Calendar No. 82

106TH CONGRESS

1ST SESSION S. 461

A BILL

To assure that innocent users and businesses gain

nificant sectors of the American economy.settle year 2000 lawsuits that may disrupt siglated failures through fostering an incentive toaccess to solutions to the year 2000 problem-reMARCH 26, 1999

Reported with an amendment
II

Calendar No. 82

106TH CONGRESS

1ST SESSION S. 461

To assure that innocent users and businesses gain access to solutions to

the year 2000 problem-related failures through fostering an incentive

to settle year 2000 lawsuits that may disrupt significant sectors of

the American economy.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 24, 1999

Mr. HATCH (for himself, Mrs. FEINSTEIN, and Mr. MCCONNELL) introduced

the following bill; which was read twice and referred to the Committee

on the Judiciary

MARCH 26, 1999

Reported under authority of the order of the Senate of March 25, 1999, by

Mr. HATCH, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To assure that innocent users and businesses gain access

to solutions to the year 2000 problem-related failures

through fostering an incentive to settle year 2000 lawsuits that may disrupt significant sectors of the American economy.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Year 2000 Fairness and Responsibility Act’’.

4 (b) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Findings, purposes, and scope.

Sec. 3. Definitions.

TITLE I—PRELITIGATION PROCEDURES FOR YEAR 2000 CIVIL

ACTIONS

Sec. 101. Pre-trial notice.

Sec. 102. Alternative dispute resolution.

Sec. 103. Pleading requirements.

Sec. 104. Duty to mitigate.

TITLE II—YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTS

Sec. 201. Contract preservation.

Sec. 202. Evidence of reasonable efforts and defenses.

Sec. 203. Damages limitation.

TITLE III—YEAR 2000 CIVIL ACTIONS INVOLVING TORT AND

OTHER NONCONTRACTUAL CLAIMS

Sec. 301. Proportionate liability.

Sec. 302. State of mind and foreseeability.

Sec. 303. Reasonable efforts defense.

Sec. 304. Damages limitation.

Sec. 305. Economic losses.

Sec. 306. Liability of officers and directors.

TITLE IV—CLASS ACTIONS INVOLVING YEAR 2000 CLAIMS

Sec. 401. Minimum injury requirement.

Sec. 402. Notification.

Sec. 403. Dismissal prior to certification.

Sec. 404. Federal jurisdiction in class actions involving year 2000 claims.

TITLE V—EFFECTIVE DATE

Sec. 501. Effective date.

6 SEC. 2. FINDINGS, PURPOSES, AND SCOPE.

7 (a) FINDINGS.—Congress finds the following:

8 (1)(A) Many information technology systems,

9 devices, and programs are not capable of recognizing
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1 certain dates in 1999 and after December 31, 1999,

2 and will read dates in the year 2000 and thereafter

3 as if those dates represent the year 1900 or there4 after or will fail to process those dates.

5 (B) If not corrected, the problem described in

6 subparagraph (A) and resulting failures could inca7 pacitate systems that are essential to the functioning

8 of markets, commerce, consumer products, utilities,

9 Government, and safety and defense systems, in the

10 United States and throughout the world.

11 (2) It is in the national interest that producers

12 and users of technology products concentrate their

13 attention and resources in the time remaining before

14 January 1, 2000, on assessing, fixing, testing, and

15 developing contingency plans to address any and all

16 outstanding year 2000 computer date-change prob17 lems, so as to minimize possible disruptions associ18 ated with computer failures.

19 (3)(A) Because year 2000 computer date20 change problems may affect virtually all businesses

21 and other users of technology products to some de22 gree, there is a substantial likelihood that actual or

23 potential year 2000 failures will prompt a significant

24 volume of litigation, much of it insubstantial.
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1 (B) The litigation described in subparagraph

2 (A) would have a range of undesirable effects includ3 ing the following:

4 (i) It would threaten to waste technical

5 and financial resources that are better devoted

6 to curing year 2000 computer date-change

7 problems and ensuring that systems remain or

8 become operational.

9 (ii) It could threaten the network of valued

10 and trusted business and customer relationships

11 that are important to the effective functioning

12 of the national economy.

13 (iii) It would strain the Nation’s legal sys14 tem, causing particular problems for the small

15 businesses and individuals who already find

16 that system inaccessible because of its com17 plexity and expense.

18 (iv) The delays, expense, uncertainties, loss

19 of control, adverse publicity, and animosities

20 that frequently accompany litigation of business

21 disputes could exacerbate the difficulties associ22 ated with the date change and work against the

23 successful resolution of those difficulties.

24 (v) Concern about the potential for liabil25 ity—in particular, concern about the substan-
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1 tial litigation expense associated with defending

2 against even the most insubstantial lawsuits—

3 is prompting many persons and businesses with

4 technical expertise to avoid projects aimed at

5 curing year 2000 computer date-change prob6 lems.

7 (b) PURPOSES.—Based upon the power contained in

8 article I, section 8, clause 3 of the Constitution of the

9 United States, the purposes of this Act are—

10 (1) to establish uniform legal standards that

11 give all businesses and users of technology products

12 reasonable incentives to solve year 2000 computer

13 date-change problems before they develop;

14 (2) to encourage the resolution of year 2000

15 computer date-change disputes involving economic

16 damages without recourse to unnecessary, time con17 suming, and wasteful litigation; and

18 (3) to lessen burdens on interstate commerce by

19 discouraging insubstantial lawsuits, while also pre20 serving the ability of individuals and businesses that

21 have suffered real injury to obtain complete relief.

22 (c) SCOPE.—Nothing in this Act affects claims for

23 personal injury.

24 SEC. 3. DEFINITIONS.

25 In this Act:
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1 (1) ACTUAL DAMAGES.—The term ‘‘actual

2 damages’’—

3 (A) means damages for physical injury to

4 any person or property; and

5 (B) includes the cost of repairing or re6 placing a product that has a material defect.

7 (2) CONTRACT.—The term ‘‘contract’’ means a

8 contract, tariff, license, or warranty.

9 (3) DEFENDANT.—The term ‘‘defendant’’

10 means any person against whom a year 2000 claim

11 is asserted.

12 (4) ECONOMIC LOSS.—The term ‘‘economic

13 loss’’—

14 (A) means any damages other than dam15 ages arising out of personal injury or damage

16 to tangible property; and

17 (B) includes damages for—

18 (i) lost profits or sales;

19 (ii) business interruption;

20 (iii) losses indirectly suffered as a re21 sult of the defendant’s wrongful act or

22 omission;

23 (iv) losses that arise because of the

24 claims of third parties;
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1 (v) losses that are required to be

2 pleaded as special damages; or

3 (vi) items defined as consequential

4 damages in the Uniform Commercial Code

5 or an analogous State commercial law.

6 (5) MATERIAL DEFECT.—

7 (A) IN GENERAL.—The term ‘‘material de8 fect’’ means a defect in any item, whether tan9 gible or intangible, or in the provision of a serv10 ice, that substantially prevents the item or serv11 ice from operating or functioning as designed or

12 intended.

13 (B) EXCLUSIONS.—The term does not in14 clude any defect that—

15 (i) has an insignificant or de minimis

16 effect on the operation or functioning of an

17 item;

18 (ii) affects only a component of an

19 item that, as a whole, substantially oper20 ates or functions as designed; or

21 (iii) has an insignificant or de minimis

22 effect on the efficacy of the service pro23 vided.

24 (6) PERSON.—The term ‘‘person’’ means any

25 natural person and any entity, organization, or en-
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1 terprise, including any corporation, company (includ2 ing any joint stock company), association, partner3 ship, trust, or governmental entity.

4 (7) PERSONAL INJURY.—

5 (A) IN GENERAL.—The term ‘‘personal in6 jury’’ means any physical injury to a natural

7 person, including death of the person.

8 (B) EXCLUSIONS.—The term does not in9 clude mental suffering, emotional distress, or

10 like elements of injury that do not constitute

11 physical harm to a natural person.

12 (8) PLAINTIFF.—The term ‘‘plaintiff’’ means

13 any person who asserts a year 2000 claim.

14 (9) PUNITIVE DAMAGES.—The term ‘‘punitive

15 damages’’ means damages, other than compensatory

16 damages, that, in whole or in part, are awarded

17 against any person—

18 (A) to punish that person; or

19 (B) to deter that person, or other persons,

20 from engaging in similar behavior.

21 (10) STATE.—The term ‘‘State’’ means any

22 State of the United States, the District of Columbia,

23 the Commonwealth of Puerto Rico, the Northern

24 Mariana Islands, the U.S. Virgin Islands, Guam,

25 American Samoa, and any other territory or posses-
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1 sion of the United States, and any political subdivi2 sion thereof.

3 (11) YEAR 2000 CIVIL ACTION.—The term ‘‘year

4 2000 civil action’’ means any civil action of any kind

5 brought in any court under Federal, State, or for6 eign law, in which—

7 (A) a year 2000 claim is asserted; or

8 (B) any claim or defense is related, di9 rectly or indirectly, to an actual or potential

10 year 2000 failure.

11 (12) YEAR 2000 CLAIM.—The term ‘‘year 2000

12 claim’’ means any claim or cause of action of any

13 kind, whether asserted by way of claim, counter14 claim, cross-claim, third-party claim, or otherwise, in

15 which the plaintiff’s alleged loss or harm resulted,

16 directly or indirectly, from an actual or potential

17 year 2000 failure.

18 (13) YEAR 2000 FAILURE.—The term ‘‘year

19 2000 failure’’ means any failure by any device or

20 system (including any computer system and any

21 microchip or integrated circuit embedded in another

22 device or product), or any software, firmware, or

23 other set or collection of processing instructions,

24 however constructed, in processing, calculating, com-
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1 paring, sequencing, displaying, storing, transmitting,

2 or receiving date-related data, including—

3 (A) the failure to accurately administer or

4 account for transitions or comparisons from,

5 into, and between the 20th and 21st centuries,

6 and between 1999 and 2000; or

7 (B) the failure to recognize or accurately

8 process any specific date, and the failure accu9 rately to account for the status of the year

10 2000 as a leap year.

11 TITLE I—PRELITIGATION PRO12 CEDURES FOR YEAR 2000

13 CIVIL ACTIONS

14 SEC. 101. PRE-TRIAL NOTICE.

15 (a) NOTIFICATION PERIOD.—

16 (1) IN GENERAL.—Before filing a year 2000

17 claim, except an action for a claim that seeks only

18 injunctive relief, a prospective plaintiff shall be re19 quired to provide to each prospective defendant a

20 written notice that identifies and describes with

21 particularity—

22 (A) any manifestation of a material defect

23 alleged to have caused injury;

24 (B) the injury allegedly suffered or reason25 ably risked by the prospective plaintiff; and
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1 (C) the relief or action sought by the pro2 spective plaintiff.

3 (2) COMMENCEMENT OF ACTION.—Except as

4 provided in subsections (c) and (e), a prospective

5 plaintiff shall not file a year 2000 claim in Federal

6 or State court until the expiration of the 90-day pe7 riod beginning on the date on which the prospective

8 plaintiff provides notice under paragraph (1).

9 (b) RESPONSE TO NOTICE.—Not later than 30 days

10 after receipt of the notice specified in subsection (a), each

11 prospective defendant shall provide each prospective plain12 tiff a written statement that—

13 (1) acknowledges receipt of the notice; and

14 (2) describes any actions that the defendant will

15 take, or has taken, to address the defect or injury

16 identified by the prospective plaintiff in the notice.

17 (c) FAILURE TO RESPOND.—If a prospective defend18 ant fails to respond to a notice provided under subsection

19 (a)(1) during the 30-day period prescribed in subsection

20 (b) or does not include in the response a description of

21 actions referred to in subsection (b)(2)—

22 (1) the 90-day waiting period identified in sub23 section (a) shall terminate at the expiration of the

24 30-day period specified in subsection (b) with re25 spect to that prospective defendant; and
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1 (2) the prospective plaintiff may commence a

2 year 2000 civil action against such prospective de3 fendant immediately upon the termination of that

4 waiting period.

5 (d) FAILURE TO PROVIDE NOTICE.—

6 (1) IN GENERAL.—Subject to subsections (c)

7 and (e), a defendant may treat a complaint filed by

8 the plaintiff as a notice required under subsection

9 (a) by so informing the court and the plaintiff if the

10 defendant determines that a plaintiff has com11 menced a year 2000 civil action—

12 (A) without providing the notice specified

13 in subsection (a); or

14 (B) before the expiration of the 90-day

15 waiting period specified in subsection (a).

16 (2) STAY.—If a defendant elects under para17 graph (1) to treat a complaint as a notice—

18 (A) the court shall stay all discovery and

19 other proceedings in the action for a period of

20 90 days beginning on the date of filing of the

21 complaint; and

22 (B) the time for filing answers and all

23 other pleadings shall be tolled during this 90-

24 day period.
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1 (e) EFFECT OF CONTRACTUAL WAITING PERIODS.—

2 In any case in which a contract requires notice of non3 performance and provides for a period of delay before the

4 initiation of suit for breach or repudiation of contract, the

5 contractual period of delay controls and shall apply in lieu

6 of the waiting period specified in subsections (a) and (d).

7 (f) SANCTION FOR FRIVOLOUS INVOCATION OF THE

8 STAY PROVISION.—If a defendant acts under subsection

9 (d) to stay an action, and the court subsequently finds

10 that the assertion by the defendant that the action is a

11 year 2000 civil action was frivolous and made for the pur12 pose of causing unnecessary delay, the court may impose

13 a sanction, including an order to make payments to oppos14 ing parties in accordance with Rule 11 of the Federal

15 Rules of Civil Procedure.

16 (g) COMPUTATION OF TIME.—For purposes of this

17 section, the rules regarding computation of time shall be

18 governed by the applicable Federal or State rules of civil

19 procedure.

20 SEC. 102. ALTERNATIVE DISPUTE RESOLUTION.

21 (a) REQUESTS MADE DURING NOTIFICATION PE22 RIOD.—At any time during the 90-day notification period

23 under section 101(a), either party may request the other

24 party to use alternative dispute resolution. If, based upon

25 that request, the parties enter into an agreement to use
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1 alternative dispute resolution, the parties may also agree

2 to an extension of that 90-day period.

3 (b) REQUEST MADE AFTER NOTIFICATION PE4 RIOD.—At any time after expiration of the 90-day notifi5 cation period under section 101(a), whether before or after

6 the filing of a complaint, either party may request the

7 other party to use alternative dispute resolution.

8 (c) PAYMENT DATE.—If a dispute that is the subject

9 of the complaint or responsive pleading is resolved through

10 alternative dispute resolution as provided in subsection (a)

11 or (b), the defendant shall pay any amount of funds that

12 the defendant is required to pay the plaintiff under the

13 settlement not later than 30 days after the date on which

14 the parties settle the dispute, and all other terms shall

15 be implemented as promptly as possible based upon the

16 agreement of the parties, unless another period of time

17 is agreed to by the parties or established by contract be18 tween the parties.

19 SEC. 103. PLEADING REQUIREMENTS.

20 (a) NATURE AND AMOUNT OF DAMAGES.—In any

21 year 2000 civil action in which a plaintiff seeks an award

22 of money damages, the complaint shall state with particu23 larity with regard to each year 2000 claim—

24 (1) the nature and amount of each element of

25 damages; and
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1 (2) the factual basis for the calculation of the

2 damages.

3 (b) MATERIAL DEFECTS.—In any year 2000 civil ac4 tion in which the plaintiff alleges that a product or service

5 was defective, the complaint shall, with respect to each

6 year 2000 claim—

7 (1) identify with particularity the manifesta8 tions of the material defects; and

9 (2) state with particularity the facts supporting

10 the conclusion that the defects were material.

11 (c) REQUIRED STATE OF MIND.—In any year 2000

12 civil action in which a year 2000 claim is asserted with

13 respect to which the plaintiff may prevail only on proof

14 that the defendant acted with a particular state of mind,

15 the complaint shall, with respect to each element of the

16 claim, state in detail the facts giving rise to a strong infer17 ence that the defendant acted with the required state of

18 mind.

19 (d) MOTION TO DISMISS; STAY OF DISCOVERY.—

20 (1) DISMISSAL FOR FAILURE TO MEET PLEAD21 ING REQUIREMENTS.—In any year 2000 civil action,

22 the court shall, on the motion of any defendant, dis23 miss without prejudice any year 2000 claim asserted

24 in the complaint if any of the requirements under
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1 subsection (a), (b), or (c) is not met with respect to

2 the claim.

3 (2) STAY OF DISCOVERY.—In any year 2000

4 civil action, all discovery and other proceedings shall

5 be stayed during the pendency of any motion to dis6 miss, unless the court finds upon the motion of any

7 party that particularized discovery is necessary to

8 preserve evidence or prevent undue prejudice to that

9 party.

10 (3) PRESERVATION OF EVIDENCE.—

11 (A) IN GENERAL.—

12 (i) TREATMENT OF EVIDENCE.—Dur13 ing the pendency of any stay of discovery

14 entered under this paragraph, unless oth15 erwise ordered by the court, any party to

16 the action with actual notice of the allega17 tions contained in the complaint shall treat

18 the items described in clause (ii) as if they

19 were a subject of a continuing request for

20 production of documents from an opposing

21 party under applicable Federal or State

22 rules of civil procedure.

23 (ii) ITEMS.—The items described in

24 this clause are all documents, data com-
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1 pilations (including electronically stored or

2 recorded data), and tangible objects that—

3 (I) are in the custody or control

4 of the party described in clause (i);

5 and

6 (II) relevant to the allegations.

7 (B) SANCTION FOR WILLFUL VIOLA8 TION.—A party aggrieved by the willful failure

9 of an opposing party to comply with clause (A)

10 may apply to the court for an order awarding

11 appropriate sanctions.

12 SEC. 104. DUTY TO MITIGATE.

13 (a) IN GENERAL.—There shall be no recovery for any

14 year 2000 claim on account of injury that the plaintiff

15 could reasonably have avoided in light of any disclosure

16 or other information with respect to which the plaintiff

17 was, or reasonably could have been, aware.

18 (b) DAMAGES.—The damages awarded for any claim

19 described in subsection (a) shall exclude any amount that

20 the plaintiff reasonably could have avoided in light of any

21 disclosure or information described in that subsection.
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1 TITLE II—YEAR 2000 CIVIL AC2 TIONS INVOLVING CON3 TRACTS

4 SEC. 201. CONTRACT PRESERVATION.

5 (a) IN GENERAL.—Subject to subsections (b) and (c),

6 notwithstanding any other provision of Federal or State

7 statutory or case law, in any action in which a year 2000

8 claim is advanced, in resolving that claim all written con9 tractual terms, including limitations or exclusions of liabil10 ity or disclaimers of warranty, shall be fully enforceable.

11 (b) INTERPRETATION OF CONTRACT.—In any case in

12 which a contract is silent as to a particular issue, the in13 terpretation of the contract as to that issue shall be deter14 mined by applicable law in effect at the time that the con15 tract was entered into.

16 (c) UNENFORCEABLE CONTRACTS.—Subsection (a)

17 does not apply in any case in which a court determines

18 that the contract as a whole is unenforceable due to an

19 infirmity in the formation of the contract under applicable

20 law in effect at the time the contract was entered into.

21 SEC. 202. EVIDENCE OF REASONABLE EFFORTS AND DE22 FENSES.

23 (a) REASONABLE EFFORTS.—In any action in which

24 a year 2000 claim is advanced and in which a breach of

25 contract or related claim is alleged, in the resolution of
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1 that claim, in addition to any other rights provided by ap2 plicable law, the party against whom the claim of breach

3 is asserted shall be allowed, for the purpose of limiting

4 or eliminating the defendant’s liability, to offer evidence

5 that the implementation of the contract by that party, or

6 the efforts made by that party to implement the contract,

7 were reasonable in light of the circumstances.

8 (b) IMPOSSIBILITY OR COMMERCIAL IMPRAC9 TICABILITY.—

10 (1) IN GENERAL.—In any action in which a

11 year 2000 claim is advanced and in which a breach

12 of contract or related claim is alleged, in resolving

13 that claim applicability of the doctrines of impos14 sibility and commercial impracticability shall be de15 termined by applicable law in existence on January

16 1, 1999.

17 (2) RULE OF CONSTRUCTION.—Nothing in this

18 Act shall be construed as limiting or impairing a

19 party’s right to assert defenses based upon the doc20 trines referred to in paragraph (1).

21 SEC. 203. DAMAGES LIMITATION.

22 In any action in which a year 2000 claim is advanced

23 and that involves a breach of contract, warranty, or re24 lated claim, in resolving that claim the court shall not

25 award any damages—
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1 (1) unless those damages are provided for by

2 the express terms of the contract; or

3 (2) if the contract is silent on those damages,

4 by operation of the applicable Federal or State law

5 that governed interpretation of the contract at the

6 time the contract was entered into.

7 TITLE III—YEAR 2000 CIVIL AC8 TIONS INVOLVING TORT AND

9 OTHER NONCONTRACTUAL

10 CLAIMS

11 SEC. 301. PROPORTIONATE LIABILITY.

12 (a) IN GENERAL.—Except in cases involving personal

13 injury, a person against whom a final judgment is entered

14 on a year 2000 claim shall be liable solely for the portion

15 of the judgment that corresponds to the percentage of re16 sponsibility of that person, as determined under subsection

17 (b).

18 (b) DETERMINATION OF RESPONSIBILITY.—

19 (1) IN GENERAL.—As to any year 2000 claim,

20 the court shall instruct the jury to answer special in21 terrogatories, or if there is no jury, make findings,

22 with respect to each defendant and plaintiff, and

23 each of the other persons claimed by any of the par24 ties to have caused or contributed to the loss in25 curred by the plaintiff, including persons who have
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1 entered into settlements with the plaintiff or plain2 tiffs, concerning the percentage of responsibility of

3 that person, measured as a percentage of the total

4 fault of all persons who caused or contributed to the

5 total loss incurred by the plaintiff.

6 (2) CONTENTS OF SPECIAL INTERROGATORIES

7 OR FINDINGS.—The responses to interrogatories, or

8 findings, as appropriate, under paragraph (1) shall

9 specify—

10 (A) the total amount of damages that the

11 plaintiff is entitled to recover; and

12 (B) the percentage of responsibility of each

13 person found to have caused or contributed to

14 the loss incurred by the plaintiff or plaintiffs.

15 (3) FACTORS FOR CONSIDERATION.—In deter16 mining the percentage of responsibility under this

17 paragraph, the trier of fact shall consider—

18 (A) the nature of the conduct of each per19 son alleged to have caused or contributed to the

20 loss incurred by the plaintiff; and

21 (B) the nature and extent of the causal re22 lationship between the conduct of each such

23 person and the damages incurred by the plain24 tiff or plaintiffs.
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1 (4) NONDISCLOSURE TO JURY.—The standard

2 for allocation of damages under paragraph (1) shall

3 not be disclosed to members of the jury.

4 SEC. 302. STATE OF MIND AND FORESEEABILITY.

5 (a) DEFENDANT’S STATE OF MIND AS TO YEAR 2000

6 FAILURE.—With respect to any year 2000 claim for

7 money damages in which the defendant’s actual or con8 structive awareness of an actual or potential year 2000

9 failure is an element of the claim under applicable law,

10 the defendant shall not be liable unless the plaintiff, in

11 addition to establishing all other requisite elements of the

12 claim, proves by clear and convincing evidence that the

13 defendant actually knew, or recklessly disregarded a

14 known and substantial risk, that the failure would occur.

15 (b) INJURY TO PLAINTIFF.—With respect to any year

16 2000 claim for money damages in which the defendant’s

17 actual or constructive awareness of actual or potential

18 harm to plaintiff is greater than the standard for neg19 ligence in subsection (c) and is an element of the claim

20 under applicable law, the defendant shall not be liable un21 less the plaintiff, in addition to establishing all other req22 uisite elements of the claim, proves by clear and con23 vincing evidence that the defendant actually knew, or reck24 lessly disregarded a known and substantial risk, that

25 plaintiff would suffer that harm.
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1 (c) NEGLIGENCE.—With respect to any year 2000

2 claim for money damages, the defendant shall not be liable

3 unless the plaintiff establishes by clear and convincing evi4 dence, in addition to all other requisite elements of the

5 claim, that the defendant knew or should have known that

6 the actions of the defendant created an unreasonable risk

7 of harm to the plaintiff.

8 (d) PRESERVATION OF EXISTING LAW.—Nothing in

9 subsection (a), (b), or (c) shall be deemed to create any

10 year 2000 claim or to relieve the plaintiff in any year 2000

11 civil action of the obligation of that plaintiff to establish

12 any element of the cause of action of that plaintiff under

13 applicable law.

14 SEC. 303. REASONABLE EFFORTS DEFENSE.

15 Except for breach or repudiation of contract claims,

16 as to any year 2000 claim seeking money damages—

17 (1) the fact that a year 2000 failure occurred

18 in an entity, facility, system, product, or component

19 that was within the control of the party against

20 whom the claim is asserted shall not constitute the

21 sole basis for recovery; and

22 (2) the party against whom the claim is as23 serted shall be entitled to establish, as a complete

24 defense to the claim, that the party took measures

25 that were reasonable under the circumstances to pre-
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1 vent the year 2000 failure from occurring or from

2 causing the damages upon which the claim is based.

3 SEC. 304. DAMAGES LIMITATION.

4 (a) IN GENERAL.—As to any year 2000 claim in

5 which punitive damages may be awarded under applicable

6 law and in which a defendant is found liable for punitive

7 damages, the amount of punitive damages that may be

8 awarded to a claimant shall not exceed the greater of—

9 (1) 3 times the amount awarded to the claimant

10 for actual damages; or

11 (2) $250,000.

12 (b) SPECIAL RULE.—

13 (1) RULE.—

14 (A) IN GENERAL.—Notwithstanding sub15 section (a), as to any year 2000 claim in which

16 the defendant is found liable for punitive dam17 ages and the defendant is an individual de18 scribed in subparagraph (B), the amount of pu19 nitive damages shall not exceed the lesser of—

20 (i) 3 times the amount awarded to the

21 claimant for actual damages; or

22 (ii) $250,000.

23 (B) DESCRIPTION OF INDIVIDUAL.—An in24 dividual described in this clause is an individual

25 whose net worth does not exceed $500,000, is
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1 an owner of an unincorporated business that

2 has fewer than 25 full-time employees, or is any

3 partnership, corporation, association, unit of

4 local government, or organization that has

5 fewer than 25 full-time employees.

6 (2) APPLICABILITY.—For purposes of deter7 mining the applicability of this subsection to a cor8 poration, the number of employees of a subsidiary of

9 a wholly owned corporation shall include all employ10 ees of a parent corporation or any subsidiary of that

11 parent corporation.

12 (c) APPLICATION OF LIMITATIONS BY THE COURT.—

13 The limitations contained in subsection (a) or (b) shall be

14 applied by the court and shall not be disclosed to the jury.

15 SEC. 305. ECONOMIC LOSSES.

16 (a) IN GENERAL.—Subject to subsection (b), a party

17 to a year 2000 civil action may not recover economic losses

18 for a year 2000 claim based on tort unless the party is

19 able to show that at least one of the following cir20 cumstances exists:

21 (1) The recovery of these losses is provided for

22 in the contract to which the party seeking to recover

23 such losses is a party.

24 (2) If the contract is silent on those losses, and

25 the application of the applicable Federal or State
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1 law that governed interpretation of the contract at

2 the time the contract was entered into would allow

3 recovery of such losses.

4 (3) These losses are incidental to a claim in the

5 year 2000 civil action based on personal injury

6 caused by a year 2000 failure.

7 (4) These losses are incidental to a claim in the

8 year 2000 civil action based on damage to tangible

9 property caused by a year 2000 failure.

10 (b) TREATMENT OF ECONOMIC LOSSES.—Economic

11 losses shall be recoverable in a year 2000 civil action only

12 if applicable Federal law, or applicable State law embodied

13 in statute or controlling judicial precedent as of January

14 1, 1999, permits the recovery of such losses in the action.

15 SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.

16 (a) IN GENERAL.—A director, officer, or trustee of

17 a business or other organization (including a corporation,

18 unincorporated association, partnership, or non-profit or19 ganization) shall not be personally liable as to any year

20 2000 claim in the capacity of that individual as a director

21 or officer of the business or organization for an aggregate

22 amount greater than the greater of—

23 (1) $100,000; or

24 (2) the amount of cash compensation received

25 by the director or officer from the business or orga-
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1 nization during the 12-month period immediately

2 preceding the act or omission for which liability was

3 imposed.

4 (b) EXCEPTION.—The limitation in subsection (a)

5 shall not apply to any claim in which it is found by clear

6 and convincing evidence that the director or officer, with

7 specific intent to cause harm to the plaintiff—

8 (1) intentionally made materially misleading

9 statements relied upon by the plaintiff regarding any

10 actual or potential year 2000 problem; or

11 (2) intentionally withheld material information

12 regarding any actual or potential year 2000 problem

13 of the business or organization that the director or

14 officer had a duty to disclose.

15 (c) RULE OF CONSTRUCTION.—Nothing in this sec16 tion shall be deemed to impose, or to permit the imposition

17 of, personal liability on any director, officer, or trustee in

18 excess of the aggregate amount of liability to which such

19 director, officer, or trustee would be subject under applica20 ble State law in existence on January 1, 1999 (including

21 any charter or bylaw authorized by that State law).
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1 TITLE IV—CLASS ACTIONS

2 INVOLVING YEAR 2000 CLAIMS

3 SEC. 401. MINIMUM INJURY REQUIREMENT.

4 (a) IN GENERAL.—In any action involving a year

5 2000 claim that a product or service is defective, the ac6 tion may be maintained as a class action in Federal or

7 State court with respect to that claim only if—

8 (1) the claim satisfies all other prerequisites es9 tablished by applicable Federal or State law; and

10 (2) the court finds that the alleged defect in the

11 product or service was a material defect with respect

12 to a majority of the members of the class.

13 (b) DETERMINATION BY COURT.—

14 (1) IN GENERAL.—As soon as practicable after

15 the commencement of an action involving a year

16 2000 claim that a product or service is defective and

17 that is brought as a class action, the court shall de18 termine by order whether the requirement stated in

19 paragraph (1) is satisfied.

20 (2) ORDERS.—An order under this subsection

21 may be—

22 (A) conditional; and

23 (B) altered or amended before the decision

24 on the merits.
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1 SEC. 402. NOTIFICATION.

2 (a) NOTICE BY MAIL.—

3 (1) IN GENERAL.—In any year 2000 civil action

4 that is maintained as a class action, the court, in ad5 dition to any other notice required by applicable

6 Federal or State law, shall direct notice of the action

7 to each member of the class by United States mail,

8 return receipt requested.

9 (2) EXCLUSION OF CERTAIN PERSONS.—Any

10 person whose actual receipt of the notice is not

11 verified by the court or by counsel for 1 of the par12 ties shall be excluded from the class unless that per13 son informs the court in writing, on a date no later

14 than the commencement of trial or entry of judg15 ment, that the person wishes to join the class.

16 (b) CONTENTS OF NOTICE.—In addition to any infor17 mation required by applicable Federal or State law, the

18 notice described in this subsection shall—

19 (1) concisely and clearly describe the nature of

20 the action;

21 (2) identify the jurisdiction whose law will gov22 ern the action;

23 (3) identify any potential claims that class

24 counsel chose not to pursue so that the action would

25 satisfy class certification requirements; and
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1 (4) describe the fee arrangement of class coun2 sel.

3 SEC. 403. DISMISSAL PRIOR TO CERTIFICATION.

4 Before determining whether to certify a class in a

5 year 2000 civil action, the court may decide a motion to

6 dismiss or for summary judgment made by any party if

7 the court concludes that decision will—

8 (1) promote the fair and efficient adjudication

9 of the controversy; and

10 (2) not cause undue delay.

11 SEC. 404. FEDERAL JURISDICTION IN CLASS ACTIONS IN12 VOLVING YEAR 2000 CLAIMS.

13 (a) DIVERSITY JURISDICTION.—Section 1332 of title

14 28, United States Code, is amended—

15 (1) by redesignating subsections (b), (c), and

16 (d) as subsections (c), (d), and (e), respectively; and

17 (2) by inserting after subsection (a) the fol18 lowing:

19 ‘‘(b)(1)(A) The district courts shall, regardless of the

20 sum or value of the matter in controversy therein, have

21 original jurisdiction of any year 2000 civil action which

22 is brought as a class action and in which—

23 ‘‘(i) any member of a proposed plaintiff class is

24 a citizen of a State different from any defendant;
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1 ‘‘(ii) any member of a proposed plaintiff class

2 is a foreign state or a citizen or subject of a foreign

3 state and any defendant is a citizen of a State; or

4 ‘‘(iii) any member of a proposed plaintiff class

5 is a citizen of a State and any defendant is a citizen

6 or subject of a foreign state.

7 ‘‘(B) As used in this paragraph, the term ‘foreign

8 state’ has the meaning given that term in section 1603(a).

9 ‘‘(2)(A) The district court may, in its discretion, ab10 stain from hearing such action in a year 2000 civil action

11 described in paragraph (1) in which—

12 ‘‘(i) the substantial majority of the members of

13 all proposed plaintiff classes are citizens of a single

14 State of which the primary defendants are also citi15 zens; and

16 ‘‘(ii) the claims asserted will be governed pri17 marily by the laws of that State, the district court

18 should abstain from hearing such action.

19 ‘‘(B) The district court may, in its discretion, abstain

20 from hearing such action in a year 2000 civil action de21 scribed in paragraph (1) in which—

22 ‘‘(i) all matters in controversy asserted by the

23 individual members of all proposed plaintiff classes

24 in the aggregate do not exceed the sum or value of

25 $1,000,000, exclusive of interest and costs;
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1 ‘‘(ii) the number of members of all proposed

2 plaintiff classes in the aggregate is less than 100; or

3 ‘‘(iii) the primary defendants are States, State

4 officials, or other governmental entities against

5 whom the district court may be foreclosed from or6 dering relief, the district court may, in its discretion,

7 abstain from hearing such action.

8 ‘‘(3)(A) Paragraph (1) and section 1453 shall not

9 apply to any class action that is brought under the Securi10 ties Act of 1933 (15 U.S.C. 77a et seq.).

11 ‘‘(B) Paragraph (1) and section 1453 shall not apply

12 to a class action described in subparagraph (C) that is

13 based upon the statutory or common law of the State in

14 which the issuer concerned is incorporated (in the case of

15 a corporation) or organized (in the case of any other enti16 ty).

17 ‘‘(C) A class action is described in this subparagraph

18 if it involves—

19 ‘‘(i) the purchase or sale of securities by an

20 issuer or an affiliate of an issuer exclusively from or

21 to holders of equity securities of the issuer; or

22 ‘‘(ii) any recommendation, position, or other

23 communication with respect to the sale of securities

24 of an issuer that—
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1 ‘‘(I) is made by or on behalf of the issuer

2 or an affiliate of the issuer to holders of equity

3 securities of the issuer; and

4 ‘‘(II) concerns decisions of those equity

5 holders with respect to voting their securities,

6 acting in response to a tender or exchange

7 offer, or exercising dissenters’ or appraisal

8 rights.

9 ‘‘(D) As used in this paragraph, the terms ‘issuer’,

10 ‘security’, and ‘equity security’ have the meanings given

11 those terms in section 3 of the Securities Exchange Act

12 of 1934 (15 U.S.C. 78c).’’.

13 (b) CONFORMING AMENDMENT.—Section 1332(c) of

14 title 281 United States Code, (as redesignated by this sec15 tion) is amended by inserting after ‘‘pursuant to sub16 section (a)’’ after ‘‘Federal courts’’.

17 (c) DETERMINATION OF DIVERSITY.—Section 1332,

18 as amended by this section, is further amended by adding

19 at the end the following:

20 ‘‘(f) For purposes of subsection (b), a member of a

21 proposed class shall be deemed to be a citizen of a State

22 different from a defendant corporation only if that mem23 ber is a citizen of a State different from all States of which

24 the defendant corporation is deemed a citizen.’’.
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1 (d) REMOVAL OF CLASS ACTIONS.—Chapter 89 of

2 title 28, United States Code is amended by adding at the

3 end the following:

4 ‘‘§ 1453. Removal of class actions

5 ‘‘(a) IN GENERAL.—A year 2000 civil action that is

6 brought as a class action may be removed to a district

7 court of the United States in accordance with this chapter,

8 except that such action may be removed—

9 ‘‘(1) by any defendant without the consent of

10 all defendants; or

11 ‘‘(2) by any plaintiff class member who is not

12 a named or representative class member of the ac13 tion for which removal is sought, without the con14 sent of all members of such class.

15 ‘‘(b) WHEN REMOVABLE.—This section shall apply

16 to any year 2000 civil action that is brought as a class

17 action before or after the entry of any order certifying a

18 class.

19 ‘‘(c) PROCEDURE FOR REMOVAL.—

20 ‘‘(1) IN GENERAL.—The provisions of section

21 1446(a) relating to a defendant removing a case

22 shall apply to a plaintiff removing a case under this

23 section.

24 ‘‘(2) APPLICATION.—With respect to the appli25 cation of section 1446(b), the requirement relating
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1 to the 30-day filing period shall be met if a plaintiff

2 class member who is not a named or representative

3 class member of the action for which removal is

4 sought files notice of removal within 30 days after

5 receipt by such class member, through service or

6 otherwise, of the initial written notice of the class

7 action provided at the trial court’s direction.’’.

8 (e) REMOVAL LIMITATIONS.—Section 1446(b) is

9 amended in the second undesignated paragraph—

10 (1) by inserting ‘‘, by exercising due diligence,’’

11 after ‘‘ascertained’’; and

12 (2) by striking ‘‘section 1332’’ and inserting

13 ‘‘section’’.

14 (f) TECHNICAL AND CONFORMING AMENDMENTS.—

15 The table of sections for chapter 89 of title 28, United

16 States Code, is amended by adding after the item relating

17 to section 1452 the following:

‘‘1453. Removal of class actions.’’.

18 (g) PROCEDURE AFTER REMOVAL.—Section 1447 of

19 title 28, United States Code, is amended by adding at the

20 end the following:

21 ‘‘(f)(1) If, after removal, the court determines that

22 no aspect of an action that is subject to its jurisdiction

23 solely under the provisions of section 1332(b) may be

24 maintained as a class action under Rule 23 of the Federal

25 Rules of Civil Procedure, the court shall strike the class
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1 allegations from the action and remand the action to the

2 State court.

3 ‘‘(2) Upon remand of the action, the period of limita4 tions for any claim that was asserted in the action on be5 half of any named or unnamed member of any proposed

6 class shall be deemed tolled to the full extent provided

7 under Federal law.’’.

8 (h) APPLICATION OF SUBSTANTIVE STATE LAW.—

9 Nothing in the amendments made by this section shall

10 alter the substantive law applicable to an action to which

11 such amendments apply.

12 TITLE V—EFFECTIVE DATE

13 SEC. 501. EFFECTIVE DATE.

14 This Act and the amendments made by this Act shall

15 take effect on January 1, 1999.

16 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

17 (a) SHORT TITLE.—This Act may be cited as the

18 ‘‘Year 2000 Fairness and Responsibility Act’’.

19 (b) TABLE OF CONTENTS.—The table of contents for

20 this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Findings, purposes, and scope.

Sec. 3. Definitions.

TITLE I—PRELITIGATION PROCEDURES FOR YEAR 2000 CIVIL

ACTIONS

Sec. 101. Pretrial notice.

Sec. 102. Alternative dispute resolution.

Sec. 103. Pleading requirements.

Sec. 104. Duty to mitigate damages.
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TITLE II—YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTS

Sec. 201. Contract preservation.

Sec. 202. Evidence of reasonable efforts and defenses.

Sec. 203. Contract damages.

TITLE III—YEAR 2000 CIVIL ACTIONS INVOLVING TORT AND OTHER

NONCONTRACTUAL CLAIMS

Sec. 301. Economic losses.

Sec. 302. Proportionate liability.

Sec. 303. State of mind and foreseeability.

Sec. 304. Reasonable efforts defense.

Sec. 305. Damages limitation.

Sec. 306. Liability of officers and directors.

TITLE IV—CLASS ACTIONS INVOLVING YEAR 2000 CLAIMS

Sec. 401. Minimum injury requirement.

Sec. 402. Notification.

Sec. 403. Dismissal prior to certification.

Sec. 404. Federal jurisdiction in class actions involving year 2000 claims.

TITLE V—EFFECTIVE DATE

Sec. 501. Effective date.

1 SEC. 2. FINDINGS, PURPOSES, AND SCOPE.

2 (a) FINDINGS.—Congress finds the following:

3 (1)(A) Many information technology systems, de4 vices, and programs—

5 (i) are not capable of recognizing certain

6 dates in 1999 and after December 31, 1999, and

7 will read dates in the year 2000 and thereafter

8 as if those dates represent the year 1900 or there9 after; or

10 (ii) will fail to process those dates.

11 (B) If not corrected, the problems described in

12 subparagraph (A) (referred to in this Act as ‘‘year

13 2000 computer date-change problems’’) and resulting

14 failures could incapacitate systems that are essential
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1 to the functioning of markets, commerce, consumer

2 products, utilities, Government, and safety and de3 fense systems, in the United States and throughout

4 the world.

5 (2) It is in the national interest that producers

6 and users of technology products concentrate their at7 tention and resources in the time remaining before

8 January 1, 2000, on assessing, fixing, testing, and de9 veloping contingency plans to address any and all

10 outstanding year 2000 computer date-change prob11 lems, so as to minimize possible disruptions associ12 ated with computer failures.

13 (3)(A) Because year 2000 computer date-change

14 problems may affect virtually all businesses and other

15 users of technology products to some degree, there is

16 a substantial likelihood that actual or potential year

17 2000 failures will prompt a significant volume of liti18 gation, much of it insubstantial.

19 (B) The litigation described in subparagraph (A)

20 would have a range of undesirable effects including

21 the following:

22 (i) It would threaten to waste technical and

23 financial resources that are better devoted to cur24 ing year 2000 computer date-change problems
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1 and ensuring that systems remain or become

2 operational.

3 (ii) It could threaten the network of valued

4 and trusted business and customer relationships

5 that are important to the effective functioning of

6 the national economy.

7 (iii) It would strain the legal system of the

8 United States, causing particular problems for

9 the small businesses and individuals who already

10 find that system inaccessible because of its com11 plexity and expense.

12 (iv) The delays, expense, uncertainties, loss

13 of control, adverse publicity, and animosities

14 that frequently accompany litigation of business

15 disputes could exacerbate the difficulties associ16 ated with the date change and work against the

17 successful resolution of those difficulties.

18 (v) Concern about the potential for liability

19 (in particular, concern about the substantial liti20 gation expense associated with defending against

21 even the most insubstantial lawsuits) is prompt22 ing many persons and businesses with technical

23 expertise to avoid projects aimed at curing year

24 2000 computer date-change problems.
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1 (b) PURPOSES.—Based upon the power contained in

2 article I, section 8, clause 3 of the Constitution of the

3 United States, the purposes of this Act are—

4 (1) to establish uniform legal standards that give

5 all businesses and users of technology products reason6 able incentives to solve year 2000 computer date7 change problems before they develop;

8 (2) to encourage the resolution of year 2000 com9 puter date-change disputes involving economic dam10 ages without recourse to unnecessary, time con11 suming, and wasteful litigation; and

12 (3) to lessen burdens on interstate commerce by

13 discouraging insubstantial lawsuits, while also pre14 serving the ability of individuals and businesses that

15 have suffered real injury to obtain complete relief.

16 (c) SCOPE.—Nothing in this Act affects any claim for

17 personal injury, including claims asserted by way of claim,

18 counterclaim, cross-claim, third-party claim, or otherwise

19 that arise out of an underlying action for personal injury.

20 SEC. 3. DEFINITIONS.

21 In this Act:

22 (1) COMPENSATORY DAMAGES.—The term ‘‘com23 pensatory damages’’ means damages that compensate

24 the injured party for the specific injury sustained.
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1 (2) CONTRACT.—The term ‘‘contract’’ means a

2 contract, tariff, license, or warranty.

3 (3) DEFENDANT.—The term ‘‘defendant’’ means

4 any person against whom a year 2000 claim is as5 serted.

6 (4) ECONOMIC LOSS.—The term ‘‘economic

7 loss’’—

8 (A) means any damages, other than dam9 ages arising out of personal injury or damage to

10 tangible property; and

11 (B) includes damages for—

12 (i) lost profits or sales;

13 (ii) business interruption;

14 (iii) losses indirectly suffered as a re15 sult of the defendant’s wrongful act or omis16 sion;

17 (iv) losses that arise because of the

18 claims of third parties;

19 (v) losses that are required to be plead20 ed as special damages; or

21 (vi) items defined as consequential

22 damages in the Uniform Commercial Code

23 or an applicable analogous State commer24 cial law.

25 (5) MATERIAL DEFECT.—
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1 (A) IN GENERAL.—The term ‘‘material de2 fect’’ means a defect in any item, whether tan3 gible or intangible, or in the provision of a serv4 ice, that substantially prevents the item or serv5 ice from operating or functioning as designed or

6 intended.

7 (B) EXCLUSIONS.—The term does not in8 clude any defect that—

9 (i) has an insignificant or de minimis

10 effect on the operation or functioning of an

11 item;

12 (ii) affects only a component of an

13 item that, as a whole, substantially operates

14 or functions as designed; or

15 (iii) has an insignificant or de mini16 mis effect on the efficacy of the service pro17 vided.

18 (6) PERSON.—The term ‘‘person’’ means any

19 natural person and any entity, organization, or en20 terprise, including any corporation, company (in21 cluding any joint stock company), association, part22 nership, trust, or governmental entity.

23 (7) PERSONAL INJURY.—
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1 (A) IN GENERAL.—The term ‘‘personal in2 jury’’ means any physical injury to a natural

3 person, including death of the person.

4 (B) EXCLUSIONS.—The term does not in5 clude mental suffering, emotional distress, or

6 similar elements of injury that do not constitute

7 physical harm to a natural person.

8 (8) PLAINTIFF.—The term ‘‘plaintiff’’ means

9 any person who asserts a year 2000 claim.

10 (9) PUNITIVE DAMAGES.—The term ‘‘punitive

11 damages’’ means damages, other than compensatory

12 damages, that, in whole or in part, are awarded

13 against any person—

14 (A) to punish that person; or

15 (B) to deter that person, or other persons,

16 from engaging in similar behavior.

17 (10) STATE.—The term ‘‘State’’ means any

18 State of the United States, the District of Columbia,

19 the Commonwealth of Puerto Rico, the Northern Mar20 iana Islands, the U.S. Virgin Islands, Guam, Amer21 ican Samoa, and any other territory or possession of

22 the United States, and any political subdivision

23 thereof.

24 (11) YEAR 2000 CIVIL ACTION.—The term ‘‘year

25 2000 civil action’’—
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1 (A) means any civil action of any kind

2 brought in any court under Federal, State, or

3 foreign law, in which—

4 (i) a year 2000 claim is asserted; or

5 (ii) any claim or defense is related, di6 rectly or indirectly, to an actual or poten7 tial year 2000 failure; and

8 (B) does not include any action brought by

9 a Federal, State, or other public entity, agency,

10 or authority acting in a regulatory, supervisory,

11 or enforcement capacity.

12 (12) YEAR 2000 CLAIM.—The term ‘‘year 2000

13 claim’’ means any claim or cause of action of any

14 kind, whether asserted by way of claim, counterclaim,

15 cross-claim, third-party claim, or otherwise, in which

16 the plaintiff’s alleged loss or harm resulted, directly

17 or indirectly, from an actual or potential year 2000

18 failure.

19 (13) YEAR 2000 FAILURE.—The term ‘‘year 2000

20 failure’’ means any failure by any device or system

21 (including any computer system and any microchip,

22 semiconductor device, or integrated circuit embedded

23 in another device or product), or any software,

24 firmware, or other set or collection of processing in25 structions, however constructed, in processing, calcu-
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1 lating, comparing, sequencing, displaying, storing,

2 transmitting, or receiving date-related data,

3 including—

4 (A) the failure to accurately administer or

5 account for transitions or comparisons from,

6 into, and between the 20th and 21st centuries,

7 and between 1999 and 2000; or

8 (B) the failure to recognize or accurately

9 process any specific date, and the failure accu10 rately to account for the status of the year 2000

11 as a leap year.

12 TITLE I—PRELITIGATION PROCE13 DURES FOR YEAR 2000 CIVIL

14 ACTIONS

15 SEC. 101. PRETRIAL NOTICE.

16 (a) NOTIFICATION PERIOD.—Before filing a year 2000

17 claim, except an action for a claim that seeks only injunc18 tive relief, a prospective plaintiff shall be required to pro19 vide to each prospective defendant a written notice that

20 identifies and describes with particularity—

21 (1) any manifestation of a material defect al22 leged to have caused injury;

23 (2) the injury allegedly suffered or reasonably

24 risked by the prospective plaintiff; and
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1 (3) the relief or action sought by the prospective

2 plaintiff.

3 (b) RESPONSE TO NOTICE.—Not later than 30 days

4 after receipt of the notice specified in subsection (a), each

5 prospective defendant shall provide each prospective plain6 tiff a written statement that—

7 (1) acknowledges receipt of the notice; and

8 (2) describes any actions that the defendant will

9 take, or has taken, to address the defect or injury

10 identified by the prospective plaintiff in the notice.

11 (c) COMMENCEMENT OF ACTION.—Except as provided

12 in subsections (d) and (f), a prospective plaintiff shall not

13 file a year 2000 claim in Federal or State court until the

14 expiration of the 90-day period beginning on the date on

15 which the prospective plaintiff provides notice under para16 graph (1).

17 (d) FAILURE TO RESPOND.—If a prospective defend18 ant fails to respond to a notice provided under subsection

19 (d) during the 30-day period prescribed in subsection (b)

20 or does not include in the response a description of actions

21 referred to in subsection (b)(2)—

22 (1) the 90-day waiting period identified in sub23 section (c) shall terminate at the expiration of the 30-

24 day period specified in subsection (b) with respect to

25 that prospective defendant; and
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1 (2) the prospective plaintiff may commence a

2 year 2000 civil action against such prospective de3 fendant immediately upon the termination of that

4 waiting period.

5 (e) FAILURE TO PROVIDE NOTICE.—

6 (1) IN GENERAL.—Subject to subsections (d) and

7 (f), a defendant may treat a complaint filed by the

8 plaintiff as a notice required under subsection (a) by

9 so informing the court and the plaintiff if the defend10 ant determines that a plaintiff has commenced a year

11 2000 civil action—

12 (A) without providing the notice specified

13 in subsection (a); or

14 (B) before the expiration of the waiting pe15 riod specified in subsection (c).

16 (2) STAY.—If a defendant elects under para17 graph (1) to treat a complaint as a notice—

18 (A) the court shall stay all discovery and

19 other proceedings in the action for a period, as

20 specified in subsection (c), beginning on the date

21 of filing of the complaint; and

22 (B) the time for filing answers and all other

23 pleadings shall be tolled during that period.

24 (f) EFFECT OF CONTRACTUAL WAITING PERIODS.—In

25 any case in which a contract requires notice of nonperform-
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1 ance and provides for a period of delay before the initiation

2 of suit for breach or repudiation of contract, the contractual

3 period of delay controls and shall apply in lieu of the other4 wise applicable period specified in subsections (c) and (e).

5 (g) SANCTION FOR FRIVOLOUS INVOCATION OF THE

6 STAY PROVISION.—If a defendant acts under subsection (e)

7 to stay an action, and the court subsequently finds that the

8 assertion by the defendant that the action is a year 2000

9 civil action was frivolous and made for the purpose of caus10 ing unnecessary delay, the court may impose a sanction,

11 including an order to make payments to opposing parties

12 in accordance with Rule 11 of the Federal Rules of Civil

13 Procedure or applicable State rules of procedures.

14 (h) COMPUTATION OF TIME.—For purposes of this sec15 tion, the rules regarding computation of time shall be con16 strued in accordance with applicable Federal or State rules

17 of civil procedure.

18 (i) SINGLE PERIOD.—In any claim, action, or

19 proceeding—

20 (1) stating a year 2000 claim subject to the pro21 visions of subsection (c)(2) regarding commencement

22 of actions applies; or

23 (2) to which subsection (e)(2) regarding stays

24 applies;
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1 only 1 waiting or stay period, not exceeding 90 days shall

2 be accorded to the parties.

3 (j) APPLICABILITY OF STATUTES OF LIMITATIONS.—

4 Any applicable statute of limitations shall toll during the

5 period during which a claimant has filed notice under sub6 section (a).

7 SEC. 102. ALTERNATIVE DISPUTE RESOLUTION.

8 (a) REQUESTS MADE DURING NOTIFICATION PE9 RIOD.—At any time during the 90-day notification period

10 under section 101(a), either party may request the other

11 party to use alternative dispute resolution. If, based upon

12 that request, the parties enter into an agreement to use al13 ternative dispute resolution, the parties may also agree to

14 an extension of that 90-day period.

15 (b) REQUEST MADE AFTER NOTIFICATION PERIOD.—

16 At any time after expiration of the 90-day notification pe17 riod under section 101(a), whether before or after the filing

18 of a complaint, either party may request the other party

19 to use alternative dispute resolution.

20 (c) PAYMENT DATE.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2), if a dispute that is the subject of the com23 plaint or responsive pleading is resolved through al24 ternative dispute resolution as provided in subsection

25 (a) or (b)—
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1 (A) the defendant shall pay any amount of

2 funds that the defendant is required to pay the

3 plaintiff under the settlement not later than 30

4 days after the date on which the parties settle the

5 dispute; and

6 (B) all other terms achieved through the res7 olution shall be implemented as promptly as pos8 sible based upon the agreement of the parties.

9 (2) EXCEPTIONS.—The 30-day period prescribed

10 in paragraph (1) shall not apply if—

11 (A) the parties engaged in alternative dis12 pute resolution under this section agree to a dif13 ferent period of time; or

14 (B) a different period of time is established

15 by contract between the parties.

16 SEC. 103. PLEADING REQUIREMENTS.

17 (a) NATURE AND AMOUNT OF DAMAGES.—In any year

18 2000 civil action in which a plaintiff seeks an award of

19 money damages, the complaint shall state with particu20 larity with regard to each year 2000 claim—

21 (1) the nature and amount of each element of

22 damages; and

23 (2) the factual basis for the calculation of the

24 damages.
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1 (b) MATERIAL DEFECTS.—In any year 2000 civil ac2 tion in which the plaintiff alleges that a product or service

3 was defective, the complaint shall, with respect to each year

4 2000 claim—

5 (1) identify with particularity the manifesta6 tions of the material defects; and

7 (2) state with particularity the facts supporting

8 the conclusion that the defects were material.

9 (c) REQUIRED STATE OF MIND.—In any year 2000

10 civil action in which a year 2000 claim is asserted with

11 respect to which the plaintiff may prevail only on proof

12 that the defendant acted with a particular state of mind,

13 the complaint shall, with respect to each element of the

14 claim, state in detail the facts giving rise to a strong infer15 ence that the defendant acted with the required state of

16 mind.

17 (d) MOTION TO DISMISS; STAY OF DISCOVERY.—

18 (1) DISMISSAL FOR FAILURE TO MEET PLEADING

19 REQUIREMENTS.—In any year 2000 civil action, the

20 court shall, on the motion of any defendant, dismiss

21 without prejudice any year 2000 claim asserted in the

22 complaint if any of the requirements under subsection

23 (a), (b), or (c) is not met with respect to the claim.

24 (2) STAY OF DISCOVERY.—In any year 2000

25 civil action, all discovery and other proceedings shall
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1 be stayed during the pendency of any motion to dis2 miss, unless the court finds upon the motion of any

3 party that particularized discovery is necessary to

4 preserve evidence or prevent undue prejudice to that

5 party.

6 (3) PRESERVATION OF EVIDENCE.—

7 (A) IN GENERAL.—

8 (i) TREATMENT OF EVIDENCE.—Dur9 ing the pendency of any stay of discovery

10 entered under this paragraph, unless other11 wise ordered by the court, any party to the

12 action shall treat the items described in

13 clause (ii) as if those items were a subject

14 of a continuing request for production of

15 documents from an opposing party under

16 applicable Federal or State rules of civil

17 procedure.

18 (ii) ITEMS.—The items described in

19 this clause are all documents, data compila20 tions (including electronically stored or re21 corded data), and tangible objects that—

22 (I) are in the custody or control of

23 the party described in clause (i); and

24 (II) relevant to the allegations.
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1 (B) SANCTION FOR WILLFUL VIOLATION.—A

2 party aggrieved by the willful failure of an op3 posing party to comply with subclause (A) may

4 apply to the court for an order awarding appro5 priate sanctions.

6 SEC. 104. DUTY TO MITIGATE DAMAGES.

7 Damages awarded for any year 2000 claim described

8 in subsection (a) shall exclude any amount that the plaintiff

9 reasonably could have avoided in light of any disclosure or

10 information with respect to which the plaintiff was, or rea11 sonably should have been, aware.

12 TITLE II—YEAR 2000 CIVIL AC13 TIONS INVOLVING CON14 TRACTS

15 SEC. 201. CONTRACT PRESERVATION.

16 (a) IN GENERAL.—Subject to subsection (b), in any

17 action in which a year 2000 claim is advanced, in resolving

18 that claim all written contractual terms, including limita19 tions or exclusions of liability or disclaimers of warranty,

20 shall be strictly enforced, unless the enforcement of such

21 terms would manifestly and directly contravene applicable

22 State law embodied in a specific statute specifically ad23 dressing that term as of January 1, 1999.

24 (b) INTERPRETATION OF CONTRACT.—In any case in

25 which a contract under subsection (a) is silent as to a par-
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1 ticular issue, the interpretation of the contract as to that

2 issue shall be determined by applicable law in effect at the

3 time that the contract was entered into.

4 SEC. 202. EVIDENCE OF REASONABLE EFFORTS AND DE5 FENSES.

6 (a) REASONABLE EFFORTS.—In any action in which

7 a year 2000 claim is advanced and in which a breach of

8 contract or related claim is alleged, in the resolution of that

9 claim, in addition to any other rights provided by applica10 ble law, the party against whom the claim of breach is as11 serted shall be allowed in evidence, to offer evidence that

12 the implementation of the contract by that party, or the

13 efforts made by that party to implement the contract, were

14 reasonable in light of the circumstances.

15 (b) IMPOSSIBILITY OR COMMERCIAL IMPRAC16 TICABILITY.—

17 (1) IN GENERAL.—Notwithstanding any other

18 provision of law, in any action in which a year 2000

19 claim is advanced and in which a breach of contract

20 or related claim is alleged, in resolving that claim ap21 plicability of the doctrines of impossibility and com22 mercial impracticability shall be determined by ap23 plicable law in existence on January 1, 1999.

24 (2) RULE OF CONSTRUCTION.—Nothing in this

25 Act shall be construed as limiting or impairing a
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1 party’s right to assert defenses based upon the doc2 trines referred to in paragraph (1).

3 SEC. 203. CONTRACT DAMAGES.

4 In any action in which a year 2000 claim is advanced

5 and that involves a breach of contract, warranty, or related

6 claim, in resolving that claim the court shall not award

7 any damages—

8 (1) unless those damages are provided for by the

9 express terms of the contract; or

10 (2) if the contract is silent on those damages, by

11 operation of the applicable Federal or State law that

12 governed interpretation of the contract at the time the

13 contract was entered into.

14 TITLE III—YEAR 2000 CIVIL AC15 TIONS INVOLVING TORT AND

16 OTHER NONCONTRACTUAL

17 CLAIMS

18 SEC. 301. ECONOMIC LOSSES.

19 (a) IN GENERAL.—Subject to subsection (b), a party

20 to a year 2000 civil action may not recover economic losses

21 for a year 2000 claim based on tort unless the party is able

22 to show that at least 1 of the following circumstances exists:

23 (1) The recovery of those losses is provided for in

24 the contract to which the party seeking to recover

25 those losses is a party.
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1 (2) If the contract is silent on those losses, and

2 the application of the applicable Federal or State law

3 that governed interpretation of the contract at the

4 time the contract was entered into would allow recov5 ery of those losses.

6 (3) Those losses are incidental to a claim in the

7 year 2000 civil action based on personal injury

8 caused by a year 2000 failure.

9 (4) Those losses are incidental to a claim in the

10 year 2000 civil action based on damage to tangible

11 property caused by a year 2000 failure.

12 (b) TREATMENT OF ECONOMIC LOSSES.—Economic

13 losses shall be recoverable in a year 2000 civil action only

14 if applicable Federal law, or applicable State law embodied

15 in statute or controlling judicial precedent as of January

16 1, 1999, permits the recovery of those losses in the action.

17 SEC. 302. PROPORTIONATE LIABILITY.

18 (a) IN GENERAL.—Except as provided in subsection

19 (c), a person against whom a final judgment is entered on

20 a year 2000 claim shall be liable solely for the portion of

21 the judgment that corresponds to the percentage of responsi22 bility of that person, as determined under subsection (b).

23 (b) DETERMINATION OF RESPONSIBILITY.—

24 (1) IN GENERAL.—With respect to any year 2000

25 claim, the court shall instruct the jury to answer spe-
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1 cial interrogatories, or if there is no jury, make find2 ings, with respect to each defendant and plaintiff,

3 and each of the other persons claimed by any of the

4 parties to have caused or contributed to the loss in5 curred by the plaintiff, including any person who has

6 entered into a settlement with the plaintiff, con7 cerning the percentage of responsibility of that person,

8 measured as a percentage of the total fault of all per9 sons who caused or contributed to the total loss in10 curred by the plaintiff.

11 (2) CONTENTS OF SPECIAL INTERROGATORIES OR

12 FINDINGS.—Each response to an interrogatory, or

13 finding, as appropriate, under paragraph (1) shall

14 specify—

15 (A) the total amount of damages that the

16 plaintiff is entitled to recover; and

17 (B) the percentage of responsibility of each

18 person found to have caused or contributed to the

19 loss incurred by the plaintiff.

20 (3) FACTORS FOR CONSIDERATION.—In deter21 mining the percentage of responsibility under this

22 paragraph, the trier of fact shall consider—

23 (A) the nature of the conduct of each person

24 alleged to have caused or contributed to the loss

25 incurred by the plaintiff; and
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1 (B) the nature and extent of the causal rela2 tionship between the conduct of each such person

3 and the damages incurred by the plaintiff.

4 (4) NONDISCLOSURE TO JURY.—The standard

5 for allocation of damages under paragraph (1) shall

6 not be disclosed to members of the jury.

7 (c) EXCEPTION.—This section does not apply if the

8 plaintiff is an individual whose net worth is less than

9 $200,000 and the plantiff’s damages were more than 10 per10 cent of his or her net worth. In such a case, the proportion11 ally liable defendants are jointly and severally liable for

12 any uncollectable amount.

13 SEC. 303. STATE OF MIND AND FORESEEABILITY.

14 (a) DEFENDANT’S STATE OF MIND AS TO YEAR 2000

15 FAILURE.—With respect to any year 2000 claim for money

16 damages in which the defendant’s actual or constructive

17 awareness of an actual or potential year 2000 failure is

18 an element of the claim under applicable law, the defendant

19 shall not be liable unless the plaintiff, in addition to estab20 lishing all other requisite elements of the claim, proves by

21 clear and convincing evidence that the defendant actually

22 knew, or recklessly disregarded a known and substantial

23 risk, that the failure would occur.

24 (b) INJURY TO PLAINTIFF.—With respect to any year

25 2000 claim for money damages in which the defendant’s
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1 actual or constructive awareness of actual or potential

2 harm to plaintiff is greater than the standard for negligence

3 in subsection (c) and is an element of the claim under ap4 plicable law, the defendant shall not be liable unless the

5 plaintiff, in addition to establishing all other requisite ele6 ments of the claim, proves by clear and convincing evidence

7 that the defendant actually knew, or recklessly disregarded

8 a known and substantial risk, that plaintiff would suffer

9 that harm.

10 (c) NEGLIGENCE.—With respect to any year 2000

11 claim for money damages, the defendant shall not be liable

12 unless the plaintiff establishes by clear and convincing evi13 dence, in addition to all other requisite elements of the

14 claim, that the defendant knew or should have known that

15 the actions of the defendant created an unreasonable risk

16 of harm to the plaintiff.

17 (d) PRESERVATION OF EXISTING LAW.—Nothing in

18 subsection (a), (b), or (c) shall be deemed to create any year

19 2000 claim or to relieve the plaintiff in any year 2000 civil

20 action of the obligation of that plaintiff to establish any

21 element of the cause of action of that plaintiff under appli22 cable law.

23 SEC. 304. REASONABLE EFFORTS DEFENSE.

24 Except for breach or repudiation of contract claims,

25 or claims involving fraud or intentional tort, with respect
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1 to any year 2000 claim in which the plaintiff is seeking

2 money damages—

3 (1) the fact that a year 2000 failure occurred in

4 an entity, facility, system, product, or component that

5 was within the control of the party against whom the

6 claim is asserted shall not constitute the sole basis for

7 recovery; and

8 (2) the party against whom the claim is asserted

9 shall be entitled to establish, as a complete defense to

10 the claim, that all of the actions of the party were

11 reasonable under the circumstances to prevent the

12 year 2000 failure from occurring or from causing the

13 damages upon which the claim is based.

14 SEC. 305. DAMAGES LIMITATION.

15 (a) IN GENERAL.—With respect to any year 2000

16 claim in which punitive damages may be awarded under

17 applicable law and in which a defendant is found liable

18 for punitive damages, the amount of punitive damages that

19 may be awarded to a claimant shall not exceed the greater

20 of—

21 (1) 3 times the amount awarded to the claimant

22 for compensatory damages; or

23 (2) $250,000.

24 (b) SPECIAL RULE.—

25 (1) RULE.—
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1 (A) IN GENERAL.—Notwithstanding sub2 section (a), as to any year 2000 claim in which

3 the defendant is found liable for punitive dam4 ages and the defendant is a person described in

5 subparagraph (B), the amount of punitive dam6 ages shall not exceed the lesser of—

7 (i) 3 times the amount awarded to the

8 claimant for compensatory damages; or

9 (ii) $250,000.

10 (B) DESCRIPTION OF PERSONS.—A person

11 described in this clause is—

12 (i) an individual—

13 (I) whose net worth does not ex14 ceed $500,000; or

15 (II) who is an owner of an unin16 corporated business that has fewer than

17 25 full-time employees; or

18 (ii) any partnership, corporation, asso19 ciation, unit of local government, or organi20 zation that has fewer than 25 full-time em21 ployees.

22 (2) APPLICABILITY.—For purposes of deter23 mining the applicability of this subsection to a cor24 poration, the number of employees of a subsidiary of

25 a wholly owned corporation shall include all employ-
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1 ees of a parent corporation or any subsidiary of that

2 parent corporation.

3 (c) APPLICATION OF LIMITATIONS BY THE COURT.—

4 The limitations contained in subsection (a) or (b) shall be

5 applied by the court and shall not be disclosed to the jury.

6 SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.

7 (a) IN GENERAL.—A director, officer, or trustee of a

8 business or other organization (including a corporation,

9 unincorporated association, partnership, or nonprofit orga10 nization) shall not be personally liable as to any year 2000

11 claim in the capacity of that individual as a director or

12 officer of the business or organization for an aggregate

13 amount greater than the greater of—

14 (1) $100,000; or

15 (2) the amount of cash compensation received by

16 the director or officer from the business or organiza17 tion during the 12-month period immediately pre18 ceding the act or omission for which liability was im19 posed.

20 (b) EXCEPTION.—The limitation in subsection (a)

21 shall not apply to any claim in which it is found by clear

22 and convincing evidence that the director or officer, with

23 specific intent to cause harm to the plaintiff—
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1 (1) intentionally made materially misleading

2 statements relied upon by the plaintiff regarding any

3 actual or potential year 2000 problem; or

4 (2) intentionally withheld material information

5 regarding any actual or potential year 2000 problem

6 of the business or organization that the director or of7 ficer had a duty to disclose.

8 (c) RULE OF CONSTRUCTION.—Nothing in this section

9 shall be deemed to impose, or to permit the imposition of,

10 personal liability on any director, officer, or trustee in ex11 cess of the aggregate amount of liability to which such direc12 tor, officer, or trustee would be subject under applicable

13 State law in existence on January 1, 1999 (including any

14 charter or bylaw authorized by that State law).

15 TITLE IV—CLASS ACTIONS

16 INVOLVING YEAR 2000 CLAIMS

17 SEC. 401. MINIMUM INJURY REQUIREMENT.

18 (a) IN GENERAL.—In any action involving a year

19 2000 claim that a product or service is defective, the action

20 may be maintained as a class action in Federal or State

21 court with respect to that claim only if—

22 (1) the claim satisfies all other prerequisites es23 tablished by applicable Federal or State law; and
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1 (2) the court finds that the alleged defect in the

2 product or service was a material defect with respect

3 to a majority of the members of the class.

4 (b) DETERMINATION BY COURT.—

5 (1) IN GENERAL.—As soon as practicable after

6 the commencement of an action involving a year 2000

7 claim that a product or service is defective and that

8 is brought as a class action, the court shall determine

9 by order whether the requirement stated in paragraph

10 (1) is satisfied.

11 (2) ORDERS.—An order under this subsection

12 may be—

13 (A) conditional; and

14 (B) altered or amended before the decision

15 on the merits.

16 SEC. 402. NOTIFICATION.

17 (a) NOTICE BY MAIL.—

18 (1) IN GENERAL.—In any year 2000 civil action

19 that is maintained as a class action, the court, in ad20 dition to any other notice required by applicable Fed21 eral or State law, shall direct notice of the action to

22 each member of the class by United States mail, re23 turn receipt requested.

24 (2) EXCLUSION OF CERTAIN PERSONS.—Any

25 person whose actual receipt of the notice is not
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1 verified by the court or by counsel for 1 of the parties

2 shall be excluded from the class unless that person in3 forms the court in writing, on a date no later than

4 the commencement of trial or entry of judgment, that

5 the person wishes to join the class.

6 (b) CONTENTS OF NOTICE.—In addition to any infor7 mation required by applicable Federal or State law, the no8 tice described in this subsection shall—

9 (1) concisely and clearly describe the nature of

10 the action;

11 (2) identify the jurisdiction whose law will gov12 ern the action;

13 (3) identify any potential claims that class coun14 sel chose not to pursue so that the action would sat15 isfy class certification requirements; and

16 (4) describe the fee arrangement of class counsel.

17 SEC. 403. DISMISSAL PRIOR TO CERTIFICATION.

18 Before determining whether to certify a class in a year

19 2000 civil action, the court may decide a motion to dismiss

20 or for summary judgment made by any party if the court

21 concludes that decision would—

22 (1) promote the fair and efficient adjudication of

23 the controversy; and

24 (2) not cause undue delay.
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1 SEC. 404. FEDERAL JURISDICTION IN CLASS ACTIONS IN2 VOLVING YEAR 2000 CLAIMS.

3 (a) DIVERSITY JURISDICTION.—Section 1332 of title

4 28, United States Code, is amended—

5 (1) by redesignating subsections (b), (c), and (d)

6 as subsections (c), (d), and (e), respectively; and

7 (2) by inserting after subsection (a) the fol8 lowing:

9 ‘‘(b)(1)(A) The district courts shall, regardless of the

10 sum or value of the matter in controversy therein, have

11 original jurisdiction of any year 2000 civil action which

12 is brought as a class action and in which—

13 ‘‘(i) any member of a proposed plaintiff class is

14 a citizen of a State different from any defendant;

15 ‘‘(ii) any member of a proposed plaintiff class is

16 a foreign state, or a citizen or subject of a foreign

17 state, and any defendant is a citizen of a State; or

18 ‘‘(iii) any member of a proposed plaintiff class

19 is a citizen of a State and any defendant is a citizen

20 or subject of a foreign state.

21 ‘‘(B) As used in this paragraph, the term ‘foreign state’

22 has the meaning given that term in section 1603(a).

23 ‘‘(2)(A) The district court may, in its discretion, ab24 stain from hearing such action in a year 2000 civil action

25 described in paragraph (1) in which—
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1 ‘‘(i) the substantial majority of the members of

2 all proposed plaintiff classes are citizens of a single

3 State of which the primary defendants are also citi4 zens; and

5 ‘‘(ii) the claims asserted will be governed pri6 marily by the laws of that State, the district court

7 should abstain from hearing such action.

8 ‘‘(B) The district court may, in its discretion, abstain

9 from hearing such action in a year 2000 civil action de10 scribed in paragraph (1) in which—

11 ‘‘(i) all matters in controversy asserted by the

12 individual members of all proposed plaintiff classes

13 in the aggregate do not exceed the sum or value of

14 $1,000,000, exclusive of interest and costs;

15 ‘‘(ii) the number of members of all proposed

16 plaintiff classes in the aggregate is less than 100; or

17 ‘‘(iii) the primary defendants are States, State

18 officials, or other governmental entities against whom

19 the district court may be foreclosed from ordering re20 lief, the district court may, in its discretion, abstain

21 from hearing such action.

22 ‘‘(3)(A) Paragraph (1) and section 1453 shall not

23 apply to any class action that is brought under the Securi24 ties Act of 1933 (15 U.S.C. 77a et seq.).
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1 ‘‘(B) Paragraph (1) and section 1453 shall not apply

2 to a class action described in subparagraph (C) that is

3 based upon the statutory or common law of the State in

4 which the issuer concerned is incorporated (in the case of

5 a corporation) or organized (in the case of any other enti6 ty).

7 ‘‘(C) A class action is described in this subparagraph

8 if it involves—

9 ‘‘(i) the purchase or sale of securities by an

10 issuer or an affiliate of an issuer exclusively from or

11 to holders of equity securities of the issuer; or

12 ‘‘(ii) any recommendation, position, or other

13 communication with respect to the sale of securities of

14 an issuer that—

15 ‘‘(I) is made by or on behalf of the issuer

16 or an affiliate of the issuer to holders of equity

17 securities of the issuer; and

18 ‘‘(II) concerns decisions of those equity hold19 ers with respect to voting their securities, acting

20 in response to a tender or exchange offer, or exer21 cising dissenters’ or appraisal rights.

22 ‘‘(D) As used in this paragraph, the terms ‘issuer’, ‘se23 curity’, and ‘equity security’ have the meanings given those

24 terms in section 3 of the Securities Exchange Act of 1934

25 (15 U.S.C. 78c).’’.
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1 (b) CONFORMING AMENDMENT.—Section 1332(c) of

2 title 28, United States Code (as redesignated by this sec3 tion), is amended by inserting ‘‘pursuant to subsection (a)’’

4 after ‘‘Federal courts’’.

5 (c) DETERMINATION OF DIVERSITY.—Section 1332, as

6 amended by this section, is further amended by adding at

7 the end the following:

8 ‘‘(f) For purposes of subsection (b), a member of a pro9 posed class shall be deemed to be a citizen of a State dif10 ferent from a defendant corporation only if that member

11 is a citizen of a State different from all States of which

12 the defendant corporation is deemed a citizen.’’.

13 (d) REMOVAL OF CLASS ACTIONS.—Chapter 89 of title

14 28, United States Code, is amended by adding at the end

15 the following:

16 ‘‘§ 1453. Removal of class actions

17 ‘‘(a) IN GENERAL.—A year 2000 civil action that is

18 brought as a class action may be removed to a district court

19 of the United States in accordance with this chapter, except

20 that such action may be removed—

21 ‘‘(1) by any defendant without the consent of all

22 defendants; or

23 ‘‘(2) by any plaintiff class member who is not a

24 named or representative class member of the action
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1 for which removal is sought, without the consent of all

2 members of such class.

3 ‘‘(b) WHEN REMOVABLE.—This section shall apply to

4 any year 2000 civil action that is brought as a class action

5 before or after the entry of any order certifying a class.

6 ‘‘(c) PROCEDURE FOR REMOVAL.—

7 ‘‘(1) IN GENERAL.—The provisions of section

8 1446(a) relating to a defendant removing a case shall

9 apply to a plaintiff removing a case under this sec10 tion.

11 ‘‘(2) APPLICATION.—With respect to the applica12 tion of section 1446(b), the requirement relating to the

13 30-day filing period shall be met if a plaintiff class

14 member who is not a named or representative class

15 member of the action for which removal is sought files

16 notice of removal within 30 days after receipt by such

17 class member, through service or otherwise, of the ini18 tial written notice of the class action provided at the

19 trial court’s direction.’’.

20 (e) REMOVAL LIMITATIONS.—Section 1446(b) is

21 amended in the second undesignated paragraph—

22 (1) by inserting ‘‘, by exercising due diligence,’’

23 after ‘‘ascertained’’; and

24 (2) by striking ‘‘section 1332’’ and inserting

25 ‘‘section’’.
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1 (f) TECHNICAL AND CONFORMING AMENDMENTS.—The

2 table of sections for chapter 89 of title 28, United States

3 Code, is amended by adding after the item relating to sec4 tion 1452 the following:

‘‘1453. Removal of class actions.’’.

5 (g) PROCEDURE AFTER REMOVAL.—Section 1447 of

6 title 28, United States Code, is amended by adding at the

7 end the following:

8 ‘‘(f)(1) If, after removal, the court determines that no

9 aspect of an action that is subject to its jurisdiction solely

10 under the provisions of section 1332(b) may be maintained

11 as a class action under Rule 23 of the Federal Rules of

12 Civil Procedure, the court shall strike the class allegations

13 from the action and remand the action to the State court.

14 ‘‘(2) Upon remand of the action, the period of limita15 tions for any claim that was asserted in the action on behalf

16 of any named or unnamed member of any proposed class

17 shall be deemed tolled to the full extent provided under Fed18 eral law.’’.

19 (h) APPLICATION OF SUBSTANTIVE STATE LAW.—

20 Nothing in the amendments made by this section shall alter

21 the substantive law applicable to an action to which such

22 amendments apply.
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1 TITLE V—EFFECTIVE DATE

2 SEC. 501. EFFECTIVE DATE.

3 This Act and the amendments made by this Act shall

4 take effect on January 1, 1999.