Y2K Act
PL 106-37 (H.R.775), enacted 07/20/1999

PUBLIC LAW 106-37-^JULY 20, 1999 
113 STAT. 185 
Public Law 106-37 
106th Congress 
An Act 
To establish certain procedures for civil actions brought for damages relating to 
T 1 9n IQQQ 
the failure of any device or system to process or otherwise deal with the transition 
—Hi—'. 
from the year 1999 to the year 2000, and for other purposes. 
[H.R. 775] 
Be it enacted by the Senate and House of Representatives 
of 
the United States of America in Congress assembled, 
Y2KAct. 
SECTION 1. SHORT TITLE; TABLE OF SECTIONS. 
(a) SHORT TITLE.—This Act may be cited as the 'T2K Act". 
15 use 6601 
(b) TABLE OF SECTIONS.—The table of sections for this Act note. 
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 impossibiUty 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. 
15USC6601. 
(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, £ind 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 £ind users 
of technology products concentrate their attention and resources 
in the time remaining before JanuEiry 1, 2000, on assessing, 
fixing, testing, and developing contingency plans to address 
113 STAT. 186 
PUBLIC LAW 106-37-JULY 20, 1999 
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 r£inge of undesirable effects, including the following: 
(i) It would threaten to waste technicEd and financial 
resources that £ire 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) Tftie 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 
agednst 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 m£my 
businesses and individuals who already find the legal system 
inaccessible, particulsirly 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 insubst£inti£d lawsuits—^is 
prompting many persons and businesses with techniced exper-
tise to avoid projects aimed at curing year 2000 computer 
date-change problems. 
(7) A proliferation of fidvolous 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 necessEiry, 
PUBLIC LAW 106-37^JULY 20, 1999 
113 STAT. 187 
urges the parties to enter into voluntary, nonbinding mediation 
rather than Utigation. 
(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 standsirds 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-consimiing 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 £ind businesses that have suffered real injury to 
obtain complete relief. 
SEC. 3. DEFINITIONS. 
15USC6602. 
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 Ein 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 loced government (including multijurisdictioned agen-
cies, instnunentalities, and entities). 
113 STAT. 188 
PUBLIC LAW 106-37—JULY 20, 1999 
(4) MATERIAL DEFECT.—The term "material defect" means 
a defect in any item, whether teingible 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 "materied 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) Eiffects 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 simileir 
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, Eind 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. 
15 use 6603. 
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 Jemuary 
1, 2003, or for a potentieQ 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 edter-
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 expemds Einy liability 
otherwise imposed or limits any defense otherwise avsdlable 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 
m£inifestly and directly contravene applicable State 
law 
embodied in any statute in effect on January 1, 1999, specifi-
cally addressing that term. 
PUBLIC LAW 106-37—JULY 20, 1999 
113 STAT. 189 
(2) INTERPRETATION OF CONTRACT.—In any Y2K action in 
which a contract to which paragraph (1) appHes is silent as 
to a particular issue, the interpretation of the contract as 
to that issue shall be determined by applicable law in effect 
at the time the contract was executed. 
(3) UNCONSCIONABILITY.—Nothing in paragraph (1) sheJl 
prevent enforcement of State law doctrines of unconscionability, 
including adhesion, recognized as of January 1, 1999, in control-
ling judicial precedent by the courts of the State whose law 
applies to the Y2K action. 
(e) PREEMPTION OF STATE LAW.—This Act supersedes State 
law to the extent that it establishes a rule of law applicable 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 immu-
nity. 
(f) APPLICATION WITH YEAR 2000 INFORMATION AND READINESS 
DISCLOSURE ACT.—Nothing in this Act supersedes any provision 
of the Year 2000 Information and Readiness Disclosure Act. 
(g) APPLICATION TO ACTIONS BROUGHT BY A GOVERNMENT 
ENTITY.— 
(1) IN GENERAL.—To the extent provided in this subsection, 
this Act shall apply to £ui action brought by a government 
entity described in section 3(1)(C). 
(2) DEFINITIONS.—In this subsection: 
(A) DEFENDANT.— 
(i) IN GENERAL.—^The term "defendant" includes 
a State or local government. 
(ii) STATE.—The term "State" mesins each of the 
severed States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the 
Virgin Islands, Guam, American Samoa, and the 
Commonwealth of the Northern Mariana Isleuids. 
(iii) LOCAL GOVERNMENT.—^The term "local govern-
ment" means— 
(I) £iny county, city, town, township, peirish, 
village, or other general purpose politiced subdivi-
sion of a State; and 
(II) any combination of political subdivisions 
described in subclause (I) recognized by the Sec-
retary of Housing and Urban Development. 
(B) Y2K UPSET.—The term "Y2K upset"— 
(i) means an exceptional temporary noncompliance 
with applicable federally enforceable measurement, 
monitoring, or reporting requirements directly related 
to a Y2K failure that are beyond the reasonable control 
of the defendant chsirged with compliance; and 
(ii) does not include— 
(I) noncompliance with applicable federally 
enforceable measurement, monitoring, or reporting 
requirements that constitutes or would create an 
imminent threat to public health, safety, or the 
environment; 
(II) noncompliance with applicable federally 
enforceable measurement, monitoring, or reporting 
requirements that provide for the safety and 
soundness of the bsinking or monetary system, or 
113 STAT. 190 
PUBLIC LAW 106-37-JULY 20, 1999 
for the integrity of the national securities markets, 
including the protection of depositors and inves-
tors; 
(III) noncompliance with applicable federally 
enforceable measurement, monitoring, or reporting 
requirements to the extent caused by operational 
error or negligence; 
(IV) lack of reasonable preventative mainte-
nance; 
(V) lack of preparedness for a Y2K failure; 
or 
(VI) noncompliance with the underlying feder-
ally 
enforceable 
requirements 
to 
which 
the 
• 
applicable 
federally 
enforceable 
measurement, 
monitoring, or reporting requirement relates. 
(3) CONDITIONS NECESSARY FOR A DEMONSTRATION OF A 
Y2K UPSET.—^A defendant who wishes to establish the affirma-
tive defense of Y2K upset shall demonstrate, through properly 
signed, contemporaneous operating logs, or other relevant evi-
dence that— 
(A) the defendant previously made a reasonable good 
faith effort to einticipate, prevent, and effectively remediate 
a potentigJ Y2K failiu-e; 
(B) a Y2K upset occurred as a result of a Y2K failure 
or other emergency directly related to a Y2K failure; 
(C) noncompliance 
with 
the 
applicable 
federally 
enforceable measurement, monitoring, or reporting require-
ment was unavoidable in the face of an emergency directly 
related to a Y2K fgulure and was necesseiry to prevent 
the disruption of critical functions or services that could 
result in harm to life or property; 
(D) upon identification of noncompligince the defendant 
invoking the defense began immediate actions to correct 
any violation of federally enforceable measurement, moni-
toring, or reporting reqmrements; £ind 
(E) the defendant submitted notice to the appropriate 
Federail regulatory authority of a Y2K upset within 72 
hours from the time that the defendant 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 the imposition of a penalty in any action 
brought as a result of noncompliance with federally enforceable 
measurement, monitoring, or reporting requirements for any 
defendant who establishes by a preponderance of the evidence 
that the conditions set forth in paragraph (3) Eire met. 
(5) LENGTH OF Y2K UPSET.—The maximum allowable length 
of the Y2K upset shall be not more than 15 days beginning 
on the date of the upset unless specific relief by the appropriate 
regulatory authority is granted. 
(6) 
FRAUDULENT INVOCATION OF Y2K UPSET DEFENSE.— 
Fraudulent use of the Y2K upset defense provided for in this 
subsection shall be subject to the s£inctions 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. 
PUBLIC LAW 106-37^JULY 20, 1999 
113 STAT. 191 
(8) PRESERVATION OF AUTHORITY.—Nothing in this sub-
section shall affect the authority of a government entity to 
seek injunctive relief or require a defendeint to correct a viola-
tion of a federally enforceable measurement, monitoring, or 
reporting requirement. 
(h) CONSUMER PROTECTION FROM Y2K FAILURES.— 
(1) IN GENERAL.—No person who transacts business on 
matters directly or indirectly affecting residential mortgages 
shall cause or permit a foreclosure on any such mortgage 
ag£dnst a consumer as a result of an actual Y2K failure that 
results in an inability to accurately or timely process £uiy mort-
gage payment transaction. 
(2) NOTICE.—^A consumer who is Eififected by an inability 
described in paragraph (1) shedl notify the servicer for the 
mortgage, in writing and within 7 business days from the 
time that the consumer becomes aware of the Y2K fedlure 
Euid the consimaer's inability to accurately or timely fulfill his 
or her obligation to pay, of such failure and inability and 
shall provide to the servicer any available documentation with 
respect to the failure. 
(3) ACTIONS MAY RESUME AFTER GRACE PERIOD.—Notwith-
standing paragraph (1), an action prohibited under paragraph 
(1) may be resumed, if the consumer's mortgage obligation 
has not been paid and the servicer of the mortgage has not 
expressly eind in writing granted the consumer an extension 
of time during which to pay the consumer's mortgage obligation, 
but only after the later of— 
(A) four weeks sifter JanuEuy 1, 2000; or 
(B) four weeks sifter notification is made as required 
under paragraph (2), except that Einy notification made 
on or after March 15, 2000, shall not be effective for pur-
poses of this subsection. 
(4) APPLICABILITY.—This subsection does not apply to trans-
actions upon which a default has occurred before December 
15, 1999, or with respect to which an imminent default was 
foreseeable before December 15,1999. 
(5) ENFORCEMENT OF OBLIGATIONS MERELY TOLLED.—This 
subsection delays but does not prevent the enforcement of finan-
cial obUgations, and does not otherwise affect or extinguish 
the obligation to pay. 
(6) DEFINITION.—In this subsection— 
(A) The term "consumer" means a natural person. 
(B) The term "residential mortgage" has the meaning 
given the term "federally related mortgage login" under 
section 3 of the Real Estate Settlement Procedures Act 
of 1974 (12 U.S.C. 2602). 
(C) The term "servicer" means the person, including 
any successor, responsible for receiving any scheduled peri-
odic payments fi-om a consumer pursuant to the terms 
of a residential mortgage, including amounts for any escrow 
account, and for making the pa5mDients of principal and 
interest and such other pa5ntnents with respect to the 
amounts received from the borrower as may be required 
pursuant to the terms of the mortgage. Such term includes 
the person, including any successor, who makes or holds 
a loan if such person also services the loan. 
113 STAT. 192 
PUBLIC LAW 106-37^JULY 20, 1999 
(i) APPLICABILITY TO SECURITIES LITIGATION.—In any Y2K 
action in which the underlying claim arises under the secmities 
laws (as defined in section 3(a) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78c(a)), the provisions of this Act, other than 
section 13(b) of this Act, shall not apply. 
15 use 6604. 
SEC. 5. PUNITIVE DAMAGES LIMITATIONS. 
(a) IN GENERAL.—In any Y2K action in which punitive damages 
are permitted by applicable law, the defendant shall not be liable 
for punitive damages unless the plaintiff proves by clesir and con-
vincing evidence that the applicable standard for awarding damages 
has been met. 
(b) CAPS ON PUNITIVE DAMAGES.— 
(1) IN GENERAL.—Subject to the evidentiary standard estab-
lished by subsection (a), punitive damages permitted under 
applicable law against a defendant described in paragraph (2) 
in a Y2K action may not exceed the lesser of— 
(A) three times the amount awarded for compensatory 
damages; or 
(B) $250,000. 
(2) DEFENDANT DESCRIBED.—A defendant described in this 
paragraph is a defendeint— 
(A) who— 
(i) is sued in his or her capacity as an individual; 
and 
(ii) whose net worth does not exceed $500,000; 
or 
(B) that is an unincorporated business, a partnership, 
corporation, association, or organization, with fewer than 
50 full-time employees. 
(3) No CAP IF INJURY SPECIFICALLY INTENDED.—Paragraph 
(1) does not apply if the plaintiff establishes by clear and 
convincing evidence that the defendant acted with specific 
intent to injure the plsdntiff. 
(c) GOVERNMENT ENTITIES.—Punitive damages in a Y2K action 
may not be awarded against a government entity. 
15 use 6605. 
SEC. 6. PROPORTIONATE LIABILITY. 
(a) IN GENERAL.—Except in a Y2K action that is a contract 
action, and except as provided in subsections (b) through (g), a 
person against whom a final judgment is entered in a Y2K action 
shall be liable solely for the portion of the judgment that cor-
responds to the relative and proportionate responsibility of that 
person. In determining the percentage of responsibility of any 
defendant, the trier of fact shall determine that percentage as 
a percentage of the toted fault of all persons, including the plaintiff, 
who caused or contributed to the total loss incurred by the plaintiff. 
(b) PROPORTIONATE LIABILITY.— 
Courts. 
(1) DETERMINATION OF RESPONSIBILITY.—In any Y2K action 
that is not a contract action, the court shall instruct the jury 
to answer special interrogatories, or, if there is no jury, the 
court shall make findings with respect to each defendeuit, 
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 contributed to the loss incurred 
by the plaintiff; and 
PUBLIC LAW 106-37—JULY 20, 1999 
113 STAT. 193 
(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 pgiragraph 
(1) shall specify the total Eimount of damages that the plaintiff 
is entitled to recover Eind 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)(l)(B)(ii) and paragraph (1)(B) 
of this subsection, a defendeuit 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-
£uit 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 £iny Y2K action that is not a contract 
113 STAT. 194 
PUBLIC LAW 106-37—JULY 20, 1999 
action, the court determines that all or part of the share 
of the judgment agsdnst 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 axe jointly and severally liable for the uncollectible 
sh£ire 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 
PLAENTIFFS.—For 
a 
plaintiff 
not 
described in clause (i), each of the other defendants 
is liable for the imcollectible 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 Uable for an additional portion of the 
uncollectible share in an amount equal to 50 percent 
of the amoimt 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) 
fi*om 
all defendants may not exceed 
the Eunount of the imcollectible shsire. 
(C) SUBJECT TO CONTRIBUTION.—A defendant against 
whom judgment is not collectible is subject to contribution 
Euid to any continuing liability to the plaintiff on the judg-
ment. 
(D) SUITS BY CONSUMERS.— 
(i) NotwithstEuiding subparagraph (A), the other 
defendants are jointly and severally liable for the 
uncollectible sheire if— 
(I) the plaintiff is a consumer whose suit 
alleges or arises out of a defect in a consimaer 
product; and 
(II) the plaintiff is suing as an individual and 
not as part of a class action. 
(ii) In this subpeiragraph: 
(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 psirties 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. 
PUBLIC LAW 106-37-^JULY 20, 1999 
113 STAT. 195 
consolidated, or otherwise proceed as a single 
action for any purpose. 
(II) The term "consumer" means aui individual 
who acquires a consumer product for purposes 
other than reseJe. 
(III) The term "consimier product" means any 
personal property or service which is normeJly 
used for personal, family, or household purposes, 
(2) SPECIAL RIGHT OF CONTRIBUTION.—^To the extent that 
a defendeuit is required to make an additioned pajmient under 
parsigraph (1), that defendant may recover contribution— 
(A) from the defendant originally liable to maike the 
payment; 
(B) from any other defendant that is jointly and sever-
gdly liable; 
(C) from any other defendsuit held proportionately 
liable who is liable to meike the same pa3rment 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 pajonent that would have been liable 
to make the s£ime payment. 
(3) NONDISCLOSURE TO JURY.—The standard for allocation 
of damages under subsection (a) and subsection (b)(1), and 
the procedure for resdlocation of uncollectible sheu-es under 
pgiragraph (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 finEd verdict 
or judgment shall be dischsirged from all claims for contribution 
brought by other persons. Upon entry of the settlement by Courts. 
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, llie order shall bar sdl future 
claims for contribution arising out of the action— 
(A) by any person against the settling defendant; and 
(B) by the settling defendant against £uiy person other 
thsm 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 amoiuit that corresponds to the percentage of 
responsibility of that defendant; or 
(B) the amount pedd to the plaintiff by that defendant. 
(f) GENERAL RIGHT OF CONTRIBUTION.— 
(1) IN GENERAL.—^A defendant who is jointly and severally 
liable for dsunages in any Y2K action that is not a contract 
action may recover contribution from £iny other person who, 
if joined in the origined 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 cledm for contribution is made. 
(2) STATUTE OF LIAHTATIONS FOR CONTRIBUTION.—An action 
for contribution in connection with a Y2K action that is not 
a contract action shsdl be brought not later than 6 months 
113 STAT. 196 
PUBLIC LAW 106-37-^JULY 20, 1999 
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 EUI additional pa3mient 
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. 
15 use 6606. 
SEC. 7. PRELTTIGATION NOTICE. 
(a) IN GENERAL.—Before commencing a Y2K action, except 
an action that seeks only injunctive relief, a prospective pleiintiff 
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 zdlegedly suffered by the prospective 
plaintiff; 
(3) how the prospective plaintiff would like the prospective 
defendemt to remedy the problem; 
(4) the basis upon which the prospective plaintiff seeks 
that remedy; and 
(5) the name, title, address, and telephone nimiber of any 
individu£j 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-
leirly-situated person if the prospective defendsint is any other 
enterprise; or 
(3) if the prospective defendant has designated a person 
to receive prehtigation 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.— 
Deadline. 
(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. 
PUBLIC LAW 1 0 6 - 3 7 - J U L Y 20, 1999 
113 STAT. 197 
(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 £iny 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 hesdth 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 teike, 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 defendauit 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 
fi"om 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 defendsint. 
(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 
£Uid 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 complsdnt as such a notice 
by so infonning 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- Courts. 
ceedings in the action for the appropriate period Eifl^er filing 
of the complaint; and 
(2) the time for filing answers and all other pleadings 
shall be tolled during the appropriate period. 
113 STAT. 198 
PUBLIC LAW 106-37^JULY 20, 1999 
(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 wedting period specified in 
subsections (c) £uid (d). 
(h) STATE LAW CONTROLS ALTERNATIVE METHODS.—Nothing 
in this section supersedes or otherwise preempts £iny 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 litigemt 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 provisioned remedies in any civil action in which the 
underlying complaint seeks both injunctive and moneteiry relief 
(j) SPECIAL RULE FOR CLASS ACTIONS.—For the purpose of 
appljdng this section to a Y2K action that is medntained as a 
class action in Federal or State court, the requirements of the 
preceding subsections of this section apply only to neimed plaintiffs 
in the class action. 
15 use 6607. 
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 eind 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 materied defects 
and the facts supporting a conclusion that the defects are material. 
(d) REQUIRED STATE OF MIND.—In any Y2K action in which 
a clsdm 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 clsdm, a statement of the facts giving rise to a strong 
inference that the defendant acted with the required state of mind. 
15 use 6608. 
SEC. 9. DUTY TO MITIGATE. 
(a) IN GENERAL.—Damages awarded in any Y2K action shall 
exclude compensation for damages the plaintiff coidd 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 remedjdng or avoiding the Y2K failure involved in the 
action. 
PUBLIC LAW 106-37-^JULY 20, 1999 
113 STAT. 199 
(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 materigd misrepresentation by the 
defendeuit, made by the defendant with actual knowledge of its 
falsity, concerning the potentied for Y2K failure of the device or 
system used or sold by the defendeint that experienced the Y2K 
failure alleged to have caused the plgdntiff's harm. 
SEC. 10. APPUCATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL 15 USC 6609. 
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 
Janu£iry 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. 
15 USC 6610. 
In any Y2K action for breach or repudiation of contract, no 
party may cledm, or be awarded, Euiy 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. 
15 USC 6611. 
(a) IN GENERAL.—^A party to a Y2K action making a tort claim, 
other than a claim of intentional tort auising independent of a 
contract, may not recover damages for economic loss luiless— 
(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 Eire permitted imder applicable FedersJ or State 
law. 
(b) ECONOMIC LOSS.—For purposes of this section only, eind 
except as otherwise specifically provided in a VEilid and enforceable 
written contract between the plaintiff and the defendant in a Y2K 
action, the term "economic loss" means amoiuits aweirded to com-
pensate an injured party for any loss, and includes amounts 
awEirded 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 eurise because of the claims of third parties; 
(5) losses that must be pled as special damages; and 
113 STAT. 200 
PUBLIC LAW 106-37-^JULY 20, 1999 
(6) consequential damages (as defined in the Uniform 
Commercial Code or anedogous 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 amoiuit 
of those damages. 
15 use 6612. 
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 am actuEd or poten-
tial Y2K failure is an element of the claim, the defendsuit is not 
liable unless the plaintiff establishes that element of the cleum 
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 manufactiu'er, 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 
defendeuit; and 
(C) the defendant's actual or constructive awareness 
of an actugJ or potential Y2K failure is an element of 
the claim under applicable law, 
the defendant shall not be liable unless the pledntiff, 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 
actu£dly knew, or recklessly disreg£u*ded a known and substeui-
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 Eirising out of the performance of profes-
sional services, the plaintiff and the defendant either have 
contractual relations with one Euiother 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), clEums 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 clsdms for 
negligence but do include claims such as fraud, constructive 
fi*aud, breach of fiduciary duty, negligent misrepresentation, 
and interference with contract or economic advantage. 
(c) CONTROL NOT DETERMINATIVE OF LLVBILITY.—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 
PUBLIC LAW 106-37—JULY 20, 1999 
113 STAT. 201 
in that action. A clsdm in a Y2K action for breach or repudiation 
of contract for such a failiu-e 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 (PubHc Law 105-271) shall apply 
to any Y2K action. 
SEC. 14. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATE 
15USC6613. 
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. 
15USC6614. 
(a) MATERL\L 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 eJleged 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 awEird 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 shedl 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 primEuy defendants are States, State officials, 
or other governmental entities against whom the district 
courts of the United States may be foreclosed from ordering 
relief; 
69-194-01 -8:QL3Part 1 
113 STAT. 202 
PUBLIC LAW 106-37-^JULY 20, 1999 
(C) the plaintiff class does not seek an award of puni-
tive dsunages, and the Eimount in controversy is less than 
the sum of $10,000,000 (exclusive of interest £ind costs), 
computed on the basis of all cleiims to be determined in 
the action; or 
(D) there are less than 100 members of the proposed 
plaintiff class. 
A party urging that any exception described in subpeiragraph 
(A), (B), (C), or (D) applies to an action shall bear the full 
burden of demonstrating the applicability of the exception. 
(3) PROCEDURE IF REQUIREMENTS NOT MET.— 
(A) DISMISSAL OR REMAND.—A United States district 
court shall dismiss, or, if after removal, strike the class 
allegations and remand, £uiy Y2K action brought or 
removed under this subsection as a class action if— 
(i) the action is subject to the jurisdiction of the 
coiut solely under this subsection; and 
(ii) the court determines the action may not pro-
ceed as a class action based on a failure to satisfy 
the conditions of Rule 23 of the Federal Rules of Civil 
Procediu-e. 
(B) AMENDMENT; REMOVAL.—Nothing in psu-agraph (A) 
shall prohibit plaintiffs from filing an simended class action 
in Federsd or State coiui;. A defendant shall have the 
right to remove such an amended class action to a United 
States district court under this subsection. 
(C) PERIOD OF LIMITATIONS TOLLED.—Upon dismissal 
or remand, the period of limitations for any claim that 
was asserted in an action on behalf of any named or 
unnamed member of any proposed class shedl be deemed 
tolled to the full extent provided under Federal law. 
(D) DISMISSAL WITHOUT PREJUDICE.—The dismissal of 
a Y2K action under subparagraph (A) sh2Jl be without 
prejudice. 
(d) EFFECT ON RULES OF CIVIL PROCEDURE.—Except as other-
wise provided in this section, nothing in this section supersedes 
any rule of Federal or State civil procedure applicable to class 
actions. 
15 use 6615. 
SEC. 16. APPLICABILITY OF STATE LAW. 
Nothing in this Act shall be construed to affect the applicability 
of any State law that provides stricter limits on damages and 
liabilities, affording greater protection to defendants in Y2K actions, 
than are provided in this Act. 
15 use 6616. 
SEC. 17. ADMISSIBLE EVIDENCE ULTIMATE ISSUE IN STATE COURTS. 
Any party to a Y2K action in a State court in a State that 
has not adopted a rule of evidence substantiedly similar to Rule 
704 of the Federal Rules of Evidence may introduce in such action 
evidence that would be admissible if Rule 704 applied in that 
jurisdiction. 
15 use 6617. 
SEC. 18. SUSPENSION OF PENALTIES FOR CERTAIN YEAR 2000 FAIL-
URES BY SMALL BUSINESS CONCERNS. 
(a) DEFINITIONS.—In this section— 
(1) the term "agency" means £uiy executive agency, as 
defined in section 105 of title 5, United States Code, that 
PUBLIC LAW 106-37—JULY 20, 1999 
113 STAT. 203 
has the authority to impose civil penalties on small business 
concerns; 
(2) the term "first-time violation" means a violation by 
a small business concern of a federally enforceable rule or 
regulation (other than a Federal rule or regulation that relates 
to the safety and soimdness of the banking or monetary system 
or for the integrity of the National Securities markets, including 
protection of depositors and investors) caused by a Y2K failure 
if that Federal rule or regulation had not been violated by 
that small business concern within the preceding 3 yesirs; and 
(3) the term "small business concern" has the same 
meaning as a defendant described in section 5(b)(2)(B). 
(b) ESTABLISHMENT OF LIAISONS.—Not later than 30 days after Deadline. 
the date of the enactment of this Act, each agency shall— 
(1) establish a point of contact within the agency to act 
as a liaison between the agency and small business concerns 
with respect to problems arising out of Y2K failures £ind compli-
ance with Federal rules or regulations; and 
(2) publish the name and phone number of the point of Federal! Register, 
contact for the agency in the Federsd Register. 
publication. 
(c) GENERAL RULE.—Subject to subsections (d) and (e), no 
agency shall impose any civil money penalty on a small business 
concern for a first-time violation. 
(d) STANDARDS FOR WAIVER.—An agency shall provide a waiver 
of civil money penalties for a first-time violation, provided that 
a small business concern demonstrates, and the agency determines, 
that— 
(1) the small business concern previously made a reason-
able good faith effort to anticipate, prevent, and effectively 
remediate a potential Y2K failure; 
(2) a first-time violation occurred as a result of the Y2K 
failure of the smsdl business concern or other entity, which 
significeintly affected the small business concern's ability to 
comply with a Federal rule or regulation; 
(3) the first-time violation was unavoidable in the face 
of a Y2K failure or occurred as a result of efforts to prevent 
the disruption of criticeJ functions or services that could result 
in harm to life or property; 
(4) upon identification of a first-time violation, the small 
business concern initiated reasonable and prompt measures 
to correct the violation; and 
(5) the small business concern submitted notice to the 
appropriate agency of the first-time violation within a reason-
able time not to exceed 5 business days from the time that 
the small business concern became aware that the first-time 
violation had occurred. 
(e) EXCEPTIONS.—^An agency may impose civil money penedties 
authorized under Federal law on a small business concern for 
a first-time violation if— 
(1) the small business concern's failure to comply with 
Federal rules or regulations resulted in actual harm, or con-
stitutes or creates an imminent threat to public health, safety, 
or the environment; or 
113 STAT. 204 
PUBLIC LAW 106-37^JULY 20, 1999 
(2) the small business concern fails to correct the violation 
not later than 1 month after initial notification to the agency, 
(f) EXPIRATION.—This section shedl not apply to first-time viola-
tions caused by a Y2K failure occurring after December 31, 2000. 
Approved July 20, 1999. 
LEGISLATIVE HISTORY—H.R. 775 (S. 96) (S. 461): 
HOUSE REPORTS: Nos. 106-131, Pt. 1 (Comm. on the Judiciary) and 106-212 
(Comm. of Conference). 
SENATE REPORTS: No. 106-10 accompanying S. 96 (Comm. on Commerce, 
Science, and Transportation). 
CONGRESSIONAL RECORD, Vol. 145 (1999): 
May 12, considered and passed House. 
June 15, considered and passed Senate, amended, in lieu of S. 96. 
July 1, House and Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 35 (1999): 
July 20, Presidential statement.