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Tech Law Journal |
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| News, records, and analysis of legislation, litigation, and regulation affecting the computer, internet, communications and information technology sectors | |
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A BILL To assure that innocent users and businesses gain access to solutions to the year 2000 problem-related failures through fostering an incentive to settle year 2000 lawsuits that may disrupt significant sectors of the American economy. March 26, 1999Reported with an amendment S 461 RS Calendar No. 82 106th CONGRESS 1st Session S. 461 To assure that innocent users and businesses gain access to solutions to the year 2000 problem-related failures through fostering an incentive to settle year 2000 lawsuits that may disrupt significant sectors of the American economy. IN THE SENATE OF THE UNITED STATES February 24, 1999 Mr. HATCH (for himself, Mrs. FEINSTEIN, and Mr. MCCONNELL) introduced the following bill; which was read twice and referred to the Committee on the Judiciary March 26, 1999 Reported under authority of the order of the Senate of March 25, 1999, by Mr. HATCH, with an amendment [Strike out all after the enacting clause and insert the part printed in italic][the entirety of S 461 IS was stricken, and is not reprinted here.] A BILL To assure that innocent users and businesses gain access to solutions to the year 2000 problem-related failures through fostering an incentive to settle year 2000 lawsuits that may disrupt significant sectors of the American economy. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.(a) SHORT TITLE- This Act may be cited as the `Year 2000 Fairness and Responsibility Act'. (b) TABLE OF CONTENTS- The table of contents for this Act is as follows: Sec. 1. Short title and table of contents. TITLE I--PRELITIGATION PROCEDURES FOR YEAR 2000 CIVIL ACTIONSSec. 101. Pretrial notice. TITLE II--YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTSSec. 201. Contract preservation. TITLE III--YEAR 2000 CIVIL ACTIONS INVOLVING TORT AND OTHER NONCONTRACTUAL CLAIMSSec. 301. Economic losses. TITLE IV--CLASS ACTIONS INVOLVING YEAR 2000 CLAIMSSec. 401. Minimum injury requirement. Sec. 404. Federal jurisdiction in class actions involving year 2000 claims. TITLE V--EFFECTIVE DATESec. 501. Effective date. SEC. 2. FINDINGS, PURPOSES, AND SCOPE.(a) FINDINGS- Congress finds the following: (1)(A) Many information technology systems, devices, and programs-- (i) 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 (ii) will fail to process those dates. (B) If not corrected, the problems described in subparagraph (A) (referred to in this Act as `year 2000 computer date-change problems') and resulting failures could incapacitate systems that are essential to the functioning of markets, commerce, consumer products, utilities, Government, and safety and defense systems, 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 any and all outstanding year 2000 computer date-change problems, 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 computer date-change problems and ensuring that systems remain or become operational. (ii) It could threaten the network of valued and trusted business and customer relationships that are important to the effective functioning of the national economy. (iii) It would strain the legal system of the United States, causing particular problems for the small businesses and individuals 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 accompany litigation of business disputes could exacerbate the difficulties associated with the date change and work against the successful resolution of those difficulties. (v) 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 expertise to avoid projects aimed at curing year 2000 computer date-change problems. (b) PURPOSES- Based upon the power contained in 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 incentives to solve year 2000 computer date-change problems before they develop; (2) to encourage the resolution of year 2000 computer date-change disputes involving economic damages without recourse to unnecessary, time consuming, and wasteful litigation; and (3) to lessen burdens on interstate commerce by discouraging insubstantial lawsuits, while also preserving the ability of individuals and businesses that have suffered real injury to obtain complete relief. (c) SCOPE- Nothing in this Act affects any claim for personal injury, including claims asserted by way of claim, counterclaim, cross-claim, third-party claim, or otherwise that arise out of an underlying action for personal injury. SEC. 3. DEFINITIONS.In this Act: (1) COMPENSATORY DAMAGES- The term `compensatory damages' means damages that compensate the injured party for the specific injury sustained. (2) CONTRACT- The term `contract' means a contract, tariff, license, or warranty. (3) DEFENDANT- The term `defendant' means any person against whom a year 2000 claim is asserted. (4) ECONOMIC LOSS- The term `economic loss'-- (A) means any damages, other than damages arising out of personal injury or damage to tangible property; and (B) includes damages for-- (i) lost profits or sales; (ii) business interruption; (iii) losses indirectly suffered as a result of the defendant's wrongful act or omission; (iv) losses that arise because of the claims of third parties; (v) losses that are required to be pleaded as special damages; or (vi) items defined as consequential damages in the Uniform Commercial Code or an applicable analogous State commercial law. (5) MATERIAL DEFECT- (A) IN GENERAL- 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 intended. (B) EXCLUSIONS- The term does not include any defect that-- (i) has an insignificant or de minimis effect on the operation or functioning of an item; (ii) affects only a component of an item that, as a whole, substantially operates or functions as designed; or (iii) has an insignificant or de minimis effect on the efficacy of the service provided. (6) PERSON- The term `person' means any natural person and any entity, organization, or enterprise, including any corporation, company (including any joint stock company), association, partnership, trust, or governmental entity. (7) PERSONAL INJURY- (A) IN GENERAL- The term `personal injury' means any physical injury to a natural person, including death of the person. (B) EXCLUSIONS- The term does not include mental suffering, emotional distress, or similar elements of injury that do not constitute physical harm to a natural person. (8) PLAINTIFF- The term `plaintiff' means any person who asserts a year 2000 claim. (9) PUNITIVE DAMAGES- The term `punitive damages' means damages, other than compensatory damages, that, in whole or in part, are awarded against any person-- (A) to punish that person; or (B) to deter that person, or other persons, from engaging in similar behavior. (10) 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 U.S. Virgin Islands, Guam, American Samoa, and any other territory or possession of the United States, and any political subdivision thereof. (11) YEAR 2000 CIVIL ACTION- The term `year 2000 civil action'-- (A) means any civil action of any kind brought in any court under Federal, State, or foreign law, in which-- (i) a year 2000 claim is asserted; or (ii) any claim or defense is related, directly or indirectly, to an actual or potential year 2000 failure; and (B) does not include any action brought by a Federal, State, or other public entity, agency, or authority acting in a regulatory, supervisory, or enforcement capacity. (12) YEAR 2000 CLAIM- The term `year 2000 claim' means any claim or cause of action of any kind, whether asserted by way of claim, counterclaim, cross-claim, third-party claim, or otherwise, in which the plaintiff's alleged loss or harm resulted, directly or indirectly, from an actual or potential year 2000 failure. (13) YEAR 2000 FAILURE- The term `year 2000 failure' means any failure by any device or system (including any computer system and any microchip, semiconductor device, or integrated circuit embedded in another device or product), or any software, firmware, or other set or collection of processing instructions, however constructed, in processing, calculating, comparing, sequencing, displaying, storing, transmitting, or receiving date-related data, including-- (A) the failure to accurately administer or account for transitions or comparisons from, into, and between the 20th and 21st centuries, and between 1999 and 2000; or (B) the failure to recognize or accurately process any specific date, and the failure
accurately to account for the status of the year 2000 as a leap year. TITLE I--PRELITIGATION PROCEDURES FOR YEAR 2000 CIVIL ACTIONSSEC. 101. PRETRIAL NOTICE.(a) NOTIFICATION PERIOD- Before filing a year 2000 claim, except an action for a claim that seeks only injunctive relief, a prospective plaintiff shall be required to provide to each prospective defendant a written notice that identifies and describes with particularity-- (1) any manifestation of a material defect alleged to have caused injury; (2) the injury allegedly suffered or reasonably risked by the prospective plaintiff; and (3) the relief or action sought by the prospective plaintiff. (b) RESPONSE TO NOTICE- Not later than 30 days after receipt of the notice specified in subsection (a), each prospective defendant shall provide each prospective plaintiff a written statement that-- (1) acknowledges receipt of the notice; and (2) describes any actions that the defendant will take, or has taken, to address the defect or injury identified by the prospective plaintiff in the notice. (c) COMMENCEMENT OF ACTION- Except as provided in subsections (d) and (f), a prospective plaintiff shall not file a year 2000 claim in Federal or State court until the expiration of the 90-day period beginning on the date on which the prospective plaintiff provides notice under paragraph (1). (d) FAILURE TO RESPOND- If a prospective defendant fails to respond to a notice provided under subsection (d) during the 30-day period prescribed in subsection (b) or does not include in the response a description of actions referred to in subsection (b)(2)-- (1) the 90-day waiting period identified in subsection (c) shall terminate at the expiration of the 30-day period specified in subsection (b) with respect to that prospective defendant; and (2) the prospective plaintiff may commence a year 2000 civil action against such prospective defendant immediately upon the termination of that waiting period. (e) FAILURE TO PROVIDE NOTICE- (1) IN GENERAL- Subject to subsections (d) and (f), a defendant may treat a complaint filed by the plaintiff as a notice required under subsection (a) by so informing the court and the plaintiff if the defendant determines that a plaintiff has commenced a year 2000 civil action-- (A) without providing the notice specified in subsection (a); or (B) before the expiration of the waiting period specified in subsection (c). (2) STAY- If a defendant elects under paragraph (1) to treat a complaint as a notice-- (A) the court shall stay all discovery and other proceedings in the action for a period, as specified in subsection (c), beginning on the date of filing of the complaint; and (B) the time for filing answers and all other pleadings shall be tolled during that period. (f) EFFECT OF CONTRACTUAL WAITING PERIODS- In any case in which a contract requires notice of nonperformance and provides for a period of delay before the initiation of suit for breach or repudiation of contract, the contractual period of delay controls and shall apply in lieu of the otherwise applicable period specified in subsections (c) and (e). (g) SANCTION FOR FRIVOLOUS INVOCATION OF THE STAY PROVISION- If a defendant acts under subsection (e) to stay an action, and the court subsequently finds that the assertion by the defendant that the action is a year 2000 civil action was frivolous and made for the purpose of causing unnecessary delay, the court may impose a sanction, including an order to make payments to opposing parties in accordance with Rule 11 of the Federal Rules of Civil Procedure or applicable State rules of procedures. (h) COMPUTATION OF TIME- For purposes of this section, the rules regarding computation of time shall be construed in accordance with applicable Federal or State rules of civil procedure. (i) SINGLE PERIOD- In any claim, action, or proceeding-- (1) stating a year 2000 claim subject to the provisions of subsection (c)(2) regarding commencement of actions applies; or (2) to which subsection (e)(2) regarding stays applies; only 1 waiting or stay period, not exceeding 90 days shall be accorded to the parties. (j) APPLICABILITY OF STATUTES OF LIMITATIONS- Any applicable statute of limitations shall toll during the period during which a claimant has filed notice under subsection (a). SEC. 102. ALTERNATIVE DISPUTE RESOLUTION.(a) REQUESTS MADE DURING NOTIFICATION PERIOD- At any time during the 90-day notification period under section 101(a), either party may request the other party to use alternative dispute resolution. If, based upon that request, the parties enter into an agreement to use alternative dispute resolution, the parties may also agree to an extension of that 90-day period. (b) REQUEST MADE AFTER NOTIFICATION PERIOD- At any time after expiration of the 90-day notification period under section 101(a), whether before or after the filing of a complaint, either party may request the other party to use alternative dispute resolution. (c) PAYMENT DATE- (1) IN GENERAL- Except as provided in paragraph (2), if a dispute that is the subject of the complaint or responsive pleading is resolved through alternative dispute resolution as provided in subsection (a) or (b)-- (A) the defendant shall pay any amount of funds that the defendant is required to pay the plaintiff under the settlement not later than 30 days after the date on which the parties settle the dispute; and (B) all other terms achieved through the resolution shall be implemented as promptly as possible based upon the agreement of the parties. (2) EXCEPTIONS- The 30-day period prescribed in paragraph (1) shall not apply if-- (A) the parties engaged in alternative dispute resolution under this section agree to a different period of time; or (B) a different period of time is established by contract between the parties. SEC. 103. PLEADING REQUIREMENTS.(a) NATURE AND AMOUNT OF DAMAGES- In any year 2000 civil action in which a plaintiff seeks an award of money damages, the complaint shall state with particularity with regard to each year 2000 claim-- (1) the nature and amount of each element of damages; and (2) the factual basis for the calculation of the damages. (b) MATERIAL DEFECTS- In any year 2000 civil action in which the plaintiff alleges that a product or service was defective, the complaint shall, with respect to each year 2000 claim-- (1) identify with particularity the manifestations of the material defects; and (2) state with particularity the facts supporting the conclusion that the defects were material. (c) REQUIRED STATE OF MIND- In any year 2000 civil action in which a year 2000 claim is asserted with respect to which the plaintiff may prevail only on proof that the defendant acted with a particular state of mind, the complaint shall, with respect to each element of the claim, state in detail the facts giving rise to a strong inference that the defendant acted with the required state of mind. (d) MOTION TO DISMISS; STAY OF DISCOVERY- (1) DISMISSAL FOR FAILURE TO MEET PLEADING REQUIREMENTS- In any year 2000 civil action, the court shall, on the motion of any defendant, dismiss without prejudice any year 2000 claim asserted in the complaint if any of the requirements under subsection (a), (b), or (c) is not met with respect to the claim. (2) STAY OF DISCOVERY- In any year 2000 civil action, all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss, unless the court finds upon the motion of any party that particularized discovery is necessary to preserve evidence or prevent undue prejudice to that party. (3) PRESERVATION OF EVIDENCE- (A) IN GENERAL- (i) TREATMENT OF EVIDENCE- During the pendency of any stay of discovery entered under this paragraph, unless otherwise ordered by the court, any party to the action shall treat the items described in clause (ii) as if those items were a subject of a continuing request for production of documents from an opposing party under applicable Federal or State rules of civil procedure. (ii) ITEMS- The items described in this clause are all documents, data compilations (including electronically stored or recorded data), and tangible objects that-- (I) are in the custody or control of the party described in clause (i); and (II) relevant to the allegations. (B) SANCTION FOR WILLFUL VIOLATION- A party aggrieved by the willful failure of an opposing party to comply with subclause (A) may apply to the court for an order awarding appropriate sanctions. SEC. 104. DUTY TO MITIGATE DAMAGES.Damages awarded for any year 2000 claim described in subsection (a) shall exclude any
amount that the plaintiff reasonably could have avoided in light of any disclosure or
information with respect to which the plaintiff was, or reasonably should have been,
aware. TITLE II--YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTSSEC. 201. CONTRACT PRESERVATION.(a) IN GENERAL- Subject to subsection (b), in any action in which a year 2000 claim is advanced, in resolving that claim all written contractual terms, including limitations or exclusions of liability or disclaimers of warranty, shall be strictly enforced, unless the enforcement of such terms would manifestly and directly contravene applicable State law embodied in a specific statute specifically addressing that term as of January 1, 1999. (b) INTERPRETATION OF CONTRACT- In any case in which a contract under subsection (a) 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 that the contract was entered into. SEC. 202. EVIDENCE OF REASONABLE EFFORTS AND DEFENSES.(a) REASONABLE EFFORTS- In any action in which a year 2000 claim is advanced and in which a breach of contract or related claim is alleged, in the resolution of that claim, in addition to any other rights provided by applicable law, the party against whom the claim of breach is asserted shall be allowed in evidence, to offer evidence that the implementation of the contract by that party, or the efforts made by that party to implement the contract, were reasonable in light of the circumstances. (b) IMPOSSIBILITY OR COMMERCIAL IMPRACTICABILITY- (1) IN GENERAL- Notwithstanding any other provision of law, in any action in which a year 2000 claim is advanced and in which a breach of contract or related claim is alleged, in resolving that claim applicability of the doctrines of impossibility and commercial impracticability shall be determined by applicable law in existence on January 1, 1999. (2) RULE OF CONSTRUCTION- Nothing in this Act shall be construed as limiting or impairing a party's right to assert defenses based upon the doctrines referred to in paragraph (1). SEC. 203. CONTRACT DAMAGES.In any action in which a year 2000 claim is advanced and that involves a breach of contract, warranty, or related claim, in resolving that claim the court shall not award any damages-- (1) unless those damages are provided for by the express terms of the contract; or (2) if the contract is silent on those damages, by operation of the applicable Federal
or State law that governed interpretation of the contract at the time the contract was
entered into. TITLE III--YEAR 2000 CIVIL ACTIONS INVOLVING TORT AND OTHER NONCONTRACTUAL CLAIMSSEC. 301. ECONOMIC LOSSES.(a) IN GENERAL- Subject to subsection (b), a party to a year 2000 civil action may not recover economic losses for a year 2000 claim based on tort unless the party is able to show that at least 1 of the following circumstances exists: (1) The recovery of those losses is provided for in the contract to which the party seeking to recover those losses is a party. (2) If the contract is silent on those losses, and the application of the applicable Federal or State law that governed interpretation of the contract at the time the contract was entered into would allow recovery of those losses. (3) Those losses are incidental to a claim in the year 2000 civil action based on personal injury caused by a year 2000 failure. (4) Those losses are incidental to a claim in the year 2000 civil action based on damage to tangible property caused by a year 2000 failure. (b) TREATMENT OF ECONOMIC LOSSES- Economic losses shall be recoverable in a year 2000 civil action only if applicable Federal law, or applicable State law embodied in statute or controlling judicial precedent as of January 1, 1999, permits the recovery of those losses in the action. SEC. 302. PROPORTIONATE LIABILITY.(a) IN GENERAL- Except as provided in subsection (c), a person against whom a final judgment is entered on a year 2000 claim shall be liable solely for the portion of the judgment that corresponds to the percentage of responsibility of that person, as determined under subsection (b). (b) DETERMINATION OF RESPONSIBILITY- (1) IN GENERAL- With respect to any year 2000 claim, the court shall instruct the jury to answer special interrogatories, or if there is no jury, make findings, with respect to each defendant and plaintiff, and each of the other persons claimed by any of the parties to have caused or contributed to the loss incurred by the plaintiff, including any person who has entered into a settlement with the plaintiff, concerning the percentage of responsibility of that person, measured as a percentage of the total fault of all persons who caused or contributed to the total loss incurred by the plaintiff. (2) CONTENTS OF SPECIAL INTERROGATORIES OR FINDINGS- Each response to an interrogatory, or finding, as appropriate, under paragraph (1) shall specify-- (A) the total amount of damages that the plaintiff is entitled to recover; and (B) the percentage of responsibility of each person 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 paragraph, the trier of fact shall consider-- (A) the nature of the conduct of each person alleged 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. (4) NONDISCLOSURE TO JURY- The standard for allocation of damages under paragraph (1) shall not be disclosed to members of the jury. (c) EXCEPTION- This section does not apply if the plaintiff is an individual whose net worth is less than $200,000 and the plantiff's damages were more than 10 percent of his or her net worth. In such a case, the proportionally liable defendants are jointly and severally liable for any uncollectable amount. SEC. 303. STATE OF MIND AND FORESEEABILITY.(a) DEFENDANT'S STATE OF MIND AS TO YEAR 2000 FAILURE- With respect to any year 2000 claim for money damages in which the defendant's actual or constructive awareness of an actual or potential year 2000 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 clear and convincing evidence that the defendant actually knew, or recklessly disregarded a known and substantial risk, that the failure would occur. (b) INJURY TO PLAINTIFF- With respect to any year 2000 claim for money damages in which the defendant's actual or constructive awareness of actual or potential harm to plaintiff is greater than the standard for negligence in subsection (c) and 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 clear and convincing evidence that the defendant actually knew, or recklessly disregarded a known and substantial risk, that plaintiff would suffer that harm. (c) NEGLIGENCE- With respect to any year 2000 claim for money damages, the defendant shall not be liable unless the plaintiff establishes by clear and convincing evidence, in addition to all other requisite elements of the claim, that the defendant knew or should have known that the actions of the defendant created an unreasonable risk of harm to the plaintiff. (d) PRESERVATION OF EXISTING LAW- Nothing in subsection (a), (b), or (c) shall be deemed to create any year 2000 claim or to relieve the plaintiff in any year 2000 civil action of the obligation of that plaintiff to establish any element of the cause of action of that plaintiff under applicable law. SEC. 304. REASONABLE EFFORTS DEFENSE.Except for breach or repudiation of contract claims, or claims involving fraud or intentional tort, with respect to any year 2000 claim in which the plaintiff is seeking money damages-- (1) the fact that a year 2000 failure occurred in an entity, facility, system, product, or component that was within the control of the party against whom the claim is asserted shall not constitute the sole basis for recovery; and (2) the party against whom the claim is asserted shall be entitled to establish, as a complete defense to the claim, that all of the actions of the party were reasonable under the circumstances to prevent the year 2000 failure from occurring or from causing the damages upon which the claim is based. SEC. 305. DAMAGES LIMITATION.(a) IN GENERAL- With respect to any year 2000 claim in which punitive damages may be awarded under applicable law and in which a defendant is found liable for punitive damages, the amount of punitive damages that may be awarded to a claimant shall not exceed the greater of-- (1) 3 times the amount awarded to the claimant for compensatory damages; or (2) $250,000. (b) SPECIAL RULE- (1) RULE- (A) IN GENERAL- Notwithstanding subsection (a), as to any year 2000 claim in which the defendant is found liable for punitive damages and the defendant is a person described in subparagraph (B), the amount of punitive damages shall not exceed the lesser of-- (i) 3 times the amount awarded to the claimant for compensatory damages; or (ii) $250,000. (B) DESCRIPTION OF PERSONS- A person described in this clause is-- (i) an individual-- (I) whose net worth does not exceed $500,000; or (II) who is an owner of an unincorporated business that has fewer than 25 full-time employees; or (ii) any partnership, corporation, association, unit of local government, or organization that has fewer than 25 full-time employees. (2) APPLICABILITY- For purposes of determining the applicability of this subsection to a corporation, the number of employees of a subsidiary of a wholly owned corporation shall include all employees of a parent corporation or any subsidiary of that parent corporation. (c) APPLICATION OF LIMITATIONS BY THE COURT- The limitations contained in subsection (a) or (b) shall be applied by the court and shall not be disclosed to the jury. SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.(a) IN GENERAL- A director, officer, or trustee of a business or other organization (including a corporation, unincorporated association, partnership, or nonprofit organization) shall not be personally liable as to any year 2000 claim in the capacity of that individual as a director or officer of the business or organization for an aggregate amount greater than the greater of-- (1) $100,000; or (2) the amount of cash compensation received by the director or officer from the business or organization during the 12-month period immediately preceding the act or omission for which liability was imposed. (b) EXCEPTION- The limitation in subsection (a) shall not apply to any claim in which it is found by clear and convincing evidence that the director or officer, with specific intent to cause harm to the plaintiff-- (1) intentionally made materially misleading statements relied upon by the plaintiff regarding any actual or potential year 2000 problem; or (2) intentionally withheld material information regarding any actual or potential year 2000 problem of the business or organization that the director or officer had a duty to disclose. (c) RULE OF CONSTRUCTION- Nothing in this section shall be deemed to impose, or to
permit the imposition of, personal liability on any director, officer, or trustee in
excess of the aggregate amount of liability to which such director, officer, or trustee
would be subject under applicable State law in existence on January 1, 1999 (including any
charter or bylaw authorized by that State law). TITLE IV--CLASS ACTIONS INVOLVING YEAR 2000 CLAIMSSEC. 401. MINIMUM INJURY REQUIREMENT.(a) IN GENERAL- In any action involving a year 2000 claim that a product or service is defective, the action may be maintained as a class action in Federal or State court with respect to that claim only if-- (1) the claim satisfies all other prerequisites established by applicable Federal or State law; and (2) the court finds that the alleged defect in the product or service was a material defect with respect to a majority of the members of the class. (b) DETERMINATION BY COURT- (1) IN GENERAL- As soon as practicable after the commencement of an action involving a year 2000 claim that a product or service is defective and that is brought as a class action, the court shall determine by order whether the requirement stated in paragraph (1) is satisfied. (2) ORDERS- An order under this subsection may be-- (A) conditional; and (B) altered or amended before the decision on the merits. SEC. 402. NOTIFICATION.(a) NOTICE BY MAIL- (1) IN GENERAL- In any year 2000 civil 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 by United States mail, return receipt requested. (2) EXCLUSION OF CERTAIN PERSONS- Any person whose actual receipt of the notice is not verified by the court or by counsel for 1 of the parties shall be excluded from the class unless that person informs the court in writing, on a date no later than the commencement of trial or entry of judgment, that the person wishes to join the class. (b) CONTENTS OF NOTICE- In addition to any information required by applicable Federal or State law, the notice described in this subsection shall-- (1) concisely and clearly describe the nature of the action; (2) identify the jurisdiction whose law will govern the action; (3) identify any potential claims that class counsel chose not to pursue so that the action would satisfy class certification requirements; and (4) describe the fee arrangement of class counsel. SEC. 403. DISMISSAL PRIOR TO CERTIFICATION.Before determining whether to certify a class in a year 2000 civil action, the court may decide a motion to dismiss or for summary judgment made by any party if the court concludes that decision would-- (1) promote the fair and efficient adjudication of the controversy; and (2) not cause undue delay. SEC. 404. FEDERAL JURISDICTION IN CLASS ACTIONS INVOLVING YEAR 2000 CLAIMS.(a) DIVERSITY JURISDICTION- Section 1332 of title 28, United States Code, is amended-- (1) by redesignating subsections (b), (c), and (d) as subsections (c), (d), and (e), respectively; and (2) by inserting after subsection (a) the following: `(b)(1)(A) The district courts shall, regardless of the sum or value of the matter in controversy therein, have original jurisdiction of any year 2000 civil action which is brought as a class action and in which-- `(i) any member of a proposed plaintiff class is a citizen of a State different from any defendant; `(ii) any member of a proposed plaintiff class is a foreign state, or a citizen or subject of a foreign state, and any defendant is a citizen of a State; or `(iii) any member of a proposed plaintiff class is a citizen of a State and any defendant is a citizen or subject of a foreign state. `(B) As used in this paragraph, the term `foreign state' has the meaning given that term in section 1603(a). `(2)(A) The district court may, in its discretion, abstain from hearing such action in a year 2000 civil action described in paragraph (1) in which-- `(i) the substantial majority of the members of all proposed plaintiff classes are citizens of a single State of which the primary defendants are also citizens; and `(ii) the claims asserted will be governed primarily by the laws of that State, the district court should abstain from hearing such action. `(B) The district court may, in its discretion, abstain from hearing such action in a year 2000 civil action described in paragraph (1) in which-- `(i) all matters in controversy asserted by the individual members of all proposed plaintiff classes in the aggregate do not exceed the sum or value of $1,000,000, exclusive of interest and costs; `(ii) the number of members of all proposed plaintiff classes in the aggregate is less than 100; or `(iii) the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief, the district court may, in its discretion, abstain from hearing such action. `(3)(A) Paragraph (1) and section 1453 shall not apply to any class action that is brought under the Securities Act of 1933 (15 U.S.C. 77a et seq.). `(B) Paragraph (1) and section 1453 shall not apply to a class action described in subparagraph (C) that is based upon the statutory or common law of the State in which the issuer concerned is incorporated (in the case of a corporation) or organized (in the case of any other entity). `(C) A class action is described in this subparagraph if it involves-- `(i) the purchase or sale of securities by an issuer or an affiliate of an issuer exclusively from or to holders of equity securities of the issuer; or `(ii) any recommendation, position, or other communication with respect to the sale of securities of an issuer that-- `(I) is made by or on behalf of the issuer or an affiliate of the issuer to holders of equity securities of the issuer; and `(II) concerns decisions of those equity holders with respect to voting their securities, acting in response to a tender or exchange offer, or exercising dissenters' or appraisal rights. `(D) As used in this paragraph, the terms `issuer', `security', and `equity security' have the meanings given those terms in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c).'. (b) CONFORMING AMENDMENT- Section 1332(c) of title 28, United States Code (as redesignated by this section), is amended by inserting `pursuant to subsection (a)' after `Federal courts'. (c) DETERMINATION OF DIVERSITY- Section 1332, as amended by this section, is further amended by adding at the end the following: `(f) For purposes of subsection (b), a member of a proposed class shall be deemed to be a citizen of a State different from a defendant corporation only if that member is a citizen of a State different from all States of which the defendant corporation is deemed a citizen.'. (d) REMOVAL OF CLASS ACTIONS- Chapter 89 of title 28, United States Code, is amended by adding at the end the following: `Sec. 1453. Removal of class actions`(a) IN GENERAL- A year 2000 civil action that is brought as a class action may be removed to a district court of the United States in accordance with this chapter, except that such action may be removed-- `(1) by any defendant without the consent of all defendants; or `(2) by any plaintiff class member who is not a named or representative class member of the action for which removal is sought, without the consent of all members of such class. `(b) WHEN REMOVABLE- This section shall apply to any year 2000 civil action that is brought as a class action before or after the entry of any order certifying a class. `(c) PROCEDURE FOR REMOVAL- `(1) IN GENERAL- The provisions of section 1446(a) relating to a defendant removing a case shall apply to a plaintiff removing a case under this section. `(2) APPLICATION- With respect to the application of section 1446(b), the requirement relating to the 30-day filing period shall be met if a plaintiff class member who is not a named or representative class member of the action for which removal is sought files notice of removal within 30 days after receipt by such class member, through service or otherwise, of the initial written notice of the class action provided at the trial court's direction.'. (e) REMOVAL LIMITATIONS- Section 1446(b) is amended in the second undesignated paragraph-- (1) by inserting `, by exercising due diligence,' after `ascertained'; and (2) by striking `section 1332' and inserting `section'. (f) TECHNICAL AND CONFORMING AMENDMENTS- The table of sections for chapter 89 of title 28, United States Code, is amended by adding after the item relating to section 1452 the following: `1453. Removal of class actions.'. (g) PROCEDURE AFTER REMOVAL- Section 1447 of title 28, United States Code, is amended by adding at the end the following: `(f)(1) If, after removal, the court determines that no aspect of an action that is subject to its jurisdiction solely under the provisions of section 1332(b) may be maintained as a class action under Rule 23 of the Federal Rules of Civil Procedure, the court shall strike the class allegations from the action and remand the action to the State court. `(2) Upon remand of the action, the period of limitations for any claim that was asserted in the action on behalf of any named or unnamed member of any proposed class shall be deemed tolled to the full extent provided under Federal law.'. (h) APPLICATION OF SUBSTANTIVE STATE LAW- Nothing in the amendments made by this
section shall alter the substantive law applicable to an action to which such amendments
apply. TITLE V--EFFECTIVE DATESEC. 501. EFFECTIVE DATE.This Act and the amendments made by this Act shall take effect on January 1, 1999. |
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