15 U.S.C. § 6612: State of mind; bystander…

Summary

Sets rules for when someone can be held responsible for a Y2K problem that a claim says they knew about. If a lawsuit (other than a simple contract breach) requires proof that the defendant knew or should have known about a real or possible Y2K failure, the plaintiff must meet the proof level the state used on the day before January 1, 1999. If the defendant did not make, sell, distribute, or provide the failing product or service, and the plaintiff was not in "substantial privity" with the defendant, then the plaintiff must also prove the defendant actually knew or recklessly ignored a known and substantial risk that the failure would happen, using that same pre-1999 proof standard. "Substantial privity" means the parties had a contract or the plaintiff was specifically identified as the person for whose special benefit a professional service was performed. Claims that require proof of knowledge include fraud, constructive fraud, breach of fiduciary duty, negligent misrepresentation, and interference with contract or economic advantage; ordinary negligence claims are not included. Simply having control of the failing system or product is not enough by itself to get damages, and contract breaches follow the contract terms. Protections in section 4 of the Year 2000 Information and Readiness Disclosure Act apply to any Y2K lawsuit.

Title 15, §6612

Commerce and Trade, Source: USLM XML via OLRC

(a)Defendant’s state of mind

In a Y2K action other than a claim for breach or repudiation of contract, and in which the defendant’s actual or constructive awareness of an actual or potential Y2K failure is an element of the claim, the defendant is not liable unless the plaintiff establishes that element of the claim by the standard of evidence under applicable State law in effect on the day before January 1, 1999.

(b)Limitation on bystander liability for Y2K failures

(1)In general

With respect to any Y2K action for money damages in which—

(A)the defendant is not the manufacturer, seller, or distributor of a product, or the provider of a service, that suffers or causes the Y2K failure at issue;

(B)the plaintiff is not in substantial privity with the defendant; and

(C)the defendant’s actual or constructive awareness of an actual or potential Y2K 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 the standard of evidence under applicable State law in effect on the day before January 1, 1999, that the defendant actually knew, or recklessly disregarded a known and substantial risk, that such failure would occur.

(2)Substantial privity

For purposes of paragraph (1)(B), a plaintiff and a defendant are in substantial privity when, in a Y2K action arising out of the performance of professional services, the plaintiff and the defendant either have contractual relations with one another or the plaintiff is a person who, prior to the defendant’s performance of such services, was specifically identified to and acknowledged by the defendant as a person for whose special benefit the services were being performed.

(3)Certain claims excluded

For purposes of paragraph (1)(C), claims in which the defendant’s actual or constructive awareness of an actual or potential Y2K failure is an element of the claim under applicable law do not include claims for negligence but do include claims such as fraud, constructive fraud, breach of fiduciary duty, negligent misrepresentation, and interference with contract or economic advantage.

(c)Control not determinative of liability

The fact that a Y2K failure occurred in an entity, facility, system, product, or component that was sold, leased, rented, or otherwise within the control of the party against whom a claim is asserted in a Y2K action shall not constitute the sole basis for recovery of damages in that action. A claim in a Y2K action for breach or repudiation of contract for such a failure is governed by the terms of the contract.

(d)Protections of the Year 2000 Information and Readiness Disclosure Act apply

The protections for the exchanges of information provided by section 4 of the Year 2000 Information and Readiness Disclosure Act (Public Law 105–271) shall apply to any Y2K action.

Editorial Notes

References in Text

section 4 of the Year 2000 Information and Readiness Disclosure Act, referred to in subsec. (d), is section 4 of Pub. L. 105–271, which was formerly set out in a note under section 1 of this title.

§6612 State of Mind; Bystander Liability; Control

Summary

Title 15, §6612

Notes & Related Subsidiaries

Editorial Notes

References in Text

Citations & Metadata