HBA-EVB S.B. 598 76(R)BILL ANALYSIS
Office of House Bill AnalysisS.B. 598
By: Duncan
Civil Practices
4/21/1999
Committee Report (Amended)
BACKGROUND AND PURPOSE
Currently, many computer products are unable to recognize and process dates
beginning with the year 2000. The inability to recognize the year, along
with other dates, stems from earlier computer programming policies devised
to limit the use of expensive memory resources to process information. Now,
computer manufacturers and sellers have distributed and provided huge
quantities of merchandise, placing them under threat of litigation,
containing the computer glitch known as the "Year 2000" or "Y2K" problem.
S.B. 598 creates legal exemptions for certain businesses regarding the
"Year 2000" issue and computer date failure. In addition, S.B. 598 provides
affirmative defenses to liability including the submission of a notice to
cure or correct on the Year 2000 Project Office website.
RULEMAKING AUTHORITY
It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. FINDINGS AND PURPOSE. Sets forth the legislative findings.
SECTION 2. Amends Title 6, Civil Practice and Remedies Code, by adding
Chapter 147, as follows:
CHAPTER 147. YEAR 2000 COMPUTER DATE FAILURE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 147.001. DEFINITIONS. Defines "action," "claimant," "computer
product," "computer service product," "defendant," "good faith," "recent
consumer product," "small business," and "Year 2000 Project Office
website."
Sec. 147.002. ACTION FOR COMPUTER DATE FAILURE. Provides that this chapter
applies only to an action in which a claimant seeks recovery of damages or
any other relief for harm caused by a computer date failure as described by
Section 147.003, or the failure to properly detect, disclose, prevent,
report, correct, cure, or remediate a computer date failure as described by
Section 147.003, subject to Section 147.004 and regardless of the legal
theory, statute, or cause of action on which the action is based, including
an action based in tort, contract, or breach of an express or implied
warranty.
Sec. 147.003. COMPUTER DATE FAILURE. Provides that a computer date failure
is the inability to correctly process, recognize, store, receive, transmit,
or in any way use date data referring to the year 2000 or affected by the
transition between the 20th and 21st century or between 1999 and 2000; or
with years expressed in a two-digit or four-digit format.
Sec. 147.004. APPLICABILITY. Provides that this chapter does not apply to
an action for death or bodily injury; to collect workers' compensation
benefits under the workers' compensation laws of this state; or to enforce
the terms of a written agreement, or to seek contractual remedies for
breach of a written agreement, that specifically provides for liability and
damages for a computer date failure.
Sec. 147.005. DUTY OR ACTION NOT CREATED. Provides that this chapter does
not create a duty, nor does it create a cause of action.
Sec. 147.006. IMMUNITY NOT AFFECTED. Provides that this chapter does not
expand or limit the immunity of a person under any other law or statute
providing immunity.
Sec. 147.007. INSURANCE COVERAGE NOT AFFECTED. Provides that this chapter
does not affect the coverage or benefits of parties under a contract of
insurance.
Sec. 147.008. SOVEREIGN IMMUNITY NOT WAIVED. Provides that this chapter
does not waive sovereign immunity of the state or of a political
subdivision of the state.
Sec. 147.009. MANUFACTURER'S DUTY TO INDEMNIFY. Provides that this chapter
does not relieve a manufacturer from the obligation, if any, to indemnify a
seller for losses arising out of a product liability action for property
damage under Section 82.002 (Manufacturer's Duty to Indemnify), Civil
Practice and Remedies Code, subject to any defenses the manufacturer could
have asserted at the time the action was filed.
SUBCHAPTER B. PREREQUISITES TO BRINGING ACTION
Sec. 147.041. LIMITATIONS PERIOD. (a) Provides that an action must be
brought not later than two years after the date the computer date failure
first caused the harm that is the subject matter of the action.
(b) Provides that this section does not extend the limitations period
within which an action for harm caused by a computer date failure is
authorized to be commenced under any other law or revive a claim that is
barred by the operation of any other law.
Sec. 147.042. REPOSE. (a) Provides that a claimant must commence an action
against a manufacturer or seller of a computer product or computer service
product, except as provided by Subsection (b), before the end of 15 years
after the date of the sale by the defendant. Provides that the 15-year
period begins to run on the date the defendant sold the computer product,
if the computer product which caused the computer date failure is a
component of another product and if the product and computer product were
sold at different times.
(b) Provides that this section does not apply, if a manufacturer or seller
expressly represented that the computer product or computer service product
would not manifest the computer date failure.
(c) Provides that this section does not reduce a limitations period that
applies to an action that accrues before the end of the limitations period
under this section.
(d) Provides that this section does not extend the limitations period
within which an action may be commenced under any other law.
Sec. 147.043. DISABILITY. Provides that Section 16.001 (Effect of
Disability) applies to the periods of limitation and repose established by
this subchapter.
Sec. 147.044. NOTICE. (a) Prohibits a claimant from commencing an action
unless the claimant gave notice to the defendant before the 60th day
preceding the date the action commences.
(b) Provides that the claimant must give notice to the defendant before the
31st day after the date the action commences, if the 60-day notice
requirement under Subsection (a) would prevent commencing the action before
the expiration of the period of limitation or repose.
(c) Provides that the claimant must give notice to the defendant before the
31st day after the date of service on the defendant, if the action is a
counterclaim, cross-claim, or third-party action.
(d) Provides that the notice must be in writing, identify the claimant,
describe in reasonable detail the computer date failure and the harm caused
by the failure, and include a specific statement of the amount of the
damages claimed or the remedy sought.
Sec. 147.045. NOTICE STAYS PROCEEDINGS. Provides that all proceedings in
the action are stayed for 60 days following the date the defendant received
the notice under Section 147.044.
Sec. 147.046. FAILURE TO GIVE NOTICE. (a) Requires the court, on motion of
the defendant that the claimant did not give the notice under Section
147.044, to abate the action, and require the claimant to give the notice
before the 31st day after the date of the order of abatement.
(b) Requires the court to dismiss the claimant's action if the claimant
does not give notice as required by Subsection (a).
Sec. 147.047. INSPECTION. (a) Authorizes a person receiving notice under
Section 147.044 to inspect a computer product or computer service product
that is subject to the claimant's control to assess the nature, scope, and
consequences of the computer date failure.
(b) Provides that the inspection must be conducted in a reasonable manner
and at a reasonable time and place.
Sec. 147.048. OFFER TO SETTLE. (a) Authorizes a defendant receiving notice
under Section 147.044 to offer to settle the claim. Authorizes the offer
to include an offer to cure or correct the computer date failure.
(b) Provides that the offer must be accepted by the claimant not later than
the 30th day after the date the offer is made or the offer is rejected.
(c) Authorizes a defendant to file a rejected offer to settle with the
court with an affidavit certifying its rejection.
(d) Prohibits the claimant from recovering any amount in excess of the
lesser of the amount of damages tendered in the settlement offer, or the
amount of damages found by the trier of fact, if the court finds that the
amount tendered in a rejected offer to settle filed with the court is the
same as, substantially the same as, or more than the damages found by the
trier of fact.
(e) Provides that Subsection (d) does not apply if the court finds that the
defendant making the offer could not perform the offer when the offer was
made, or substantially misrepresented the value of the offer.
(f) Provides that in this section, the term "damages" does not include
attorney's fees or litigation expenses.
SUBCHAPTER C. AFFIRMATIVE DEFENSES TO LIABILITY
Sec. 147.081. AFFIRMATIVE DEFENSE: NOTICE TO CURE OR CORRECT. (a) Provides
that it is an affirmative defense to liability in an action if the claimant
was notified in a certain manner; the claimant was offered a cure or
correction for the computer date failure; and the offered cure or
correction would have avoided the harm to the claimant caused by the
computer date failure.
(b) Establishes the affirmative defense provided by this section, in
addition to the requirement of Subsection (a), as follows:
_provides that the defendant must prove that the charge, if any, for the
cure or correction did not exceed the reasonable charges for the delivery
and installation of the product or items needed to cure or correct the
computer date failure, if the claimant's action involves a recent consumer
product; or
_provides that the defendant must prove that the charge, if any, for the
cure or correction did not exceed the reasonable and necessary costs to
develop, produce, deliver, and install the product or items needed to cure
or correct the computer date failure, if the claimant's action involves a
computer product or computer service product that is not a recent consumer
product.
(c) Provides that if the cure or correction described by Subsection (a) is
designed to cure or correct a computer date failure for only a limited
period of time, that cure or correction does not entitle a person to a
defense to liability for harm caused by the computer date failure after the
period of time expires.
Sec. 147.082. NOTICE. (a) Provides that notice under Section 147.081 must
identify the computer product or computer service product that manifests or
may manifest a computer date failure; explain how a cure or correction to
the computer product or computer service product may be obtained; state
that there is no additional charge for the cure or correction other than
reasonable and customary charges for delivering and installing the product
or items needed to make the cure, if any, to obtain the cure or correction;
and inform the recipient that the solution is offered to avoid harm to the
recipient and that offering the cure or correction could affect the
recipient's right to recover damages.
(b) Provides that notice under Section 147.081 must be received by the
claimant before the beginning of the longer of the following periods:
_the 90th day before the date the claimant suffers harm from the computer
date failure; or
_the time needed to order, deliver, and install the correction to the
product or service before the claimant suffers harm from the computer date
failure.
(c) Authorizes the defendant to satisfy the notice requirement under
Section 147.081 by showing that the defendant delivered notice within the
period provided by this section, or that the claimant actually received
notice within the period provided by this section.
(d) Provides that there is a rebuttable presumption that notice has been
delivered to a claimant if the Year 2000 Project Office website or
toll-free telephone number established under Section 147.083(e) provides
access to information from which a person is authorized to obtain the
information required by this section relating to a cure or correction for
the computer date failure. Authorizes the presumption to be rebutted by
credible evidence that the claimant did not receive notice.
Sec. 147.083. NOTICE ON YEAR 2000 PROJECT OFFICE WEBSITE. (a) Sets forth
that a person who provides information to the Year 2000 Project Office
website to satisfy the requirements of Section 147.082 is responsible for
the accuracy of the person's information posted on the website.
(b) Provides that a person is not subject to the jurisdiction of the
courts of this state solely on the basis that the person has provided
information for posting on the Year 2000 Project Office website.
(c) Provides that the state is not liable for any damages arising from its
Year 2000-related activities conducted by the Department of Information
Resources (DIR), including operation of the Year 2000 Project Office
website; reliance on the accuracy of the information on the Year 2000
Project Office website; or operation and management of the toll-free
telephone number established in accordance with Subsection (e).
(d) Requires DIR in its Year 2000 Project Office website to provide for the
posting of information and the creating of links to other websites to
facilitate the posting of notice.
(e) Requires DIR to establish a toll-free telephone number for persons who
are unable to access the Internet to provide to those persons information
relating to a cure or correction for computer date failure posted on or
linked to the Year 2000 Project Office website. Authorizes DIR to establish
the toll-free telephone number either in cooperation with the General
Services Commission or by contracting with a private vendor.
(f) Provides that any contracts for goods or services between DIR and
private vendors that may be necessary or appropriate to the fulfillment of
the requirements of this section are exempt from the requirements of
Subtitle D (State Purchasing and General Services), Title 10, Government
Code. Provides that if DIR elects to contract with one or more private
vendors, the vendors have no greater liability to third parties for their
actions than the state would have had if it had provided the goods and
services directly.
Sec. 147.084. AFFIRMATIVE DEFENSE: RELIANCE. (a) Provides that in an
action for fraud, misrepresentation, disparagement, libel, or other similar
action based on the alleged falsity or misleading character of a computer
date statement or an express warranty, it is an affirmative defense to
liability that:
_the defendant reasonably relied on the computer date statement or express
warranty of an independent, upstream manufacturer or seller of the computer
product or computer service product that the computer product or computer
service product would not manifest computer date failure;
_the statement was false or misleading; and
_the defendant did not have actual knowledge that the statement or warranty
was false or misleading.
(b) Defines "computer date statement."
Sec. 147.085. ADMISSIBILITY OF STATEMENT RELATING TO COMPUTER DATE FAILURE.
(a) Provides that the following are not admissible to prove liability for
computer date failure:
_an offer to settle under Section 147.048;
_notice required under Section 147.081(a)(1);
_except as provided by Subsection (b), evidence of furnishing or offering
or promising to furnish a correction or cure for a present or future
computer date failure; or
_except as provided by Subsection (c), a statement made in the process of
correcting, curing, or attempting to correct or cure a present or future
computer date failure.
(b) Provides that evidence of furnishing or offering or promising to
furnish a correction or cure for a present or future computer date failure
is admissible to the extent it is evidence of a guarantee or warranty of
the correction or cure and the claim is for breach of the guarantee or
warranty.
(c) Provides that a statement made in the process of correcting, curing, or
attempting to correct or cure a present or future computer date failure is
admissible if the statement is false, the statement is made with knowledge
that it is false, and the claimant relied on the statement to the
claimant's detriment.
SUBCHAPTER D. DAMAGES
Sec. 147.121. DAMAGE LIMITATIONS APPLY ONLY IF DEFENDANT SHOWS GOOD FAITH
EFFORT TO CURE OR CORRECT. Sets forth that the limitations on the recovery
of damages established by Section 147.122 apply to a claimant only if the
defendant can show a good faith effort to cure, correct, avoid, or mitigate
the claimant's possible computer date failure problem.
Sec. 147.122. DAMAGES NOT RECOVERABLE. (a) Prohibits a claimant, subject to
Section 147.121, from recovering the following damages in an action:
_damages for mental anguish, loss of consortium, or loss of companionship;
_exemplary or punitive damages unless the claimant proves by clear and
convincing evidence that the conduct of the defendant was committed with
fraud or malice;
_additional damages under Section 17.50(b)(1) (Relief for Consumers),
Business & Commerce Code, unless the trier of fact finds the conduct of the
defendant was committed with fraud or malice; or
_consequential damages, unless they were reasonably foreseeable.
(b) Defines "fraud" and "malice."
Sec. 147.123. MITIGATION OF DAMAGES. (a) Requires the court, in an action
to which Chapter 33 (Proportionate Responsibility), Civil Practice and
Remedies Code, applies, to instruct the finder of fact regarding the
determination of responsibility under Section 33.003 (Determination of
Percentage of Responsibility), Civil Practice and Remedies Code, using the
appropriate approved pattern jury charge which is authorized to be modified
by the court as appropriate to the circumstances.
(b) Requires the court to instruct the finder of fact, in all actions not
governed by Subsection (a), regarding a claimant's duty to mitigate or
avoid damages in a manner appropriate to the action using the appropriate
approved pattern jury charge which may be modified by the court as
appropriate to the circumstances.
SECTION 3. Amends Subchapter C, Chapter 101, Civil Practice and Remedies
Code, by adding Section 101.066 as follows:
Sec. 101.066. COMPUTER DATE FAILURE. Provides that this chapter does not
apply to a claim for property damage caused by a computer date failure as
described by Section 147.003.
SECTION 4. Amends Chapter 108, Civil Practice and Remedies Code, by adding
Section 108.004 as follows:
Sec. 108.004. COMPUTER DATE FAILURE. Provides that except in an action
arising under the constitution or laws of the United States, a public
servant is not personally liable for property damages caused by a computer
date failure as described by Section 147.003.
SECTION 5. Requires DIR to perform its duties under Subsections (d) and
(e), Section 147.083, Civil Practice and Remedies Code, as added by this
Act, before the 31st day after the effective date of this Act.
SECTION 6. (a) Sets forth that except as provided by Subsection (b) of this
section, this Act applies only to a civil action commenced on or after the
effective date of this Act. Makes application of this Act to an action
prospective, except as provided by Subsection (b) of this section.
(b) Makes Sections 147.041 and 147.042, Civil Practice and Remedies Code,
as added by this Act, prospective beginning September 1, 1999.
SECTION 7. Emergency clause.
Effective date: upon passage.
EXPLANATION OF AMENDMENTS
Amendment #1
Amends S.B. 598 as follows:
(1) Defines "claimant" in SECTION 2 (Section 147.001 (Definitions), Civil
Practice and Remedies Code), to mean a party seeking recovery of damages or
other relief, including a plaintiff, counterclaimant, cross-claimant, or
third-party plaintiff.
(2) Defines a "defendant" in SECTION 2 (Section 147.001 (Definitions),
Civil Practice and Remedies Code), to mean a party from whom a claimant
seeks recovery of damages or other relief, including a counterdefendant,
cross-defendant, or third-party defendant.
(3) Strikes Subdivision (3) on page 12, lines 4-7, in SECTION 2 (Section
147.082(a), Civil Practice and Remedies Code), and inserts a new
Subdivision (3) to provide that notice under Section 147.081(a) provides an
affirmative defense if, among other things, it states the additional
charges, if any, to obtain the cure or correction.
Amendment #2
(1) Strikes lines 11 and 12 of Amendment #1, and inserts an alternative
Subdivision (3) to provide that notice under Section 147.081(a) provides an
affirmative defense if:
_in the case of a recent computer product, it states that there is no
additional charge for the cure or correction and state the amount that will
be charged, if any, for delivering and installing the cure or correction,
as authorized by Section 147.081(b)(1); or
_in the case of a product or service that is not a recent consumer product,
it states the amount that will charged, if any, for the cure or correction,
as authorized by Section 147.081(b)(2).