H. B. 2298
(By Mr. Speaker, Mr. Kiss, and Delegate Martin)
[Introduced January 19, 1999; referred to the
Committee on the Judiciary.]
A BILL to amend chapter forty-seven of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article eighteen-a,
relating to information technology resources; creating the
"Commerce Protection Act"; defining terms; prescribing
exclusive remedies against persons, businesses and
governmental agencies for damages caused by the failure of
their information technology resources to function properly
with respect to date data; prescribing damages; expanding
the waiver of sovereign immunity; providing for costs and
attorney's fees; barring certain class actions; providing
immunity from personal liability for directors and officers
of businesses under specified circumstances; creating a lien
in favor of certain lending institutions on proceeds
received by a business as a result of its failure or the failure of another to be year-2000 compliant; imposing
insurance and warranty requirements on persons who undertake
to assess whether information technology resources are
year-2000 compliant or make such resources so compliant and
prescribing remedies against such persons; prohibiting such
persons from misusing or disclosing specified information
provided to them; providing for remedies and damages for
unlawful use or disclosure of that information; providing
criminal penalties; exempting the exchange of certain
information among specified entities from action under the
state antitrust act; prescribing incentives to use
alternative dispute-resolution procedures; and, providing
for liability for costs and attorney's fees under specified
circumstances.
Be it enacted by the Legislature of West Virginia:
That chapter forty-seven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article eighteen-a, to
read as follows:
ARTICLE 18A. COMMERCE PROTECTION ACT.
§47-18A-1.Short title.
This act may be cited as the "Commerce Protection Act."
§47-18A-2. Definitions.
For the purposes of this article the following terms mean as
follows:
(a) "Business" means a person or entity, however organized,
that is routinely engaged in this state providing goods or
services in the stream of commerce, but the term excludes any
governmental agency.
(b) "Date data" means data that contains dates or that
contains both dates and times.
(c) "Governmental agency" means the state or any of its
political subdivisions, or any agency of either.
(d) "Information technology product" means software,
firmware, microcode, hardware and embedded chips that create,
read, write, calculate, compare, sequence or otherwise process
date data.
(e) "Solution provider" means any entity that accepts
compensation or other valuable consideration from a business or
governmental agency either to assess whether it or any of its
information technology products is year-2000 compliant or to make
it or any of its information technology products year-2000
compliant.
(f) "Year-2000 compliant" means the state of an information
technology product that processes all of its date data accurately
and if it will do so even for a data that contain dates occurring
before February twenty-ninth, one thousand nine hundred ninety-six, and dates occurring after February twenty-ninth, two
thousand.
§47-18A-3. Remedies for failure to be year two thousand
compliant; waiver of sovereign immunity; costs and attorney's
fees; limitation on class actions.
(a) Effective January first, two thousand, the exclusive
remedies in this state for recovering from a business or
governmental agency damages caused by its failure to be year-2000
compliant are those provided by this article or by contract with
the business or governmental agency. However, if a contract
provides exclusive or limited remedies and circumstances cause
those remedies to fail of their essential purpose, remedy may be
had as provided in this article.
(b) Effective January first, two thousand, any business that
is not year-2000 compliant is liable:
(1) For compensatory damages caused by its failure to be
year-2000 compliant; and
(2) For punitive damages in an amount equal to three times
the amount of any compensatory damages caused by its intentional
or grossly negligent misrepresentation that it is year-2000
compliant.
(c) Effective January first, two thousand, any governmental
agency that is not year-2000 compliant is liable for compensatory damages caused by its failure to be year two thousand compliant.
(d) Compensatory damages awarded under this section exclude
damages that a plaintiff should reasonably have avoided as a
result of any disclosure actually made to the plaintiff before
the first day of September, one thousand nine hundred
ninety-nine, by the business or governmental agency concerning
whether it or any of its information technology products were
year-2000 compliant.
(e) The prevailing party in an action brought under this
section is entitled to recover costs and reasonable attorney's
fees. However, a business or governmental agency is not liable
for such costs and fees if, before the first day of September,
one thousand nine hundred ninety-nine, it has:
(1) Exercised due diligence in assessing whether it is year
two thousand compliant and, based on that assessment, holds a
reasonable good-faith belief that it is year-2000 compliant or
has adequately disclosed to the other party before that date that
it is not year-2000 compliant; and
(2) Exercised due diligence in assessing its legal liability
for failure to be year-2000 compliant, with respect to both
claims by its customers and claims by third parties, and, based
on that assessment, has before that date insured itself against
all foreseeable claims.
(f) Effective the first day of January, two-thousand, a class action may not be maintained in this state:
(1) Against a governmental agency to be year-2000 compliant;
(2) Against a business for damages caused by the failure of
the business to be year-2000 compliant, unless each member of
the class has suffered damages in excess of fifty-thousand
dollars. However, the limitation in this paragraph does not
apply to class actions against a manufacturer or vendor of
information technology products for damages resulting from the
failure of those products to be year-2000 compliant.
§47-18A-4. Immunity from liability for directors and officers of
businesses.
A director or officer of a business is not personally liable
for any damages resulting from the failure of the business to
become year-2000 compliant if the officer has in good faith and
with due diligence secured an assessment by qualified persons to
determine actions necessary for the business to become year-2000
compliant and that assessment can reasonably be expected to:
(a) Allow the business to become year-2000 compliant by the
first day of September, one thousand nine hundred ninety-nine;
and
(b) Identify those persons who are likely to suffer damages
as a result of the failure of the business to be year-2000
compliant and allow the business to disclose to them by the first day of September, one thousand nine hundred ninety-nine,
that is not year-2000 compliant.
§47-18A-5. Lien in favor of lending institutions.
Any financial institution which holds an interest in any
asset of a business as security for a loan made to that business
has a lien, in the amount of the outstanding balance of the loan,
on all damages received by that business pursuant to a civil
action, settlement agreement, insurance policy or indemnity
agreement as a result of the failure of that business or of
another to be year-2000 compliant. The lien provided by this
section is superior to all other liens and claims of creditors
other than liens for the payment of taxes.
§47-18A-6. Solution providers; warranties; remedies; insurance
requirements.
(a) A solution provider who represents to a business or
governmental agency that it or any of its information technology
products is year-2000 compliant or that the solution provider
will make the business or governmental agency or any of its
information technology products year-2000 compliant thereby gives
an express warranty upon which the business or governmental
agency may rely. This express warranty supersedes all warranty
exclusions, modifications and disclaimers and, if circumstances
cause an exclusion or limited remedy to fail of its essential purpose, remedy may be had as provided in the uniform commercial
code.
(b) Each solution provider must maintain liability insurance
in an amount that is not less than its annual gross income to
cover claims against it by its customers and third parties.
§47-18A-7. Confidentiality of information provided to solution
providers; remedies regarding unlawful use or disclosure; penalties.
(a) All information acquired by a solution provider
concerning the information technology operations, programs,
equipment and data of a business or governmental agency remain in
the property of the business or governmental agency. The
solution provider: (1) May use the information only in the
manner expressly permitted by the business or governmental
agency; and (2) may not disclose the information to another
without the express consent of the business or governmental
agency.
(b) Notwithstanding any provision of the law to the contrary,
a business or governmental agency may bring an action to enjoin
any actual or threatened violation of subsection (a) of this
section or to recover damages resulting from a violation of
subsection (a) of this section. These damages may include: (1)
Both the actual monetary loss incurred as a result of the violation and any unjust enrichment caused by the violation which
is not otherwise considered in calculating the actual monetary
loss incurred; and (2) if the misuse or disclosure was
intentional or grossly negligent, punitive damages in an amount
not exceeding three times the award made pursuant to the
provisions of subdivision (1) of this subsection. Additionally,
the court shall award costs and reasonable attorney's fees to the
prevailing party in any action taken under the provisions of this
section.
(c) Any person who misuses or discloses information in
violation of this section is guilty of a misdemeanor and, upon
conviction therefor, may be confined in a regional jail facility
up to three months, or fined an amount not to exceed one thousand
dollars, or both, in the discretion of the court, fined and
confined. Any person who, for pecuniary gain, intentionally
misuses or discloses information in violation of this section is
guilty of a felony and, upon conviction thereof, may be confined
in a correctional facility one to three years, or may be fined
not more than ten thousand dollars, or, in the discretion of the
court, may be both fined and confined.
§47-18A-8. Antitrust exemption with respect to exchanges of
information.
The exchange of information among businesses and governmental agencies concerning measures that have been taken or are to be
taken in order for a business or governmental agency to become
year-2000 compliant does not constitute an activity or conduct in
restraint of trade or commerce under this state's antitrust act.
§47-18-9. Incentives to use alternative dispute-resolution
procedures; voluntary binding arbitration.
(a) Any party to a dispute under this article for which there
is no prior arbitration agreement may, before a lawsuit has been
filed, make an offer to the other party to submit the dispute to
voluntary binding arbitration. An offer made under this section
must set out the maximum amount of damages that may be imposed
pursuant to arbitration.
(b) If at trial, the court finds that an offer was made under
this section and was rejected, the court shall award attorney's
fees and costs in accordance with this section regardless of
which party is determined to be the prevailing party and
notwithstanding any provisions of law to the contrary:
(1) If the offer was made by the plaintiff and rejected by
the defendant, and if the defendant is ultimately found to be
liable for damages in an amount equal to or exceeding the maximum
amount of damages specified in the plaintiff's offer, the
defendant must pay the plaintiff's costs and reasonable
attorney's fees;
(2) If the offer was made by the defendant and rejected by
the plaintiff, and if the plaintiff is not ultimately awarded
damages in an amount exceeding the maximum amount of damages
specified in the defendant's offer, the plaintiff must pay the
defendant's costs and reasonable attorney's fees.
(c) The court may submit a claim for damages under this
article to mediation upon its own motion or upon the motion of
the parties. If the mediation reaches an impasse, the mediator
shall file with the court, under seal, both the plaintiff's and
defendant's last best offer, and these offers may not be
disclosed to the ultimate trier of fact until after trial.
Regardless of which party is determined to be the prevailing
party and notwithstanding any provision of law to the contrary:
(1) If the ultimate trier of fact does not award the
plaintiff more than seventy-five percent of the defendant's last
best offer, the plaintiff must pay the defendant's costs and
reasonable attorney's fees; and
(2) If the ultimate trier of fact awards the plaintiff one
hundred twenty-five percent or more of the plaintiff's last best
offer, the defendant must pay the plaintiff's costs and
reasonable attorney's fees.
NOTE: The purpose of this bill is to create the "Commerce Protection Act of 1999" designed to address the Y2K year-2000
problem and, in doing so, to safeguard consumers and businesses.
Specifically, the bill's provisions encompass the following
items: Defining terms; prescribing exclusive remedies against
persons, businesses and governmental agencies for damages caused
by the failure of their information technology resources to
function properly with respect to date data; prescribing damages;
expanding the waiver of sovereign immunity; providing for costs
and attorney's fees; barring certain class actions; providing
immunity from personal liability for directors and officers of
businesses under specified circumstances; creating a lien in
favor of certain lending institutions on proceeds received by a
business as a result of its failure or the failure of another to
be year-2000 compliant; imposing insurance and warranty
requirements on persons who undertake to assess whether
information technology resources are year-2000 compliant or make
such resources so compliant and prescribing remedies against
these persons; prohibiting persons from misusing or disclosing
specified information provided to them; providing for remedies
and damages for unlawful use or disclosure of that information;
providing criminal penalties; exempting the exchange of certain
information among specified entities from action under the state
antitrust act; prescribing incentives to use alternative
dispute-resolution procedures; providing for liability for costs
and attorney's fees under specified circumstances.
Article 18A is new; therefore, strike-throughs and
underscoring have been omitted.