I
106TH CONGRESS
1ST SESSION
H. R. 775
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.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 23, 1999
Mr. DAVIS of Virginia (for himself, Mr. DREIER, Mr. COX, Mr. MORAN of Vir-
ginia, Mr. CRAMER, and Mr. DOOLEY of California) introduced the fol-
lowing bill; which was referred to the Committee on the Judiciary, and
in addition to the Committee on Small Business, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
A BILL
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,
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 courts and to pro-
vide initiatives to help businesses prepare and be in
a position to withstand the potentially devastating
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.
(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
actions 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.
(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-
essary, urges the parties to enter into voluntary,
non-binding mediation rather than litigation.
whether asserted by way of claim, counterclaim,
cross-claim, third-party claim, or otherwise, in which
the plaintiff’s alleged loss or harm resulted, directly
or indirectly, from an actual or potential year 2000
failure.
(13) 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 process-
ing instructions, however constructed, in processing,
calculating, comparing, sequencing, displaying, stor-
ing, transmitting, or receiving date-related data, in-
cluding, without limitation, failure in accurately
dealing with or failure in accurately accounting for
transitions or comparisons from, into, and between
the years 1999 and 2000, failure to recognize or ac-
curately process any specific date, and failure accu-
rately to account for the year 2000’s status as a
leap year.
SEC. 4. EXCLUSION OF PERSONAL INJURY CLAIMS.
None of the provisions of this Act shall apply to any
claim based on personal injury.
TITLE 
I—UNIFORM 
PRELITI-
GATION 
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 provide to each prospec-
tive defendant a written notice that identifies, with
particularity—
(1) any symptoms of a material defect alleged
to have caused injury;
(2) the injury allegedly suffered by the prospec-
tive plaintiff;
(3) the facts that lead the prospective plaintiff
to hold such person responsible for both the defect
and the injury; and
(3) the relief or action sought by the prospec-
tive plaintiff.
Except as provided in subsection (c), the prospective plain-
tiff shall not commence an action in Federal or State court
until the expiration of 90 days after the date on which
such notice is provided. Such 90-day period shall be ex-
cluded in the computation of any applicable statute of lim-
itations.
(b) RESPONSE TO NOTICE.—Not later than 30 days
after receipt of the notice specified in subsection (a), each
prospective defendant shall provide to each prospective
plaintiff a written statement acknowledging receipt of the
notice and describing the actions it will take or has taken,
if any, to address the problem identified by the prospective
plaintiff.
(c) FAILURE TO RESPOND.—If a prospective defend-
ant fails to respond to a notice provided pursuant to sub-
section (a) within the 30-day period specified in subsection
(b) or does not describe the action, if any, that the pro-
spective defendant will take to address the problem identi-
fied by the prospective plaintiff, the 90-day period speci-
fied in subsection (a) shall terminate at the end of that
30-day period as to that prospective defendant and the
prospective plaintiff may thereafter commence its action
against that prospective defendant.
(d) FAILURE TO PROVIDE NOTICE.—If a defendant
determines that a plaintiff has filed a year 2000 action
without providing the notice specified in subsection (a)
and without awaiting the expiration of the 90-day period
specified in subsection (a), the defendant may treat the
plaintiff’s complaint as such a notice by so informing the
court and the plaintiff. 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 90 days after fil-
ing of the complaint; and
(2) the time for filing answers and all other
pleadings shall be tolled during this 90-day period.
(e) EFFECT OF CONTRACTUAL WAITING PERIODS.—
In cases where a contract requires notice of nonperform-
ance and provides for a period of delay prior to the initi-
ation of suit for breach or repudiation of contract, the pe-
riod of delay provided in the contract 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.
(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.
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
monies due within 30 days, unless another period of time
is agreed to by the parties or established by contract be-
tween the parties.
SEC. 103. PLEADING REQUIREMENTS.
(a) NATURE AND AMOUNT OF DAMAGES.—In any
year 2000 action that seeks the award of money damages,
the complaint shall state with particularity the nature and
amount of each element of damages, and the factual basis
for the damages calculation.
(b) MATERIAL DEFECTS.—In any year 2000 action
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 shall state with
particularity the facts supporting the conclusion that the
defects were material.
(c) REQUIRED STATE OF MIND.—In any year 2000
action in which a claim is asserted as to which the plaintiff
may prevail only on proof that the defendant acted with
a particular state of mind, the complaint shall, with re-
spect to each element of the claim, state with particularity
the facts giving rise to a strong inference that the defend-
ant acted with the required state of mind.
(d) 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 with or without prejudice if the re-
quirements of subsection (a), (b), or (c) are not met
with respect to any 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
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.
There shall be no recovery in any year 2000 action
on account of injury that the plaintiff could reasonably
have avoided in light of any disclosure or other informa-
tion of which the plaintiff was, or reasonably could have
been, aware, and the damages awarded in any such action
shall exclude any amount that the plaintiff reasonably
could have avoided in light of any such disclosure or infor-
mation.
TITLE II—YEAR 2000 ACTIONS
INVOLVING CONTRACTS
SEC. 201. CERTAINTY OF CONTRACT TERMS FOR PREVEN-
TION OF YEAR 2000 DAMAGES.
Notwithstanding any other provision of Federal or
State statutory or common law, in any year 2000 action
all written contractual terms, including limitations or ex-
clusions of liability or disclaimers of warranty, shall be
fully enforceable, except that—
(1) if the contract is silent as to a particular
issue, the interpretation of the contract as to that
issue shall be determined by applicable law in force
at the time that the contract was entered into; and
(2) this section does not apply if a court deter-
mines that the contract as a whole is unenforceable
due to an infirmity in the formation of the contract
under applicable law in force at the time the con-
tract was entered into.
SEC. 202. DEFENSES.
(a) REASONABLE EFFORTS.—In any year 2000 ac-
tion in which breach of contract is alleged, in addition to
any other rights provided by applicable law, the party
against whom the claim of breach is asserted shall be al-
lowed to offer evidence that its implementation of the con-
tract, or its efforts to implement the contract, were rea-
sonable in light of the circumstances for the purpose of
limiting or eliminating the defendant’s liability.
(b) IMPOSSIBILITY OR COMMERCIAL IMPRACTICABIL-
ITY.—In any year 2000 action in which breach of contract
is alleged, applicability of the doctrines of impossibility
and commercial impracticability shall be determined by
applicable law in existence on January 1, 1999, and noth-
ing in this Act shall be construed as limiting or impairing
a party’s right to assert defenses based upon such doc-
trines.
SEC. 203. PROTECTION OF PERSONS FROM LIABILITY NOT
ANTICIPATED IN YEAR 2000 CONTRACTS.
In any year 2000 action involving a breach of con-
tract or a claim related to the contract, the court shall
not award any damages unless such damages are provided
for by the express terms of the contract, or, if the contract
is silent on such damages, then by operation of the appli-
cable Federal or State law that governed interpretation
of the contract at the time the contract was entered into.
TITLE III—YEAR 2000 ACTIONS
INVOLVING TORT AND OTHER
NONCONTRACTUAL CLAIMS
SEC. 301. PROPORTIONATE LIABILITY.
(a) IN GENERAL.—Except with respect to claims in-
volving personal injury, a person against whom a final
judgment is entered in a year 2000 action shall be liable
solely for the portion of the judgment that corresponds
to the percentage of responsibility of that person, as deter-
mined under subsection (b).
(b) DETERMINATION OF RESPONSIBILITY.—
(1) IN GENERAL.—In any year 2000 action, the
court shall instruct the jury to answer special inter-
rogatories, or if there is no jury, shall make find-
ings, 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 in-
curred by the plaintiff, including (but not limited to)
persons who have entered into settlements with the
plaintiff or plaintiffs, concerning the percentage of
responsibility of the defendant, the plaintiff, and
each such person, measured as a percentage of the
total fault of all persons who caused or contributed
to the total loss incurred by the plaintiff.
(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. PROTECTION OF GOOD FAITH EFFORTS TO PRE-
VENT YEAR 2000 DAMAGES.
(a) DEFENDANT’S STATE OF MIND AS TO YEAR 2000
FAILURE.—With respect to any year 2000 claim for
money damages in which the defendant’s actual or con-
structive awareness of an actual or potential year 2000
failure is an element of the claim under applicable law,
except for a claim based upon personal injury, the defend-
ant 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 substantial risk,
that such failure would occur in the specific facts and cir-
cumstances of such claim.
(b) INJURY TO PLAINTIFF.—With respect to any year
2000 claim for money damages in which the defendant’s
actual or constructive awareness of actual or potential
harm to the plaintiff is an element of the claim under ap-
plicable law, except for a claim based upon personal injury,
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 the plaintiff would suffer
such harm.
(c) FORESEEABILITY.—With respect to any year
2000 claim for money damages, except for a claim based
upon personal injury, the defendant shall not be liable un-
less the plaintiff establishes by clear and convincing evi-
dence, in addition to all other requisite elements of the
claim, that the defendant knew or reasonably should have
known that its actions would cause harm to the plaintiff
in the specific facts and circumstances of such claim.
(d) PRESERVATION OF EXISTING LAW.—Nothing in
subsections (a), (b), or (c) shall be deemed to relieve the
plaintiff in any year 2000 action of its obligation to estab-
lish any element of its cause of action under applicable
law.
SEC. 303. REASONABLE EFFORTS DEFENSE.
In any year 2000 action involving a claim for 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 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.
SEC. 304. DAMAGES LIMITATION.
(a) YEAR 2000 RECOVERY FUND.—There is estab-
lished in the Treasury a Year 2000 Recovery Fund. In
any year 2000 action in which punitive damages are
awarded under applicable law, including this Act, the en-
tire amount of such damages shall be paid into the Year
2000 Recovery Fund. Amounts in the Fund shall be used
for the assistance of small businesses, State and local gov-
ernments, and nonprofit organizations, that are affected
by Year 2000 failures.
(b) STANDARD FOR AWARDS.—In any year 2000 ac-
tion in which punitive damages may be awarded under ap-
plicable law, the defendant shall not be liable for punitive
damages unless the plaintiff proves by clear and convinc-
ing evidence that the defendant specifically intended to
cause injury to the plaintiff. This requirement is in addi-
tion to any other requirement in applicable law for the
award of such damages.
(c) CAPS ON PUNITIVE DAMAGES.—
(1) IN GENERAL.—In any year 2000 action, if
a defendant is found liable for punitive damages, the
amount of punitive damages that may be awarded to
a claimant shall not exceed the greater of—
(A) 3 times the amount awarded to the
claimant for actual damages; or
(B) $250,000.
(2) SPECIAL RULE.—
(A) IN GENERAL.—Notwithstanding para-
graph (1), in any year 2000 action, if the de-
fendant is found liable for punitive damages
and the defendant—
(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 3 times the amount awarded
to the claimant for actual damages, 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
(1) and (2) shall be applied by the court and shall
not be disclosed to the jury.
SEC. 305. RECOVERY OF ECONOMIC DAMAGES IN YEAR 2000
ACTIONS.
(a) LIMITATION
ON
RECOVERY
OF
ECONOMIC
LOSSES.—Subject to subsection (b), a party to a year
2000 action making a tort claim may recover economic
losses only upon establishing, in addition to all other ele-
ments 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 party seeking to recover
such losses is a party.
(2) Such losses are incidental to a claim in the
year 2000 action based on personal injury caused by
a year 2000 failure.
(3) Such losses are incidental to a claim in the
year 2000 action based on damage to tangible prop-
erty caused by a year 2000 failure (other than dam-
age to property that is the subject of the contract).
(b) RECOVERY MUST BE PERMITTED UNDER APPLI-
CABLE LAW.—Economic losses shall be recoverable in a
year 2000 action only if applicable Federal law, or applica-
ble State law embodied in statute or controlling judicial
precedent as of January 1, 1999, permits the recovery of
such losses in the action.
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 non-profit or-
ganization) shall not be personally liable in any year 2000
action 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 claim that a product or service is defective, the action
may be maintained as a class action in Federal or state
court as to that claim only if it satisfies all other pre-
requisites established by applicable Federal or State law
and the court also finds that the alleged defect in the prod-
uct 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 claim that a product or service is defective and
that is brought as a class action, the court shall determine
by order whether the requirement set forth in paragraph
(1) is satisfied. An order under this subsection may be
conditional, and may be altered or amended before the de-
cision 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
(f) REMOVAL
LIMITATIONS.—Section 1446(b) is
amended in the second sentence—
(1) by inserting after ‘‘has become removable’’
the following: ‘‘, or, in the case of an action remov-
able on the basis of jurisdiction under section
1332(b), from which it may first be ascertained, by
exercising due diligence, that the case is one which
is or has become removable’’; and
(2) by inserting ‘‘(a)’’ after ‘‘section 1332’’.
(g) TECHNICAL AND CONFORMING AMENDMENTS.—
The table of sections for chapter 89 is amended by adding
after the item relating to section 1452 the following:
‘‘1453. Removal of class actions.’’.
(h) APPLICATION OF SUBSTANTIVE STATE LAW.—
Nothing in this section or the amendments made by this
section shall alter the substantive law applicable to an ac-
tion to which the amendments made by subsection (b) of
this section apply.
(i) PROCEDURE AFTER REMOVAL.—Section 1447 is
amended by adding at the end the following new sub-
section:
‘‘(f) If, after removal, the court determines that no
aspect of an action that is subject to its jurisdiction solely
under the provisions of section 1332(b) may be maintained
as a class action under Rule 23 of the Federal Rules of
Civil Procedure, the court shall strike the class allegations