expression 
                          of the year's date.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 19, 1999

 Mr. McCain (for himself and Mr. Frist) introduced the following bill; 
    which was read twice and referred to the Committee on Commerce, 
                      Science, and Transportation

                             March 10, 1999

               Reported by Mr. McCain, with an amendment
 [Strike all after the enacting clause and insert the part printed in 
                                italic]

_______________________________________________________________________

                                 A BILL


 
To regulate commerce between and among the several States by providing 
 for the orderly resolution of disputes arising out of computer-based 
problems related to processing data that includes a 2-digit expression 
                          of the year's date.

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

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Y2K Act''.</DELETED>

<DELETED>SEC. 2. DEFINITIONS.</DELETED>

<DELETED>    In this Act:</DELETED>
        <DELETED>    (1) Y2K action.--The term ``Y2K action'' means a 
        civil action commenced in any Federal or State court for a 
        cause of action arising out of a Y2K failure but does include 
        an action to recover damages for personal injury (excluding 
        emotional harm) or wrongful death.</DELETED>
        <DELETED>    (2) Y2K failure.--The term ``Y2K failure'' means a 
        systems product failure caused by the inability of a computer 
        system, program, or software's failure to accurately store, 
        process, provide, or receive data containing the year-2000 
        date.</DELETED>
        <DELETED>    (3) Y2K-compliant.--The term ``Y2K-compliant'' 
        means--</DELETED>
                <DELETED>    (A) with respect to an information 
                technology product, that the product does not have a 
                Y2K failure; and</DELETED>
                <DELETED>    (B) with respect to a business, that none 
                of that business's information technology products that 
                materially affects the business's capacity to deliver 
                goods and services has a Y2K failure.</DELETED>
        <DELETED>    (4) Information technology product.--The term 
        ``information technology product'' means a computer, a computer 
        program, or computer software, or product using a computer 
        program, chip, or computer software.</DELETED>

<DELETED>SEC. 3. APPLICABILITY; PREEMPTION.</DELETED>

<DELETED>    (a) Applicability to Y2K Actions.--This Act applies to any 
Y2K action, commenced after the date of enactment of this Act, brought 
in a Federal or State court.</DELETED>
<DELETED>    (b) Scope of Preemption.--This Act supersedes any State 
law regarding recovery for harm caused by a Y2K failure only to the 
extent that this Act establishes a rule of law applicable to any such 
recovery which is inconsistent with State law. Any issue arising under 
this Act that is not governed by any such rule of law shall be governed 
by applicable State or Federal law.</DELETED>
<DELETED>    (c) Actions for Personal Injury.--This Act does not apply 
to a civil action brought for personal injury to the extent that the 
action is based on physical injury.</DELETED>

<DELETED>SEC. 4. EXCLUSIVE REMEDIES.</DELETED>

<DELETED>    (a) In General.--The remedies provided by this Act are the 
exclusive remedies available to a plaintiff in a Y2K action, except as 
may be otherwise provided in a contract to which the plaintiff and the 
defendant are parties.</DELETED>
<DELETED>    (b) Defendant's Opportunity to Fix Problem.--A Y2K action 
may not proceed to trial until--</DELETED>
        <DELETED>    (1) the plaintiff has notified the defendant in 
        writing, describing the Y2K failure with particularity; 
        and</DELETED>
        <DELETED>    (2) the plaintiff has afforded the defendant the 
        opportunity, including reasonable access to computers and 
        computer software affected by the Y2K failure described in the 
        notice, to fix the problem.</DELETED>

<DELETED>SEC. 5. DAMAGES.</DELETED>

<DELETED>    (a) Economic Loss.--Except as otherwise provided in this 
section, damages awarded in a Y2K action are limited to economic 
loss.</DELETED>
<DELETED>    (b) Other damages.--</DELETED>
        <DELETED>    (1) In general.--Damages in a Y2K action 
        (including punitive damages) other than for economic loss may 
        not exceed the greater of--</DELETED>
                <DELETED>    (A) 3 times the amount awarded for 
                economic loss; or</DELETED>
                <DELETED>    (B) $250,000.</DELETED>
        <DELETED>    (2) Special rule.--In the case of a defendant--
        </DELETED>
                <DELETED>    (A) who--</DELETED>
                        <DELETED>    (i) is sued in his or her capacity 
                        as a individual; and</DELETED>
                        <DELETED>    (ii) whose net worth does not 
                        exceed $500,000; or</DELETED>
                <DELETED>    (B) that is an unincorporated business, a 
                partnership, corporation, association, unit of local 
                government, or organization with fewer than 25 full-
                time employees,</DELETED>
        <DELETED>paragraph (1) shall be applied by substituting 
        ``$50,000'' for ``$250,000'' in subparagraph (B).</DELETED>
<DELETED>    (c) Punitive damages.--No amount shall be awarded a 
plaintiff in a Y2K action for punitive damages--</DELETED>
        <DELETED>    (1) except to the extent authorized by State law; 
        and</DELETED>
        <DELETED>    (2) unless the plaintiff proves that the economic 
        damages suffered resulted from conscious and flagrant 
        disregard, rather than mere negligence, on the part of the 
        defendant.</DELETED>
<DELETED>    (d) Good Faith Limitation.--Damages in a Y2K action may 
not be awarded, except for economic loss, against any defendant who 
demonstrates that the defendant exercised due diligence and reasonable 
care to prevent or remedy the Y2K failure according to generally 
accepted standards of care and effort in the business activity in which 
the defendant was engaged.</DELETED>

<DELETED>SEC. 6. SEVERAL LIABILITY.</DELETED>

<DELETED>    The liability of more than 1 defendant in a Y2K action may 
be several but may not be joint.</DELETED>

<DELETED>SEC. 7. APPOINTMENT OF SPECIAL MASTERS FOR Y2K 
              ACTIONS.</DELETED>

<DELETED>    Any District Court of the United States in which a Y2K 
action is pending may appoint a special master to hear the matter and 
to make findings of fact and conclusions of law in accordance with Rule 
53 of the Federal Rules of Civil Procedure.</DELETED>

<DELETED>SEC. 8. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, 
              RENTERS, AND LESSORS.</DELETED>

<DELETED>    (a) General Rule.--</DELETED>
        <DELETED>    (1) In general.--In any Y2K action, an information 
        technology product seller other than a manufacturer shall be 
        liable to a claimant only if the claimant establishes--
        </DELETED>
                <DELETED>    (A) that--</DELETED>
                        <DELETED>    (i) the information technology 
                        product that allegedly caused the harm that is 
                        the subject of the complaint was sold, rented, 
                        or leased by the information technology product 
                        seller;</DELETED>
                        <DELETED>    (ii) the information technology 
                        product seller failed to exercise reasonable 
                        care with respect to the information technology 
                        product; and</DELETED>
                        <DELETED>    (iii) the failure to exercise 
                        reasonable care was a proximate cause of harm 
                        to the claimant;</DELETED>
                <DELETED>    (B) that--</DELETED>
                        <DELETED>    (i) the information technology 
                        product seller made an express warranty 
                        applicable to the information technology 
                        product that allegedly caused the harm that is 
                        the subject of the complaint, independent of 
                        any express warranty made by a manufacturer as 
                        to the same information technology 
                        product;</DELETED>
                        <DELETED>    (ii) the information technology 
                        product failed to conform to the warranty; 
                        and</DELETED>
                        <DELETED>    (iii) the failure of the 
                        information technology product to conform to 
                        the warranty caused harm to the claimant; 
                        or</DELETED>
                <DELETED>    (C) that--</DELETED>
                        <DELETED>    (i) the information technology 
                        product seller engaged in intentional 
                        wrongdoing, as determined under applicable 
                        State law; and</DELETED>
                        <DELETED>    (ii) such intentional wrongdoing 
                        was a proximate cause of the harm that is the 
                        subject of the complaint.</DELETED>
        <DELETED>    (2) Reasonable opportunity for inspection.--For 
        purposes of paragraph (1)(A)(ii), an information technology 
        product seller shall not be considered to have failed to 
        exercise reasonable care with respect to an information 
        technology product based upon an alleged failure to inspect the 
        information technology product--</DELETED>
                <DELETED>    (A) if the failure occurred because there 
                was no reasonable opportunity to inspect the 
                information technology product; or</DELETED>
                <DELETED>    (B) if the inspection, in the exercise of 
                reasonable care, would not have revealed the aspect of 
                the information technology product which allegedly 
                caused the claimant's harm.</DELETED>
<DELETED>    (b) Special Rule.--</DELETED>
        <DELETED>    (1) In general.--An information technology product 
        seller shall be liable as a manufacturer of an information 
        technology product for harm caused by the information 
        technology product if--</DELETED>
                <DELETED>    (A) the manufacturer is not subject to 
                service of process under the laws of any State in which 
                the action may be brought; or</DELETED>
                <DELETED>    (B) the court determines that the claimant 
                would be unable to enforce a judgment against the 
                manufacturer.</DELETED>
        <DELETED>    (2) Statute of limitations.--For purposes of this 
        subsection only, the statute of limitations applicable to 
        claims asserting liability of an information technology product 
        seller as a manufacturer shall be tolled from the date of the 
        filing of a complaint against the manufacturer to the date that 
        judgment is entered against the manufacturer.</DELETED>
<DELETED>    (c) Rented or Leased Products.--Any person engaged in the 
business of renting or leasing an information technology product (other 
than a person that is an information technology product manufacturer or 
a seller liable as a manufacturer under paragraph (1)) shall be subject 
to liability in a Y2K action, but any person engaged in the business of 
renting or leasing an information technology product shall not be 
liable to a claimant for the acts of another solely by reason of 
ownership of such information technology product.</DELETED>

SECTION 1. SHORT TITLE; TABLE OF SECTIONS.

    (a) Short Title.--This Act may be cited as the ``Y2K Act''.
    (b) Table of Sections.--The table of sections for this Act is as 
follows:

Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.

             Title I--OPPORTUNITY TO RESOLVE Y2K PROBLEMS.

Sec. 101. Pre-filing notice.
Sec. 102. Pleading requirements.
Sec. 103. Duty to mitigate.
Sec. 104. Proportionate liability.

        Title II--Y2K ACTIONS INVOLVING CONTRACT-RELATED CLAIMS.

Sec. 201. Contracts enforced.
Sec. 202. Defenses.
Sec. 203. Damages limitation .
Sec. 204. Mixed actions.

             Title III--Y2K ACTIONS INVOLVING TORT CLAIMS.

Sec. 301. Damages in tort claims.
Sec. 302. Certain defenses.
Sec. 303. Liability of officers and directors.

                      Title IV--Y2K CLASS ACTIONS.

Sec. 401. Minimum injury requirement.
Sec. 402. Notification.
Sec. 403. Forum for Y2K class actions.

SEC. 2. FINDINGS AND PURPOSES.

    The Congress finds that:
            (1) The majority of responsible business enterprises in the 
        United States are committed to working in cooperation with 
        their contracting partners towards the timely and cost-
        effective resolution of the many technological, business, and 
        legal issues associated with the Y2K date change.
            (2) Congress seeks to encourage businesses to concentrate 
        their attention and resources in short time remaining before 
        January 1, 2000, on addressing, assessing, remediating, and 
        testing their Y2K problems, and to minimize any possible 
        business disruptions associated with the Y2K issues.
            (3) It is appropriate for the Congress to enact legislation 
        to assure that Y2K problems do not unnecessarily disrupt 
        interstate commerce or create unnecessary caseloads in Federal 
        courts and to provide initiatives to help businesses prepare 
        and be in a position to withstand the potentially devastating 
        economic impact of Y2K.
            (4) Y2K issues will potentially affect practically all 
        business enterprises to at least some degree, giving rise 
        possibly to a large number of disputes.
            (5) Resorting to the legal system for resolution of Y2K 
        problems is not feasible for many businesses, particularly 
        small businesses, because of its complexity and expense.
            (6) 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 Y2K date change, and work 
        against the successful resolution of those difficulties.
            (7) Congress recognizes that every business in the United 
        States should be concerned that widespread and protracted Y2K 
        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 and sometime ineffective judicial 
        system.
            (8) A proliferation of frivolous Y2K lawsuits 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.
            (9) Congress encourages businesses to approach their Y2K 
        disputes responsibly, and to avoid unnecessary, time-consuming 
        and costly litigation about Y2K failures, particularly those 
        that are not material. Congress supports good faith 
        negotiations between parties when there is a dispute over a Y2K 
        problem, and, if necessary, urges the parties to enter into 
        voluntary, non-binding mediation rather than litigation.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Y2K action.--The term ``Y2K action'' means a civil 
        action commenced in any Federal or State court in which the 
        plaintiff's alleged harm or injury resulted directly or 
        indirectly from an actual or potential Y2K failure, or a claim 
        or defense of a defendant is related directly or indirectly to 
        an actual or potential Y2K failure.
            (2) Y2K failure.--The term ``Y2K failure'' means 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 to process, to calculate, to 
        compare, to sequence, to display, to store, to transmit, or to 
        receive date-related data, including failures--
                    (A) to deal with or account for transitions or 
                comparisons from, into, and between the years 1999 and 
                2000 accurately;
                    (B) to recognize or accurately process any specific 
                date in 1999, 2000, or 2001; or
                    (C) accurately to account for the year 2000's 
                status as a leap year, including recognition and 
                processing of the correct date on February 29, 2000.
            (3) Actual damages.--The term ``actual damages'' means 
        direct damages for injury to tangible property, and the cost of 
        repairing or replacing products that have a material defect.
            (4) Economic loss.--Except as otherwise specifically 
        provided in a written contract between the plaintiff and the 
        defendant in a Y2K action (and subject to applicable State 
        law), the term ``economic loss''--
                    (A) means amounts awarded to compensate an injured 
                party for any loss other than for personal injury or 
                damage to tangible property (other than property that 
                is the subject of the contract); and
                    (B) includes amounts awarded 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 must be pleaded as special 
                        damages; and
                            (vi) consequential damages (as defined in 
                        the Uniform Commercial Code or analogous State 
                        commercial law); but
                    (C) does not include actual 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. 
        The term ``material defect'' does not include a defect that--
                    (A) has an insignificant or de minimis effect on 
                the operation or functioning of an item or computer 
                program;
                    (B) affects only on a component of an item or 
                program that, as a whole, substantially operates or 
                functions as designed; or
                    (C) has an insignificant or de minimis effect on 
                the efficacy of the service provided.
            (6) Personal injury.--The term ``personal injury''--
                    (A) means any physical injury to a natural person, 
                including death of the person; but
                    (B) does not include mental suffering, emotional 
                distress, or like elements of injury that do not 
                constitute physical harm to a natural person.
            (7) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, 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.
            (8) Contract.--The term ``contract'' means a contract, 
        tariff, license, or warranty.
            (9) Person.--
                    (A) In general.--The term ``person'' has the 
                meaning given to that term by section 1 of title 1, 
                United States Code.
                    (B) Government entities.--The term ``person'' 
                includes an agency, instrumentality, or other entity of 
                Federal, State, or local government (including 
                multijurisdictional agencies, instrumentalities, and 
                entities) when that agency, instrumentality, or other 
                entity is a plaintiff or a defendant in a Y2K action.
            (10) Alternative dispute resolution.--The term 
        ``alternative dispute resolution'' means any process or 
        proceeding, other than adjudication by a court or in an 
        administrative proceeding, in which a neutral third party 
        participates to assist in the resolution of issues in 
        controversy, through processes such as early neutral 
        evaluation, mediation, minitrial, and arbitration.

SEC. 4. APPLICATION OF ACT.

    (a) General Rule.--This Act applies to any Y2K action brought in a 
State or Federal court after February 22, 1999.
    (b) No New Cause of Action Created.--Nothing in this Act creates a 
new cause of action under Federal or State law.
    (c) Actions for Personal Injury or Wrongful Death Excluded.--This 
Act does not apply to a claim for personal injury or for wrongful 
death.
    (d) Written Contract Controls.--The provisions of this Act do not 
supersede a valid, enforceable written contract between a plaintiff and 
a defendant in a Y2K action.
    (e) Preemption of State Law.--This Act supersedes State law to the 
extent that it establishes a rule of law applicable to a Y2K action 
that is inconsistent with State law.

SEC. 5. PUNITIVE DAMAGES LIMITATIONS.

    (a) In General.--In any Y2K action in which punitive damages may be 
awarded under applicable State law, the defendant shall not be liable 
for punitive damages unless the plaintiff proves by clear and 
convincing evidence that the defendant acted with conscious and 
flagrant disregard for the rights and property of others.
    (b) Caps on Punitive Damages.--
            (1) In general.--Punitive damages against a defendant in 
        such a Y2K action may not exceed the larger of--
                    (A) 3 times the amount awarded for actual damages; 
                or
                    (B) $250,000.
            (2) Special rule.--In the case of a defendant--
                    (A) who--
                            (i) is sued in his or her capacity as a 
                        individual; and
                            (ii) whose net worth does not exceed 
                        $500,000; or
                    (B) that is an unincorporated business, a 
                partnership, corporation, association, unit of local 
                government, or organization with fewer than 25 full-
                time employees,
        paragraph (1) shall be applied by substituting ``smaller'' for 
        ``larger''.
    (c) Government Entities.--Punitive damages in such a Y2K action may 
not be awarded against a person described in section 3(8)(B).

              TITLE I--OPPORTUNITY TO RESOLVE Y2K PROBLEMS

SEC. 101. PRE-FILING NOTICE.

    (a) In General.--Before commencing a Y2K action, except an action 
that seeks only injunctive relief, a prospective plaintiff with a Y2K 
claim shall serve on each prospective defendant in that action a 
written notice that identifies with particularity--
            (1) the manifestations of any material defect alleged to 
        have caused harm or loss;
            (2) the harm or loss allegedly suffered by the prospective 
        plaintiff;
            (3) the remedy sought by the prospective plaintiff;
            (4) the basis upon which the prospective plaintiff seeks 
        that remedy; and
            (5) the name, title, address, and telephone number of any 
        individual who has authority to negotiate a resolution of the 
        dispute on behalf of the prospective plaintiff.
    (b) Delay of Action.--Except as provided in subsection (d), a 
prospective plaintiff may not commence a Y2K action in Federal or State 
court until the expiration of 90 days from the date of service of the 
notice required by subsection (a).
    (c) Response to Notice.--Within 30 days after receipt of the notice 
specified in subsection (a), each prospective defendant shall serve on 
each prospective plaintiff a written statement acknowledging receipt of 
the notice, and proposing the actions it has taken or will take to 
address the problem identified by the prospective plaintiff. The 
written statement shall state whether the prospective defendant is 
willing to engage in alternative dispute resolution.
    (d) Failure To Respond.--If a prospective defendant--
            (1) fails to respond to a notice provided pursuant to 
        subsection (a) within the 30 days specified in subsection (c); 
        or
            (2) does not describe the action, if any, the prospective 
        defendant will take to address the problem identified by the 
        prospective plaintiff,
then the 90-day period specified in subsection (a) will terminate at 
the end of the 30-day period as to that prospective defendant and the 
prospective plaintiff may commence its action against that prospective 
defendant.
    (e) Failure To Provide Notice.--If a defendant determines that a 
plaintiff has filed a Y2K action without providing the notice specified 
in subsection (a) and without awaiting the expiration of the 90-day 
period specified in subsection (b), 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.
    (f) Effect of Contractual Waiting Periods.--In cases in which 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 (e).
    (g) State Law Controls Alternative Methods.--Nothing in this 
section supersedes or otherwise preempts any State law or rule of civil 
procedure with respect to the use of alternative dispute resolution for 
Y2K actions.

SEC. 102. PLEADING REQUIREMENTS.

    (a) Nature and Amount of Damages.--In all Y2K actions in which 
damages are requested, the complaint shall provide specific information 
as to the nature and amount of each element of damages and the factual 
basis for the damages calculation.
    (b) Material Defects.--In any Y2K action in which the plaintiff 
alleges that a product or service is defective, the complaint shall 
contain specific information regarding the manifestations of the 
material defects and the facts supporting a conclusion that the defects 
are material.
    (c) Required State of Mind.--In any Y2K action in which a claim is 
asserted on 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 that claim, state with particularity 
the facts giving rise to a strong inference that the defendant acted 
with the required state of mind.

SEC. 103. DUTY TO MITIGATE.

    Damages awarded in any Y2K action shall exclude compensation for 
damages 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, including reasonable efforts made by 
a defendant to make information available to purchasers or users of the 
defendant's product or services concerning means of remedying or 
avoiding Y2K failure.

SEC. 104. PROPORTIONATE LIABILITY.

    (a) In General.--A person against whom a final judgment is entered 
in a Y2K action shall be liable solely for the portion of the judgment 
that corresponds to the relative and proportional responsibility of 
that person. In determining the percentage of responsibility of any 
defendant, the trier of fact shall determine that percentage as a 
percentage of the total fault of all persons, including the plaintiff, 
who caused or contributed to the total loss incurred by the plaintiff.
    (b) Several Liability.--Liability in a Y2K action shall be several 
but not joint.

        TITLE II--Y2K ACTIONS INVOLVING CONTRACT-RELATED CLAIMS

SEC. 201. CONTRACTS ENFORCED.

    In any Y2K action, any written term or condition of a valid and 
enforceable contract between the plaintiff and the defendant, including 
limitations or exclusions of liability and disclaimers of warranty, is 
fully enforceable, unless the court determines that the contract as a 
whole is unenforceable. If the contract is silent with respect to any 
matter, the interpretation of the contract with respect to that matter 
shall be determined by applicable law in force at the time the contract 
was executed.

SEC. 202. DEFENSES.

    (a) Reasonable Efforts.--In any Y2K 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 Y2K 
action in which breach of contract is alleged, the 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. DAMAGES LIMITATION.

    In any Y2K action for breach or repudiation of contract, no party 
may claim, nor be awarded, consequential or punitive damages unless 
such damages are allowed--
            (1) by the express terms of the contract; or
            (2) if the contract is silent on such damages, by operation 
        of State law at the time the contract was executed or by 
        operation of Federal law.

SEC. 204. MIXED ACTIONS.

    If a Y2K action includes claims based on breach of contract and 
tort or other noncontract claims, then this title shall apply to the 
contract-related claims and title III shall apply to the tort or other 
noncontract claims.

              TITLE III--Y2K ACTIONS INVOLVING TORT CLAIMS

SEC. 301. DAMAGES IN TORT CLAIMS.

    A party to a Y2K action making a tort claim may not recover damages 
for economic loss unless--
            (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 result directly from a personal injury 
        claim resulting from the Y2K failure; or
            (3) such losses result directly from damage to tangible 
        property caused by the Y2K failure (other than damage to 
        property that is the subject of the contract),
and such damages are permitted under applicable Federal or State law.

SEC. 302. CERTAIN DEFENSES.

    (a) Good Faith; Reasonable Efforts.--In any Y2K action except an 
action for breach or repudiation of contract, the party against whom 
the claim is asserted shall be entitled to establish, as a complete 
defense to any claim for damages, that it acted in good faith and took 
measures that were reasonable under the circumstances to prevent the 
Y2K failure from occurring or from causing the damages upon which the 
claim is based.
    (b) Defendant's State of Mind.--In a Y2K action making a claim for 
money damages in which the defendant's actual or constructive awareness 
of an actual or potential Y2K failure is an element of the claim, the 
defendant is not liable unless the plaintiff, in addition to 
establishing all other requisite elements of the claim, proves by clear 
and convincing evidence that the defendant knew, or recklessly 
disregarded a known and substantial risk, that the failure would occur 
in the specific facts and circumstances of the claim.
    (c) Foreseeability.--In a Y2K action making a claim for money 
damages, the defendant is not liable unless the plaintiff proves by 
clear and convincing evidence, in addition to all other requisite 
elements of the claim, that the defendant knew, or should have known, 
that the defendant's action or failure to act would cause harm to the 
plaintiff in the specific facts and circumstances of the claim.
    (d) Control Not Determinative of Liability.--The fact that a Y2K 
failure occurred in an entity, facility, system, product, or component 
that was within the control of the party against whom a claim for money 
damages is asserted in a Y2K action shall not constitute the sole basis 
for recovery of damages in that action.
    (e) Preservation of Existing Law.--The provisions of this section 
are in addition to, and not in lieu of, any requirement under 
applicable law as to burdens of proof and elements necessary for 
prevailing in a claim for money damages.

SEC. 303. LIABILITY OF OFFICERS AND DIRECTORS.

    (a) In General.--A director, officer, trustee, or employee of a 
business or other organization (including a corporation, unincorporated 
association, partnership, or non-profit organization) shall not be 
personally liable in any Y2K action making a tort or other noncontract 
claim in that person's capacity as a director, officer, trustee, or 
employee of the business or organization for more than the greater of--
            (1) $100,000; or
            (2) the amount of pre-tax compensation received by the 
        director, officer, trustee, or employee from the business or 
        organization during the 12 months immediately preceding the act 
        or omission for which liability was imposed.
    (b) Exception.--Subsection (a) does not apply in any Y2K action in 
which it is found by clear and convincing evidence that the director, 
officer, trustee, or employee--
            (1) intentionally made misleading statements regarding any 
        actual or potential year 2000 problem; or
            (2) intentionally withheld from the public significant 
        information there was a legal duty to disclose to the public 
        regarding any actual or potential year 2000 problem of that 
        business or organization which would likely result in 
        actionable Y2K failure.
    (c) State Law, Charter, or Bylaws.--Nothing in this section 
supersedes any provision of State law, charter, or a bylaw authorized 
by State law, in existence on January 1, 1999, that establishes lower 
limits on the liability of a director, officer, trustee, or employee of 
such a business or organization.

                      TITLE IV--Y2K CLASS ACTIONS

SEC. 401. MINIMUM INJURY REQUIREMENT.

    In any Y2K 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--
            (1) it satisfies all other prerequisites established by 
        applicable Federal or State law or applicable rules of civil 
        procedure; and
            (2) the court finds that the alleged defect in a product or 
        service is material as to the majority of the members of the 
        class.

SEC. 402. NOTIFICATION.

    (a) Notice by Mail.--In any Y2K 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 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 where the case is pending; 
        and
            (3) describe the fee arrangement of class counsel.

SEC. 403. FORUM FOR Y2K CLASS ACTIONS.

    (a) Jurisdiction.--The District Courts of the United States have 
original jurisdiction of any Y2K action, without regard to the sum or 
value of the matter in controversy involved, that is brought as a class 
action if--
            (1) any member of the proposed plaintiff class is a citizen 
        of a State different from the State of which any defendant is a 
        citizen;
            (2) any member of the proposed plaintiff class is a foreign 
        Nation or a citizen of a foreign Nation and any defendant is a 
        citizen or lawful permanent resident of the United States; or
            (3) any member of the proposed plaintiff class is a citizen 
        or lawful permanent resident of the United States and any 
        defendant is a citizen or lawful permanent resident of a 
        foreign Nation.
    (b) Predominant State Interest.--A United States District Court in 
an action described in subsection (a) may abstain from hearing the 
action if--
            (1) a substantial majority of the members of all proposed 
        plaintiff classes are citizens of a single State;
            (2) the primary defendants are citizens of that State; and
            (3) the claims asserted will be governed primarily by the 
        laws of that State.
    (c) Limited Controversies.--A United States District Court in an 
action described in subsection (a) may abstain from hearing the action 
if--
            (1) the value of all matters in controversy asserted by the 
        individual members of all proposed plaintiff classes in the 
        aggregate does not exceed $1,000,000, exclusive of interest and 
        costs;
            (2) the number of members of all proposed plaintiff classes 
        in the aggregate in less than 100; or
            (3) the primary defendants are States, State officials, or 
        other governmental entities against whom the district court may 
        be foreclosed from ordering relief.
    (d) Diversity Determination.--For purposes of applying section 
1322(b) of title 28, United States Code, to actions described in 
subsection (a) of this section, a member of a proposed class is deemed 
to be a citizen of a State different from a corporation that is a 
defendant if that member is a citizen of a State different from each 
State of which that corporation is deemed a citizen.
    (e) Removal.--
            (1) In general.--A class action described in subsection (a) 
        may be removed to a district court of the United States in 
        accordance with chapter 89 of title 28, United States Code, 
        except that the action may be removed--
                    (A) by any defendant without the consent of all 
                defendants; or
                    (B) 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 the class.
            (2) Timing.--This subsection applies to any class before or 
        after the entry of any order certifying a class.
            (3) Procedure.--
                    (A) In general.--Section 1446(a) of title 28, 
                United States Code, shall be applied to a plaintiff 
                removing a case under this section by treating the 30-
                day filing period as 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 of the initial written notice of the class 
                action provided at the trial court's direction.
                    (B) Application of section 1446.--Section 1446 of 
                title 28, United States Code, shall be applied--
                            (i) to the removal of a case by a plaintiff 
                        under this section by substituting the term 
                        ``plaintiff'' for the term ``defendant'' each 
                        place it appears; and
                            (ii) to the removal of a case by a 
                        plaintiff or a defendant under this section--
                                    (I) by inserting the phrase ``by 
                                exercising due diligence'' after 
                                ``ascertained'' in the second paragraph 
                                of subsection (b); and
                                    (II) by treating the reference to 
                                ``jurisdiction conferred by section 
                                1332 of this title'' as a reference to 
                                subsection (a) of this section.
    (f) Application of Substantive State Law.--Nothing in this section 
alters the substantive law applicable to an action described in 
subsection (a).
    (g) Procedure After Removal.--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) of title 
28, United States Code, 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.