Sen. McCain's "Y2k Act," S. 96.
Re: Year 2000 conversion problem litigation reform.
Date introduced: January 19, 1999.
Source:  Senate Commerce Committee.  This document was created by Tech Law Journal by scanning and converting into HTML the January 14, 1999 Staff Discussion Draft of the bill.  Copyright 1999 Tech Law Journal.  All Rights Reserved.

[STAFF DISCUSSION DRAFT]

January 14, 1999

To regulate commerce between and among the several States by providing for the orderly resolution of disputes arising out of computer-based problems related to processing data that includes a 2-digit expression of the year's date.

IN THE SENATE OF THE UNITED STATES

JANUARY ____, 1999

Mr. _____ (for himself. Mr. _____ and Mr. _____)  introduced the following bill; which was read twice and referred to the Committee on ____________

A BILL

To regulate commerce between and among the several States by providing for the orderly resolution of disputes arising out of computer-based problems related to processing data that includes a 2-digit expression of the year's date.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

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SECTION 1. SHORT TITLE.

This Act may be cited as the "Y2K Act".

SEC. 2. DEFINITIONS. In this Act:

(1) Y2K ACTION.---The term "Y2K action"' means a civil action commenced in any Federal or State court for a cause of action arising out of a Y2K problem.

(2) Y2K PROBLEM.---The term "Y2K problem" means a problem caused by a computer system, program, or software's failure to store accurately, process, provide, or receive data involving the year-2000 date.

(3) Y2K-COMPLIANT.---The term "Y2K-compliant" means---

(A) with respect to an information technology product, that the product does not have a Y2K problem; and

(B) with respect to a business, that none of that business's information technology products that materially affects the business's capacity to deliver goods and services has a Y2K problem.

(4) INFORMATION TECHNOLOGY PRODUCT.---The term "information technology product" means a [begin page 3] computer, a computer program, or computer software.

SEC. 3. APPLICABILITY; PREEMPTION.

(a) APPLICABILITY TO Y2K ACTIONS.---This Act applies to any civil action, commenced after the date of enactment of this Act, brought in a Federal or State court against a manufacturer of an information technology product for harm caused by a Y2K problem.

(b) SCOPE OF PREEMPTION.---This Act supersedes any State law regarding recovery for harm caused by a Y2K problem only to the extent that this Act establishes a rule of law applicable to any such recovery and that is inconsistent with State law. Any issue arising under this Act that is not governed by any such rule of law shall be governed by applicable State or Federal law.

(c) ACTIONS FOR PERSONAL INJURY.---This Act does not apply to a civil action brought for personal injury to the extent that the action is based on physical injury.

SEC. 4. EXCLUSIVE REMEDIES.

(a) IN GENERAL.---The remedies provided by this Act are the exclusive remedies available to a plaintiff in a Y2K action, except as may be otherwise provided in a contract to which the plaintiff and the defendant are parties.

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(b) FORM OF ACTION.---A Y2K action shall be treated as a civil action for breach of contract, regardless of the form in which the action is brought.

(c) DEFENDANT'S OPPORTUNITY TO FIX PPROBLEM.---A Y2K action may not proceed to trial until---

(1) the plaintiff has notified the defendant in writing, describing the Y2K problem with particularity; and

(2) the plaintiff has afforded the defendant the opportunity, including reasonable access to computers and computer software affected by the Y2K problem described in the notice, to fix the problem.

SEC. 5. DAMAGES.

(a) ECONOMIC Loss.---Except as otherwise provided in this section, damages awarded in a Y2K action are limited to economic loss.

(b) OTHER DAMAGES.---

(1) IN GENERAL.---Damages in a Y2K action (including punitive damages) other than for economic loss may not exceed the greater of---

(A) 3 times the amount awarded for economic loss; or

(B) $250,000.

(2) SPECIAL RULE.---In the case of a defendant---

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(A) who---

(i) is sued in his or her capacity as a individual and

(ii) whose net worth does not exceed $500,000; or

(B) that is an unincorporated business, a partnership, corporation, association, unit of local government, or organization with fewer than 25 full-time employees, paragraph (1) shall be applied by substituting "$50,000" for "$250,000" in subparagraph (B).

(c) PUNITIVE DAMAGES.---No amount shall be awarded a plaintiff in a Y2K action for punitive damages unless the plaintiff proves that the economic damages suffered resulted from reckless disregard, rather than mere negligence on the part of the defendant.

(d) GOOD FAITH LIMITATION.---Damages in a Y2K action may not be awarded, except for economic loss, against any defendant who demonstrates that the defendant exercised due diligence and reasonable care to prevent or remedy the Y2K problem according to generally accepted standards of care and effort in the business activity in which the defendant was engaged.

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SEC. 6. SEVERAL LIABILITY.

The liability of more than 1 defendant in a Y2K action may be several but may not be joint.

SEC. 7. APPOINTMENT OF SPECIAL MASTERS FOR Y2K ACTIONS.

Any District Court of the United States in which a Y2K action is pending may appoint a special master 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. 8. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, RENTERS, AND LESSORS.

(a) GENERAL RULE.---

(1) IN GENERAL.---In any Y2K action, a information technology product seller other than a manufacturer shall be liable to a claimant only if the claimant establishes---

(A) that---

(i) the information technology product that allegedly caused the harm that is the subject of the complaint was sold, rented, or leased by the information technology product seller;

(ii) the information technology product seller failed to exercise reasonable care [begin page 7] with respect to the information technology Product: and

(iii) the failure to exercise reasonable care was a proximate cause of harm to the claimant;

(B) that---

(i) the information technology product seller made an express warranty applicable to the information technology product that allegedly caused the harm that is the subject of the complaint, independent of any express warranty made by a manufacturer as to the same information technology product;

(ii) the information technology product failed to conform to the warranty; and

(iii) the failure of the information technology product to conform to the warranty caused harm to the claimant; or

(C) that---

(i) the information technology product seller engaged in intentional wrongdoing, as determined under applicable State law; and

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(ii) such intentional wrongdoing was a proximate cause of the harm that is the subject of the complaint.

(2) REASONABLE OPPORTUNITY FOR INSPECTION.---For purposes of paragraph (1)(A)(ii), a information technology product seller shall not be considered to have failed to exercise reasonable care with respect to a information technology product based upon an alleged failure to inspect the information technology product---

(A) if the failure occurred because there was no reasonable opportunity to inspect the information technology product; or

(B) if the inspection, in the exercise of reasonable care, would not have revealed the aspect of the information technology product which allegedly caused the claimant's harm.

(b) SPECIAL RULE.---

(1) IN GENERAL.---A information technology product seller shall be liable as a manufacturer of a information technology product for harm caused by the information technology product if---

(A) the manufacturer is not subject to service of process under the laws of any State in which the action may be brought; or

[begin page 9]

(B) the court determines that the claimant would be unable to enforce a judgment against the manufacturer.

(2) STATUTE OF LIMITATIONS.---For purposes of this subsection only, the statute of limitations applicable to claims asserting liability of a information technology product seller as a manufacturer shall be tolled from the date of the filing of a complaint against the manufacturer to the date that judgment is entered against the manufacturer.

(c) RENTED OR LEASED PRODUCTS.---Any person engaged in the business of renting or leasing a information technology product (other than a person that is an information technology product manufacturer or a seller liable as a manufacturer under paragraph (1)) shall be subject to liability in a Y2K action, but any person engaged in the business of renting or leasing a information technology product shall not be liable to a claimant for the acts of another solely by reason of ownership of such information technology product.