`[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1138 Placed on Calendar Senate (PCS)]





                                                       Calendar No. 125

106th CONGRESS

  1st Session

                                S. 1138



_______________________________________________________________________

                                 A BILL

 To regulate interstate commerce by making provision for dealing with 
losses arising from Year 2000 Problem-related failures that may disrupt 
communications, intermodal transportation, and other matters affecting 
                          interstate commerce.

_______________________________________________________________________

                              May 27, 1999

            Read the second time and placed on the calendar





                                                       Calendar No. 125
106th CONGRESS
  1st Session
                                S. 1138

 To regulate interstate commerce by making provision for dealing with 
losses arising from Year 2000 Problem-related failures that may disrupt 
communications, intermodal transportation, and other matters affecting 
                          interstate commerce.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 26, 1999

     Mr. McCain (for himself, Mr. Dodd, Mr. Wyden, Mr. Hatch, Mrs. 
 Feinstein, Mr. Gorton, Mr. Bennett, Mr. Lott, Mr. Abraham, Mr. Frist, 
   Mr. Burns, Mr. Santorum, Mr. Smith of Oregon, and Mr. Lieberman) 
      introduced the following bill; which was read the first time

                              May 27, 1999

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
 To regulate interstate commerce by making provision for dealing with 
losses arising from Year 2000 Problem-related failures that may disrupt 
communications, intermodal transportation, and other matters affecting 
                          interstate commerce.

    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. Pre-litigation 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. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that:
            (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 others 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 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.
            (5) Resorting to the legal system for resolution of Y2K 
        problems 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) 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) 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.
            (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.
    (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 Y2K computer date-change problems before 
        they develop;
            (2) to encourage continued Y2K remediation and testing 
        efforts by providers, suppliers, customers, and other 
        contracting partners;
            (3) to encourage private and public parties alike to 
        resolve Y2K disputes 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 Y2K 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 any agency board of contract appeal 
                proceeding, in which the plaintiff's alleged harm or 
                injury resulted from a Y2K failure;
                    (B) includes a civil action commenced in any 
                Federal or State court by a governmental entity when 
                acting in a commercial or contracting capacity; but
                    (C) does not include an action brought by a 
                governmental 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, 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 in a 
State or Federal court after January 1, 1999, for a Y2K failure 
occurring 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) 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.
    (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.

SEC. 5. PUNITIVE DAMAGES LIMITATIONS.

    (a) In General.--In any Y2K action in which punitive damages are 
permitted by applicable law, the defendant shall not be liable for 
punitive damages unless the plaintiff proves by clear and convincing 
evidence that the applicable standard for awarding damages has been 
met.
    (b) Caps on Punitive Damages.--
            (1) In general.--Subject to the evidentiary standard 
        established by subsection (a), punitive damages permitted under 
        applicable law against a defendant described in paragraph (2) 
        in a Y2K action may not exceed the lesser of--
                    (A) 3 times the amount awarded for compensatory 
                damages; or
                    (B) $250,000.
            (2) Defendant described.--A defendant described in this 
        paragraph is a defendant--
                    (A) who--
                            (i) is sued in his or her capacity as an 
                        individual; and
                            (ii) whose net worth does not exceed 
                        $500,000; or
                    (B) that is an unincorporated business, a 
                partnership, corporation, association, or organization 
                with fewer than 50 full-time employees.
            (3) No cap if injury specifically intended.--Paragraph (1) 
        does not apply if the plaintiff establishes by clear and 
        convincing evidence that the defendant acted with specific 
        intent to injure the plaintiff.
    (c) Government Entities.--Punitive damages in a Y2K action may not 
be awarded against a government entity.

SEC. 6. PROPORTIONATE LIABILITY.

    (a) In General.--Except as provided in subsections (b) and (c), a 
person against whom a final judgment is entered in a Y2K action shall 
be liable solely for the portion of a 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) Proportionate Liability.--
            (1) Determination of responsibility.--In any Y2K action, 
        the court shall instruct the jury to answer special 
        interrogatories, or, if there is no jury, the court shall make 
        findings with respect to each defendant, including defendants 
        who have entered into settlements with the plaintiff or 
        plaintiffs, concerning--
                    (A) the percentage of responsibility, if any, of 
                each defendant, measured as a percentage of the total 
                fault of all persons who caused or contributed to the 
                loss incurred by the plaintiff; and
                    (B) if alleged by the plaintiff, whether the 
                defendant (other than a defendant who has entered into 
                a settlement agreement with the plaintiff)--
                            (i) acted with specific intent to injure 
                        the plaintiff; or
                            (ii) knowingly committed fraud.
            (2) Contents of special interrogatories or findings.--The 
        responses to interrogatories or findings under paragraph (1) 
        shall specify the total amount of damages that the plaintiff is 
        entitled to recover and the percentage of responsibility of 
        each defendant found to have caused or contributed to the loss 
        incurred by the plaintiff.
            (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 found 
                to have caused or contributed to the loss incurred by 
                the plaintiff; and
                    (B) the nature and extent of the casual 
                relationship between the conduct of each such person 
                and the damages incurred by the plaintiff.
    (c) Joint Liability for Specific Intent or Fraud.--
            (1) In general.--Notwithstanding subsection (a), the 
        liability of a defendant in a Y2K action is joint and several 
        if the trier of fact specifically determines that the 
        defendant--
                    (A) acted with specific intent to injure the 
                plaintiff; or
                    (B) knowingly committed fraud.
            (2) Fraud; recklessness.--
                    (A) Knowing commission of fraud described.--For 
                purposes of subsection (b)(1)(B)(ii) and paragraph 
                (1)(B) of this subsection, a defendant knowingly 
                committed fraud if the defendant--
                            (i) made an untrue statement of a material 
                        fact, with actual knowledge that the statement 
                        was false;
                            (ii) omitted a fact necessary to make the 
                        statement not be misleading with actual 
                        knowledge that, as a result of the omission, 
                        the statement was false; and
                            (iii) knew that the plaintiff was 
                        reasonably likely to rely on the false 
                        statement.
                    (B) Recklessness.--For purposes of subsection 
                (b)(1)(B) and paragraph (1) of this subsection, 
                reckless conduct by the defendant does not constitute 
                either a specific intent to injure, or the knowing 
                commission of fraud, by the defendant.
            (3) Right to contribution not affected.--Nothing in this 
        section affects the right under any other law, of a defendant 
        to contribution with respect to another defendant found under 
        subsection (b)(1)(B), or determined under paragraph (1)(B) of 
        this subsection, to have acted with specific intent to injure 
        the plaintiff or to have knowingly committed fraud.
    (d) Special Rules.--
            (1) Uncollectible share.--
                    (A) In general.--Notwithstanding subsection (a), 
                if, upon motion made not later than 6 months after a 
                final judgment is entered in any Y2K action, the court 
                determines that all or part of the share of the 
                judgment against a defendant for compensatory damages 
                is not collectible against that defendant, then each 
                other defendant in the action is liable for the 
                uncollectible share as follows:
                            (i) Percentage of net worth.--The other 
                        defendants are jointly and severally liable for 
                        any uncollectible share if the plaintiff 
                        establishes that--
                                    (I) the plaintiff is an individual 
                                whose recoverable damages under the 
                                final judgment are equal to more than 
                                10 percent of the net worth of the 
                                plaintiff; and
                                    (II) the net worth of the plaintiff 
                                is less than $200,000.
                            (ii) Other plaintiffs.--For a plaintiff not 
                        described in clause (i), each of the other 
                        defendants is liable for the uncollectible 
                        share in proportion to the percentage of 
                        responsibility of that defendant, except that 
                        the total liability of a defendant under this 
                        clause may not exceed 50 percent of the 
                        proportionate share of that defendant, as 
                        determined under subsection (b)(2).
                    (B) Overall limit.--The total payments required 
                under subparagraph (A) from all defendants may not 
                exceed the amount of the uncollectible share.
                    (C) Subject to contribution.--A defendant against 
                whom judgment is not collectible is subject to 
                contribution and to any continuing liability to the 
                plaintiff on the judgment.
            (2) Special right of contribution.--To the extent that a 
        defendant is required to make an additional payment under 
        paragraph (1), that defendant may recover contribution--
                    (A) from the defendant originally liable to make 
                the payment;
                    (B) from any other defendant that is jointly and 
                severally liable;
                    (C) from any other defendant held proportionately 
                liable who is liable to make the same payment and has 
                paid less than that other defendant's proportionate 
                share of that payment; or
                    (D) from any other person responsible for the 
                conduct giving rise to the payment that would have been 
                liable to make the same payment.
            (3) Nondisclosure to jury.--The standard for allocation of 
        damages under subsection (a) and subsection (b)(1), and the 
        procedure for reallocation of uncollectible shares under 
        paragraph (1) of this subsection, shall not be disclosed to 
        members of the jury.
    (e) Settlement Discharge.--
            (1) In general.--A defendant who settles a Y2K action at 
        any time before final verdict or judgment shall be discharged 
        from all claims for contribution brought by other persons. Upon 
        entry of the settlement by the court, the court shall enter a 
        bar order constituting the final discharge of all obligations 
        to the plaintiff of the settling defendant arising out of the 
        action. The order shall bar all future claims for contribution 
        arising out of the action--
                    (A) by any person against the settling defendant; 
                and
                    (B) by the settling defendant against any person 
                other than a person whose liability has been 
                extinguished by the settlement of the settling 
                defendant.
            (2) Reduction.--If a defendant enters into a settlement 
        with the plaintiff before the final verdict or judgment, the 
        verdict or judgment shall be reduced by the greater of--
                    (A) an amount that corresponds to the percentage of 
                responsibility of that defendant; or
                    (B) the amount paid to the plaintiff by that 
                defendant.
    (f) General Right of Contribution.--
            (1) In general.--A defendant who is jointly and severally 
        liable for damages in any Y2K action may recover contribution 
        from any other person who, if joined in the original action, 
        would have been liable for the same damages. A claim for 
        contribution shall be determined based on the percentage of 
        responsibility of the claimant and of each person against whom 
        a claim for contribution is made.
            (2) Statute of limitations for contribution.--An action for 
        contribution in connection with a Y2K action shall be brought 
        not later than 6 months after the entry of a final, 
        nonappealable judgment in the Y2K action, except than an action 
        for contribution brought by a defendant who was required to 
        make an additional payment under subsection (d)(1) may be 
        brought not later than 6 months after the date on which such 
        payment was made.
    (g) More Protective State Law Not Preempted.--Nothing in this 
section pre-empts or supersedes any provision of State statutory law 
that--
            (1) limits the liability of a defendant in a Y2K action to 
        a lesser amount than the amount determined under this section; 
        or
            (2) otherwise affords a greater degree of protection from 
        joint or several liability than is afforded by this section.

SEC. 7. PRE-LITIGATION 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 send a written notice by certified mail (with either return 
receipt requested or other means of verification that the notice was 
sent) to each prospective defendant in that action. The notice shall 
provide specific and detailed information about--
            (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) how the prospective plaintiff would like the 
        prospective defendant to remedy the problem;
            (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) Person to Whom Notice To Be Sent.--The notice required by 
subsection (a) shall be sent--
            (1) to the registered agent of the prospective defendant 
        for service of legal process;
            (2) if the prospective defendant does not have a registered 
        agent, then to the chief executive officer of a corporation, 
        the managing partner of a partnership, the proprietor of a sole 
        proprietorship, or to a similarly-situated person for any other 
        enterprise; or
            (3) if the prospective defendant has designated a person to 
        receive pre-litigation notices on a Year 2000 Internet Website 
        (as defined in section 3(7) of the Year 2000 Information and 
        Readiness Disclosure Act), to the designated person, if the 
        prospective plaintiff has reasonable access to the Internet.
    (c) Response to Notice.--
            (1) In general.--Within 30 days after receipt of the notice 
        specified in subsection (a), each prospective defendant shall 
        send by certified mail with return receipt requested to each 
        prospective plaintiff a written statement acknowledging receipt 
        of the notice, and describing the actions it has taken or will 
        take to address the problem identified by the prospective 
        plaintiff.
            (2) Willingness to engage in ADR.--The written statement 
        shall state whether the prospective defendant is willing to 
        engage in alternative dispute resolution.
            (3) Inadmissability.--A written statement required by this 
        paragraph is not admissible in evidence, under Rule 408 of the 
        Federal Rules of Evidence or any analogous rule of evidence in 
        any State, in any proceeding to prove liability for, or the 
        invalidity of, a claim or its amount, or otherwise as evidence 
        of conduct or statements made in compromise negotiations.
            (4) Presumptive time of receipt.--For purposes of paragraph 
        (1), a notice under subsection (a) is presumed to be received 7 
        days after it was sent.
    (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)(1); or
            (2) does not describe the action, if any, the prospective 
        defendant has taken, or will take, to address the problem 
        identified by the prospective plaintiff,
the prospective plaintiff may immediately commence a legal action 
against that prospective defendant.
    (e) Remediation Period.--
            (1) In general.--If the prospective defendant responds and 
        proposes remedial action it will take, or offers to engage in 
        alternative dispute resolution, then the prospective plaintiff 
        shall allow the prospective defendant an additional 60 days 
        from the end of the 30-day notice period to complete the 
        proposed remedial action before commencing a legal action 
        against that prospective defendant.
            (2) Extension by agreement.--The prospective plaintiff and 
        prospective defendant may change the length of the 60-day 
        remediation period by written agreement.
            (3) Multiple extensions not allowed.--Except as provided in 
        paragraph (2), a defendant in a Y2K action is entitled to no 
        more than one 30-day period and one 60-day remediation period 
        under paragraph (1).
            (4) Statutes of limitation, etc., tolled.--Any applicable 
        statute of limitations or doctrine of laches in a Y2K action to 
        which paragraph (1) applies shall be tolled during the notice 
        and remediation period under that paragraph.
    (f) Failure To Provide Notice.--If a defendant determines that a 
plaintiff has filed a Y2K action without providing the notice specified 
in subsection (a) or without awaiting the expiration of the appropriate 
waiting period specified in subsection (c), the defendant may treat the 
plaintiff's complaint as such a notice by so informing the court and 
the plaintiff in its initial response to 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 the appropriate period after 
        filing of the complaint; and
            (2) the time for filing answers and all other pleadings 
        shall be tolled during the appropriate period.
    (g) Effect of Contractual or Statutory Waiting Periods.--In cases 
in which a contract, or a statute enacted before January 1, 1999, 
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 by contract or the statute is controlling 
over the waiting period specified in subsections (c) and (d).
    (h) 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.
    (i) Provisional Remedies Unaffected.--Nothing in this section 
interferes with the right of a litigant to provisional remedies 
otherwise available under Rule 65 of the Federal Rules of Civil 
Procedure or any State rule of civil procedure providing extraordinary 
or provisional remedies in any civil action in which the underlying 
complaint seeks both injunctive and monetary relief.
    (j) Special Rule for Class Actions.--For the purpose of applying 
this section to a Y2K action that is maintained as a class action in 
Federal or State court, the requirements of the preceding subsections 
of this section apply only to named plaintiffs in the class action.

SEC. 8. PLEADING REQUIREMENTS.

    (a) Application With Rules of Civil Procedure.--This section 
applies exclusively to Y2K actions and, except to the extent that this 
section requires additional information to be contained in or attached 
to pleadings, nothing in this section is intended to amend or otherwise 
supersede applicable rules of Federal or State civil procedure.
    (b) Nature and Amount of Damages.--In all Y2K actions in which 
damages are requested, there shall be filed with the complaint a 
statement of specific information as to the nature and amount of each 
element of damages and the factual basis for the damages calculation.
    (c) Material Defects.--In any Y2K action in which the plaintiff 
alleges that there is a material defect in a product or service, there 
shall be filed with the complaint a statement of specific information 
regarding the manifestations of the material defects and the facts 
supporting a conclusion that the defects are material.
    (d) 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, there shall be filed 
with the complaint, with respect to each element of that claim, a 
statement of the facts giving rise to a strong inference that the 
defendant acted with the required state of mind.

SEC. 9. 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 should have been, aware, including information made 
available by the defendant to purchasers or users of the defendant's 
product or services concerning means of remedying or avoiding the Y2K 
failure.

SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL 
              IMPRACTICABILITY DOCTRINES.

    In any Y2K action for breach or repudiation of contract, the 
applicability of the doctrines of impossibility and commercial 
impracticability shall be determined by the law in existence on January 
1, 1999. Nothing in this Act shall be construed as limiting or 
impairing a party's right to assert defenses based upon such doctrines.

SEC. 11. DAMAGES LIMITATION BY CONTRACT.

    In any Y2K action for breach or repudiation of contract, no party 
may claim, nor be awarded, any category of 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 effective or by 
        operation of Federal law.

SEC. 12. DAMAGES IN TORT CLAIMS.

    (a) In General.--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; or
            (2) such losses result directly from damage to tangible 
        personal or real property caused by the Y2K failure (other than 
        damage to property that is the subject of the contract between 
        the parties to the Y2K action or, in the event there is no 
        contract between the parties, other than damage caused only to 
        the property that experienced the Y2K failure),
and such damages are permitted under applicable Federal or State law.
    (b) Economic Loss.--For purposes of this section only, and except 
as otherwise specifically provided in a valid and enforceable written 
contract between the plaintiff and the defendant in a Y2K action, the 
term ``economic loss''--
            (1) means amounts awarded to compensate an injured party 
        for any loss other than losses described in subsection (a)(2); 
        and
            (2) includes amounts awarded for damages such as--
                    (A) lost profits or sales;
                    (B) business interruption;
                    (C) losses indirectly suffered as a result of the 
                defendant's wrongful act or omission;
                    (D) losses that arise because of the claims of 
                third parties;
                    (E) losses that must be plead as special damages; 
                and
                    (F) consequential damages (as defined in the 
                Uniform Commercial Code or analogous State commercial 
                law).
    (c) Certain Actions Excluded.--This section does not affect, 
abrogate, amend, or alter any patent, copyright, trade-secret, 
trademark, or service-mark action, or any claim for defamation or 
invasion of privacy under Federal or State law.
    (d) Certain Other Actions.--A person liable for damages, whether by 
settlement or judgment, in a civil action to which this Act does not 
apply because of section 4(c) whose liability, in whole or in part, is 
the result of a Y2K failure may, notwithstanding any other provision of 
this Act, pursue any remedy otherwise available under Federal or State 
law against the person responsible for that Y2K failure to the extent 
of recovering the amount of those damages.

SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.

    (a) Defendant's State of Mind.--In a Y2K action other than a claim 
for breach or repudiation of contract, and 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 establishes that element of the claim by the standard of 
evidence under applicable State law in effect before January 1, 1999.
    (b) Limitation on Bystander Liability for Y2K Failures.--
            (1) In general.--With respect to any Y2K action for money 
        damages in which--
                    (A) the defendant is not the manufacturer, seller, 
                or distributor of a product, or the provider of a 
                service, that suffers or causes the Y2K failure at 
                issue;
                    (B) the plaintiff is not in substantial privity 
                with the defendant; and
                    (C) the defendant's actual or constructive 
                awareness of an actual or potential Y2K failure is an 
                element of the claim under applicable law,
        the defendant shall not be liable unless the plaintiff, in 
        addition to establishing all other requisite elements of the 
        claim, proves, by the standard of evidence under applicable 
        State law in effect before January 1, 1999, that the defendant 
        actually knew, or recklessly disregarded a known and 
        substantial risk, that such failure would occur.
            (2) Substantial privity.--For purposes of paragraph (1)(B), 
        a plaintiff and a defendant are in substantial privity when, in 
        a Y2K action arising out of the performance of professional 
        services, the plaintiff and the defendant either have 
        contractual relations with one another or the plaintiff is a 
        person who, prior to the defendant's performance of such 
        services, was specifically identified to and acknowledged by 
        the defendant as a person for whose special benefit the 
        services were being performed.
            (3) Certain claims excluded.--For purposes of paragraph 
        (1)(C), claims in which the defendant's actual or constructive 
        awareness of an actual or potential Y2K failure is an element 
        of the claim under applicable law do not include claims for 
        negligence but do not include claims such as fraud, 
        constructive fraud, breach of fiduciary duty, negligent 
        misrepresentation, and interference with contract or economic 
        advantage.
    (c) Control Not Determinative of Liability.--The fact that a Y2K 
failure occurred in an entity, facility, system, product, or component 
that was sold, leased, rented, or otherwise within the control of the 
party against whom a claim is asserted in a Y2K action shall not 
constitute the sole basis for recovery of damages in that action. A 
claim in a Y2K action for breach or repudiation of contract for such a 
failure is governed by the terms of the contract.
    (d) Protections of the Year 2000 Information and Readiness 
Disclosure Act Apply.--The protections for the exchanges of information 
provided by section 4 of the Year 2000 Information and Readiness 
Disclosure Act (Public Law 105-271) shall apply to this Act.

SEC. 14. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATE JUDGES FOR Y2K 
              ACTIONS.

    Any District Court of the United States in which a Y2K action is 
pending may appoint a special master or a magistrate judge 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.

SEC. 15. Y2K ACTIONS AS CLASS ACTIONS.

    (a) Material Defect Requirement.--A Y2K action involving a claim 
that a product or service is defective 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, including applicable rules of 
        civil procedure; and
            (2) the court finds that the defect in a product or service 
        as alleged would be a material defect for the majority of the 
        members of the class.
    (b) Notification.--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, which shall include--
            (1) a concise and clear description of the nature of the 
        action;
            (2) the jurisdiction where the case is pending; and
            (3) the fee arrangements with class counsel, including the 
        hourly fee being charged, or if it is a contingency fee, the 
        percentage of the final award which will be paid, including an 
        estimate of the total amount that would be paid if the 
        requested damages were to be granted.
    (c) Forum for Y2K Class Actions.--
            (1) Jurisdiction.--Except as provided in paragraph (2), a 
        Y2K action may be brought as a class action in a United States 
        District Court or removed to a United States District Court if 
        the amount in controversy is greater than the sum or value of 
        $1,000,000 (exclusive of interest and costs), computed on the 
        basis of all claims to be determined in the action.
            (2) Exception.--A Y2K action may not be brought or removed 
        as a class action under this section if--
                    (A)(i) a substantial majority of the members of the 
                proposed plaintiff class are citizens of a single 
                State;
                    (ii) the primary defendants are citizens of that 
                State; and
                    (iii) the claims asserted will be governed 
                primarily by the law of that State; or
                    (B) the primary defendants are States, State 
                officials, or other governmental entities against whom 
                the United States District Court may be foreclosed from 
                ordering relief.
    (d) Effect on Rules of Civil Procedure.--Except as otherwise 
provided in this section, nothing in this section supersedes any rule 
of Federal or State civil procedure applicable to class actions.
            Amend the title so as to read: An Act 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 through fostering an incentive 
        for businesses to continue fixing and testing their systems, to 
        communicate with other businesses, resolve year-2000 business 
        disputes without litigation, and to settle year 2000 lawsuits 
        that may disrupt significant sectors of the American economy.`