H. R. 775
One Hundred Sixth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Wednesday,
the sixth day of January, one thousand nine hundred and ninety-nine
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 Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF SECTIONS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Y2K Act’’.
(b) TABLE OF SECTIONS.—The table of sections for this Act
is as follows:
Sec.
1. Short title; table of sections.
Sec.
2. Findings and purposes.
Sec.
3. Definitions.
Sec.
4. Application of Act.
Sec.
5. Punitive damages limitations.
Sec.
6. Proportionate liability.
Sec.
7. Prelitigation notice.
Sec.
8. Pleading requirements.
Sec.
9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial impracticability
doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Appointment of special masters or magistrate judges for Y2K actions.
Sec. 15. Y2K actions as class actions.
Sec. 16. Applicability of State law.
Sec. 17. Admissible evidence ultimate issue in State courts.
Sec. 18. Suspension of penalties for certain year 2000 failures by small business
concerns.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds the following:
(1)(A) Many information technology systems, devices, and
programs are not capable of recognizing certain dates in 1999
and after December 31, 1999, and will read dates in the year
2000 and thereafter as if those dates represent the year 1900
or thereafter or will fail to process dates after December 31,
1999.
(B) If not corrected, the problem described in subparagraph
(A) and resulting failures could incapacitate systems that are
essential to the functioning of markets, commerce, consumer
products, utilities, Government, and safety and defense sys-
tems, in the United States and throughout the world.
(2) It is in the national interest that producers and users
of technology products concentrate their attention and resources
in the time remaining before January 1, 2000, on assessing,
fixing, testing, and developing contingency plans to address
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any and all outstanding year 2000 computer date-change prob-
lems, so as to minimize possible disruptions associated 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 litigation, 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 curing year 2000 com-
puter 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 system, causing
particular problems for the small businesses and individ-
uals who already find that system inaccessible because
of its complexity and expense.
(iv) The delays, expense, uncertainties, loss of control,
adverse publicity, and animosities that frequently accom-
pany litigation of business disputes could exacerbate the
difficulties associated 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 the year 2000 problems described in this section
do not unnecessarily disrupt interstate commerce or create
unnecessary caseloads in Federal courts and to provide initia-
tives to help businesses prepare and be in a position to with-
stand the potentially devastating economic impact of such prob-
lems.
(5) Resorting to the legal system for resolution of year
2000 problems described in this section is not feasible for many
businesses and individuals who already find the legal system
inaccessible, particularly small businesses and individuals who
already find the legal system inaccessible, because of its com-
plexity and expense.
(6) 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 persons and businesses with technical exper-
tise to avoid projects aimed at curing year 2000 computer
date-change problems.
(7) A proliferation of frivolous lawsuits relating to year
2000 computer date-change problems 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) Congress encourages businesses to approach their dis-
putes relating to year 2000 computer date-change problems
responsibly, and to avoid unnecessary, time-consuming, and
costly litigation about Y2K failures, particularly those that
are not material. Congress supports good faith negotiations
between parties when there is such a dispute, and, if necessary,
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urges the parties to enter into voluntary, 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 reasonable incen-
tives to solve year 2000 computer date-change problems before
they develop;
(2) to encourage continued remediation and testing efforts
to solve such problems by providers, suppliers, customers, and
other contracting partners;
(3) to encourage private and public parties alike to resolve
disputes relating to year 2000 computer date-change problems
by alternative dispute mechanisms 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 such problems; and
(4) to lessen the burdens on interstate commerce by discour-
aging insubstantial lawsuits while preserving 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 pro-
ceeding, in which the plaintiff ’s alleged harm or injury
arises from or is related to an actual or potential Y2K
failure, or a claim or defense arises from or is related
to an actual or potential Y2K failure;
(B) includes a civil action commenced in any Federal
or State court by a government entity when acting in
a commercial or contracting capacity; but
(C) does not include an action brought by a government
entity acting in a regulatory, supervisory, 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 compari-
sons 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 recognition and processing of
the correct date on February 29, 2000.
(3) GOVERNMENT ENTITY.—The term ‘‘government entity’’
means an agency, instrumentality, or other entity of Federal,
State, or local government (including multijurisdictional agen-
cies, instrumentalities, and entities).
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(4) 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 operating or functioning as designed or
according to its specifications. The term ‘‘material defect’’ does
not include a defect that—
(A) has an insignificant or de minimis effect 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 effect on the
efficacy of the service provided.
(5) PERSONAL INJURY.—The term ‘‘personal injury’’ means
physical injury to a natural person, including—
(A) death as a result of a physical injury; and
(B) mental suffering, emotional distress, or similar
injuries suffered by that person in connection with a phys-
ical 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 possession of the United States, and any political subdivision
thereof.
(7) CONTRACT.—The term ‘‘contract’’ means a contract,
tariff, license, or warranty.
(8) ALTERNATIVE DISPUTE RESOLUTION.—The term ‘‘alter-
native 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 processes 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
after January 1, 1999, for a Y2K failure occurring before January
1, 2003, or for a potential Y2K failure that could occur or has
allegedly caused harm or injury before January 1, 2003, including
any appeal, remand, stay, or other judicial, administrative, or alter-
native 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) WARRANTY AND CONTRACT PRESERVATION.—
(1) IN GENERAL.—Subject to paragraph (2), in any Y2K
action any written contractual term, including 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
embodied in any statute in effect on January 1, 1999, specifi-
cally addressing that term.