law, shall direct notice of the action to each member of
the class by United States mail, return receipt requested.
Persons whose actual receipt of the notice is not verified
by the court or by counsel for one of the parties shall be
excluded from the class unless those persons inform the
court in writing, on a date no later than the commence-
ment of trial or entry of judgment, that they wish to join
the class.
(b) CONTENTS OF NOTICE.—In addition to any infor-
mation required by applicable Federal or State law, the
notice described in this subsection shall—
(1) concisely and clearly describe the nature of
the action;
(2) identify the jurisdiction whose law will gov-
ern the action;
(3) identify any potential claims that class
counsel chose not to pursue so that the action would
satisfy class certification requirements; and
(4) describe the fee arrangement of class coun-
sel.
SEC. 403. DISMISSAL PRIOR TO CERTIFICATION.
Before determining whether to certify a class in a
year 2000 action, the court may decide a motion to dis-
miss or for summary judgment made by any party if the
court concludes that decision will promote the fair and ef-
ficient adjudication of the controversy and will not cause
undue delay.
SEC. 404. FEDERAL JURISDICTION IN YEAR 2000 CLASS AC-
TIONS.
(a) REFERENCE.—Whenever in this section an
amendment or repeal is expressed in terms of an amend-
ment to, or repeal of, a section or other provision, the ref-
erence shall be considered to be made to a section or other
provision of title 28, United States Code.
(b) DIVERSITY
JURISDICTION.—Section 1332 is
amended by redesignating subsections (b), (c), and (d) as
subsections (c), (d), and (e), respectively, and by inserting
after subsection (a) the following:
‘‘(b)(1) The district courts shall have original juris-
diction of any year 2000 action, regardless of the sum or
value of the matter in controversy therein, which is
brought as a class action and in which—
‘‘(A) any member of a proposed plaintiff class
is a citizen of a State different from any defendant;
‘‘(B) any member of a proposed plaintiff class
is a foreign state or a citizen or subject of a foreign
state and any defendant is a citizen of a State; or
‘‘(C) any member of a proposed plaintiff class
is a citizen of a State and any defendant is a citizen
or subject of a foreign state.
As used in this paragraph, the term ‘foreign state’ has
the meaning given that term in section 1603(a).
‘‘(2)(A) In a year 2000 action described in paragraph
(1) in which—
‘‘(i) the substantial majority of the members of
all proposed plaintiff classes are citizens of a single
State of which the primary defendants are also citi-
zens, and
‘‘(ii) the claims asserted will be governed pri-
marily by the laws of that State,
the district court should abstain from hearing such action.
‘‘(B) In a year 2000 action described in paragraph
(1) in which—
‘‘(i) all matters in controversy asserted by the
individual members of all proposed plaintiff classes
in the aggregate do not exceed the sum or value of
$1,000,000, exclusive of interest and costs,
‘‘(ii) the number of members of all proposed
plaintiff classes in the aggregate is less than 100, or
‘‘(iii) the primary defendants are States, State
officials, or other governmental entities against
whom the district court may be foreclosed from or-
dering relief,
the district court may, in its discretion, abstain from hear-
ing such action.
‘‘(3)(A) Paragraph (1) and section 1453 shall not
apply to any class action that is brought under the Securi-
ties Act of 1933.
‘‘(B) Paragraph (1) and section 1453 shall not apply
to a class action described in subparagraph (C) that is
based upon the statutory or common law of the State in
which the issuer concerned is incorporated (in the case of
a corporation) or organized (in the case of any other en-
tity).
‘‘(C) A class action is described in this subparagraph
if it involves—
‘‘(i) the purchase or sale of securities by an
issuer or an affiliate of an issuer exclusively from or
to holders of equity securities of the issuer; or
‘‘(ii) any recommendation, position, or other
communication with respect to the sale of securities
of an issuer that—
‘‘(I) is made by or on behalf of the issuer
or an affiliate of the issuer to holders of equity
securities of the issuer; and
‘‘(II) concerns decisions of those equity
holders with respect to voting their securities,
acting in response to a tender or exchange
offer, or exercising dissenters’ or appraisal
rights.
‘‘(D) As used in this paragraph, the terms ‘issuer’,
‘security’, and ‘equity security’ have the meanings given
those terms in section 3 of the Securities Exchange Act
of 1934.
‘‘(4) As used in this subsection, the term ‘year 2000
action’ has the meaning given that term in section 3 of
the Year 2000 Readiness Act.’’.
(c) CONFORMING AMENDMENT.—Section 1332(c) (as
redesignated by this section) is amended by inserting after
‘‘Federal courts’’ the following: ‘‘pursuant to subsection
(a) of this section’’.
(d) DETERMINATION OF DIVERSITY.—Section 1332,
as amended by this section, is further amended by adding
at the end the following:
‘‘(f) For purposes of subsection (b), a member of a
proposed class shall be deemed to be a citizen of a State
different from a defendant corporation only if that mem-
ber is a citizen of a State different from all States of which
the defendant corporation is deemed a citizen.’’.
(e) REMOVAL OF CLASS ACTIONS.—Chapter 89 is
amended by adding after section 1452 the following:
‘‘§ 1453. Removal of class actions
‘‘(a) IN GENERAL.—A year 2000 action which is a
class action may be removed to a district court of the
United States in accordance with this chapter, except that
such action may be removed—
‘‘(1) by any defendant without the consent of
all defendants; or
‘‘(2) by any plaintiff class member who is not
a named or representative class member of the ac-
tion for which removal is sought, without the con-
sent of all members of such class.
‘‘(b) WHEN REMOVABLE.—This section shall apply
to any year 2000 action before or after the entry of any
order certifying a class.
‘‘(c) PROCEDURE FOR REMOVAL.—The provisions of
section 1446(a) relating to a defendant removing a case
shall apply to a plaintiff removing a case under this sec-
tion. With respect to the application of subsection (b) of
such section, the requirement relating to the 30-day filing
period shall be met if a plaintiff class member who is not
a named or representative class member of the action for
which removal is sought files notice of removal within 30
days after receipt by such class member, through service
or otherwise, of the initial written notice of the class action
provided at the trial court’s direction.
‘‘(d) DEFINITION.—As used in this section, the term
‘year 2000 action’ has the meaning given that term in sec-
tion 3 of the Year 2000 Readiness Act.’’.
from the action and remand the action to the State court.
Upon remand of the action, the period of limitations for
any claim that was asserted in the action on behalf of any
named or unnamed member of any proposed class shall
be deemed tolled to the full extent provided under Federal
law.’’.
TITLE V—CLIENT PROTECTION
IN CONNECTION WITH YEAR
2000 ACTIONS
SEC. 501. SCOPE.
This title applies to any year 2000 claim or year 2000
action asserted or brought in Federal or State court.
SEC. 502. DEFINITIONS.
In this title:
(1) ATTORNEY.—the term ‘‘attorney’’ means
any natural person, professional law association, cor-
poration, or partnership authorized under applicable
State law to practice law.
(2) ATTORNEY’S SERVICES.—The term ‘‘attor-
ney’s services’’ means the professional advice or
counseling of or representation by an attorney, but
such term shall not include other assistance in-
curred, directly or indirectly, in connection with an
attorney’s services, such as administrative or sec-
retarial assistance, overhead, travel expenses, wit-
ness fees, or preparation by a person other than the
attorney of any study, analysis, report, or test.
(3) CONTINGENT FEE.—The term ‘‘contingent
fee’’ means the cost or price of an attorney’s services
determined by applying a specified percentage, which
may be a firm fixed percentage, a graduated or slid-
ing percentage, or any combination thereof, to the
amount of the settlement or judgment obtained.
(4) HOURLY
FEE.—The term ‘‘hourly fee’’
means the cost or price per hour of an attorney’s
services.
(5) INITIAL MEETING.—The term ‘‘initial meet-
ing’’ means the first conference or discussion be-
tween a client and an attorney, whether by telephone
or in person, concerning the details, facts, or basis
of the plaintiff’s claim.
(6) RETAIN.—The term ‘‘retain’’ means the act
of a client in engaging an attorney’s services, wheth-
er by express or implied agreement, by seeking and
obtaining the attorney’s services.
SEC. 503. CONSUMER’S RIGHT TO ELECT HOURLY OR CON-
TINGENT FEE ARRANGEMENT.
(a) ELECTION OF TERMS.—A plaintiff who retains
an attorney with respect to a year 2000 claim or a year
2000 action may elect whether to compensate the attor-
ney’s services in connection with the year 2000 claim or
the year 2000 action on an hourly basis or a contingent
fee basis, except that—
(1) in no event shall an attorney that has been
retained on a contingent fee basis be paid a fee
greater than the lesser of the attorney’s hourly rate
or rates disclosed under section 505 multiplied by
the total number of hours spent by the attorney in
connection with the claim or action or an agreed
upon percentage of the total recovery which does not
exceed one-third of the total recovery; and
(2) in no event shall such an attorney be paid
a contingent fee based on a percentage of a settle-
ment or judgment obtained for that portion of dam-
ages claimed which the defendant offered prior to, or
within 90 days after, the filing of the relevant year
2000 action.
(b) ADDITIONAL LIMITATION.—In no event shall an
attorney representing a client in connection with a year
2000 claim or a year 2000 action be paid a fee greater
than the attorney’s hourly rate or rates disclosed under
section 505 multiplied by the total number of hours spent
by the attorney in connection with the claim or action.
SEC. 504. CONSUMER’S RIGHT TO UP-FRONT DISCLOSURE
OF INFORMATION REGARDING FEES AND
SETTLEMENT PROPOSALS.
An attorney retained by a client shall, at the initial
meeting (or in the instance of an attorney retained before
the effective date of this Act, 30 days after the date of
the enactment of this Act), disclose to the client the cli-
ent’s rights under this title and the client’s right to receive
a written statement of the information described under
sections 505 and 506.
SEC. 505. INFORMATION AFTER INITIAL MEETING.
(a) WRITTEN DISCLOSURE
OF FEES.—Within 30
days after the disclosure described under section 504, an
attorney retained by a client shall provide a written state-
ment to the client setting forth—
(1) the estimated number of hours of the attor-
ney’s services that will be spent—
(A) settling or attempting to settle the
year 2000 claim or year 2000 action; and
(B) handling the year 2000 claim or year
2000 action through trial;
(2) the attorney’s hourly fee for services in pur-
suing the year 2000 claim or year 2000 action and
any conditions, limitations, restrictions, or other
qualifications on the fee, including likely expenses
and the client’s obligation for those expenses and
stating that in no event shall such hourly fee for
services exceed $1,000 per hour; and
(3) in the case of an attorney retained on a
contingent fee basis, the attorney’s contingent fee
for services in pursuing the year 2000 claim or year
2000 action and any conditions, limitations, restric-
tions, or other qualifications on the fee, including
likely expenses and the client’s obligation for those
expenses and stating that in no event shall such con-
tingent fee exceed one third of the total recovery.
(b) CONSUMER’S RIGHT TO TIMELY UPDATED IN-
FORMATION ABOUT FEES.—In addition to the require-
ments contained in subsection (a), the attorney shall also
render monthly statements to the client containing a de-
scription of hourly charges and expenses incurred in the
pursuit of the client’s year 2000 claim or year 2000 action
by each attorney assigned to the client’s matter.
SEC. 506. CONSUMER’S RIGHT TO TIMELY UPDATED INFOR-
MATION ABOUT SETTLEMENT PROPOSALS
AND DETAILED STATEMENT OF HOURS AND
FEES.
An attorney retained by a client shall immediately
transmit all settlement offers to the client with an esti-
mate of the likelihood of achieving a more or less favorable
resolution to the year 2000 claim or year 2000 action, the
likely timing of such resolution, and the likely attorney’s
fees and expenses required to obtain such a resolution. An
attorney retained by a client shall, within a reasonable
time not later than 30 days after the date on which the
year 2000 claim or year 2000 action is finally settled or
adjudicated, provide a written statement to the client
containing—
(1) the actual number of hours expended by
each attorney on behalf of the client in connection
with the year 2000 claim or year 2000 action and
such attorney’s hourly rate; and
(2) the total amount of the hourly fees or total
contingent fee for the attorney’s services in connec-
tion with the year 2000 claim or year 2000 action.
SEC. 507. CLASS ACTIONS.
An attorney representing a class in a year 2000 ac-
tion shall make the disclosures required under this title
to the presiding judge. The presiding judge shall, at the
outset of the year 2000 action, determine the appropriate
hourly rate, which in no event shall exceed $1,000 per
hour, and the maximum percentage of the recovery to be
paid in attorney’s fees, which in no event shall exceed one
third of the recovery. Notwithstanding any other provision
of law or agreement to the contrary, the presiding judge
shall award attorney’s fees only pursuant to this title.
‘‘(II) the program (commonly re-
ferred to as the ‘Certified Lenders
Program’) authorized in paragraph
(19); and
‘‘(ii) the term ‘year 2000 computer
failure’ means any failure by any device or
system (including, without limitation, any
computer system and any microchip or in-
tegrated circuit embedded in another de-
vice 
or 
product), 
or 
any 
software,
firmware, or other set of collection of proc-
essing instructions, however constructed, in
processing, calculating, comparing, se-
quencing, displaying, storing, transmitting,
or receiving date-related data, including,
without limitation, failure in accurately
dealing with or failure in accurately ac-
counting for transitions or comparisons
from, into, and between the 20th and the
21st centuries, or during the years 1999
and 2000, failure to recognize or accu-
rately process any specific date, and failure
to accurately account for the year 2000’s
leap year status.
‘‘(B) ESTABLISHMENT OF PROGRAM.—The
Administration shall—
‘‘(i) establish a pilot program, under
which the Administration shall guarantee
loans made by eligible lenders to small
business concerns in accordance with this
subsection to allow such concerns to ad-
dress year 2000 computer failures; and
‘‘(ii) notify eligible lenders of the es-
tablishment of the program under this
paragraph.
‘‘(C) USE OF FUNDS.—A small business
concern that receives a loan guaranteed under
this paragraph shall use the proceeds of the
loan solely to address year 2000 computer fail-
ures, including the repair or acquisition of in-
formation technology systems and other auto-
mated systems.
‘‘(D) 
MAXIMUM
AMOUNT.—The 
total
amount of a loan made to a small business con-
cern and guaranteed under this paragraph shall
not exceed $50,000.
‘‘(E) GUARANTEE LIMIT.—The guarantee
percentage of a loan guaranteed under this
paragraph shall not exceed 50 percent of the
balance of the financing outstanding at the time
of disbursement of the loan.
‘‘(F) REPORT.—The Administration shall
annually submit to the Committees on Small
Business of the House of Representatives and
the Senate a report on the program authorized
by this paragraph. Such report shall include in-
formation relating to—
‘‘(i) the number and amount of loans
guaranteed under this paragraph;
‘‘(ii) whether the loans guaranteed
were made to repair or replace information
technology and other automated systems;
and
‘‘(iii) the number of eligible lenders
participating in the program.’’.
(b) REGULATIONS.—Not later than 60 days after the
date of enactment of this title, the Administrator of the
Small Business Administration shall issue final regula-
tions to carry out the program established by section
7(a)(27) of the Small Business Act, as added by this sec-
tion.
(c) REPEAL.—Effective on October 1, 2001, this
section and the amendment made by this section are
repealed.
SEC. 604. PILOT PROGRAM REQUIREMENTS.
Section 7(a)(25) of the Small Business Act (15
U.S.C. 636(a)(25)) is amended by adding at the end the
following:
‘‘(D) NOTIFICATION
OF
CHANGE.—Not
later than 30 days before initiating any new
pilot program or making any change in a pilot
program under this subsection that may affect
the subsidy rate estimates for the loan program
under this subsection, the Administration shall
notify the Committees on Small Business of the
House of Representatives and the Senate. Such
notification shall include—
‘‘(i) a description of the proposed new
program or the change to a program; and
‘‘(ii) an estimation, which shall be de-
veloped by the Administration in consulta-
tion with the Director of the Office of
Management and Budget, of the effect
that the new program or the change to a
program will have on the subsidy rate.
‘‘(E) REPORT ON PILOT PROGRAMS.—The
Administration shall annually submit to the
Committees on Small Business of the House of
Representatives and the Senate a report on
each pilot program under this subsection. Such
report shall include information relating to—
‘‘(i) the number and amount of loans
made under the pilot program;
‘‘(ii) the number of lenders participat-
ing in the pilot program; and
‘‘(iii) the default rate, delinquency
rate, and recovery rate for loans under the
pilot program, as compared to those rates
for other loan programs under this sub-
section.’’.
SEC. 605. 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
agency, as defined in section 105 of title 5, United
States Code, that has the authority to impose civil
penalties on small business concerns;
(2) the term ‘‘first-time violation’’ means any
first-time violation, resulting from a year 2000 fail-
ure, of a Federal requirement regarding the collec-
tion of information; and
(4) the small business concern fails to correct
the violation not later than 6 months after receiving
written notification of the violation from the agency;
or
(5) the agency determines that the violation
presents an imminent and substantial danger to the
public health or safety.
(e) DANGER TO PUBLIC HEALTH AND SAFETY.—
(1) WAIVER OF PENALTIES.—An agency may
waive any civil penalty imposed pursuant to sub-
section (d)(5) if the violation for which the penalty
is imposed is corrected not later than 30 days after
the agency provides written notice of the violation to
the small business concern.
(2) STANDARDS FOR WAIVER.—In making a de-
termination whether to waive a civil penalty under
paragraph (1) the agency shall take into account all
of the facts and circumstances regarding the first-
time violation, including—
(A) the nature and seriousness of the vio-
lation, including whether it is technical or inad-
vertent or involves willful criminal conduct;
(B) whether the small business concern
has made and is making a good faith effort to
comply with applicable laws and to remedy the
violation in the shortest practicable period of
time; and
(C) whether the small business concern has
obtained a significant economic benefit from the
violation.
(3) CONGRESSIONAL NOTIFICATION REQUIRE-
MENT.—If an agency imposes on a small business
concern a civil penalty pursuant to subsection (d)(5)
without providing the small business concern with
the 30 days to correct the violation authorized under
paragraph (1), the agency shall notify Congress of
the penalty not later than 60 days after it is im-
posed.
(f) STATE
PENALTIES
TO
CONFORM.—Notwith-
standing any other provision of law, no State may impose
on a small business concern any civil penalty inconsistent
with this section.
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