H.R. 775 (ih) 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. [Introduced i...

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        H.R.775

                       One Hundred Sixth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
   the sixth day of January, one thousand nine hundred and ninety-nine


                                 An Act


 
 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; 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.
Sec.  6. Proportionate liability.
Sec.  7. Prelitigation notice.
Sec.  8. Pleading requirements.
Sec.  9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial 
          impracticability 
          doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Appointment of special masters or magistrate judges for Y2K 
          actions.
Sec. 15. Y2K actions as class actions.
Sec. 16. Applicability of State law.
Sec. 17. Admissible evidence ultimate issue in State courts.
Sec. 18. Suspension of penalties for certain year 2000 failures by small 
          business concerns.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The 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 dates after December 31, 1999.
         (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.
        (4) It is appropriate for the Congress to enact legislation to 
    assure that the year 2000 problems described in this section 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 such problems.
        (5) Resorting to the legal system for resolution of year 2000 
    problems described in this section is not feasible for many 
    businesses and individuals who already find the legal system 
    inaccessible, particularly small businesses and individuals who 
    already find the legal system inaccessible, because of its 
    complexity and expense.
        (6) 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.
        (7) A proliferation of frivolous lawsuits relating to year 2000 
    computer date-change problems 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) Congress encourages businesses to approach their disputes 
    relating to year 2000 computer date-change problems 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 such a dispute, and, if necessary, urges the parties to 
    enter into voluntary, nonbinding mediation rather than litigation.
    (b) Purposes.--Based upon the power of the Congress under 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 continued remediation and testing efforts to 
    solve such problems by providers, suppliers, customers, and other 
    contracting partners;
        (3) to encourage private and public parties alike to resolve 
    disputes relating to year 2000 computer date-change problems by 
    alternative dispute mechanisms in order to avoid costly and time-
    consuming litigation, to initiate those mechanisms as early as 
    possible, and to encourage the prompt identification and correction 
    of such problems; and
        (4) to lessen the burdens on interstate commerce by 
    discouraging insubstantial lawsuits while preserving the ability of 
    individuals and businesses that have suffered real injury to obtain 
    complete relief.

SEC. 3. DEFINITIONS.

    In this Act:
        (1) Y2K action.--The term ``Y2K action''--
            (A) means a civil action commenced in any Federal or State 
        court, or an agency board of contract appeal proceeding, in 
        which the plaintiff's alleged harm or injury arises from or is 
        related to an actual or potential Y2K failure, or a claim or 
        defense arises from or is related to an actual or potential Y2K 
        failure;
            (B) includes a civil action commenced in any Federal or 
        State court by a government entity when acting in a commercial 
        or contracting capacity; but
            (C) does not include an action brought by a government 
        entity acting in a regulatory, supervisory, or enforcement 
        capacity.
        (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 year-2000 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 to 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) Government entity.--The term ``government entity'' means an 
    agency, instrumentality, or other entity of Federal, State, or 
    local government (including multijurisdictional agencies, 
    instrumentalities, and entities).
        (4) 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 according to 
    its specifications. 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 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.
        (5) Personal injury.--The term ``personal injury'' means 
    physical injury to a natural person, including--
            (A) death as a result of a physical injury; and
            (B) mental suffering, emotional distress, or similar 
        injuries suffered by that person in connection with a physical 
        injury.
        (6) 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.
        (7) Contract.--The term ``contract'' means a contract, tariff, 
    license, or warranty.
        (8) Alternative dispute resolution.--The term ``alternative 
    dispute resolution'' means any process or proceeding, other than 
    adjudication by a court or in an administrative proceeding, 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 after 
January 1, 1999, for a Y2K failure occurring before January 1, 2003, or 
for a potential Y2K failure that could occur or has allegedly caused 
harm or injury before January 1, 2003, including any appeal, remand, 
stay, or other judicial, administrative, or alternative dispute 
resolution proceeding in such an action.
    (b) No New Cause of Action Created.--Nothing in this Act creates a 
new cause of action, and, except as otherwise explicitly provided in 
this Act, nothing in this Act expands any liability otherwise imposed 
or limits any defense otherwise available under Federal or State law.
    (c) Claims for Personal Injury or Wrongful Death Excluded.--This 
Act does not apply to a claim for personal injury or for wrongful 
death.
    (d) Warranty and Contract Preservation.--
        (1) In general.--Subject to paragraph (2), in any Y2K action 
    any written contractual term, including a limitation or an 
    exclusion of liability, or a disclaimer of warranty, shall be 
    strictly enforced unless the enforcement of that term would 
    manifestly and directly contravene applicable State law embodied in 
    any statute in effect on January 1, 1999, specifically addressing 
    that term.
        (2) Interpretation of contract.--In any Y2K action in which a 
    contract to which paragraph (1) applies 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 
    the contract was executed.
        (3) Unconscionability.--Nothing in paragraph (1) shall prevent 
    enforcement of State law doctrines of unconscionability, including 
    adhesion, recognized as of January 1, 1999, in controlling judicial 
    precedent by the courts of the State whose law applies to the 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, but nothing in this Act 
implicates, alters, or diminishes the ability of a State to defend 
itself against any claim on the basis of sovereign immunity.
    (f) Application with Year 2000 Information and Readiness Disclosure 
Act.--Nothing in this Act supersedes any provision of the Year 2000 
Information and Readiness Disclosure Act.
    (g) Application to Actions Brought by a Government Entity.--
        (1) In general.--To the extent provided in this subsection, 
    this Act shall apply to an action brought by a government entity 
    described in section 3(1)(C).
        (2) Definitions.--In this subsection:
            (A) Defendant.--
                (i) In general.--The term ``defendant'' includes a 
            State or local government.
                (ii) State.--The term ``State'' means each of the 
            several States of the United States, the District of 
            Columbia, the Commonwealth of Puerto Rico, the Virgin 
            Islands, Guam, American Samoa, and the Commonwealth of the 
            Northern Mariana Islands.
                (iii) Local government.--The term ``local government'' 
            means--

                    (I) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State; and
                    (II) any combination of political subdivisions 
                described in subclause (I) recognized by the Secretary 
                of Housing and Urban Development.

            (B) Y2K upset.--The term ``Y2K upset''--
                (i) means an exceptional temporary noncompliance with 
            applicable federally enforceable measurement, monitoring, 
            or reporting requirements directly related to a Y2K failure 
            that are beyond the reasonable control of the defendant 
            charged with compliance; and
                (ii) does not include--

                    (I) noncompliance with applicable federally 
                enforceable measurement, monitoring, or reporting 
                requirements that constitutes or would create an 
                imminent threat to public health, safety, or the 
                environment;
                    (II) noncompliance with applicable federally 
                enforceable measurement, monitoring, or reporting 
                requirements that provide for the safety and soundness 
                of the banking or monetary system, or for the integrity 
                of the national securities markets, including the 
                protection of depositors and investors;
                    (III) noncompliance with applicable federally 
                enforceable measurement, monitoring, or reporting 

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