Calendar No. 113
106TH CONGRESS
1ST SESSION
H. R. 775
AN ACT
To establish certain procedures for civil actions
brought for damages relating to the failure of
any device or system to process or otherwise deal
with the transition from the year 1999 to the
year 2000, and for other purposes.
MAY 13, 1999
Received; read twice and placed on the calendar
II
Calendar No. 113
106TH CONGRESS
1ST SESSION
H. R. 775
IN THE SENATE OF THE UNITED STATES
MAY 13, 1999
Received; read twice and placed on the calendar
AN ACT
To establish certain procedures for civil actions brought for
damages relating to the failure of any device or system
to process or otherwise deal with the transition from
the year 1999 to the year 2000, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
HR 775 PCS
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Year 2000 Readiness
and Responsibility Act’’.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The Congress seeks to encourage businesses
to concentrate their attention and resources in the
short time remaining before January 1, 2000, on ad-
dressing, assessing, remediating, and testing their
year 2000 problems, and to minimize any possible
business disruptions associated with year 2000
issues.
(2) It is appropriate for the Congress to enact
legislation to assure that year 2000 problems do not
unnecessarily disrupt interstate commerce or create
unnecessary case loads in Federal and State courts
and to provide initiatives to help businesses prepare
and be in a position to withstand the potentially dev-
astating economic impact of the year 2000 problem.
(3) Year 2000 issues will affect practically all
business enterprises to some degree, giving rise to a
large number of disputes.
(4) Resorting to the legal system for resolution
of year 2000 problems is not feasible for many busi-
nesses, particularly small businesses, because of its
complexity and expense.
HR 775 PCS
(5) The delays, expense, uncertainties, loss of
control, adverse publicity and animosities that fre-
quently accompany litigation of business disputes
can only exacerbate the difficulties associated with
the year 2000 date change, and work against the
successful resolution of those difficulties.
(6) The Congress recognizes that every business
in the United States should be concerned that wide-
spread and protracted year 2000 litigation may
threaten the network of valued and trusted business
relationships that are so important to the effective
functioning of the world economy, and which may
put unbearable strains on an overburdened judicial
system.
(7) A proliferation of frivolous year 2000 ac-
tions by opportunistic parties may further limit ac-
cess to courts by straining the resources of the legal
system and depriving deserving parties of their le-
gitimate rights to relief.
(8) The Congress encourages businesses to ap-
proach their year 2000 disputes responsibly, and to
avoid unnecessary, time-consuming and costly litiga-
tion based on year 2000 failures. Congress supports
good faith negotiations between parties when there
is a dispute over a year 2000 problem, and, if nec-
HR 775 PCS
essary, urges the parties to enter into voluntary,
non-binding mediation rather than litigation.
SEC. 3. DEFINITIONS.
In this Act:
(1) CONTRACT.—The term ‘‘contract’’ means a
contract, tariff, license, or warranty.
(2) DAMAGES.—The term ‘‘damages’’ means
punitive, compensatory, and restitutionary relief.
(3) 
DEFENDANT.—The 
term 
‘‘defendant’’
means any person against whom a year 2000 claim
has been asserted.
(4) ECONOMIC
LOSS.—The term ‘‘economic
loss’’—
(A) means any damages other than dam-
ages arising out of personal injury or damage
to tangible property; and
(B) includes, but is not limited to, dam-
ages for lost profits or sales, for business inter-
ruption, for losses indirectly suffered as a result
of the defendant’s wrongful act or omission, for
losses that arise because of the claims of third
parties, for losses that must be pleaded as spe-
cial damages, and consequential damages (as
defined in the Uniform Commercial Code or
analogous State commercial law).
HR 775 PCS
(5) GOVERNMENTAL ENTITY.—The term ‘‘gov-
ernmental entity’’ means an agency, instrumentality,
other entity, or official of Federal, State, or local
government (including multijurisdictional agencies,
instrumentalities, and entities).
(6) MATERIAL DEFECT.—The term ‘‘material
defect’’ means a defect in any item, whether tangible
or intangible, or in the provision of a service, that
substantially prevents the item or service from oper-
ating or functioning as designed or intended. The
term ‘‘material defect’’ does not include a defect
that has an insignificant or de minimis effect on the
operation or functioning of an item, that affects only
a component of an item that, as a whole, substan-
tially operates or functions as designed, or that has
an insignificant or de minimis effect on the efficacy
of the service provided.
(7) PERSON.—The term ‘‘person’’ means any
natural person and any entity, organization, or en-
terprise, including but not limited to corporations,
companies, joint stock companies, associations, part-
nerships, trusts, and governmental entities.
(8) PERSONAL
INJURY.—The term ‘‘personal
injury’’ means any physical injury to a natural per-
son, including death of the person, and mental suf-
HR 775 PCS
fering, emotional distress, or like elements of injury
suffered by a natural person in connection with a
physical injury.
(9) PLAINTIFF.—The term ‘‘plaintiff’’ means
any person who asserts a year 2000 claim.
(10) PUNITIVE DAMAGES.—The term ‘‘punitive
damages’’ means damages that are awarded against
any person to punish such person or to deter such
person, or others, from engaging in similar behavior
in the future.
(11) STATE.—The term ‘‘State’’ means any
State of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Northern
Mariana Islands, the United States Virgin Islands,
Guam, American Samoa, and any other territory or
possession of the United States, and any political
subdivision thereof.
(12) YEAR 2000 ACTION.—The term ‘‘year 2000
action’’ means any civil action of any kind brought
in any court under Federal or State law, or an agen-
cy board of contract appeal proceeding, in which a
year 2000 claim is asserted.
(13) YEAR 2000 CLAIM.—The term ‘‘year 2000
claim’’—
HR 775 PCS
(A) means any claim or cause of action of
any kind, other than a claim based on personal
injury, whether asserted by way of claim, coun-
terclaim, cross-claim, third-party claim, defense,
or otherwise, in which the plaintiff’s alleged loss
or harm resulted, directly or indirectly, from a
year 2000 failure;
(B) includes a claim brought in any Fed-
eral or State court by a governmental entity
when acting in a commercial or contracting ca-
pacity; and
(C) does not include a claim brought by
such a governmental entity acting in a regu-
latory, supervisory, or enforcement capacity.
(14) YEAR
2000
FAILURE.—The term ‘‘year
2000 failure’’ means any failure by any device or
system (including, without limitation, any computer
system and any microchip or integrated circuit em-
bedded in another device or product), or any soft-
ware, firmware, or other set or collection of proc-
essing instructions, however constructed, in proc-
essing, calculating, comparing, sequencing, dis-
playing, storing, transmitting, or receiving year
2000 date-related data.
HR 775 PCS
SEC. 4. APPLICATION OF ACT.
(a) GENERAL RULE.—This Act applies to any year
2000 claim brought after January 1, 1999, including any
appeal, remand, stay, or other judicial, administrative, or
alternative dispute resolution proceeding with respect to
such claim.
(b) NO NEW CAUSE OF ACTION CREATED.—Nothing
in this Act creates a new cause of action, and, except as
otherwise explicitly provided in this Act, nothing in this
Act expands any liability otherwise imposed or limits any
defense otherwise available under Federal or State law.
(c) EXCLUSION OF PERSONAL INJURY CLAIMS.—
None of the provisions of this Act shall apply to any claim
based on personal injury, including any claim asserted by
way of claim, counterclaim, cross-claim, third-party claim,
or otherwise, that arises out of an underlying action for
personal injury.
(d) PREEMPTION OF STATE LAW.—Except as other-
wise provided in this Act, this Act supersedes State law
to the extent that it establishes a rule of law applicable
to a year 2000 claim that is inconsistent with State law.
(e) CERTAIN OTHER ACTIONS.—A person who is lia-
ble for damages, whether by settlement or judgment, in
a claim or civil action to which this Act does not apply
by reason of subsection (c) and whose liability, in whole
or in part, is the result of a year 2000 failure may pursue
HR 775 PCS
any remedy otherwise available under Federal or State law
against the person responsible for that year 2000 failure
to the extent of recovering the amount of those damages.
Any such remedy shall not be subject to this Act.
TITLE 
I—UNIFORM 
PRE-
LITIGATION 
PROCEDURES
FOR YEAR 2000 ACTIONS
SEC. 101. NOTICE PROCEDURES TO AVOID UNNECESSARY
YEAR 2000 ACTIONS.
(a) NOTIFICATION PERIOD.—Before filing a year
2000 action, except an action that seeks only injunctive
relief, a prospective plaintiff shall send by certified mail
to each prospective defendant a written notice that identi-
fies, with particularity as to any year 2000 claim—
(1) any symptoms of any material defect alleged
to have caused harm or loss;
(2) the harm or loss allegedly suffered by the
prospective plaintiff;
(3) the facts that lead the prospective plaintiff
to hold such person responsible for both the defect
and the injury;
(4) the relief or action sought by the prospec-
tive plaintiff; and
(5) the name, title, address, and telephone
numbers of any individual who has authority to ne-
HR 775 PCS
plaint. If any defendant elects to treat the complaint as
such a notice—
(1) the court shall stay all discovery in the ac-
tion involving that defendant for the applicable time
period provided in subsection (a) or (c), as the case
may be, after filing of the complaint; and
(2) the time for filing answers and all other
pleadings shall be tolled during such applicable pe-
riod.
(e) EFFECT OF CONTRACTUAL WAITING PERIODS.—
In cases in which a contract or a statute enacted before
January 1, 1999, requires notice of nonperformance and
provides for a period of delay prior to the initiation of suit
for breach or repudiation of contract, the period of delay
provided in the contract or the statute is controlling over
the waiting period specified in subsections (a) and (d).
(f) SANCTION FOR FRIVOLOUS INVOCATION OF THE
STAY PROVISION.—In any action in which a defendant
acts pursuant to subsection (d) to stay the action, and
the court subsequently finds that the defendant’s assertion
that the suit is a year 2000 action was frivolous and made
for the purpose of causing unnecessary delay, the court
may award sanctions to opposing parties in accordance
with the provisions of Rule 11 of the Federal Rules of
Civil Procedure or the equivalent applicable State rule.
HR 775 PCS
(g) COMPUTATION OF TIME.—For purposes of this
section, the rules regarding computation of time shall be
governed by the applicable Federal or State rules of civil
procedure.
(h) SPECIAL RULE FOR CLASS ACTIONS.—For the
purpose of applying this section to a year 2000 action that
is maintained as a class action in Federal or State court,
the requirements of the preceding subsections of this sec-
tion apply only to named plaintiffs in the class action.
SEC. 102. ALTERNATIVE DISPUTE RESOLUTION TO AVOID
UNNECESSARY YEAR 2000 ACTIONS.
(a) IN GENERAL.—(1) At any time during the 90-
day period specified in section 101(a), either party may
request the other to use alternative dispute resolution. If,
based upon that request, the parties enter into an agree-
ment to use alternative dispute resolution, they may also
agree to an extension of the 90-day period.
(2) At any time after expiration of the 90-day period
specified in section 101(a), whether before or after the fil-
ing of a complaint, either party may request the other to
use alternative dispute resolution.
(b) PAYMENT OF MONEYS DUE.—If the parties re-
solve their dispute through alternative dispute resolution
as provided in subsection (a), the defendant shall pay all
moneys due within 30 days, unless another period of time
HR 775 PCS
is agreed to by the parties or established by contract be-
tween the parties.
(c) FORECLOSURE OF FURTHER PROCEEDINGS ON
RESOLVED ISSUES.—Resolution of the issues by the par-
ties prior to litigation through negotiation or alternative
dispute resolution shall foreclose any further proceedings
with respect to those issues.
SEC. 103. PLEADING REQUIREMENTS.
(a) APPLICATION WITH RULES OF CIVIL PROCE-
DURE.—This section applies exclusively to year 2000
claims and, except to the extent that this section requires
additional information to be contained in or attached to
pleadings, nothing in this section is intended to amend or
otherwise supersede applicable rules of Federal or State
civil procedure.
(b) NATURE AND AMOUNT OF DAMAGES.—With re-
spect to any year 2000 claim that seeks the award of
money damages, the complaint shall state with particu-
larity the nature and amount of each element of damages,
and the factual basis for the damages calculation.
(c) MATERIAL DEFECTS.—With respect to any year
2000 claim in which the plaintiff alleges that a product
or service was defective, the complaint shall identify with
particularity the symptoms of the material defects and
HR 775 PCS
shall state with particularity the facts supporting the con-
clusion that the defects are material.
(d) REQUIRED STATE OF MIND.—With respect to
any year 2000 claim as to which the plaintiff may prevail
only on proof that the defendant acted with a particular
state of mind, the complaint shall, with respect to each
element of the year 2000 claim, state with particularity
the facts giving rise to a strong inference that the defend-
ant acted with the required state of mind.
(e) MOTION TO DISMISS; STAY OF DISCOVERY.—
(1) DISMISSAL FOR FAILURE TO MEET PLEAD-
ING REQUIREMENTS.—In any year 2000 action, the
court shall, on the motion of any defendant, dismiss
the complaint without prejudice if the requirements
of subsection (a), (b), or (c) are not met with re-
spect to any year 2000 claim asserted therein.
(2) STAY OF DISCOVERY.—In any year 2000
action, all discovery shall be stayed during the pend-
ency of any motion to dismiss, unless the court finds
upon the motion of any party that particularized dis-
covery is necessary to preserve evidence or prevent
undue prejudice to that party.
(3) PRESERVATION OF EVIDENCE.—
(A) IN GENERAL.—During the pendency of
any stay of discovery entered pursuant to this
HR 775 PCS
subsection, unless otherwise ordered by the
court, any party to the action with actual notice
of the allegations contained in the complaint
shall treat all documents, data compilations (in-
cluding electronically stored or recorded data),
and tangible objects that are in the custody or
control of such person and that are relevant to
the allegations, as if they were a subject of a
continuing request for production of documents
from an opposing party under applicable Fed-
eral or State rules of civil procedure.
(B) 
SANCTION
FOR
WILLFUL
VIOLA-
TION.—A party aggrieved by the willful failure
of an opposing party to comply with subpara-
graph (A) may apply to the court for an order
awarding appropriate sanctions.
SEC. 104. DUTY OF ALL PERSONS TO MITIGATE YEAR 2000
COMPUTER FAILURES AND RESULTING DAM-
AGES.
Damages awarded for any year 2000 claim shall ex-
clude compensation for damages the plaintiff could reason-
ably have avoided in light of any disclosure or other infor-
mation of which the plaintiff was, or reasonably should
have been, aware, including information made available by
the defendant to purchasers or users of the defendant’s
HR 775 PCS
product or services concerning means of remedying or
avoiding the year 2000 failure.
TITLE II—YEAR 2000 ACTIONS
INVOLVING CONTRACTS
SEC. 201. CERTAINTY OF CONTRACT TERMS FOR PREVEN-
TION OF YEAR 2000 DAMAGES.
(a) IN GENERAL.—Subject to subsection (b), in re-
solving any year 2000 claim, any written contractual term,
including a limitation or an exclusion of liability, or a dis-
claimer of warranty, shall be fully enforced unless the en-
forcement of that term would manifestly and directly con-
travene applicable State law embodied in any statute in
effect on January 1, 1999, specifically addressing that
term.
(b) INTERPRETATION OF CONTRACT.—In resolving
any year 2000 claim as to which a contract to which sub-
section (a) applies is silent with respect to a particular
issue, the interpretation of the contract with respect to
that issue shall be determined by applicable law in effect
at the time the contract was executed.
SEC. 202. APPLICATION OF EXISTING IMPOSSIBILITY OR
COMMERCIAL 
IMPRACTICABILITY 
DOC-
TRINES.
(a) DOCTRINE OF IMPOSSIBILITY AND COMMERCIAL
IMPRACTICABILITY.—With respect to any year 2000 claim
HR 775 PCS
for breach or repudiation of contract, the applicability of
the doctrines of impossibility and commercial imprac-
ticability 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.
(b) REASONABLE EFFORTS.—To the extent that im-
possibility or commercial impracticability is raised as a de-
fense against a claim for breach or repudiation of contract,
the party asserting the defense shall be allowed to offer
evidence that its implementation of the contract, or its ef-
forts to implement the contract, were reasonable in light
of the circumstances.
SEC. 203. PROTECTION OF PERSONS FROM LIABILITY NOT
ANTICIPATED IN YEAR 2000 CONTRACTS.
With respect to any year 2000 claim involving a
breach of contract or a claim related to the contract, no
party may claim or be awarded any category of damages
unless such damages are allowed by the express terms of
the contract or, if the contract is silent on such damages,
by operation of the applicable Federal or State law that
governed interpretation of the contract at the time the
contract was entered into.
HR 775 PCS
TITLE III—YEAR 2000 ACTIONS
INVOLVING TORT AND OTHER
NONCONTRACTUAL CLAIMS
SEC. 301. PROPORTIONATE LIABILITY.
(a) IN GENERAL.—A person against whom a final
judgment is entered with respect to a year 2000 claim,
other than a claim for breach or repudiation of contract,
shall be liable solely for the portion of the judgment that
corresponds to the percentage of responsibility of that per-
son, as determined under subsection (b).
(b) DETERMINATION OF RESPONSIBILITY.—
(1) IN
GENERAL.—With respect to any year
2000 claim, the court shall instruct the jury to an-
swer special interrogatories, or if there is no jury,
shall make findings, with respect to each defendant
and plaintiff, and each of the other persons claimed
by any of the parties to have caused or contributed
to the loss incurred by the plaintiff, including (but
not limited to) persons who have entered into settle-
ments with the plaintiff or plaintiffs, concerning the
percentage of responsibility of the defendant, the
plaintiff, and each such person, measured as a per-
centage of the total fault of all persons who caused
or contributed to the total loss incurred by the plain-
tiff.
HR 775 PCS
(2) CONTENTS OF SPECIAL INTERROGATORIES
OR FINDINGS.—The responses to interrogatories, or
findings, as appropriate, under paragraph (1) shall
specify the total amount of damages that the plain-
tiff is entitled to recover and the percentage of re-
sponsibility of each person found to have caused or
contributed to the loss incurred by the plaintiff or
plaintiffs.
(3) FACTORS FOR CONSIDERATION.—In deter-
mining the percentage of responsibility under this
subsection, the trier of fact shall consider—
(A) the nature of the conduct of each per-
son alleged to have caused or contributed to the
loss incurred by the plaintiff; and
(B) the nature and extent of the causal re-
lationship between the conduct of each such
person and the damages incurred by the plain-
tiff or plaintiffs.
(4) NONDISCLOSURE TO JURY.—The standard
for allocation of damages under paragraph (1) shall
not be disclosed to members of the jury.
SEC. 302. LIMITATION ON BYSTANDER LIABILITY FOR YEAR
2000 FAILURES.
(a) IN GENERAL.—With respect to any year 2000
claim for money damages in which—
HR 775 PCS
(1) the defendant is not the manufacturer, sell-
er, or distributor of a product, or the provider of a
service, that suffers or causes the year 2000 failure
at issue;
(2) the plaintiff is not in substantial privity
with the defendant; and
(3) the defendant’s actual or constructive
awareness of an actual or potential year 2000 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 clear and convincing evidence that the
defendant actually knew, or recklessly disregarded a
known and substantial risk, that such failure would occur.
(b) SUBSTANTIAL PRIVITY.—For purposes of sub-
section (a)(2), a plaintiff and a defendant are in substan-
tial privity when, in a year 2000 claim arising out of the
performance of professional services, the plaintiff and the
defendant either have contractual relations with one an-
other or the plaintiff is a person who, prior to the defend-
ant’s performance of such services, was specifically identi-
fied to and acknowledged by the defendant as a person
for whose special benefit the services were being per-
formed.
HR 775 PCS
(c) CERTAIN CLAIMS EXCLUDED.—For purposes of
subsection (a)(3), claims in which the defendant’s actual
or constructive awareness of an actual or potential year
2000 failure is an element of the claim under applicable
law do not include claims for negligence but do include
claims such as fraud, constructive fraud, breach of fidu-
ciary duty, negligent misrepresentation, and interference
with contract or economic advantage.
SEC. 303. REASONABLE EFFORTS DEFENSE.
With respect to any year 2000 claim seeking money
damages, except with respect to claims asserting breach
or repudiation of contract—
(1) the fact that a year 2000 failure occurred
in an entity, facility, system, product, or component
that was sold by, leased by, rented by, or otherwise
within the control of the party against whom the
claim is asserted shall not constitute the sole basis
for recovery; and
(2) the party against whom the claim is as-
serted shall be entitled to establish, as a complete
defense to the claim, that it took measures that were
reasonable under the circumstances to prevent the
year 2000 failure from occurring or from causing
the damages upon which the claim is based.
HR 775 PCS
SEC. 304. DAMAGES LIMITATION.
(a) STANDARD FOR AWARDS.—With respect to any
year 2000 claim for which punitive damages may be
awarded under applicable law, the defendant shall not be
liable for punitive damages unless the plaintiff proves by
clear and convincing evidence that conduct carried out by
the defendant showed a conscious, flagrant indifference to
the rights or safety of others and was the proximate cause
of the harm or loss that is the subject of the year 2000
claim. This requirement is in addition to any other re-
quirement in applicable law for the award of such dam-
ages.
(b) CAPS ON PUNITIVE DAMAGES.—
(1) IN
GENERAL.—With respect to any year
2000 claim, if a defendant is found liable for puni-
tive damages, the amount of punitive damages that
may be awarded to a plaintiff shall not exceed the
greater of—
(A) three times the amount awarded to the
plaintiff for compensatory damages; or
(B) $250,000.
(2) SPECIAL RULE.—
(A) IN GENERAL.—Notwithstanding para-
graph (1), with respect to any year 2000 claim,
if the defendant is found liable for punitive
damages and the defendant—
HR 775 PCS
(i) is an individual whose net worth
does not exceed $500,000;
(ii) is an owner of an unincorporated
business that has fewer than 25 full-time
employees; or
(iii) is—
(I) a partnership;
(II) corporation;
(III) association;
(IV) unit of local government; or
(V) organization,
that has fewer than 25 full-time employees,
the amount of punitive damages shall not ex-
ceed the lesser of three times the amount
awarded to the plaintiff for compensatory dam-
ages, or $250,000.
(B) APPLICABILITY.—For purposes of de-
termining the applicability of this paragraph to
a corporation, the number of employees of a
subsidiary of a wholly owned corporation shall
include all employees of a parent corporation or
any subsidiary of that parent corporation.
(3) APPLICATION
OF
LIMITATIONS
BY
THE
COURT.—The limitations contained in paragraphs
HR 775 PCS
(1) and (2) shall be applied by the court and shall
not be disclosed to the jury.
SEC. 305. RECOVERY OF ECONOMIC DAMAGES FOR YEAR
2000 CLAIMS.
(a) LIMITATION
ON
RECOVERY
OF
ECONOMIC
LOSSES.—Subject to subsection (b), a plaintiff making a
year 2000 claim alleging a nonintentional tort may recover
economic losses only upon establishing, in addition to all
other elements of the claim under applicable law, that any
one of the following circumstances exists:
(1) The recovery of such losses is provided for
in a contract to which the plaintiff is a party.
(2) Such losses are incidental to a year 2000
claim based on damage to tangible personal or real
property caused by a year 2000 failure (other than
damage to property that is the subject of a contract
between the parties involved in the year 2000 claim).
(b) RECOVERY MUST BE PERMITTED UNDER APPLI-
CABLE LAW.—Economic losses shall be recoverable under
this section only if applicable Federal law, or applicable
State law embodied in statute or controlling judicial prece-
dent as of January 1, 1999, permits the recovery of such
losses.
HR 775 PCS
SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.
(a) IN GENERAL.—A director, officer, or trustee of
a business or other organization (including a corporation,
unincorporated association, partnership, or nonprofit or-
ganization) shall not be personally liable with respect to
any year 2000 claim in his or her capacity as a director
or officer of the business or organization for an aggregate
amount that exceeds the greater of—
(1) $100,000; or
(2) the amount of cash compensation received
by the director or officer from the business or orga-
nization during the 12-month period immediately
preceding the act or omission for which liability was
imposed.
(b) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be deemed to impose, or to permit the imposition
of, personal liability on any director, officer, or trustee in
excess of the aggregate amount of liability to which such
director, officer, or trustee would be subject under applica-
ble State law in existence on January 1, 1999 (including
any charter or bylaw authorized by such State law).
TITLE IV—YEAR 2000 CLASS
ACTIONS
SEC. 401. MINIMUM INJURY REQUIREMENT.
(a) IN GENERAL.—In any year 2000 action involving
a year 2000 claim that a product or service is defective,
HR 775 PCS
the action may be maintained as a class action in Federal
or State court as to that claim only if it satisfies all other
prerequisites established by applicable Federal or State
law and the court also finds that the alleged defect in the
product or service was a material defect as to a majority
of the members of the class.
(b) DETERMINATION BY COURT.—As soon as prac-
ticable after the commencement of a year 2000 action in-
volving a year 2000 claim that a product or service is de-
fective and that is brought as a class action, the court
shall determine by order whether the requirement set forth
in subsection (a) is satisfied. An order under this sub-
section may be conditional, and may be altered or amend-
ed before the decision on the merits.
SEC. 402. NOTIFICATION.
(a) NOTICE BY MAIL.—In any year 2000 action that
is maintained as a class action, the court, in addition to
any other notice required by applicable Federal or State
law, shall direct notice of the action to each member of
the class by United States mail, return receipt requested.
Persons whose actual receipt of the notice is not verified
by the court or by counsel for one of the parties shall be
excluded from the class unless those persons inform the
court in writing, on a date no later than the commence-
HR 775 PCS
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 and where the action is pending;
(3) identify any potential claims that class
counsel chose not to pursue so that the action would
satisfy class certification requirements;
(4) describe the fee arrangements with class
counsel, including the hourly fee being charged, or,
if it is a contingency fee, the percentage of the final
award which will be paid, including an estimate of
the total amount that would be paid if the requested
damages were to be granted; and
(5) describe the procedure for opting out of the
class.
(c) SETTLEMENT.—The parties to a year 2000 action
that is brought as a class action may not enter into, nor
request court approval of, any settlement or compromise
before the class has been certified.
HR 775 PCS
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) JURISDICTION.—Except as provided in subsection
(b), a year 2000 action may be brought as a class action
in the United States district court or removed to the ap-
propriate United States district court if the amount in
controversy is greater than the sum or value of $1,000,000
(exclusive of interest and costs), computed on the basis
of all claims to be determined in the action.
(b) EXCEPTION.—A year 2000 action shall not be
brought or removed as a class action under this section
if—
(1)(A) the substantial majority of the members
of the proposed plaintiff class are citizens of a single
State of which the primary defendants are also citi-
zens; and
(B) the claims asserted will be governed pri-
marily by the laws of that State; or
HR 775 PCS
(2) the primary defendants are States, State of-
ficials, or other governmental entities against whom
the United States district court may be foreclosed
from ordering relief.
TITLE V—CLIENT PROTECTION
IN CONNECTION WITH YEAR
2000 ACTIONS
SEC. 501. SCOPE.
This title applies to any 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 secre-
tarial assistance, overhead, travel expenses, witness
fees, or preparation by a person other than the at-
torney of any study, analysis, report, or test.
HR 775 PCS
(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) 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 UP-FRONT DISCLOSURE
OF INFORMATION REGARDING FEES AND
SETTLEMENT PROPOSALS.
Before being retained by a client with respect to a
year 2000 claim or a year 2000 action, an attorney shall
disclose to the client the client’s rights under this title and
the client’s right to receive a written statement of the in-
formation described under sections 504 and 505.
SEC. 504. INFORMATION AFTER INITIAL MEETING.
(a) WRITTEN DISCLOSURE
OF FEES.—Within 30
days after the disclosure described under section 503, an
attorney retained by a client with respect to a year 2000
HR 775 PCS
claim or a year 2000 action shall provide a written state-
ment to the client setting forth—
(1) in the case of an attorney retained on an
hourly basis, the attorney’s hourly fee for services in
pursuing the year 2000 claim or year 2000 action
and any conditions, limitations, restrictions, or other
qualifications on the fee, including likely expenses
and the client’s obligation for those expenses; and
(2) 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.
(b) CONSUMER’S RIGHT TO TIMELY UPDATED IN-
FORMATION ABOUT FEES.—In addition to the require-
ments contained in subsection (a), in the case of an attor-
ney retained on an hourly basis, the attorney shall also
render regular statements (at least once each 90 days) to
the client containing a description of hourly charges and
expenses incurred in the pursuit of the client’s year 2000
claim or year 2000 action by each attorney assigned to
the client’s matter.
HR 775 PCS
SEC. 505. CONSUMER’S RIGHT TO TIMELY UPDATED INFOR-
MATION ABOUT SETTLEMENT PROPOSALS
AND DETAILED STATEMENT OF HOURS AND
FEES.
An attorney retained by a client with respect to a
year 2000 claim or a year 2000 action shall advise the
client of all written settlement offers to the client and of
the attorney’s estimate of the likelihood of achieving a
more or less favorable resolution to the year 2000 claim
or year 2000 action, the likely timing of such resolution,
and the likely attorney’s fees and expenses required to ob-
tain such a resolution. An attorney retained by a client
with respect to a year 2000 claim or a year 2000 action
shall, within a reasonable time not later than 60 days after
the date on which the year 2000 claim or year 2000 action
is finally settled or adjudicated, provide a written state-
ment to the client containing—
(1) in the case of an attorney retained on an
hourly basis, the actual number of hours expended
by each attorney on behalf of the client in connec-
tion with the year 2000 claim or year 2000 action,
the attorney’s hourly rate, and the total amount of
hourly fees; and
(2) in the case of an attorney retained on a
contingent fee basis, the total contingent fee for the
HR 775 PCS
attorney’s services in connection with the year 2000
claim or year 2000 action.
SEC. 506. CLASS ACTIONS.
An attorney representing a class or a defendant in
a year 2000 action maintained as a class action shall make
the disclosures required under this title to the presiding
judge, in addition to making such disclosures to each
named representative of the class. The presiding judge
shall, at the outset of the year 2000 action, determine a
reasonable attorney’s fee by determining the appropriate
hourly rate and the maximum percentage of the recovery
to be paid in attorney’s fees. Notwithstanding any other
provision of law or agreement to the contrary, the pre-
siding judge shall award attorney’s fees only pursuant to
this title.
SEC. 507. AWARD OF REASONABLE COSTS AND ATTORNEY’S
FEES AFTER AN OFFER OF SETTLEMENT.
(a) OFFER OF SETTLEMENT.—With respect to any
year 2000 claim, any party may, at any time not less than
10 days before trial, serve upon any adverse party a writ-
ten offer to settle the year 2000 claim for money or prop-
erty, including a motion to dismiss the claim, and to enter
into a stipulation dismissing the claim or allowing judg-
ment to be entered according to the terms of the offer.
HR 775 PCS
Any such offer, together with proof of service thereof, shall
be filed with the clerk of the court.
(b) ACCEPTANCE OF OFFER.—If the party receiving
an offer under subsection (a) serves written notice on the
offeror that the offer is accepted, either party may then
file with the clerk of the court the notice of acceptance,
together with proof of service thereof.
(c) FURTHER OFFERS NOT PRECLUDED.—The fact
that an offer under subsection (a) is made but not accept-
ed does not preclude a subsequent offer under subsection
(a). Evidence of an offer is not admissible for any purpose
except in proceedings to enforce a settlement, or to deter-
mine costs and expenses under this section.
(d) EXEMPTION OF CLAIMS.—At any time before
judgment is entered, the court, upon its own motion or
upon the motion of any party, may exempt from this sec-
tion any year 2000 claim that the court finds presents
a question of law or fact that is novel and important and
that substantially affects nonparties. If a claim is exempt-
ed from this section, all offers made by any party under
subsection (a) with respect to that claim shall be void and
have no effect.
(e) PETITION FOR PAYMENT OF COSTS, ETC.—If all
offers made by a party under subsection (a) with respect
to a year 2000 claim, including any motion to dismiss the
HR 775 PCS
claim, are not accepted and the dollar amount of the judg-
ment, verdict, or order that is finally issued (exclusive of
costs, expenses, and attorneys’ fees incurred after judg-
ment or trial) with respect to the year 2000 claim is not
more favorable to the offeree with respect to the year 2000
claim than the last such offer, the offeror may file with
the court, within 10 days after the final judgment, verdict,
or order is issued, a petition for payment of costs and ex-
penses, including attorneys’ fees, incurred with respect to
the year 2000 claim from the date the last such offer was
made or, if the offeree made an offer under this section,
from the date the last such offer by the offeree was made.
(f) ORDER TO PAY COSTS, ETC.—If the court finds,
pursuant to a petition filed under subsection (e) with re-
spect to a year 2000 claim, that the dollar amount of the
judgment, verdict, or order that is finally issued is not
more favorable to the offeree with respect to the year 2000
claim than the last such offer, the court shall order the
offeree to pay the offeror’s costs and expenses, including
attorneys’ fees, incurred with respect to the year 2000
claim from the date the last offer was made or, if the
offeree made an offer under this section, from the date
the last such offer by the offeree was made, unless the
court finds that requiring the payment of such costs and
expenses would be manifestly unjust.
HR 775 PCS
SEC. 508. ENFORCEMENT OF CONSUMER PROTECTION
RULES IN YEAR 2000 CLAIMS AND ACTIONS.
A client whose attorney fails to comply with this title
may file a civil action for damages in the court in which
the year 2000 claim or year 2000 action was filed or could
have been filed or other court of competent jurisdiction.
The remedy provided by this section is in addition to any
other available remedy or penalty.
Passed the House of Representatives May 12, 1999.
Attest:
JEFF TRANDAHL,
Clerk.