HR 775 EAS
lems, so as to minimize possible disruptions associ-
ated with computer failures.
(3)(A) Because year 2000 computer date-change
problems may affect virtually all businesses and other
users of technology products to some degree, there is
a substantial likelihood that actual or potential year
2000 failures will prompt a significant volume of liti-
gation, much of it insubstantial.
(B) The litigation described in subparagraph (A)
would have a range of undesirable effects, including
the following:
(i) It would threaten to waste technical and
financial resources that are better devoted to cur-
ing year 2000 computer date-change problems
and ensuring that systems remain or become
operational.
(ii) It could threaten the network of valued
and trusted business and customer relationships
that are important to the effective functioning of
the national economy.
(iii) It would strain the Nation’s legal sys-
tem, causing particular problems for the small
businesses and individuals who already find that
system inaccessible because of its complexity and
expense.
HR 775 EAS
(iv) The delays, expense, uncertainties, loss
of control, adverse publicity, and animosities
that frequently accompany litigation of business
disputes could exacerbate the difficulties associ-
ated with the date change and work against the
successful resolution of those difficulties.
(4) It is appropriate for the Congress to enact
legislation to assure that Y2K problems do not unnec-
essarily disrupt interstate commerce or create unnec-
essary caseloads in Federal courts and to provide ini-
tiatives to help businesses prepare and be in a posi-
tion to withstand the potentially devastating eco-
nomic impact of Y2K.
(5) Resorting to the legal system for resolution of
Y2K problems is not feasible for many businesses and
individuals who already find the legal system inacces-
sible, particularly small businesses and individuals
who already find the legal system inaccessible, because
of its complexity and expense.
(6) 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
Y2K date change, and work against the successful res-
olution of those difficulties.
HR 775 EAS
(7) Concern about the potential for liability—in
particular, concern about the substantial litigation
expense associated with defending against even the
most insubstantial lawsuits—is prompting many per-
sons and businesses with technical expertise to avoid
projects aimed at curing year 2000 computer date-
change problems.
(8) A proliferation of frivolous Y2K lawsuits by
opportunistic parties may further limit access to
courts by straining the resources of the legal system
and depriving deserving parties of their legitimate
rights to relief.
(9) Congress encourages businesses to approach
their Y2K disputes responsibly, and to avoid unneces-
sary, time-consuming and costly litigation about Y2K
failures, particularly those that are not material.
Congress supports good faith negotiations between
parties when there is a dispute over a Y2K problem,
and, if necessary, urges the parties to enter into vol-
untary, nonbinding mediation rather than litigation.
(b) PURPOSES.—Based upon the power of the Congress
under Article I, Section 8, Clause 3 of the Constitution of
the United States, the purposes of this Act are—
(1) to establish uniform legal standards that give
all businesses and users of technology products reason-
HR 775 EAS
able incentives to solve Y2K computer date-change
problems before they develop;
(2) to encourage continued Y2K remediation and
testing efforts by providers, suppliers, customers, and
other contracting partners;
(3) to encourage private and public parties alike
to resolve Y2K disputes by alternative dispute mecha-
nisms in order to avoid costly and time-consuming
litigation, to initiate those mechanisms as early as
possible, and to encourage the prompt identification
and correction of Y2K problems; and
(4) to lessen the burdens on interstate commerce
by discouraging insubstantial lawsuits while pre-
serving the ability of individuals and businesses that
have suffered real injury to obtain complete relief.
SEC. 3. DEFINITIONS.
In this Act:
(1) Y2K ACTION.—The term ‘‘Y2K action’’—
(A) means a civil action commenced in any
Federal or State court, or an agency board of
contract appeal proceeding, in which the plain-
tiff’s alleged harm or injury resulted from a Y2K
failure;
(B) includes a civil action commenced in
any Federal or State court by a governmental
HR 775 EAS
entity when acting in a commercial or con-
tracting capacity; but
(C) does not include an action brought by
a governmental entity acting in a regulatory, su-
pervisory, or enforcement capacity.
(2) Y2K FAILURE.—The term ‘‘Y2K failure’’
means failure by any device or system (including any
computer system and any microchip or integrated
circuit embedded in another device or product), or
any software, firmware, or other set or collection of
processing instructions to process, to calculate, to
compare, to sequence, to display, to store, to transmit,
or to receive year-2000 date-related data, including
failures—
(A) to deal with or account for transitions
or comparisons from, into, and between the years
1999 and 2000 accurately;
(B) to recognize or accurately to process
any specific date in 1999, 2000, or 2001; or
(C) accurately to account for the year
2000’s status as a leap year, including recogni-
tion and processing of the correct date on Feb-
ruary 29, 2000.
(3) GOVERNMENT
ENTITY.—The term ‘‘govern-
ment entity’’ means an agency, instrumentality, or
HR 775 EAS
other entity of Federal, State, or local government
(including multijurisdictional agencies, instrumental-
ities, and entities).
(4) MATERIAL DEFECT.—The term ‘‘material de-
fect’’ means a defect in any item, whether tangible or
intangible, or in the provision of a service, that sub-
stantially prevents the item or service from operating
or functioning as designed or according to its speci-
fications. The term ‘‘material defect’’ does not include
a defect that—
(A) has an insignificant or de minimis ef-
fect on the operation or functioning of an item
or computer program;
(B) affects only a component of an item or
program that, as a whole, substantially operates
or functions as designed; or
(C) has an insignificant or de minimis ef-
fect on the efficacy of the service provided.
(5) PERSONAL INJURY.—The term ‘‘personal in-
jury’’ means physical injury to a natural person,
including—
(A) death as a result of a physical injury;
and
HR 775 EAS
(B) mental suffering, emotional distress, or
similar injuries suffered by that person in con-
nection with a physical injury.
(6) 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 posses-
sion of the United States, and any political subdivi-
sion thereof.
(7) CONTRACT.—The term ‘‘contract’’ means a
contract, tariff, license, or warranty.
(8) ALTERNATIVE
DISPUTE
RESOLUTION.—The
term ‘‘alternative dispute resolution’’ means any
process or proceeding, other than adjudication by a
court or in an administrative proceeding, to assist in
the resolution of issues in controversy, through proc-
esses such as early neutral evaluation, mediation,
minitrial, and arbitration.
SEC. 4. APPLICATION OF ACT.
(a) GENERAL RULE.—This Act applies to any Y2K
action brought in a State or Federal court after January
1, 1999, for a Y2K failure occurring before January 1,
2003, including any appeal, remand, stay, or other judicial,
HR 775 EAS
administrative, or alternative dispute resolution proceeding
in such an action.
(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) CLAIMS FOR PERSONAL INJURY OR WRONGFUL
DEATH EXCLUDED.—This Act does not apply to a claim
for personal injury or for wrongful death.
(d) CONTRACT PRESERVATION.—
(1) IN GENERAL.—Subject to paragraph (2), in
any Y2K action any written contractual term, in-
cluding a limitation or an exclusion of liability, or
a disclaimer of warranty, shall be strictly enforced
unless the enforcement of that term would manifestly
and directly contravene applicable State law em-
bodied in any statute in effect on January 1, 1999,
specifically addressing that term.
(2) INTERPRETATION
OF
CONTRACT.—In any
Y2K action in which a contract to which paragraph
(1) applies is silent as to a particular issue, the inter-
pretation of the contract as to that issue shall be de-
termined by applicable law in effect at the time the
contract was executed.
HR 775 EAS
(e) PREEMPTION OF STATE LAW.—This Act supersedes
State law to the extent that it establishes a rule of law ap-
plicable to a Y2K action that is inconsistent with State law,
but nothing in this Act implicates, alters, or diminishes the
ability of a State to defend itself against any claim on the
basis of sovereign immunity.
(f) APPLICATION WITH YEAR 2000 INFORMATION AND
READINESS DISCLOSURE ACT.—Nothing in this Act super-
sedes any provision of the Year 2000 Information and
Readiness Disclosure Act.
(g) APPLICATION TO ACTIONS BROUGHT BY A GOVERN-
MENTAL ENTITY.—
(1) IN GENERAL.—To the extent provided in this
subsection, this Act shall apply to an action brought
by a governmental entity described in section 3(1)(C).
(2) DEFINITIONS.—In this subsection:
(A) DEFENDANT.—
(i) IN GENERAL.—The term ‘‘defend-
ant’’ includes a State or local government.
(ii) STATE.—The term ‘‘State’’ means
each of the several States of the United
States, the District of Columbia, the Com-
monwealth of Puerto Rico, the Virgin Is-
lands, Guam, American Samoa, and the
HR 775 EAS
Commonwealth of the Northern Mariana Is-
lands.
(iii) LOCAL GOVERNMENT.—The term
‘‘local government’’ means—
(I) any county, city, town, town-
ship, parish, village, or other general
purpose political subdivision of a
State; and
(II) any combination of political
subdivisions described in subclause (I)
recognized by the Secretary of Housing
and Urban Development.
(B) Y2K UPSET.—The term ‘‘Y2K upset’’—
(i) means an exceptional incident in-
volving temporary noncompliance with ap-
plicable federally enforceable measurement
or reporting requirements because of factors
related to a Y2K failure that are beyond the
reasonable control of the defendant charged
with compliance; and
(ii) does not include—
(I) noncompliance with applicable
federally enforceable requirements that
constitutes or would create an immi-
HR 775 EAS
nent threat to public health, safety, or
the environment;
(II) noncompliance with applica-
ble federally enforceable requirements
that provide for the safety and sound-
ness of the banking or monetary sys-
tem, including the protection of deposi-
tors;
(III) noncompliance to the extent
caused by operational error or neg-
ligence;
(IV) lack of reasonable preventa-
tive maintenance; or
(V) lack of preparedness for Y2K.
(3) CONDITIONS NECESSARY FOR A DEMONSTRA-
TION OF A Y2K UPSET.—A defendant who wishes to
establish the affirmative defense of Y2K upset shall
demonstrate, through properly signed, contempora-
neous operating logs, or other relevant evidence that—
(A) the defendant previously made a good
faith effort to effectively remediate Y2K prob-
lems;
(B) a Y2K upset occurred as a result of a
Y2K system failure or other Y2K emergency;
HR 775 EAS
(C) noncompliance with the applicable fed-
erally enforceable measurement or reporting re-
quirement was unavoidable in the face of a Y2K
emergency or was intended to prevent the dis-
ruption of critical functions or services that
could result in the harm of life or property;
(D) upon identification of noncompliance
the defendant invoking the defense began imme-
diate actions to remediate any violation of feder-
ally enforceable measurement or reporting re-
quirements; and
(E) the defendant submitted notice to the
appropriate Federal regulatory authority of a
Y2K upset within 72 hours from the time that
it became aware of the upset.
(4) GRANT OF A Y2K UPSET DEFENSE.—Subject
to the other provisions of this subsection, the Y2K
upset defense shall be a complete defense to any action
brought as a result of noncompliance with federally
enforceable measurement or reporting requirements
for any defendant who establishes by a preponderance
of the evidence that the conditions set forth in para-
graph (3) are met.
(5) LENGTH OF Y2K UPSET.—The maximum al-
lowable length of the Y2K upset shall be not more
HR 775 EAS
than 15 days beginning on the date of the upset un-
less granted specific relief by the appropriate regu-
latory authority.
(6) VIOLATION
OF
A
Y2K
UPSET.—Fraudulent
use of the Y2K upset defense provided for in this sub-
section shall be subject to penalties provided in section
1001 of title 18, United States Code.
(7) EXPIRATION OF DEFENSE.—The Y2K upset
defense may not be asserted for a Y2K upset occurring
after June 30, 2000.
(h) CREDIT PROTECTION
FROM YEAR 2000 FAIL-
URES.—
(1) IN GENERAL.—No person who transacts busi-
ness on matters directly or indirectly affecting mort-
gages, credit accounts, banking, or other financial
transactions shall cause or permit a foreclosure, de-
fault, or other adverse action against any other per-
son as a result of the improper or incorrect trans-
mission or inability to cause transaction to occur,
which is caused directly or indirectly by an actual or
potential Y2K failure that results in an inability to
accurately or timely process any information or data,
including data regarding payments and transfers.
(2) SCOPE.—The prohibition of such adverse ac-
tion to enforce obligations referred to in paragraph
HR 775 EAS
(1) includes but is not limited to mortgages, con-
tracts, landlord-tenant agreements, consumer credit
obligations, utilities, and banking transactions.
(3) ADVERSE CREDIT INFORMATION.—The prohi-
bition on adverse action in paragraph (1) includes
the entry of any negative credit information to any
credit reporting agency, if the negative credit infor-
mation is due directly or indirectly by an actual or
potential disruption of the proper processing of finan-
cial responsibilities and information, or the inability
of the consumer to cause payments to be made to
creditors where such inability is due directly or indi-
rectly to an actual or potential Y2K failure.
(4) ACTIONS MAY RESUME AFTER PROBLEM IS
FIXED.—No enforcement or other adverse action pro-
hibited by paragraph (1) shall resume until the obli-
gor has a reasonable time after the full restoration of
the ability to regularly receive and dispense data nec-
essary to perform the financial transaction required
to fulfill the obligation.
(5) SUBSECTION DOES NOT APPLY TO NON-Y2K-
RELATED PROBLEMS.—This subsection shall not affect
transactions upon which a default has occurred prior
to a Y2K failure that disrupts financial or data
transfer operations of either party.
HR 775 EAS
(6) ENFORCEMENT
OF
OBLIGATIONS
MERELY
TOLLED.—This subsection delays but does not prevent
the enforcement of financial obligations.
SEC. 5. PUNITIVE DAMAGES LIMITATIONS.
(a) IN GENERAL.—In any Y2K action in which puni-
tive damages are permitted by applicable law, the defendant
shall not be liable for punitive damages unless the plaintiff
proves by clear and convincing evidence that the applicable
standard for awarding damages has been met.
(b) CAPS ON PUNITIVE DAMAGES.—
(1) IN
GENERAL.—Subject to the evidentiary
standard established by subsection (a), punitive dam-
ages permitted under applicable law against a defend-
ant described in paragraph (2) in a Y2K action may
not exceed the lesser of—
(A) 3 times the amount awarded for com-
pensatory damages; or
(B) $250,000.
(2) DEFENDANT DESCRIBED.—A defendant de-
scribed in this paragraph is a defendant—
(A) who—
(i) is sued in his or her capacity as an
individual; and
(ii) whose net worth does not exceed
$500,000; or
HR 775 EAS
(B) that is an unincorporated business, a
partnership, corporation, association, or organi-
zation with fewer than 50 full-time employees.
(3) NO
CAP
IF
INJURY
SPECIFICALLY
IN-
TENDED.—Paragraph (1) does not apply if the plain-
tiff establishes by clear and convincing evidence that
the defendant acted with specific intent to injure the
plaintiff.
(c) GOVERNMENT ENTITIES.—Punitive damages in a
Y2K action may not be awarded against a government enti-
ty.
SEC. 6. PROPORTIONATE LIABILITY.
(a) IN GENERAL.—Except as provided in subsections
(b) and (c), a person against whom a final judgment is
entered in a Y2K action shall be liable solely for the portion
of the judgment that corresponds to the relative and propor-
tional responsibility of that person. In determining the per-
centage of responsibility of any defendant, the trier of fact
shall determine that percentage as a percentage of the total
fault of all persons, including the plaintiff, who caused or
contributed to the total loss incurred by the plaintiff.
(b) PROPORTIONATE LIABILITY.—
(1) DETERMINATION
OF
RESPONSIBILITY.—In
any Y2K action, the court shall instruct the jury to
answer special interrogatories, or, if there is no jury,
HR 775 EAS
the court shall make findings with respect to each de-
fendant, including defendants who have entered into
settlements 
with 
the 
plaintiff 
or 
plaintiffs,
concerning—
(A) the percentage of responsibility, if any,
of each defendant, measured as a percentage of
the total fault of all persons who caused or con-
tributed to the loss incurred by the plaintiff; and
(B) if alleged by the plaintiff, whether the
defendant (other than a defendant who has en-
tered into a settlement agreement with the plain-
tiff)—
(i) acted with specific intent to injure
the plaintiff; or
(ii) knowingly committed fraud.
(2) CONTENTS OF SPECIAL INTERROGATORIES OR
FINDINGS.—The responses to interrogatories or find-
ings under paragraph (1) shall specify the total
amount of damages that the plaintiff is entitled to re-
cover and the percentage of responsibility of each de-
fendant found to have caused or contributed to the
loss incurred by the plaintiff.
(3) FACTORS
FOR
CONSIDERATION.—In deter-
mining the percentage of responsibility under this
subsection, the trier of fact shall consider—
HR 775 EAS
(A) the nature of the conduct of each person
found to have caused or contributed to the loss
incurred by the plaintiff; and
(B) the nature and extent of the causal rela-
tionship between the conduct of each such person
and the damages incurred by the plaintiff.
(c) JOINT
LIABILITY
FOR
SPECIFIC
INTENT
OR
FRAUD.—
(1) IN
GENERAL.—Notwithstanding subsection
(a), the liability of a defendant in a Y2K action is
joint and several if the trier of fact specifically deter-
mines that the defendant—
(A) acted with specific intent to injure the
plaintiff; or
(B) knowingly committed fraud.
(2) FRAUD; RECKLESSNESS.—
(A) KNOWING COMMISSION OF FRAUD DE-
SCRIBED.—For 
purposes 
of 
subsection
(b)(1)(B)(ii) and paragraph (1)(B) of this sub-
section, a defendant knowingly committed fraud
if the defendant—
(i) made an untrue statement of a ma-
terial fact, with actual knowledge that the
statement was false;
HR 775 EAS
(ii) omitted a fact necessary to make
the statement not be misleading, with actual
knowledge that, as a result of the omission,
the statement was false; and
(iii) knew that the plaintiff was rea-
sonably likely to rely on the false statement.
(B) RECKLESSNESS.—For purposes of sub-
section (b)(1)(B) and paragraph (1) of this sub-
section, reckless conduct by the defendant does
not constitute either a specific intent to injure,
or the knowing commission of fraud, by the de-
fendant.
(3) RIGHT TO CONTRIBUTION NOT AFFECTED.—
Nothing in this section affects the right, under any
other law, of a defendant to contribution with respect
to 
another 
defendant 
found 
under 
subsection
(b)(1)(B), or determined under paragraph (1)(B) of
this subsection, to have acted with specific intent to
injure the plaintiff or to have knowingly committed
fraud.
(d) SPECIAL RULES.—
(1) UNCOLLECTIBLE SHARE.—
(A) IN
GENERAL.—Notwithstanding sub-
section (a), if, upon motion made not later than
6 months after a final judgment is entered in
HR 775 EAS
any Y2K action, the court determines that all or
part of the share of the judgment against a de-
fendant for compensatory damages is not collect-
ible against that defendant, then each other de-
fendant 
in 
the 
action 
is 
liable 
for 
the
uncollectible share as follows:
(i) PERCENTAGE OF NET WORTH.—The
other defendants are jointly and severally
liable for the uncollectible share if the plain-
tiff establishes that—
(I) the plaintiff is an individual
whose recoverable damages under the
final judgment are equal to more than
10 percent of the net worth of the
plaintiff; and
(II) the net worth of the plaintiff
is less than $200,000.
(ii) OTHER PLAINTIFFS.—For a plain-
tiff not described in clause (i), each of the
other 
defendants 
is 
liable 
for 
the
uncollectible share in proportion to the per-
centage of responsibility of that defendant,
except that the total liability of a defendant
under this clause may not exceed 50 percent
HR 775 EAS
of the proportionate share of that defendant,
as determined under subsection (b)(2).
(B) OVERALL LIMIT.—The total payments
required under subparagraph (A) from all de-
fendants may not exceed the amount of the
uncollectible share.
(C) SUBJECT TO CONTRIBUTION.—A defend-
ant against whom judgment is not collectible is
subject to contribution and to any continuing li-
ability to the plaintiff on the judgment.
(2) SPECIAL RIGHT OF CONTRIBUTION.—To the
extent that a defendant is required to make an addi-
tional payment under paragraph (1), that defendant
may recover contribution—
(A) from the defendant originally liable to
make the payment;
(B) from any other defendant that is jointly
and severally liable;
(C) from any other defendant held propor-
tionately liable who is liable to make the same
payment and has paid less than that other de-
fendant’s proportionate share of that payment;
or
(D) from any other person responsible for
the conduct giving rise to the payment that
HR 775 EAS
would have been liable to make the same pay-
ment.
(3) NONDISCLOSURE
TO
JURY.—The standard
for allocation of damages under subsection (a) and
subsection (b)(1), and the procedure for reallocation of
uncollectible shares under paragraph (1) of this sub-
section, shall not be disclosed to members of the jury.
(e) SETTLEMENT DISCHARGE.—
(1) IN
GENERAL.—A defendant who settles a
Y2K action at any time before final verdict or judg-
ment shall be discharged from all claims for contribu-
tion brought by other persons. Upon entry of the set-
tlement by the court, the court shall enter a bar order
constituting the final discharge of all obligations to
the plaintiff of the settling defendant arising out of
the action. The order shall bar all future claims for
contribution arising out of the action—
(A) by any person against the settling de-
fendant; and
(B) by the settling defendant against any
person other than a person whose liability has
been extinguished by the settlement of the settling
defendant.
(2) REDUCTION.—If a defendant enters into a
settlement with the plaintiff before the final verdict or
HR 775 EAS
judgment, the verdict or judgment shall be reduced by
the greater of—
(A) an amount that corresponds to the per-
centage of responsibility of that defendant; or
(B) the amount paid to the plaintiff by that
defendant.
(f) GENERAL RIGHT OF CONTRIBUTION.—
(1) IN GENERAL.—A defendant who is jointly
and severally liable for damages in any Y2K action
may recover contribution from any other person who,
if joined in the original action, would have been liable
for the same damages. A claim for contribution shall
be determined based on the percentage of responsi-
bility of the claimant and of each person against
whom a claim for contribution is made.
(2) STATUTE OF LIMITATIONS FOR CONTRIBU-
TION.—An action for contribution in connection with
a Y2K action shall be brought not later than 6
months after the entry of a final, nonappealable judg-
ment in the Y2K action, except that an action for
contribution brought by a defendant who was re-
quired to make an additional payment under sub-
section (d)(1) may be brought not later than 6 months
after the date on which such payment was made.