H. R. 775—9
(B) if alleged by the plaintiff, whether the defendant
(other than a defendant who has entered into a settlement
agreement with the plaintiff)—
(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 findings under paragraph
(1) shall specify the total amount of damages that the plaintiff
is entitled to recover and the percentage of responsibility of
each defendant found to have caused or contributed to the
loss incurred by the plaintiff.
(3) FACTORS
FOR
CONSIDERATION.—In determining the
percentage of responsibility under this subsection, the trier
of fact shall consider—
(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 relationship
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 that is not a contract
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 DESCRIBED.—For
purposes of subsection (b)(1)(B)(ii) and paragraph (1)(B)
of this subsection, a defendant knowingly committed fraud
if the defendant—
(i) made an untrue statement of a material fact,
with actual knowledge that the statement was false;
(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 reasonably likely
to rely on the false statement.
(B) 
RECKLESSNESS.—For 
purposes 
of 
subsection
(b)(1)(B) and paragraph (1) of this subsection, reckless con-
duct by the defendant does not constitute either a specific
intent to injure, or the knowing commission of fraud, by
the defendant.
(3) RIGHT TO CONTRIBUTION NOT AFFECTED.—Nothing in
this section affects the right, under any other law, of a defend-
ant 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 subsection (a), if,
upon motion made not later than 6 months after a final
judgment is entered in any Y2K action that is not a contract
H. R. 775—10
action, the court determines that all or part of the share
of the judgment against a defendant for compensatory dam-
ages is not collectible against that defendant, then each
other defendant in the action is liable for the uncollectible
share as follows:
(i) PERCENTAGE OF NET WORTH.—The other defend-
ants are jointly and severally liable for the uncollectible
share if the plaintiff establishes that—
(I) the plaintiff is an individual whose recover-
able 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 
plaintiff 
not
described in clause (i), each of the other defendants
is liable for the uncollectible share in proportion to
the percentage of responsibility of that defendant.
(iii) For a plaintiff not described in clause (i), in
addition to the share identified in clause (ii), the
defendant is liable for an additional portion of the
uncollectible share in an amount equal to 50 percent
of the amount determined under clause (ii) if the plain-
tiff demonstrates by a preponderance of the evidence
that the defendant acted with reckless disregard for
the likelihood that its acts would cause injury of the
sort suffered by the plaintiff.
(B) OVERALL
LIMIT.—The total payments required
under subparagraph (A) from all defendants may not exceed
the amount of the uncollectible share.
(C) SUBJECT TO CONTRIBUTION.—A defendant against
whom judgment is not collectible is subject to contribution
and to any continuing liability to the plaintiff on the judg-
ment.
(D) SUITS BY CONSUMERS.—
(i) Notwithstanding subparagraph (A), the other
defendants are jointly and severally liable for the
uncollectible share if—
(I) the plaintiff is a consumer whose suit
alleges or arises out of a defect in a consumer
product; and
(II) the plaintiff is suing as an individual and
not as part of a class action.
(ii) In this subparagraph:
(I) The term ‘‘class action’’ means—
(aa) a single lawsuit in which: (1) damages
are sought on behalf of more than 10 persons
or prospective class members; or (2) one or
more named parties seek to recover damages
on a representative basis on behalf of them-
selves and other unnamed parties similarly
situated; or
(bb) any group of lawsuits filed in or
pending in the same court in which: (1) dam-
ages are sought on behalf of more than 10
persons; and (2) the lawsuits are joined,
H. R. 775—11
consolidated, or otherwise proceed as a single
action for any purpose.
(II) The term ‘‘consumer’’ means an individual
who acquires a consumer product for purposes
other than resale.
(III) The term ‘‘consumer product’’ means any
personal property or service which is normally
used for personal, family, or household purposes.
(2) SPECIAL RIGHT OF CONTRIBUTION.—To the extent that
a defendant is required to make an additional 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 sever-
ally liable;
(C) from any other defendant held proportionately
liable who is liable to make the same payment and has
paid less than that other defendant’s proportionate share
of that payment; or
(D) from any other person responsible for the conduct
giving rise to the payment that would have been liable
to make the same payment.
(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 subsection, shall not be disclosed to mem-
bers of the jury.
(e) SETTLEMENT DISCHARGE.—
(1) IN GENERAL.—A defendant who settles a Y2K action
that is not a contract action at any time before final verdict
or judgment shall be discharged from all claims for contribution
brought by other persons. Upon entry of the settlement by
the court, the court shall enter an order constituting the final
discharge of all obligations to the plaintiff of the settling defend-
ant 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 defendant; 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 judgment, the
verdict or judgment shall be reduced by the greater of—
(A) an amount that corresponds to the percentage 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 that is not a contract
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 responsibility of the claimant and
of each person against whom a claim for contribution is made.
(2) STATUTE OF LIMITATIONS FOR CONTRIBUTION.—An action
for contribution in connection with a Y2K action that is not
a contract action shall be brought not later than 6 months
H. R. 775—12
after the entry of a final, nonappealable judgment in the Y2K
action, except that an action for contribution brought by a
defendant who was required to make an additional payment
under subsection (d)(1) may be brought not later than 6 months
after the date on which such payment was made.
(g) MORE PROTECTIVE STATE LAW NOT PREEMPTED.—Nothing
in this section preempts or supersedes any provision of State law
that—
(1) limits the liability of a defendant in a Y2K action
to a lesser amount than the amount determined under this
section; or
(2) otherwise affords a greater degree of protection from
joint or several liability than is afforded by this section.
SEC. 7. PRELITIGATION NOTICE.
(a) IN GENERAL.—Before commencing a Y2K action, except
an action that seeks only injunctive relief, a prospective plaintiff
in a Y2K action shall send a written notice by certified mail (with
either return receipt requested or other means of verification that
the notice was sent) to each prospective defendant in that action.
The notice shall provide specific and detailed information about—
(1) the manifestations of any material defect alleged to
have caused harm or loss;
(2) the harm or loss allegedly suffered by the prospective
plaintiff;
(3) how the prospective plaintiff would like the prospective
defendant to remedy the problem;
(4) the basis upon which the prospective plaintiff seeks
that remedy; and
(5) the name, title, address, and telephone number of any
individual who has authority to negotiate a resolution of the
dispute on behalf of the prospective plaintiff.
(b) PERSON TO WHOM NOTICE TO BE SENT.—The notice required
by subsection (a) shall be sent—
(1) to the registered agent of the prospective defendant
for service of legal process;
(2) if the prospective defendant does not have a registered
agent, then to the chief executive officer if the prospective
defendant is a corporation, to the managing partner if the
prospective defendant is a partnership, to the proprietor if
the prospective defendant is a sole proprietorship, or to a simi-
larly-situated person if the prospective defendant is any other
enterprise; or
(3) if the prospective defendant has designated a person
to receive prelitigation notices on a Year 2000 Internet Website
(as defined in section 3(7) of the Year 2000 Information and
Readiness Disclosure Act), to the designated person, if the
prospective plaintiff has reasonable access to the Internet.
(c) RESPONSE TO NOTICE.—
(1) IN GENERAL.—Within 30 days after receipt of the notice
specified in subsection (a), each prospective defendant shall
send by certified mail with return receipt requested to each
prospective plaintiff a written statement acknowledging receipt
of the notice, and describing the actions it has taken or will
take to address the problem identified by the prospective plain-
tiff.
H. R. 775—13
(2) WILLINGNESS TO ENGAGE IN ADR.—The written state-
ment shall state whether the prospective defendant is willing
to engage in alternative dispute resolution.
(3) INADMISSIBILITY.—A written statement required by this
subsection is not admissible in evidence, under Rule 408 of
the Federal Rules of Evidence or any analogous rule of evidence
in any State, in any proceeding to prove liability for, or the
invalidity of, a claim or its amount, or otherwise as evidence
of conduct or statements made in compromise negotiations.
(4) PRESUMPTIVE TIME OF RECEIPT.—For purposes of para-
graph (1), a notice under subsection (a) is presumed to be
received 7 days after it was sent.
(5) PRIORITY.—A prospective defendant receiving more than
one notice under this section may give priority to notices with
respect to a product or service that involves a health or safety
related Y2K failure.
(d) FAILURE TO RESPOND.—If a prospective defendant—
(1) fails to respond to a notice provided pursuant to
subsection (a) within the 30 days specified in subsection (c)(1);
or
(2) does not describe the action, if any, the prospective
defendant has taken, or will take, to address the problem
identified by the prospective plaintiff,
the prospective plaintiff may immediately commence a legal action
against that prospective defendant.
(e) REMEDIATION PERIOD.—
(1) IN
GENERAL.—If the prospective defendant responds
and proposes remedial action it will take, or offers to engage
in alternative dispute resolution, then the prospective plaintiff
shall allow the prospective defendant an additional 60 days
from the end of the 30-day notice period to complete the pro-
posed remedial action or alternative dispute resolution before
commencing a legal action against that prospective defendant.
(2) EXTENSION BY AGREEMENT.—The prospective plaintiff
and prospective defendant may change the length of the 60-
day remediation period by written agreement.
(3) MULTIPLE EXTENSIONS NOT ALLOWED.—Except as pro-
vided in paragraph (2), a defendant in a Y2K action is entitled
to no more than one 30-day period and one 60-day remediation
period under paragraph (1).
(4) STATUTES OF LIMITATION, ETC., TOLLED.—Any applicable
statute of limitations or doctrine of laches in a Y2K action
to which paragraph (1) applies shall be tolled during the notice
and remediation period under that paragraph.
(f ) FAILURE TO PROVIDE NOTICE.—If a defendant determines
that a plaintiff has filed a Y2K action without providing the notice
specified in subsection (a) or without awaiting the expiration of
the appropriate waiting period specified in subsection (c), the
defendant may treat the plaintiff ’s complaint as such a notice
by so informing the court and the plaintiff in its initial response
to the plaintiff. If any defendant elects to treat the complaint
as such a notice—
(1) the court shall stay all discovery and all other pro-
ceedings in the action for the appropriate period after filing
of the complaint; and
(2) the time for filing answers and all other pleadings
shall be tolled during the appropriate period.
H. R. 775—14
(g) 
EFFECT
OF
CONTRACTUAL
OR
STATUTORY
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 by contract
or the statute is controlling over the waiting period specified in
subsections (c) and (d).
(h) STATE LAW CONTROLS ALTERNATIVE METHODS.—Nothing
in this section supersedes or otherwise preempts any State law
or rule of civil procedure with respect to the use of alternative
dispute resolution for Y2K actions.
(i) PROVISIONAL REMEDIES UNAFFECTED.—Nothing in this sec-
tion interferes with the right of a litigant to provisional remedies
otherwise available under Rule 65 of the Federal Rules of Civil
Procedure or any State rule of civil procedure providing extraor-
dinary or provisional remedies in any civil action in which the
underlying complaint seeks both injunctive and monetary relief.
( j) SPECIAL RULE
FOR CLASS ACTIONS.—For the purpose of
applying this section to a Y2K action that is maintained as a
class action in Federal or State court, the requirements of the
preceding subsections of this section apply only to named plaintiffs
in the class action.
SEC. 8. PLEADING REQUIREMENTS.
(a) APPLICATION WITH RULES OF CIVIL PROCEDURE.—This sec-
tion applies exclusively to Y2K actions 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.—In all Y2K actions
in which damages are requested, there shall be filed with the
complaint a statement of specific information as to the nature
and amount of each element of damages and the factual basis
for the damages calculation.
(c) MATERIAL DEFECTS.—In any Y2K action in which the plain-
tiff alleges that there is a material defect in a product or service,
there shall be filed with the complaint a statement of specific
information regarding the manifestations of the material defects
and the facts supporting a conclusion that the defects are material.
(d) REQUIRED STATE OF MIND.—In any Y2K action in which
a claim is asserted on which the plaintiff may prevail only on
proof that the defendant acted with a particular state of mind,
there shall be filed with the complaint, with respect to each element
of that claim, a statement of the facts giving rise to a strong
inference that the defendant acted with the required state of mind.
SEC. 9. DUTY TO MITIGATE.
(a) IN GENERAL.—Damages awarded in any Y2K action shall
exclude compensation for damages the plaintiff could reasonably
have avoided in light of any disclosure or other information of
which the plaintiff was, or reasonably should have been, aware,
including information made available by the defendant to pur-
chasers or users of the defendant’s product or services concerning
means of remedying or avoiding the Y2K failure involved in the
action.
H. R. 775—15
(b) PRESERVATION OF EXISTING LAW.—The duty imposed by
this section is in addition to any duty to mitigate imposed by
State law.
(c) EXCEPTION FOR INTENTIONAL FRAUD.—Subsection (a) does
not apply to damages suffered by reason of the plaintiff ’s justifiable
reliance upon an affirmative material misrepresentation by the
defendant, made by the defendant with actual knowledge of its
falsity, concerning the potential for Y2K failure of the device or
system used or sold by the defendant that experienced the Y2K
failure alleged to have caused the plaintiff ’s harm.
SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL
IMPRACTICABILITY DOCTRINES.
In any Y2K action for breach or repudiation of contract, the
applicability of the doctrines of impossibility and commercial
impracticability 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.
SEC. 11. DAMAGES LIMITATION BY CONTRACT.
In any Y2K action for breach or repudiation of contract, no
party may claim, or be awarded, any category of damages unless
such damages are allowed—
(1) by the express terms of the contract; or
(2) if the contract is silent on such damages, by operation
of State law at the time the contract was effective or by oper-
ation of Federal law.
SEC. 12. DAMAGES IN TORT CLAIMS.
(a) IN GENERAL.—A party to a Y2K action making a tort claim,
other than a claim of intentional tort arising independent of a
contract, may not recover damages for economic loss unless—
(1) the recovery of such losses is provided for in a contract
to which the party seeking to recover such losses is a party;
or
(2) such losses result directly from damage to tangible
personal or real property caused by the Y2K failure involved
in the action (other than damage to property that is the subject
of the contract between the parties to the Y2K action or, in
the event there is no contract between the parties, other than
damage caused only to the property that experienced the Y2K
failure),
and such damages are permitted under applicable Federal or State
law.
(b) ECONOMIC LOSS.—For purposes of this section only, and
except as otherwise specifically provided in a valid and enforceable
written contract between the plaintiff and the defendant in a Y2K
action, the term ‘‘economic loss’’ means amounts awarded to com-
pensate an injured party for any loss, and includes amounts
awarded for damages such as—
(1) lost profits or sales;
(2) business interruption;
(3) losses indirectly suffered as a result of the defendant’s
wrongful act or omission;
(4) losses that arise because of the claims of third parties;
(5) losses that must be pled as special damages; and
H. R. 775—16
(6) consequential damages (as defined in the Uniform
Commercial Code or analogous State commercial law).
(c) CERTAIN OTHER ACTIONS.—A person liable for damages,
whether by settlement or judgment, in a civil action to which
this Act does not apply because of section 4(c) whose liability,
in whole or in part, is the result of a Y2K failure may, notwith-
standing any other provision of this Act, pursue any remedy other-
wise available under Federal or State law against the person respon-
sible for that Y2K failure to the extent of recovering the amount
of those damages.
SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.
(a) DEFENDANT’S STATE OF MIND.—In a Y2K action other than
a claim for breach or repudiation of contract, and in which the
defendant’s actual or constructive awareness of an actual or poten-
tial Y2K failure is an element of the claim, the defendant is not
liable unless the plaintiff establishes that element of the claim
by the standard of evidence under applicable State law in effect
on the day before January 1, 1999.
(b) LIMITATION ON BYSTANDER LIABILITY FOR Y2K FAILURES.—
(1) IN GENERAL.—With respect to any Y2K action for money
damages in which—
(A) the defendant is not the manufacturer, seller, or
distributor of a product, or the provider of a service, that
suffers or causes the Y2K failure at issue;
(B) the plaintiff is not in substantial privity with the
defendant; and
(C) the defendant’s actual or constructive awareness
of an actual or potential Y2K 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 the standard of evidence under applicable State law in
effect on the day before January 1, 1999, that the defendant
actually knew, or recklessly disregarded a known and substan-
tial risk, that such failure would occur.
(2) SUBSTANTIAL
PRIVITY.—For purposes of paragraph
(1)(B), a plaintiff and a defendant are in substantial privity
when, in a Y2K action arising out of the performance of profes-
sional services, the plaintiff and the defendant either have
contractual relations with one another or the plaintiff is a
person who, prior to the defendant’s performance of such serv-
ices, was specifically identified to and acknowledged by the
defendant as a person for whose special benefit the services
were being performed.
(3) CERTAIN CLAIMS EXCLUDED.—For purposes of paragraph
(1)(C), claims in which the defendant’s actual or constructive
awareness of an actual or potential Y2K 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 fiduciary duty, negligent misrepresentation,
and interference with contract or economic advantage.
(c) CONTROL NOT DETERMINATIVE OF LIABILITY.—The fact that
a Y2K failure occurred in an entity, facility, system, product, or
component that was sold, leased, rented, or otherwise within the
control of the party against whom a claim is asserted in a Y2K
action shall not constitute the sole basis for recovery of damages
H. R. 775—17
in that action. A claim in a Y2K action for breach or repudiation
of contract for such a failure is governed by the terms of the
contract.
(d) PROTECTIONS OF THE YEAR 2000 INFORMATION AND READI-
NESS DISCLOSURE ACT APPLY.—The protections for the exchanges
of information provided by section 4 of the Year 2000 Information
and Readiness Disclosure Act (Public Law 105–271) shall apply
to any Y2K action.
SEC. 14. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATE
JUDGES FOR Y2K ACTIONS.
Any district court of the United States in which a Y2K action
is pending may appoint a special master or a magistrate judge
to hear the matter and to make findings of fact and conclusions
of law in accordance with Rule 53 of the Federal Rules of Civil
Procedure.
SEC. 15. Y2K ACTIONS AS CLASS ACTIONS.
(a) MATERIAL DEFECT REQUIREMENT.—A Y2K action involving
a claim that a product or service is defective may be maintained
as a class action in Federal or State court as to that claim only
if—
(1) it satisfies all other prerequisites established by
applicable Federal or State law, including applicable rules of
civil procedure; and
(2) the court finds that the defect in a product or service
as alleged would be a material defect for the majority of the
members of the class.
(b) NOTIFICATION.—In any Y2K 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, which shall include—
(1) a concise and clear description of the nature of the
action;
(2) the jurisdiction where the case is pending; and
(3) 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.
(c) FORUM FOR Y2K CLASS ACTIONS.—
(1) JURISDICTION.—Except as provided in paragraph (2),
the district courts of the United States shall have original
jurisdiction of any Y2K action that is brought as a class action.
(2) EXCEPTIONS.—The district courts of the United States
shall not have original jurisdiction over a Y2K action brought
as a class action if—
(A)(i) a substantial majority of the members of the
proposed plaintiff class are citizens of a single State;
(ii) the primary defendants are citizens of that State;
and
(iii) the claims asserted will be governed primarily
by the laws of that State;
(B) the primary defendants are States, State officials,
or other governmental entities against whom the district
courts of the United States may be foreclosed from ordering
relief;