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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 775 Introduced in House (IH)]

106th CONGRESS
  1st Session
                                H. R. 775

 To establish certain procedures for civil actions brought for damages 
relating to the failure of any device or system to process or otherwise 
 deal with the transition from the year 1999 to the year 2000, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 23, 1999

 Mr. Davis of Virginia (for himself, Mr. Dreier, Mr. Cox, Mr. Moran of 
  Virginia, Mr. Cramer, and Mr. Dooley of California) introduced the 
 following bill; which was referred to the Committee on the Judiciary, 
and in addition to the Committee on Small Business, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL

 
 To establish certain procedures for civil actions brought for damages 
relating to the failure of any device or system to process or otherwise 
 deal with the transition from the year 1999 to the year 2000, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Year 2000 Readiness and 
Responsibility Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The Congress seeks to encourage businesses to 
        concentrate their attention and resources in the short time 
        remaining before January 1, 2000, on addressing, assessing, 
        remediating, and testing their Year 2000 problems, and to 
        minimize any possible business disruptions associated with Year 
        2000 issues.
            (2) It is appropriate for the Congress to enact legislation 
        to assure that Year 2000 problems do not unnecessarily disrupt 
        interstate commerce or create unnecessary case loads in Federal 
        courts and to provide initiatives to help businesses prepare 
        and be in a position to withstand the potentially devastating 
        economic impact of the Year 2000 problem.
            (3) Year 2000 issues will affect practically all business 
        enterprises to some degree, giving rise to a large number of 
        disputes.
            (4) Resorting to the legal system for resolution of Year 
        2000 problems is not feasible for many businesses, particularly 
        small businesses, because of its complexity and expense.
            (5) The delays, expense, uncertainties, loss of control, 
        adverse publicity and animosities that frequently accompany 
        litigation of business disputes can only exacerbate the 
        difficulties associated with the Year 2000 date change, and 
        work against the successful resolution of those difficulties.
            (6) The Congress recognizes that every business in the 
        United States should be concerned that widespread and 
        protracted Year 2000 litigation may threaten the network of 
        valued and trusted business relationships that are so important 
        to the effective functioning of the world economy, and which 
        may put unbearable strains on an overburdened judicial system.
            (7) A proliferation of frivolous Year 2000 actions by 
        opportunistic parties may further limit access to courts by 
        straining the resources of the legal system and depriving 
        deserving parties of their legitimate rights to relief.
            (8) The Congress encourages businesses to approach their 
        Year 2000 disputes responsibly, and to avoid unnecessary, time-
        consuming and costly litigation based on Year 2000 failures. 
        Congress supports good faith negotiations between parties when 
        there is a dispute over a Year 2000 problem, and, if necessary, 
        urges the parties to enter into voluntary, non-binding 
        mediation rather than litigation.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Actual damages.--The term ``actual damages'' means 
        damages for injury to tangible property, and the cost of 
        repairing or replacing defective products.
            (2) Contract.--The term ``contract'' means a contract, 
        tariff, license, or warranty.
            (3) Defendant.--The term ``defendant'' means any person 
        against whom a year 2000 claim has been asserted.
            (4) Economic loss.--The term ``economic loss''--
                    (A) means any damages other than damages arising 
                out of personal injury or damage to tangible property;
                    (B) includes, but is not limited to, damages for 
                lost profits or sales, for business interruption, for 
                losses indirectly suffered as a result of the 
                defendant's wrongful act or omission, for losses that 
                arise because of the claims of third parties, for 
                losses that must be pleaded as special damages, or for 
                items defined as consequential damages in the Uniform 
                Commercial Code or analogous State commercial law; and
                    (C) does not include non-economic damages.
            (5) Material defect.--The term ``material defect'' means a 
        defect in any item, whether tangible or intangible, or in the 
        provision of a service, that substantially prevents the item or 
        service from operating or functioning as designed or intended. 
        Defects that have an insignificant or de minimis effect on the 
        operation or functioning of an item, or that affect only a 
        component of an item that, as a whole, substantially operates 
        or functions as designed, or that have an insignificant or de 
        minimis effect on the efficacy of the service provided, are not 
        material defects within the meaning of this definition.
            (6) Person.--The term ``person'' means any natural person 
        and any entity, organization, or enterprise, including but not 
        limited to corporations, companies, joint stock companies, 
        associations, partnerships, trusts, and governmental entities.
            (7) Personal injury.--The term ``personal injury'' means 
        any physical injury to a natural person, including death of the 
        person. It does not include mental suffering, emotional 
        distress, or like elements of injury that do not constitute 
        physical harm to a natural person.
            (8) Plaintiff.--The term ``plaintiff'' means any person who 
        asserts a year 2000 claim.
            (9) Punitive damages.--The term ``punitive damages'' means 
        damages that are awarded against any person to punish such 
        person or to deter such person, or others, from engaging in 
        similar behavior in the future.
            (10) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Northern Mariana Islands, the United States 
        Virgin Islands, Guam, American Samoa, and any other territory 
        or possession of the United States, and any political 
        subdivision thereof.
            (11) Year 2000 action.--The term ``year 2000 action'' means 
        any civil action of any kind brought in any court under Federal 
        or State law, in which--
                    (A) a year 2000 claim is asserted; or
                    (B) any claim or defense, other than a claim or 
                defense based on personal injury, is related, directly 
                or indirectly, to an actual or potential year 2000 
                failure.
            (12) Year 2000 claim.--The term ``year 2000 claim'' means 
        any claim or cause of action of any kind, other than a claim 
        based on personal injury, whether asserted by way of claim, 
        counterclaim, cross-claim, third-party claim, or otherwise, in 
        which the plaintiff's alleged loss or harm resulted, directly 
        or indirectly, from an actual or potential year 2000 failure.
            (13) Year 2000 failure.--The term ``year 2000 failure'' 
        means any failure by any device or system (including, without 
        limitation, any computer system and any microchip or integrated 
        circuit embedded in another device or product), or any 
        software, firmware, or other set or collection of processing 
        instructions, however constructed, in processing, calculating, 
        comparing, sequencing, displaying, storing, transmitting, or 
        receiving date-related data, including, without limitation, 
        failure in accurately dealing with or failure in accurately 
        accounting for transitions or comparisons from, into, and 
        between the years 1999 and 2000, failure to recognize or 
        accurately process any specific date, and failure accurately to 
        account for the year 2000's status as a leap year.

SEC. 4. EXCLUSION OF PERSONAL INJURY CLAIMS.

    None of the provisions of this Act shall apply to any claim based 
on personal injury.

    TITLE I--UNIFORM PRELITIGATION PROCEDURES FOR YEAR 2000 ACTIONS

SEC. 101. NOTICE PROCEDURES TO AVOID UNNECESSARY YEAR 2000 ACTIONS.

    (a) Notification Period.--Before filing a year 2000 action, except 
an action that seeks only injunctive relief, a prospective plaintiff 
shall provide to each prospective defendant a written notice that 
identifies, with particularity--
            (1) any symptoms of a material defect alleged to have 
        caused injury;
            (2) the injury allegedly suffered by the prospective 
        plaintiff;
            (3) the facts that lead the prospective plaintiff to hold 
        such person responsible for both the defect and the injury; and
            (3) the relief or action sought by the prospective 
        plaintiff.
Except as provided in subsection (c), the prospective plaintiff shall 
not commence an action in Federal or State court until the expiration 
of 90 days after the date on which such notice is provided. Such 90-day 
period shall be excluded in the computation of any applicable statute 
of limitations.
    (b) Response to Notice.--Not later than 30 days after receipt of 
the notice specified in subsection (a), each prospective defendant 
shall provide to each prospective plaintiff a written statement 
acknowledging receipt of the notice and describing the actions it will 
take or has taken, if any, to address the problem identified by the 
prospective plaintiff.
    (c) Failure To Respond.--If a prospective defendant fails to 
respond to a notice provided pursuant to subsection (a) within the 30-
day period specified in subsection (b) or does not describe the action, 
if any, that the prospective defendant will take to address the problem 
identified by the prospective plaintiff, the 90-day period specified in 
subsection (a) shall terminate at the end of that 30-day period as to 
that prospective defendant and the prospective plaintiff may thereafter 
commence its action against that prospective defendant.
    (d) Failure To Provide Notice.--If a defendant determines that a 
plaintiff has filed a year 2000 action without providing the notice 
specified in subsection (a) and without awaiting the expiration of the 
90-day period specified in subsection (a), the defendant may treat the 
plaintiff's complaint as such a notice by so informing the court and 
the plaintiff. If any defendant elects to treat the complaint as such a 
notice--
            (1) the court shall stay all discovery and all other 
        proceedings in the action for 90 days after filing of the 
        complaint; and
            (2) the time for filing answers and all other pleadings 
        shall be tolled during this 90-day period.
    (e) Effect of Contractual Waiting Periods.--In cases where a 
contract requires notice of nonperformance and provides for a period of 
delay prior to the initiation of suit for breach or repudiation of 
contract, the period of delay provided in the contract is controlling 
over the waiting period specified in subsections (a) and (d).
    (f) Sanction for Frivolous Invocation of the Stay Provision.--In 
any action in which a defendant acts pursuant to subsection (d) to stay 
the action, and the court subsequently finds that the defendant's 
assertion that the suit is a year 2000 action was frivolous and made 
for the purpose of causing unnecessary delay, the court may award 
sanctions to opposing parties in accordance with the provisions of Rule 
11 of the Federal Rules of Civil Procedure.
    (g) Computation of Time.--For purposes of this section, the rules 
regarding computation of time shall be governed by the applicable 
Federal or State rules of civil procedure.

SEC. 102. ALTERNATIVE DISPUTE RESOLUTION TO AVOID UNNECESSARY YEAR 2000 
              ACTIONS.

    (a) In General.--(1) At any time during the 90-day period specified 
in section 101(a), either party may request the other to use 
alternative dispute resolution. If, based upon that request, the 
parties enter into an agreement to use alternative dispute resolution, 
they may also agree to an extension of the 90-day period.
    (2) At any time after expiration of the 90-day period specified in 
section 101(a), whether before or after the filing of a complaint, 
either party may request the other to use alternative dispute 
resolution.
    (b) Payment of Moneys Due.--If the parties resolve their dispute 
through alternative dispute resolution as provided in subsection (a), 
the defendant shall pay all monies due within 30 days, unless another 
period of time is agreed to by the parties or established by contract 
between the parties.

SEC. 103. PLEADING REQUIREMENTS.

    (a) Nature and Amount of Damages.--In any year 2000 action that 
seeks the award of money damages, the complaint shall state with 
particularity the nature and amount of each element of damages, and the 
factual basis for the damages calculation.
    (b) Material Defects.--In any year 2000 action in which the 
plaintiff alleges that a product or service was defective, the 
complaint shall identify with particularity the symptoms of the 
material defects and shall state with particularity the facts 
supporting the conclusion that the defects were material.
    (c) Required State of Mind.--In any year 2000 action in which a 
claim is asserted as to which the plaintiff may prevail only on proof 
that the defendant acted with a particular state of mind, the complaint 
shall, with respect to each element of the claim, state with 
particularity the facts giving rise to a strong inference that the 
defendant acted with the required state of mind.
    (d) Motion To Dismiss; Stay of Discovery.--
            (1) Dismissal for failure to meet pleading requirements.--
        In any year 2000 action, the court shall, on the motion of any 
        defendant, dismiss the complaint with or without prejudice if 
        the requirements of subsection (a), (b), or (c) are not met 
        with respect to any claim asserted therein.
            (2) Stay of discovery.--In any year 2000 action, all 
        discovery shall be stayed during the pendency of any motion to 
        dismiss, unless the court finds upon the motion of any party 
        that particularized discovery is necessary to preserve evidence 
        or prevent undue prejudice to that party.
            (3) Preservation of evidence.--
                    (A) In general.--During the pendency of any stay of 
                discovery entered pursuant to this subsection, unless 
                otherwise ordered by the court, any party to the action 
                with actual notice of the allegations contained in the 
                complaint shall treat all documents, data compilations 
                (including electronically stored or recorded data), and 
                tangible objects that are in the custody or control of 
                such person and that are relevant to the allegations, 
                as if they were a subject of a continuing request for 
                production of documents from an opposing party under 
                applicable Federal or State rules of civil procedure.
                    (B) Sanction for willful violation.--A party 
                aggrieved by the willful failure of an opposing party 
                to comply with subparagraph (A) may apply to the court 
                for an order awarding appropriate sanctions.

SEC. 104. DUTY OF ALL PERSONS TO MITIGATE YEAR 2000 COMPUTER FAILURES 
              AND RESULTING DAMAGES.

    There shall be no recovery in any year 2000 action on account of 
injury that the plaintiff could reasonably have avoided in light of any 
disclosure or other information of which the plaintiff was, or 
reasonably could have been, aware, and the damages awarded in any such 
action shall exclude any amount that the plaintiff reasonably could 
have avoided in light of any such disclosure or information.

            TITLE II--YEAR 2000 ACTIONS INVOLVING CONTRACTS

SEC. 201. CERTAINTY OF CONTRACT TERMS FOR PREVENTION OF YEAR 2000 
              DAMAGES.

    Notwithstanding any other provision of Federal or State statutory 
or common law, in any year 2000 action all written contractual terms, 
including limitations or exclusions of liability or disclaimers of 
warranty, shall be fully enforceable, except that--
            (1) if the contract is silent as to a particular issue, the 
        interpretation of the contract as to that issue shall be 
        determined by applicable law in force at the time that the 
        contract was entered into; and
            (2) this section does not apply if a court determines that 
        the contract as a whole is unenforceable due to an infirmity in 
        the formation of the contract under applicable law in force at 
        the time the contract was entered into.

SEC. 202. DEFENSES.

    (a) Reasonable Efforts.--In any year 2000 action in which breach of 
contract is alleged, in addition to any other rights provided by 
applicable law, the party against whom the claim of breach is asserted 
shall be allowed to offer evidence that its implementation of the 
contract, or its efforts to implement the contract, were reasonable in 
light of the circumstances for the purpose of limiting or eliminating 
the defendant's liability.
    (b) Impossibility or Commercial Impracticability.--In any year 2000 
action in which breach of contract is alleged, applicability of the 
doctrines of impossibility and commercial impracticability shall be 
determined by applicable law in existence on January 1, 1999, and 
nothing in this Act shall be construed as limiting or impairing a 
party's right to assert defenses based upon such doctrines.

SEC. 203. PROTECTION OF PERSONS FROM LIABILITY NOT ANTICIPATED IN YEAR 
              2000 CONTRACTS.

    In any year 2000 action involving a breach of contract or a claim 
related to the contract, the court shall not award any damages unless 
such damages are provided for by the express terms of the contract, or, 
if the contract is silent on such damages, then by operation of the 
applicable Federal or State law that governed interpretation of the 
contract at the time the contract was entered into.

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

SEC. 301. PROPORTIONATE LIABILITY.

    (a) In General.--Except with respect to claims involving personal 
injury, a person against whom a final judgment is entered in a year 
2000 action shall be liable solely for the portion of the judgment that 
corresponds to the percentage of responsibility of that person, as 
determined under subsection (b).
    (b) Determination of Responsibility.--
            (1) In general.--In any year 2000 action, the court shall 
        instruct the jury to answer special interrogatories, or if 
        there is no jury, shall make findings, with respect to each 
        defendant and plaintiff, and each of the other persons claimed 
        by any of the parties to have caused or contributed to the loss 
        incurred by the plaintiff, including (but not limited to) 
        persons who have entered into settlements with the plaintiff or 
        plaintiffs, concerning the percentage of responsibility of the 
        defendant, the plaintiff, and each such person, measured as a 
        percentage of the total fault of all persons who caused or 
        contributed to the total loss incurred by the plaintiff.
            (2) Contents of special interrogatories or findings.--The 
        responses to interrogatories, or findings, as appropriate, 
        under paragraph (1) shall specify the total amount of damages 
        that the plaintiff is entitled to recover and the percentage of 
        responsibility of each person found to have caused or 
        contributed to the loss incurred by the plaintiff or 
        plaintiffs.
            (3) Factors for consideration.--In determining the 
        percentage of responsibility under this subsection, the trier 
        of fact shall consider--
                    (A) the nature of the conduct of each person 
                alleged to have caused or contributed to the loss 
                incurred by the plaintiff; and
                    (B) the nature and extent of the causal 
                relationship between the conduct of each such person 
                and the damages incurred by the plaintiff or 
                plaintiffs.
            (4) Nondisclosure to jury.--The standard for allocation of 
        damages under paragraph (1) shall not be disclosed to members 
        of the jury.

SEC. 302. PROTECTION OF GOOD FAITH EFFORTS TO PREVENT YEAR 2000 
              DAMAGES.

    (a) Defendant's State of Mind as to Year 2000 Failure.--With 
respect to any year 2000 claim for money damages in which the 
defendant's actual or constructive awareness of an actual or potential 
year 2000 failure is an element of the claim under applicable law, 
except for a claim based upon personal injury, the defendant shall not 
be liable unless the plaintiff, in addition to establishing all other 
requisite elements of the claim, proves by clear and convincing 
evidence that the defendant actually knew, or recklessly disregarded a 
substantial risk, that such failure would occur in the specific facts 
and circumstances of such claim.
    (b) Injury to Plaintiff.--With respect to any year 2000 claim for 
money damages in which the defendant's actual or constructive awareness 
of actual or potential harm to the plaintiff is an element of the claim 
under applicable law, except for a claim based upon personal injury, 
the defendant shall not be liable unless the plaintiff, in addition to 
establishing all other requisite elements of the claim, proves by clear 
and convincing evidence that the defendant actually knew, or recklessly 
disregarded a known and substantial risk, that the plaintiff would 
suffer such harm.
    (c) Foreseeability.--With respect to any year 2000 claim for money 
damages, except for a claim based upon personal injury, the defendant 
shall not be liable unless the plaintiff establishes by clear and 
convincing evidence, in addition to all other requisite elements of the 
claim, that the defendant knew or reasonably should have known that its 
actions would cause harm to the plaintiff in the specific facts and 
circumstances of such claim.
    (d) Preservation of Existing Law.--Nothing in subsections (a), (b), 
or (c) shall be deemed to relieve the plaintiff in any year 2000 action 
of its obligation to establish any element of its cause of action under 
applicable law.

SEC. 303. REASONABLE EFFORTS DEFENSE.

    In any year 2000 action involving a claim for money damages, except 
with respect to claims asserting breach or repudiation of contract--
            (1) the fact that a year 2000 failure occurred in an 
        entity, facility, system, product, or component that was within 
        the control of the party against whom the claim is asserted 
        shall not constitute the sole basis for recovery; and
            (2) the party against whom the claim is asserted shall be 
        entitled to establish, as a complete defense to the claim, that 
        it took measures that were reasonable under the circumstances 
        to prevent the year 2000 failure from occurring or from causing 
        the damages upon which the claim is based.

SEC. 304. DAMAGES LIMITATION.

    (a) Year 2000 Recovery Fund.--There is established in the Treasury 
a Year 2000 Recovery Fund. In any year 2000 action in which punitive 
damages are awarded under applicable law, including this Act, the 
entire amount of such damages shall be paid into the Year 2000 Recovery 
Fund. Amounts in the Fund shall be used for the assistance of small 
businesses, State and local governments, and nonprofit organizations, 
that are affected by Year 2000 failures.
    (b) Standard for Awards.--In any year 2000 action in which punitive 
damages may be awarded under applicable law, the defendant shall not be 
liable for punitive damages unless the plaintiff proves by clear and 
convincing evidence that the defendant specifically intended to cause 
injury to the plaintiff. This requirement is in addition to any other 
requirement in applicable law for the award of such damages.
    (c) Caps on Punitive Damages.--
            (1) In general.--In any year 2000 action, if a defendant is 
        found liable for punitive damages, the amount of punitive 
        damages that may be awarded to a claimant shall not exceed the 
        greater of--
                    (A) 3 times the amount awarded to the claimant for 
                actual damages; or
                    (B) $250,000.
            (2) Special rule.--
                    (A) In general.--Notwithstanding paragraph (1), in 
                any year 2000 action, if the defendant is found liable 
                for punitive damages and the defendant--
                            (i) is an individual whose net worth does 
                        not exceed $500,000,
                            (ii) is an owner of an unincorporated 
                        business that has fewer than 25 full-time 
                        employees, or
                            (iii) is--
                                    (I) a partnership,
                                    (II) corporation,
                                    (III) association,
                                    (IV) unit of local government, or
                                    (V) organization,
                        that has fewer than 25 full-time employees,
                 the amount of punitive damages shall not exceed the 
                lesser of 3 times the amount awarded to the claimant 
                for actual damages, or $250,000.
                    (B) Applicability.--For purposes of determining the 
                applicability of this paragraph to a corporation, the 
                number of employees of a subsidiary of a wholly owned 
                corporation shall include all employees of a parent 
                corporation or any subsidiary of that parent 
                corporation.
            (3) Application of limitations by the court.--The 
        limitations contained in paragraphs (1) and (2) shall be 
        applied by the court and shall not be disclosed to the jury.

SEC. 305. RECOVERY OF ECONOMIC DAMAGES IN YEAR 2000 ACTIONS.

    (a) Limitation on Recovery of Economic Losses.--Subject to 
subsection (b), a party to a year 2000 action making a tort claim may 
recover economic losses only upon establishing, in addition to all 
other elements of the claim under applicable law, that any one of the 
following circumstances exists:
            (1) The recovery of such losses is provided for in a 
        contract to which the party seeking to recover such losses is a 
        party.
            (2) Such losses are incidental to a claim in the year 2000 
        action based on personal injury caused by a year 2000 failure.
            (3) Such losses are incidental to a claim in the year 2000 
        action based on damage to tangible property caused by a year 
        2000 failure (other than damage to property that is the subject 
        of the contract).
    (b) Recovery Must Be Permitted Under Applicable Law.--Economic 
losses shall be recoverable in a year 2000 action only if applicable 
Federal law, or applicable State law embodied in statute or controlling 
judicial precedent as of January 1, 1999, permits the recovery of such 
losses in the action.

SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.

    (a) In General.--A director, officer, or trustee of a business or 
other organization (including a corporation, unincorporated 
association, partnership, or non-profit organization) shall not be 
personally liable in any year 2000 action in his or her capacity as a 
director or officer of the business or organization for an aggregate 
amount that exceeds the greater of--
            (1) $100,000; or
            (2) the amount of cash compensation received by the 
        director or officer from the business or organization during 
        the 12-month period immediately preceding the act or omission 
        for which liability was imposed.
    (b) Rule of Construction.--Nothing in this section shall be deemed 
to impose, or to permit the imposition of, personal liability on any 
director, officer, or trustee in excess of the aggregate amount of 
liability to which such director, officer, or trustee would be subject 
under applicable State law in existence on January 1, 1999 (including 
any charter or bylaw authorized by such State law).

                   TITLE IV--YEAR 2000 CLASS ACTIONS

SEC. 401. MINIMUM INJURY REQUIREMENT.

    (a) In General.--In any year 2000 action involving a claim that a 
product or service is defective, the action may be maintained as a 
class action in Federal or state court as to that claim only if it 
satisfies all other prerequisites established by applicable Federal or 
State law and the court also finds that the alleged defect in the 
product or service was a material defect as to a majority of the 
members of the class.
    (b) Determination by Court.--As soon as practicable after the 
commencement of a year 2000 action involving a claim that a product or 
service is defective and that is brought as a class action, the court 
shall determine by order whether the requirement set forth in paragraph 
(1) is satisfied. An order under this subsection may be conditional, 
and may be altered or amended before the decision on the merits.

SEC. 402. NOTIFICATION.

    (a) Notice by Mail.--In any year 2000 action that is maintained as 
a class action, the court, in addition to any other notice required by 
applicable Federal or State law, shall direct notice of the action to 
each member of the class by United States mail, return receipt 
requested. Persons whose actual receipt of the notice is not verified 
by the court or by counsel for one of the parties shall be excluded 
from the class unless those persons inform the court in writing, on a 
date no later than the commencement of trial or entry of judgment, that 
they wish to join the class.
    (b) Contents of Notice.--In addition to any information required by 
applicable Federal or State law, the notice described in this 
subsection shall--
            (1) concisely and clearly describe the nature of the 
        action;
            (2) identify the jurisdiction whose law will govern the 
        action;
            (3) identify any potential claims that class counsel chose 
        not to pursue so that the action would satisfy class 
        certification requirements; and
            (4) describe the fee arrangement of class counsel.

SEC. 403. DISMISSAL PRIOR TO CERTIFICATION.

    Before determining whether to certify a class in a year 2000 
action, the court may decide a motion to dismiss or for summary 
judgment made by any party if the court concludes that decision will 
promote the fair and efficient adjudication of the controversy and will 
not cause undue delay.

SEC. 404. FEDERAL JURISDICTION IN YEAR 2000 CLASS ACTIONS.

    (a) Reference.--Whenever in this section an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of title 28, United States Code.
    (b) Diversity Jurisdiction.--Section 1332 is amended by 
redesignating subsections (b), (c), and (d) as subsections (c), (d), 
and (e), respectively, and by inserting after subsection (a) the 
following:
    ``(b)(1) The district courts shall have original jurisdiction of 
any year 2000 action, regardless of the sum or value of the matter in 
controversy therein, which is brought as a class action and in which--
            ``(A) any member of a proposed plaintiff class is a citizen 
        of a State different from any defendant;
            ``(B) any member of a proposed plaintiff class is a foreign 
        state or a citizen or subject of a foreign state and any 
        defendant is a citizen of a State; or
            ``(C) any member of a proposed plaintiff class is a citizen 
        of a State and any defendant is a citizen or subject of a 
        foreign state.
As used in this paragraph, the term `foreign state' has the meaning 
given that term in section 1603(a).
    ``(2)(A) In a year 2000 action described in paragraph (1) in 
which--
            ``(i) the substantial majority of the members of all 
        proposed plaintiff classes are citizens of a single State of 
        which the primary defendants are also citizens, and
            ``(ii) the claims asserted will be governed primarily by 
        the laws of that State,
the district court should abstain from hearing such action.
    ``(B) In a year 2000 action described in paragraph (1) in which--
            ``(i) all matters in controversy asserted by the individual 
        members of all proposed plaintiff classes in the aggregate do 
        not exceed the sum or value of $1,000,000, exclusive of 
        interest and costs,
            ``(ii) the number of members of all proposed plaintiff 
        classes in the aggregate is less than 100, or
            ``(iii) the primary defendants are States, State officials, 
        or other governmental entities against whom the district court 
        may be foreclosed from ordering relief,
the district court may, in its discretion, abstain from hearing such 
action.
    ``(3)(A) Paragraph (1) and section 1453 shall not apply to any 
class action that is brought under the Securities Act of 1933.
    ``(B) Paragraph (1) and section 1453 shall not apply to a class 
action described in subparagraph (C) that is based upon the statutory 
or common law of the State in which the issuer concerned is 
incorporated (in the case of a corporation) or organized (in the case 
of any other entity).
    ``(C) A class action is described in this subparagraph if it 
involves--
            ``(i) the purchase or sale of securities by an issuer or an 
        affiliate of an issuer exclusively from or to holders of equity 
        securities of the issuer; or
            ``(ii) any recommendation, position, or other communication 
        with respect to the sale of securities of an issuer that--
                    ``(I) is made by or on behalf of the issuer or an 
                affiliate of the issuer to holders of equity securities 
                of the issuer; and
                    ``(II) concerns decisions of those equity holders 
                with respect to voting their securities, acting in 
                response to a tender or exchange offer, or exercising 
                dissenters' or appraisal rights.
    ``(D) As used in this paragraph, the terms `issuer', `security', 
and `equity security' have the meanings given those terms in section 3 
of the Securities Exchange Act of 1934.
    ``(4) As used in this subsection, the term `year 2000 action' has 
the meaning given that term in section 3 of the Year 2000 Readiness 
Act.''.
    (c) Conforming Amendment.--Section 1332(c) (as redesignated by this 
section) is amended by inserting after ``Federal courts'' the 
following: ``pursuant to subsection (a) of this section''.
    (d) Determination of Diversity.--Section 1332, as amended by this 
section, is further amended by adding at the end the following:
    ``(f) For purposes of subsection (b), a member of a proposed class 
shall be deemed to be a citizen of a State different from a defendant 
corporation only if that member is a citizen of a State different from 
all States of which the defendant corporation is deemed a citizen.''.
    (e) Removal of Class Actions.--Chapter 89 is amended by adding 
after section 1452 the following:
``Sec. 1453. Removal of class actions
    ``(a) In General.--A year 2000 action which is a class action may 
be removed to a district court of the United States in accordance with 
this chapter, except that such action may be removed--
            ``(1) by any defendant without the consent of all 
        defendants; or
            ``(2) by any plaintiff class member who is not a named or 
        representative class member of the action for which removal is 
        sought, without the consent of all members of such class.
    ``(b) When Removable.--This section shall apply to any year 2000 
action before or after the entry of any order certifying a class.
    ``(c) Procedure for Removal.--The provisions of section 1446(a) 
relating to a defendant removing a case shall apply to a plaintiff 
removing a case under this section. With respect to the application of 
subsection (b) of such section, the requirement relating to the 30-day 
filing period shall be met if a plaintiff class member who is not a 
named or representative class member of the action for which removal is 
sought files notice of removal within 30 days after receipt by such 
class member, through service or otherwise, of the initial written 
notice of the class action provided at the trial court's direction.
    ``(d) Definition.--As used in this section, the term `year 2000 
action' has the meaning given that term in section 3 of the Year 2000 
Readiness Act.''.
    (f) Removal Limitations.--Section 1446(b) is amended in the second 
sentence--
            (1) by inserting after ``has become removable'' the 
        following: ``, or, in the case of an action removable on the 
        basis of jurisdiction under section 1332(b), from which it may 
        first be ascertained, by exercising due diligence, that the 
        case is one which is or has become removable''; and
            (2) by inserting ``(a)'' after ``section 1332''.
    (g) Technical and Conforming Amendments.--The table of sections for 
chapter 89 is amended by adding after the item relating to section 1452 
the following:

``1453. Removal of class actions.''.
    (h) Application of Substantive State Law.--Nothing in this section 
or the amendments made by this section shall alter the substantive law 
applicable to an action to which the amendments made by subsection (b) 
of this section apply.
    (i) Procedure After Removal.--Section 1447 is amended by adding at 
the end the following new subsection:
    ``(f) If, after removal, the court determines that no aspect of an 
action that is subject to its jurisdiction solely under the provisions 
of section 1332(b) may be maintained as a class action under Rule 23 of 
the Federal Rules of Civil Procedure, the court shall strike the class 
allegations from the action and remand the action to the State court. 
Upon remand of the action, the period of limitations for any claim that 
was asserted in the action on behalf of any named or unnamed member of 
any proposed class shall be deemed tolled to the full extent provided 
under Federal law.''.

    TITLE V--CLIENT PROTECTION IN CONNECTION WITH YEAR 2000 ACTIONS

SEC. 501. SCOPE.

    This title applies to any year 2000 claim or year 2000 action 
asserted or brought in Federal or State court.

SEC. 502. DEFINITIONS.

    In this title:
            (1) Attorney.--the term ``attorney'' means any natural 
        person, professional law association, corporation, or 
        partnership authorized under applicable State law to practice 
        law.
            (2) Attorney's services.--The term ``attorney's services'' 
        means the professional advice or counseling of or 
        representation by an attorney, but such term shall not include 
        other assistance incurred, directly or indirectly, in 
        connection with an attorney's services, such as administrative 
        or secretarial assistance, overhead, travel expenses, witness 
        fees, or preparation by a person other than the attorney of any 
        study, analysis, report, or test.
            (3) Contingent fee.--The term ``contingent fee'' means the 
        cost or price of an attorney's services determined by applying 
        a specified percentage, which may be a firm fixed percentage, a 
        graduated or sliding percentage, or any combination thereof, to 
        the amount of the settlement or judgment obtained.
            (4) Hourly fee.--The term ``hourly fee'' means the cost or 
        price per hour of an attorney's services.
            (5) Initial meeting.--The term ``initial meeting'' means 
        the first conference or discussion between a client and an 
        attorney, whether by telephone or in person, concerning the 
        details, facts, or basis of the plaintiff's claim.
            (6) Retain.--The term ``retain'' means the act of a client 
        in engaging an attorney's services, whether by express or 
        implied agreement, by seeking and obtaining the attorney's 
        services.

SEC. 503. CONSUMER'S RIGHT TO ELECT HOURLY OR CONTINGENT FEE 
              ARRANGEMENT.

    (a) Election of Terms.--A plaintiff who retains an attorney with 
respect to a year 2000 claim or a year 2000 action may elect whether to 
compensate the attorney's services in connection with the year 2000 
claim or the year 2000 action on an hourly basis or a contingent fee 
basis, except that--
            (1) in no event shall an attorney that has been retained on 
        a contingent fee basis be paid a fee greater than the lesser of 
        the attorney's hourly rate or rates disclosed under section 505 
        multiplied by the total number of hours spent by the attorney 
        in connection with the claim or action or an agreed upon 
        percentage of the total recovery which does not exceed one-
        third of the total recovery; and
            (2) in no event shall such an attorney be paid a contingent 
        fee based on a percentage of a settlement or judgment obtained 
        for that portion of damages claimed which the defendant offered 
        prior to, or within 90 days after, the filing of the relevant 
        year 2000 action.
    (b) Additional Limitation.--In no event shall an attorney 
representing a client in connection with a year 2000 claim or a year 
2000 action be paid a fee greater than the attorney's hourly rate or 
rates disclosed under section 505 multiplied by the total number of 
hours spent by the attorney in connection with the claim or action.

SEC. 504. CONSUMER'S RIGHT TO UP-FRONT DISCLOSURE OF INFORMATION 
              REGARDING FEES AND SETTLEMENT PROPOSALS.

    An attorney retained by a client shall, at the initial meeting (or 
in the instance of an attorney retained before the effective date of 
this Act, 30 days after the date of the enactment of this Act), 
disclose to the client the client's rights under this title and the 
client's right to receive a written statement of the information 
described under sections 505 and 506.

SEC. 505. INFORMATION AFTER INITIAL MEETING.

    (a) Written Disclosure of Fees.--Within 30 days after the 
disclosure described under section 504, an attorney retained by a 
client shall provide a written statement to the client setting forth--
            (1) the estimated number of hours of the attorney's 
        services that will be spent--
                    (A) settling or attempting to settle the year 2000 
                claim or year 2000 action; and
                    (B) handling the year 2000 claim or year 2000 
                action through trial;
            (2) the attorney's hourly fee for services in pursuing the 
        year 2000 claim or year 2000 action and any conditions, 
        limitations, restrictions, or other qualifications on the fee, 
        including likely expenses and the client's obligation for those 
        expenses and stating that in no event shall such hourly fee for 
        services exceed $1,000 per hour; and
            (3) in the case of an attorney retained on a contingent fee 
        basis, the attorney's contingent fee for services in pursuing 
        the year 2000 claim or year 2000 action and any conditions, 
        limitations, restrictions, or other qualifications on the fee, 
        including likely expenses and the client's obligation for those 
        expenses and stating that in no event shall such contingent fee 
        exceed one third of the total recovery.
    (b) Consumer's Right to Timely Updated Information About Fees.--In 
addition to the requirements contained in subsection (a), the attorney 
shall also render monthly statements to the client containing a 
description of hourly charges and expenses incurred in the pursuit of 
the client's year 2000 claim or year 2000 action by each attorney 
assigned to the client's matter.

SEC. 506. CONSUMER'S RIGHT TO TIMELY UPDATED INFORMATION ABOUT 
              SETTLEMENT PROPOSALS AND DETAILED STATEMENT OF HOURS AND 
              FEES.

    An attorney retained by a client shall immediately transmit all 
settlement offers to the client with an estimate of the likelihood of 
achieving a more or less favorable resolution to the year 2000 claim or 
year 2000 action, the likely timing of such resolution, and the likely 
attorney's fees and expenses required to obtain such a resolution. An 
attorney retained by a client shall, within a reasonable time not later 
than 30 days after the date on which the year 2000 claim or year 2000 
action is finally settled or adjudicated, provide a written statement 
to the client containing--
            (1) the actual number of hours expended by each attorney on 
        behalf of the client in connection with the year 2000 claim or 
        year 2000 action and such attorney's hourly rate; and
            (2) the total amount of the hourly fees or total contingent 
        fee for the attorney's services in connection with the year 
        2000 claim or year 2000 action.

SEC. 507. CLASS ACTIONS.

    An attorney representing a class in a year 2000 action shall make 
the disclosures required under this title to the presiding judge. The 
presiding judge shall, at the outset of the year 2000 action, determine 
the appropriate hourly rate, which in no event shall exceed $1,000 per 
hour, and the maximum percentage of the recovery to be paid in 
attorney's fees, which in no event shall exceed one third of the 
recovery. Notwithstanding any other provision of law or agreement to 
the contrary, the presiding judge shall award attorney's fees only 
pursuant to this title.

SEC. 508. ENFORCEMENT OF CONSUMER PROTECTION RULES IN YEAR 2000 CLAIMS 
              AND ACTIONS.

    A client whose attorney fails to comply with this title may file a 
civil action for damages in the court in which the year 2000 claim or 
year 2000 action was filed or could have been filed or other court of 
competent jurisdiction. The remedy provided by this section is in 
addition to any other available remedy or penalty.

   TITLE VI--ASSISTANCE TO SMALL BUSINESSES FOR PREVENTING YEAR 2000 
                           COMPUTER FAILURES

SECTION 601. SHORT TITLE.

    This title may be cited as the ``Small Business Year 2000 Readiness 
Act''.

SEC. 602. FINDINGS.

    Congress finds that--
            (1) the failure of many computer programs to recognize the 
        year 2000 will have extreme negative financial consequences in 
        the year 2000 and in subsequent years for both large and small 
        businesses;
            (2) small businesses are behind larger businesses in 
        implementing corrective changes to their automated systems-85 
        percent of businesses with 200 employees or fewer have not 
        commenced inventorying the changes they must make to their 
        automated systems to avoid year 2000 problems;
            (3) many small businesses do not have access to the capital 
        necessary to fix mission critical automated systems; and
            (4) the failure of a large number of domestic small 
        businesses will have a highly detrimental effect on the 
        American economy in the year 2000 and subsequent years.

SEC. 603. YEAR 2000 COMPUTER FAILURE LOAN GUARANTEE PROGRAM.

    (a) Programs Established.--Section 7(a) of the Small Business Act 
(15 U.S.C. 636(a)) is amended by adding at the end the following:
            ``(27) Year 2000 computer failure pilot program.--
                    ``(A) Definitions.--In this paragraph--
                            ``(i) the term `eligible lender' means any 
                        lender designated by the Administration as 
                        eligible to participate in--
                                    ``(I) the program (commonly 
                                referred to as the `Preferred Lenders 
                                Program') authorized by the proviso in 
                                section 5(b)(7); or
                                    ``(II) the program (commonly 
                                referred to as the `Certified Lenders 
                                Program') authorized in paragraph (19); 
                                and
                            ``(ii) the term `year 2000 computer 
                        failure' means any failure by any device or 
                        system (including, without limitation, any 
                        computer system and any microchip or integrated 
                        circuit embedded in another device or product), 
                        or any software, firmware, or other set of 
                        collection of processing instructions, however 
                        constructed, in processing, calculating, 
                        comparing, sequencing, displaying, storing, 
                        transmitting, or receiving date-related data, 
                        including, without limitation, failure in 
                        accurately dealing with or failure in 
                        accurately accounting for transitions or 
                        comparisons from, into, and between the 20th 
                        and the 21st centuries, or during the years 
                        1999 and 2000, failure to recognize or 
                        accurately process any specific date, and 
                        failure to accurately account for the year 
                        2000's leap year status.
                    ``(B) Establishment of program.--The Administration 
                shall--
                            ``(i) establish a pilot program, under 
                        which the Administration shall guarantee loans 
                        made by eligible lenders to small business 
                        concerns in accordance with this subsection to 
                        allow such concerns to address year 2000 
                        computer failures; and
                            ``(ii) notify eligible lenders of the 
                        establishment of the program under this 
                        paragraph.
                    ``(C) Use of funds.--A small business concern that 
                receives a loan guaranteed under this paragraph shall 
                use the proceeds of the loan solely to address year 
                2000 computer failures, including the repair or 
                acquisition of information technology systems and other 
                automated systems.
                    ``(D) Maximum amount.--The total amount of a loan 
                made to a small business concern and guaranteed under 
                this paragraph shall not exceed $50,000.
                    ``(E) Guarantee limit.--The guarantee percentage of 
                a loan guaranteed under this paragraph shall not exceed 
                50 percent of the balance of the financing outstanding 
                at the time of disbursement of the loan.
                    ``(F) Report.--The Administration shall annually 
                submit to the Committees on Small Business of the House 
                of Representatives and the Senate a report on the 
                program authorized by this paragraph. Such report shall 
                include information relating to--
                            ``(i) the number and amount of loans 
                        guaranteed under this paragraph;
                            ``(ii) whether the loans guaranteed were 
                        made to repair or replace information 
                        technology and other automated systems; and
                            ``(iii) the number of eligible lenders 
                        participating in the program.''.
    (b) Regulations.--Not later than 60 days after the date of 
enactment of this title, the Administrator of the Small Business 
Administration shall issue final regulations to carry out the program 
established by section 7(a)(27) of the Small Business Act, as added by 
this section.
    (c) Repeal.--Effective on October 1, 2001, this section and the 
amendment made by this section are repealed.

SEC. 604. PILOT PROGRAM REQUIREMENTS.

    Section 7(a)(25) of the Small Business Act (15 U.S.C. 636(a)(25)) 
is amended by adding at the end the following:
                    ``(D) Notification of change.--Not later than 30 
                days before initiating any new pilot program or making 
                any change in a pilot program under this subsection 
                that may affect the subsidy rate estimates for the loan 
                program under this subsection, the Administration shall 
                notify the Committees on Small Business of the House of 
                Representatives and the Senate. Such notification shall 
                include--
                            ``(i) a description of the proposed new 
                        program or the change to a program; and
                            ``(ii) an estimation, which shall be 
                        developed by the Administration in consultation 
                        with the Director of the Office of Management 
and Budget, of the effect that the new program or the change to a 
program will have on the subsidy rate.
                    ``(E) Report on pilot programs.--The Administration 
                shall annually submit to the Committees on Small 
                Business of the House of Representatives and the Senate 
                a report on each pilot program under this subsection. 
                Such report shall include information relating to--
                            ``(i) the number and amount of loans made 
                        under the pilot program;
                            ``(ii) the number of lenders participating 
                        in the pilot program; and
                            ``(iii) the default rate, delinquency rate, 
                        and recovery rate for loans under the pilot 
                        program, as compared to those rates for other 
                        loan programs under this subsection.''.

SEC. 605. SUSPENSION OF PENALTIES FOR CERTAIN YEAR 2000 FAILURES BY 
              SMALL BUSINESS CONCERNS.

    (a) Definitions.--In this section--
            (1) the term ``agency'' means any executive agency, as 
        defined in section 105 of title 5, United States Code, that has 
        the authority to impose civil penalties on small business 
        concerns;
            (2) the term ``first-time violation'' means any first-time 
        violation, resulting from a year 2000 failure, of a Federal 
        requirement regarding the collection of information; and
            (3) the term ``small business concern'' has the meaning 
        given such term in section 3 of the Small Business Act (15 
        U.S.C. 632).
    (b) Establishment of Liaison.--Not later than 30 days after the 
date of enactment of this title, the Administrator of the Small 
Business Administration shall establish 1 point of contact in the 
Administration to act as a liaison between the Administration and small 
business concerns with respect to problems arising out of year 2000 
failures and compliance with Federal requirements regarding the 
collection of information.
    (c) General Rule.--Subject to subsection (d), no agency shall 
impose any civil penalty on a small business concern for a first-time 
violation.
    (d) Exceptions.--An agency may impose civil penalties authorized 
under Federal law on a small business concern for a first-time 
violation if--
            (1) the agency determines that the violation has caused 
        actual serious harm to the public;
            (2) the agency determines that failure to impose a civil 
        penalty would impede or interfere with the detection of 
        intentional wrongful activity;
            (3) the violation is a violation of an internal revenue law 
        or a law concerning the assessment or collection of any tax, 
        debt, revenue, or receipt;
            (4) the small business concern fails to correct the 
        violation not later than 6 months after receiving written 
        notification of the violation from the agency; or
            (5) the agency determines that the violation presents an 
        imminent and substantial danger to the public health or safety.
    (e) Danger to Public Health and Safety.--
            (1) Waiver of penalties.--An agency may waive any civil 
        penalty imposed pursuant to subsection (d)(5) if the violation 
        for which the penalty is imposed is corrected not later than 30 
        days after the agency provides written notice of the violation 
        to the small business concern.
            (2) Standards for waiver.--In making a determination 
        whether to waive a civil penalty under paragraph (1) the agency 
        shall take into account all of the facts and circumstances 
        regarding the first-time violation, including--
                    (A) the nature and seriousness of the violation, 
                including whether it is technical or inadvertent or 
                involves willful criminal conduct;
                    (B) whether the small business concern has made and 
                is making a good faith effort to comply with applicable 
                laws and to remedy the violation in the shortest 
                practicable period of time; and
                    (C) whether the small business concern has obtained 
                a significant economic benefit from the violation.
            (3) Congressional Notification Requirement.--If an agency 
        imposes on a small business concern a civil penalty pursuant to 
        subsection (d)(5) without providing the small business concern 
        with the 30 days to correct the violation authorized under 
        paragraph (1), the agency shall notify Congress of the penalty 
        not later than 60 days after it is imposed.
    (f) State Penalties To Conform.--Notwithstanding any other 
provision of law, no State may impose on a small business concern any 
civil penalty inconsistent with this section.
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