44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO CIVIL ACTIONS; IMPOSING RESTRICTIONS AND LIMITATIONS ON ACTIONS SEEKING DAMAGES FOR COMPUTER DATE FAILURE; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. SHORT TITLE.--This act may be cited as the "Computer Date Failure Act".

Section 2. DEFINITIONS.--As used in the Computer Date Failure Act:

A. "computer" means an electronic, magnetic, optical electrochemical or other high-speed data processing device that performs logical, arithmetic or memory functions by the manipulations of electronic or magnetic impulses and includes all input, output, processing, storage or communication facilities that are connected or related to the device, and includes a component of a computer, such as a microprocessor, memory chip, storage or input-output device;

B. "computer date failure" means:

(1) a present or future inability of the computer product or computer service to properly handle or process dates of calendar year 1999 or subsequent years; or

(2) an incompatibility between:

(a) the computer product or computer service; and

(b) any other product, service or electronic data in any form, with respect to the handling or processing of dates of calendar year 1999 or subsequent years;

C. "computer date statement" means a statement material to a transaction made by a person about a computer product manufactured or sold by the person or about a computer service provided or sold by the person regarding:

(1) the present or future ability of the product or service to properly handle or process dates of calendar year 1999 or subsequent years; or

(2) the compatibility of the product or service with other computer products, computer services or electronic data in any form, with respect to the handling or processing of dates of calendar year 1999 or subsequent years;

D. "computer network" means the interconnection of two or more computers or computer systems by satellite, microwave, line or other communication medium with the capability to transmit information among the computers;

E. "computer product" includes a computer, computer network, computer program, computer software, computer system or any component of any of those items;

F. "computer program" means an ordered set of data representing coded instructions or statements that when executed by a computer cause the computer to process data or perform specific functions;

G. "computer service" means the product of the use of a computer, the information stored in the computer or the personnel supporting the computer, including time, data processing and storage functions;

H. "computer software" means a set of computer programs, procedures and associated documentation related to the operation of a computer, computer system or computer network;

I. "computer system" means any combination of a computer or computer network with the documentation, computer software or physical facilities supporting the computer or computer network;

J. "repair" means to correct or eliminate a defect that has or would cause a computer date failure or to instruct how to avoid or work around such defect; and

K. "restitution" means an amount of money that would restore the claimant to the position he was in prior to the transaction or occurrence involving the computer product or computer service. In the context of a contract, "restitution" includes the contract price paid by the claimant and the cost reasonably incurred by the claimant to perform under the contract, less the value of any benefit from the product or service received by the claimant under the contract. In the context of a personal injury claim, "restitution" means the economic damages resulting from bodily injury to the claimant proximately caused by the defendant's conduct. In the context of an action for fraud, misrepresentation or a similar tort action, "restitution" means the amount by which the person was unjustly enriched at the expense of the claimant.

Section 3. ACTION FOR COMPUTER DATE FAILURE.--

A. No action for harm caused by a computer date failure may be brought by any person, or on behalf of any person, unless the action alleges with specificity the defect or inadequacy of the computer product that has caused an alleged computer date failure and the actual damages resulting therefrom.

B. Notwithstanding any other provision of law, no action for harm caused by a computer date failure may be brought by any person, or on behalf of any person, later than two years from the earlier of:

(1) the date the person discovered, or in the exercise of reasonable diligence should have discovered, that the computer product or computer service manifested the computer date failure; or

(2) the first date processed improperly by the computer product or computer service or, if that date is not an actual calendar date, the next date that is an actual calendar date.

C. Except as provided in Subsection D of this section, a person must bring an action against a manufacturer or seller of a computer product or computer service for harm caused by a computer date failure no later than five years after the final product or the service was sold to the first consumer in this state. This subsection does not apply to a manufacturer or seller that expressly warranted that the product would not manifest the computer date failure.

D. If a manufacturer or seller of a product that contains a computer product expressly warranted to a person that the product had a useful safe life longer than five years, the person must bring an action against the manufacturer or seller for harm caused by a computer date failure before the end of the number of years warranted after the date of the sale of the product by the manufacturer or seller to that person.

Section 4. APPLICATION AND EFFECT OF ACT.--

A. Except as provided in this section, the Computer Date Failure Act applies to an action in which a claimant seeks recovery of damages for harm caused by a computer date failure, regardless of the legal theory or statute on which the action is based, including an action based in tort, contract or breach of an express or implied warranty. It applies also to an action based on an alleged failure to properly detect, disclose, prevent, report or remediate a computer date failure.

B. The Computer Date Failure Act does not apply to an action to collect workers' compensation benefits pursuant to the workers' compensation laws of this state.

C. The Computer Date Failure Act does not create either a duty or a cause of action.

D. Nothing in the Computer Date Failure Act limits or restricts the right of parties to enter into written agreements on the issues of liability and damages for a computer date failure. That act does not limit the right of those parties to recover damages in accordance with the terms of those written agreements.

E. The Computer Date Failure Act does not affect the rights or obligations of parties under a contract of insurance.

F. The Computer Date Failure Act does not waive governmental immunity of the state or of a political subdivision of the state.

Section 5. OPPORTUNITY TO CURE.--

A. Before a claimant may commence an action against a person for harm caused by a computer date failure, the claimant must notify the person of the failure, describe the failure and provide the person a reasonable opportunity to cure the failure or to make restitution.

B. The person must have at least three months to cure the failure or to make restitution.

C. If a claimant commences an action against a defendant for harm caused by a computer date failure without providing the defendant an opportunity to cure the failure or to make restitution, the court shall dismiss the action with prejudice.

Section 6. AFFIRMATIVE DEFENSE--NOTICE AND REPAIR.--

A. It is an affirmative defense to civil liability for harm caused by a computer date failure that:

(1) the defendant notified buyers of the computer product or computer service that the product or service may manifest the computer date failure;

(2) the defendant offered to repair, replace or upgrade the product or service, or the component that would manifest the computer date failure, at no cost to the buyer other than reasonable and customary charges for shipping, handling, installing and implementing the product or the items needed to repair, replace or upgrade the product or service; and

(3) the offered repair, replacement or upgrade would have avoided the harm caused by the computer date problem.

B. The notice issued pursuant to Paragraph (1) of Subsection A of this section must:

(1) identify the product or service supplied by the defendant that manifests or may manifest the computer date failure; and

(2) explain how the buyer may repair, replace or upgrade the product if repair, replacement or upgrade is available.

C. The notice issued pursuant to Paragraph (1) of Subsection A of this section must be sent or published at least three months before the date that constitutes the computer date failure and not more than three years before that date. A defendant satisfies the notice requirement of Paragraph (1) of Subsection A of this section if the defendant:

(1) timely delivers the notice to the claimant;

(2) timely sends the notice to all registered buyers by mail, courier, electronic mail or telephonic document transfer to the last known address or telecopier number provided by the buyer; or

(3) timely publishes the notice on the defendant's internet site, if the defendant has a site.

Section 7. AFFIRMATIVE DEFENSE--RELIANCE.--

A. 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, it is an affirmative defense to liability for harm caused by a computer date failure that the defendant:

(1) relied on the representation or express warranty of an independent, upstream vendor or supplier of the computer product or computer service that the product or service would not manifest the computer date failure problem; and

(2) the defendant did not have actual knowledge that the representation or warranty was not true.

B. For the purposes of this section, a representation that a computer product or computer service is "Year 2000 Compliant", is "Millennium Bug Free", complies with a computer date standard established by state or federal regulatory agency or a national or international service organization or a similar representation satisfies the condition of a representation or express warranty.

Section 8. AFFIRMATIVE DEFENSE--COMPLIANCE TESTING.--

A. It is an affirmative defense to civil liability in tort for harm caused by a computer date failure of a computer product or computer service that the defendant:

(1) examined the product or service to determine if it would manifest a computer date failure problem;

(2) repaired, replaced or upgraded the product or service, or a component of the product or service identified in the examination as manifesting a computer date problem;

(3) tested the product or service, or the component of the product or service, after it was repaired to determine if it would manifest a computer date failure; and

(4) the product or service successfully passed the test.

B. A defendant may satisfy an element of Paragraphs (1) through (4) of Subsection A of this section by hiring an independent contractor to perform the actions prescribed in the element.

Section 9. COMPENSATORY DAMAGES.--In an action for harm resulting directly or indirectly from a computer date failure, the court may award against a defendant only the following damages, as allowed by other law and according to the proof:

A. economic damages resulting from injury to the claimant proximately caused by the defendant's conduct;

B. costs reasonably incurred by the claimant to examine, to repair, replace or upgrade and to test the relevant product or service, to the extent those costs are incurred by the claimant as a proximate and direct result of the defendant's conduct; or

C. damages suffered by the claimant caused by breach of an express warranty made by the defendant that the computer product or computer service sold by the defendant would not manifest the computer date failure.

Section 10. EXEMPLARY DAMAGES.--In an action to recover damages for harm caused by a computer date failure, a court may award exemplary damages against a defendant only if the claimant proves by clear and convincing evidence that the defendant acted with fraud or malice with respect to the claimant.

Section 11. APPLICABILITY.--

A. Except as provided in Subsection B of this section, this act applies to a civil action commenced on or after the effective date of this act or pending on the effective date of this act and in which the trial, or any new trial or retrial following motion, appeal or otherwise, begins on or after that date. In an action commenced before the effective date of this act, a trial, new trial or retrial that is in progress on that date is governed with respect to the subject matter of this act by the applicable law in effect immediately before that date, and that law is continued in effect for that purpose.

B. This act applies to a civil action commenced on or after July 1, 1999. An action commenced before that date is governed by the applicable law in effect immediately before that date, and that law is continued in effect for that purpose.

Section 12. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.