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.