S 461 IS
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
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.
Sec. 2. Findings, purposes, and scope.
TITLE I--PRELITIGATION PROCEDURES FOR YEAR 2000 CIVIL ACTIONS
Sec. 101. Pre-trial notice.
Sec. 102. Alternative dispute resolution.
Sec. 103. Pleading requirements.
Sec. 104. Duty to mitigate.
TITLE II--YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTS
Sec. 201. Contract preservation.
Sec. 202. Evidence of reasonable efforts and defenses.
Sec. 203. Damages limitation.
TITLE III--YEAR 2000 CIVIL ACTIONS INVOLVING TORT AND OTHER NONCONTRACTUAL
CLAIMS
Sec. 301. Proportionate liability.
Sec. 302. State of mind and foreseeability.
Sec. 303. Reasonable efforts defense.
Sec. 304. Damages limitation.
Sec. 305. Economic losses.
Sec. 306. Liability of officers and directors.
TITLE IV--CLASS ACTIONS INVOLVING YEAR 2000 CLAIMS
Sec. 401. Minimum injury requirement.
Sec. 403. Dismissal prior to certification.
Sec. 404. Federal jurisdiction in class actions involving year 2000
claims.
TITLE V--EFFECTIVE DATE
Sec. 501. Effective date.
SEC. 2. FINDINGS, PURPOSES, AND SCOPE.
(a) FINDINGS- Congress finds the following:
(1)(A) Many information technology systems, devices, and programs are
not capable of recognizing certain dates in 1999 and after December 31,
1999, and will read dates in the year 2000 and thereafter as if those dates
represent the year 1900 or thereafter or will fail to process those
dates.
(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 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 Nation's legal system, 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 claims for personal injury.
SEC. 3. DEFINITIONS.
(1) ACTUAL DAMAGES- The term `actual damages'--
(A) means damages for physical injury to any person or property;
and
(B) includes the cost of repairing or replacing a product that has a
material defect.
(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 analogous State commercial law.
(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.
(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 like 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' means any
civil action of any kind brought in any court under Federal, State, or
foreign law, in which--
(A) a year 2000 claim is asserted; or
(B) any claim or defense is related, directly or indirectly, to an
actual or potential year 2000 failure.
(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 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
ACTIONS
SEC. 101. PRE-TRIAL NOTICE.
(1) IN GENERAL- 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--
(A) any manifestation of a material defect alleged to have caused
injury;
(B) the injury allegedly suffered or reasonably risked by the
prospective plaintiff; and
(C) the relief or action sought by the prospective plaintiff.
(2) COMMENCEMENT OF ACTION- Except as provided in subsections (c) and
(e), 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).
(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) FAILURE TO RESPOND- If a prospective defendant fails to respond to a
notice provided under subsection (a)(1) 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 (a) 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.
(d) FAILURE TO PROVIDE NOTICE-
(1) IN GENERAL- Subject to subsections (c) and (e), 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 90-day waiting period specified in
subsection (a).
(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 of 90 days beginning on the date of filing of the
complaint; and
(B) the time for filing answers and all other pleadings shall be
tolled during this 90-day period.
(e) 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 waiting period
specified in subsections (a) and (d).
(f) SANCTION FOR FRIVOLOUS INVOCATION OF THE STAY PROVISION- If a
defendant acts under subsection (d) 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.
(g) COMPUTATION OF TIME- For purposes of this section, the rules regarding
computation of time shall be governed by the applicable Federal or State rules
of civil procedure.
SEC. 102. ALTERNATIVE DISPUTE RESOLUTION.
(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- 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), 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
all other terms shall be implemented as promptly as possible based upon the
agreement of the parties, unless another period of time is agreed to by the
parties or 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-
(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 with actual notice of the allegations
contained in the complaint shall treat the items described in clause
(ii) as if they 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 clause (A) may apply to the
court for an order awarding appropriate sanctions.
SEC. 104. DUTY TO MITIGATE.
(a) IN GENERAL- There shall be no recovery for any year 2000 claim on
account of injury that the plaintiff could reasonably have avoided in light of
any disclosure or other information with respect to which the plaintiff was,
or reasonably could have been, aware.
(b) DAMAGES- The damages awarded for any claim described in subsection (a)
shall exclude any amount that the plaintiff reasonably could have avoided in
light of any disclosure or information described in that subsection.
TITLE II--YEAR 2000 CIVIL ACTIONS INVOLVING CONTRACTS
SEC. 201. CONTRACT PRESERVATION.
(a) IN GENERAL- Subject to subsections (b) and (c), notwithstanding any
other provision of Federal or State statutory or case law, 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 fully enforceable.
(b) INTERPRETATION OF CONTRACT- In any case in which a contract 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.
(c) UNENFORCEABLE CONTRACTS- Subsection (a) does not apply in any case in
which a court determines that the contract as a whole is unenforceable due to
an infirmity in the formation of the contract under applicable law in effect
at the time 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, for the purpose of limiting or eliminating the defendant's
liability, 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- 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. DAMAGES LIMITATION.
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 CLAIMS
SEC. 301. PROPORTIONATE LIABILITY.
(a) IN GENERAL- Except in cases involving personal injury, 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- As 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 persons who have entered into
settlements with the plaintiff or plaintiffs, 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- The responses to
interrogatories, or findings, 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 or
plaintiffs.
(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 or
plaintiffs.
(4) NONDISCLOSURE TO JURY- The standard for allocation of damages under
paragraph (1) shall not be disclosed to members of the jury.
SEC. 302. 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. 303. REASONABLE EFFORTS DEFENSE.
Except for breach or repudiation of contract claims, as to any year 2000
claim 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 the party took measures
that were reasonable under the circumstances to prevent the year 2000
failure from occurring or from causing the damages upon which the claim is
based.
SEC. 304. DAMAGES LIMITATION.
(a) IN GENERAL- As 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 actual damages;
or
(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 an individual 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 actual damages;
or
(B) DESCRIPTION OF INDIVIDUAL- An individual described in this clause
is an individual whose net worth does not exceed $500,000, is an owner of
an unincorporated business that has fewer than 25 full-time employees, or
is 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. 305. 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 one of the following
circumstances exists:
(1) The recovery of these losses is provided for in the contract to
which the party seeking to recover such 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
such losses.
(3) These losses are incidental to a claim in the year 2000 civil action
based on personal injury caused by a year 2000 failure.
(4) These 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 such losses in the action.
SEC. 306. LIABILITY OF OFFICERS AND DIRECTORS.
(a) IN GENERAL- A director, officer, or trustee of a business or other
organization (including a corporation, unincorporated association,
partnership, or non-profit 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--
(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 CLAIMS
SEC. 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--
(B) altered or amended before the decision on the merits.
SEC. 402. NOTIFICATION.
(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 will--
(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 281 United States Code,
(as redesignated by this section) is amended by inserting after `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 DATE
SEC. 501. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect on January
1, 1999.
END