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(g) MORE
PROTECTIVE
STATE
LAW
NOT
PRE-
EMPTED.—Nothing in this section preempts or supersedes
any provision of State statutory law that—
(1) limits the liability of a defendant in a Y2K
action to a lesser amount than the amount deter-
mined under this section; or
(2) otherwise affords a greater degree of protec-
tion from joint or several liability than is afforded by
this section.
SEC. 7. PRELITIGATION NOTICE.
(a) IN GENERAL.—Before commencing a Y2K action,
except an action that seeks only injunctive relief, a prospec-
tive plaintiff with a Y2K claim shall send a written notice
by certified mail (with either return receipt requested or
other means of verification that the notice was sent) to each
prospective defendant in that action. The notice shall pro-
vide specific and detailed information about—
(1) the manifestations of any material defect al-
leged to have caused harm or loss;
(2) the harm or loss allegedly suffered by the pro-
spective plaintiff;
(3) how the prospective plaintiff would like the
prospective defendant to remedy the problem;
(4) the basis upon which the prospective plaintiff
seeks that remedy; and
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(5) the name, title, address, and telephone num-
ber of any individual who has authority to negotiate
a resolution of the dispute on behalf of the prospective
plaintiff.
(b) PERSON TO WHOM NOTICE TO BE SENT.—The no-
tice required by subsection (a) shall be sent—
(1) to the registered agent of the prospective de-
fendant for service of legal process;
(2) if the prospective defendant does not have a
registered agent, then to the chief executive officer of
a corporation, the managing partner of a partner-
ship, the proprietor of a sole proprietorship, or to a
similarly-situated person for any other enterprise; or
(3) if the prospective defendant has designated a
person to receive prelitigation notices on a Year 2000
Internet Website (as defined in section 3(7) of the
Year 2000 Information and Readiness Disclosure
Act), to the designated person, if the prospective
plaintiff has reasonable access to the Internet.
(c) RESPONSE TO NOTICE.—
(1) IN GENERAL.—Within 30 days after receipt
of the notice specified in subsection (a), each prospec-
tive defendant shall send by certified mail with return
receipt requested to each prospective plaintiff a writ-
ten statement acknowledging receipt of the notice, and
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describing the actions it has taken or will take to ad-
dress the problem identified by the prospective plain-
tiff.
(2) WILLINGNESS
TO
ENGAGE
IN
ADR.—The
written statement shall state whether the prospective
defendant is willing to engage in alternative dispute
resolution.
(3) INADMISSABILITY.—A written statement re-
quired by this paragraph is not admissible in evi-
dence, under Rule 408 of the Federal Rules of Evi-
dence or any analogous rule of evidence in any State,
in any proceeding to prove liability for, or the inva-
lidity of, a claim or its amount, or otherwise as evi-
dence of conduct or statements made in compromise
negotiations.
(4) PRESUMPTIVE TIME OF RECEIPT.—For pur-
poses of paragraph (1), a notice under subsection (a)
is presumed to be received 7 days after it was sent.
(5) PRIORITY.—A prospective defendant receiv-
ing more than 1 notice under this section may give
priority to notices with respect to a product or service
that involves a health or safety related Y2K failure.
(d) 
FAILURE
TO
RESPOND.—If 
a 
prospective
defendant—
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(1) fails to respond to a notice provided pursu-
ant to subsection (a) within the 30 days specified in
subsection (c)(1); or
(2) does not describe the action, if any, the pro-
spective defendant has taken, or will take, to address
the problem identified by the prospective plaintiff,
the prospective plaintiff may immediately commence a legal
action against that prospective defendant.
(e) REMEDIATION PERIOD.—
(1) IN GENERAL.—If the prospective defendant
responds and proposes remedial action it will take, or
offers to engage in alternative dispute resolution, then
the prospective plaintiff shall allow the prospective
defendant an additional 60 days from the end of the
30-day notice period to complete the proposed reme-
dial action before commencing a legal action against
that prospective defendant.
(2) EXTENSION BY AGREEMENT.—The prospec-
tive plaintiff and prospective defendant may change
the length of the 60-day remediation period by writ-
ten agreement.
(3) MULTIPLE EXTENSIONS NOT ALLOWED.—Ex-
cept as provided in paragraph (2), a defendant in a
Y2K action is entitled to no more than one 30-day
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period and one 60-day remediation period under
paragraph (1).
(4) STATUTES OF LIMITATION, ETC., TOLLED.—
Any applicable statute of limitations or doctrine of
laches in a Y2K action to which paragraph (1) ap-
plies shall be tolled during the notice and remediation
period under that paragraph.
(f) FAILURE TO PROVIDE NOTICE.—If a defendant de-
termines that a plaintiff has filed a Y2K action without
providing the notice specified in subsection (a) or without
awaiting the expiration of the appropriate waiting period
specified in subsection (c), the defendant may treat the
plaintiff’s complaint as such a notice by so informing the
court and the plaintiff in its initial response to the plain-
tiff. If any defendant elects to treat the complaint as such
a notice—
(1) the court shall stay all discovery and all
other proceedings in the action for the appropriate
period after filing of the complaint; and
(2) the time for filing answers and all other
pleadings shall be tolled during the appropriate pe-
riod.
(g) EFFECT OF CONTRACTUAL OR STATUTORY WAIT-
ING PERIODS.—In cases in which a contract, or a statute
enacted before January 1, 1999, requires notice of non-
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performance and provides for a period of delay prior to the
initiation of suit for breach or repudiation of contract, the
period of delay provided by contract or the statute is con-
trolling over the waiting period specified in subsections (c)
and (d).
(h) STATE LAW CONTROLS ALTERNATIVE METH-
ODS.—Nothing in this section supersedes or otherwise pre-
empts any State law or rule of civil procedure with respect
to the use of alternative dispute resolution for Y2K actions.
(i) PROVISIONAL REMEDIES UNAFFECTED.—Nothing
in this section interferes with the right of a litigant to pro-
visional remedies otherwise available under Rule 65 of the
Federal Rules of Civil Procedure or any State rule of civil
procedure providing extraordinary or provisional remedies
in any civil action in which the underlying complaint seeks
both injunctive and monetary relief.
(j) SPECIAL RULE FOR CLASS ACTIONS.—For the pur-
pose of applying this section to a Y2K action that is main-
tained as a class action in Federal or State court, the re-
quirements of the preceding subsections of this section apply
only to named plaintiffs in the class action.
SEC. 8. PLEADING REQUIREMENTS.
(a) APPLICATION
WITH RULES
OF CIVIL PROCE-
DURE.—This section applies exclusively to Y2K actions
and, except to the extent that this section requires addi-
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have avoided in light of any disclosure or other information
of which the plaintiff was, or reasonably should have been,
aware, including information made available by the defend-
ant to purchasers or users of the defendant’s product or
services concerning means of remedying or avoiding the
Y2K failure.
SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR
COMMERCIAL 
IMPRACTICABILITY 
DOC-
TRINES.
In any Y2K action for breach or repudiation of con-
tract, the applicability of the doctrines of impossibility and
commercial impracticability shall be determined by the law
in existence on January 1, 1999. Nothing in this Act shall
be construed as limiting or impairing a party’s right to
assert defenses based upon such doctrines.
SEC. 11. DAMAGES LIMITATION BY CONTRACT.
In any Y2K action for breach or repudiation of con-
tract, no party may claim, nor be awarded, any category
of damages unless such damages are allowed—
(1) by the express terms of the contract; or
(2) if the contract is silent on such damages, by
operation of State law at the time the contract was
effective or by operation of Federal law.
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SEC. 12. DAMAGES IN TORT CLAIMS.
(a) IN GENERAL.—A party to a Y2K action making
a tort claim may not recover damages for economic loss
unless—
(1) the recovery of such losses is provided for in
a contract to which the party seeking to recover such
losses is a party; or
(2) such losses result directly from damage to
tangible personal or real property caused by the Y2K
failure (other than damage to property that is the
subject of the contract between the parties to the Y2K
action or, in the event there is no contract between the
parties, other than damage caused only to the prop-
erty that experienced the Y2K failure),
and such damages are permitted under applicable Federal
or State law.
(b) ECONOMIC LOSS.—For purposes of this section
only, and except as otherwise specifically provided in a
valid and enforceable written contract between the plaintiff
and the defendant in a Y2K action, the term ‘‘economic
loss’’—
(1) means amounts awarded to compensate an
injured party for any loss other than losses described
in subsection (a)(2); and
(2) includes amounts awarded for damages such
as—
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(A) lost profits or sales;
(B) business interruption;
(C) losses indirectly suffered as a result of
the defendant’s wrongful act or omission;
(D) losses that arise because of the claims of
third parties;
(E) losses that must be plead as special
damages; and
(F) consequential damages (as defined in
the Uniform Commercial Code or analogous
State commercial law).
(c) CERTAIN ACTIONS EXCLUDED.—This section does
not affect, abrogate, amend, or alter any patent, copyright,
trade-secret, trademark, or service-mark action, or any
claim for defamation or invasion of privacy under Federal
or State law.
(d) CERTAIN OTHER ACTIONS.—A person liable for
damages, whether by settlement or judgment, in a civil ac-
tion to which this Act does not apply because of section 4(c)
whose liability, in whole or in part, is the result of a Y2K
failure may, notwithstanding any other provision of this
Act, pursue any remedy otherwise available under Federal
or State law against the person responsible for that Y2K
failure to the extent of recovering the amount of those dam-
ages.
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SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.
(a) DEFENDANT’S STATE OF MIND.—In a Y2K action
other than a claim for breach or repudiation of contract,
and in which the defendant’s actual or constructive aware-
ness of an actual or potential Y2K failure is an element
of the claim, the defendant is not liable unless the plaintiff
establishes that element of the claim by the standard of evi-
dence under applicable State law in effect before January
1, 1999.
(b) LIMITATION ON BYSTANDER LIABILITY FOR Y2K
FAILURES.—
(1) IN GENERAL.—With respect to any Y2K ac-
tion for money damages in which—
(A) the defendant is not the manufacturer,
seller, or distributor of a product, or the provider
of a service, that suffers or causes the Y2K fail-
ure at issue;
(B) the plaintiff is not in substantial priv-
ity with the defendant; and
(C) the defendant’s actual or constructive
awareness of an actual or potential Y2K failure
is an element of the claim under applicable law,
the defendant shall not be liable unless the plaintiff,
in addition to establishing all other requisite elements
of the claim, proves, by the standard of evidence
under applicable State law in effect before January 1,
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1999, that the defendant actually knew, or recklessly
disregarded a known and substantial risk, that such
failure would occur.
(2) SUBSTANTIAL
PRIVITY.—For purposes of
paragraph (1)(B), a plaintiff and a defendant are in
substantial privity when, in a Y2K action arising out
of the performance of professional services, the plain-
tiff and the defendant either have contractual rela-
tions with one another or the plaintiff is a person
who, prior to the defendant’s performance of such
services, was specifically identified to and acknowl-
edged by the defendant as a person for whose special
benefit the services were being performed.
(3) CERTAIN CLAIMS EXCLUDED.—For purposes
of paragraph (1)(C), claims in which the defendant’s
actual or constructive awareness of an actual or po-
tential Y2K failure is an element of the claim under
applicable law do not include claims for negligence
but do include claims such as fraud, constructive
fraud, breach of fiduciary duty, negligent misrepre-
sentation, and interference with contract or economic
advantage.
(c) CONTROL NOT DETERMINATIVE OF LIABILITY.—
The fact that a Y2K failure occurred in an entity, facility,
system, product, or component that was sold, leased, rented,
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or otherwise within the control of the party against whom
a claim is asserted in a Y2K action shall not constitute
the sole basis for recovery of damages in that action. A
claim in a Y2K action for breach or repudiation of contract
for such a failure is governed by the terms of the contract.
(d) PROTECTIONS OF THE YEAR 2000 INFORMATION
AND READINESS DISCLOSURE ACT APPLY.—The protec-
tions for the exchanges of information provided by section
4 of the Year 2000 Information and Readiness Disclosure
Act (Public Law 105–271) shall apply to this Act.
SEC. 14. APPOINTMENT OF SPECIAL MASTERS OR MAG-
ISTRATE JUDGES FOR Y2K ACTIONS.
Any District Court of the United States in which a
Y2K action is pending may appoint a special master or
a magistrate judge to hear the matter and to make findings
of fact and conclusions of law in accordance with Rule 53
of the Federal Rules of Civil Procedure.
SEC. 15. Y2K ACTIONS AS CLASS ACTIONS.
(a) MATERIAL DEFECT REQUIREMENT.—A Y2K ac-
tion involving a claim that a product or service is defective
may be maintained as a class action in Federal or State
court as to that claim only if—
(1) it satisfies all other prerequisites established
by applicable Federal or State law, including appli-
cable rules of civil procedure; and
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(2) the court finds that the defect in a product
or service as alleged would be a material defect for the
majority of the members of the class.
(b) NOTIFICATION.—In any Y2K action that is main-
tained as a class action, the court, in addition to any other
notice required by applicable Federal or State law, shall
direct notice of the action to each member of the class, which
shall include—
(1) a concise and clear description of the nature
of the action;
(2) the jurisdiction where the case is pending;
and
(3) the fee arrangements with class counsel, in-
cluding the hourly fee being charged, or, if it is a con-
tingency fee, the percentage of the final award which
will be paid, including an estimate of the total
amount that would be paid if the requested damages
were to be granted.
(c) FORUM FOR Y2K CLASS ACTIONS.—
(1) JURISDICTION.—Except as provided in para-
graph (2), a Y2K action may be brought as a class
action in a United States District Court or removed
to a United States District Court if the amount in
controversy is greater than the sum or value of
$1,000,000 (exclusive of interest and costs), computed
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on the basis of all claims to be determined in the ac-
tion.
(2) EXCEPTION.—A Y2K action may not be
brought or removed as a class action under this sec-
tion if—
(A)(i) a substantial majority of the mem-
bers of the proposed plaintiff class are citizens of
a single State;
(ii) the primary defendants are citizens of
that State; and
(iii) the claims asserted will be governed
primarily by the law of that State; or
(B) the primary defendants are States,
State officials, or other governmental entities
against whom the United States District Court
may be foreclosed from ordering relief.
(d) EFFECT ON RULES OF CIVIL PROCEDURE.—Ex-
cept as otherwise provided in this section, nothing in this
section supersedes any rule of Federal or State civil proce-
dure applicable to class actions.
SEC. 16. APPLICABILITY OF STATE LAW.
Nothing in this Act shall be construed to affect the ap-
plicability of any State law that provides greater limits on
damages and liabilities than are provided in this Act.
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SEC. 17. ADMISSIBLE EVIDENCE ULTIMATE ISSUE IN STATE
COURTS.
Any party to a Y2K action in a State court in a State
that has not adopted a rule of evidence substantially similar
to Rule 704 of the Federal Rules of Evidence may introduce
in such action evidence that would be admissible if Rule
704 applied in that jurisdiction.
SEC. 18. SUSPENSION OF PENALTIES FOR CERTAIN YEAR
2000 FAILURES BY SMALL BUSINESS CON-
CERNS.
(a) DEFINITIONS.—In this section—
(1) the term ‘‘agency’’ means any executive agen-
cy, 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 a vio-
lation by a small business concern of a Federal rule
or regulation (other than a Federal rule or regulation
that relates to the safety and soundness of the banking
or monetary system, including protection of deposi-
tors) resulting from a Y2K failure if that Federal rule
or regulation had not been violated by that small
business concern within the preceding 3 years; and
(3) the term ‘‘small business concern’’ has the
same meaning as a defendant described in section
5(b)(2)(B).
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(b) ESTABLISHMENT OF LIAISONS.—Not later than 30
days after the date of enactment of this section each agency
shall—
(1) establish a point of contact within the agency
to act as a liaison between the agency and small busi-
ness concerns with respect to problems arising out of
Y2K failures and compliance with Federal rules or
regulations; and
(2) publish the name and phone number of the
point of contact for the agency in the Federal Reg-
ister.
(c) GENERAL RULE.—Subject to subsections (d) and
(e), no agency shall impose any civil money penalty on a
small business concern for a first-time violation.
(d) STANDARDS FOR WAIVER.—In order to receive a
waiver of civil money penalties from an agency for a first-
time violation, a small business concern shall demonstrate
that—
(1) the small business concern previously made a
good faith effort to effectively remediate Y2K prob-
lems;
(2) a first-time violation occurred as a result of
the Y2K system failure of the small business concern
or other entity, which affected the small business con-
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cern’s ability to comply with a federal rule or regula-
tion;
(3) the first-time violation was unavoidable in
the face of a Y2K system failure or occurred as a re-
sult of efforts to prevent the disruption of critical
functions or services that could result in harm to life
or property;
(4) upon identification of a first-time violation,
the small business concern initiated reasonable and
timely measures to remediate the violation; and
(5) the small business concern submitted notice
to the appropriate agency of the first-time violation
within a reasonable time not to exceed 7 business
days from the time that the small business concern be-
came aware that a first-time violation had occurred.
(e) EXCEPTIONS.—An agency may impose civil money
penalties authorized under Federal law on a small business
concern for a first-time violation if—
(1) the small business concern’s failure to comply
with Federal rules or regulations constitutes or cre-
ates an imminent threat to public health, safety, or
the environment; or
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(2) the small business concern fails to correct the
violation not later than 1 month after initial notifi-
cation to the agency.
Attest:
Secretary.