Senate Bill 0080

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    Florida Senate - 1999                                    SB 80

    By Senators Grant, Campbell, Klein, Brown-Waite and Bronson





    13-52-99

  1                      A bill to be entitled

  2         An act relating to information technology

  3         resources; creating the "Commerce Protection

  4         Act"; defining terms; prescribing exclusive

  5         remedies against persons, businesses, and

  6         governmental agencies for damages caused by the

  7         failure of their information technology

  8         resources to function properly with respect to

  9         date data; prescribing damages; expanding the

10         waiver of sovereign immunity; providing for

11         costs and attorney's fees; barring certain

12         class actions; providing immunity from personal

13         liability for directors and officers of

14         businesses under specified circumstances;

15         creating a lien in favor of certain lending

16         institutions on proceeds received by a business

17         as a result of its failure or the failure of

18         another to be year-2000 compliant; imposing

19         insurance and warranty requirements on persons

20         who undertake to assess whether information

21         technology resources are year-2000 compliant or

22         make such resources so compliant and

23         prescribing remedies against such persons;

24         prohibiting such persons from misusing or

25         disclosing specified information provided to

26         them; providing for remedies and damages for

27         unlawful use or disclosure of that information;

28         providing for costs and attorney's fees;

29         providing criminal penalties; exempting the

30         exchange of certain information among specified

31         entities from action under the Florida

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  1         Antitrust Act of 1980; prescribing incentives

  2         to use alternative dispute-resolution

  3         procedures; providing for liability for costs

  4         and attorney's fees under specified

  5         circumstances; providing an effective date.

  6

  7  Be It Enacted by the Legislature of the State of Florida:

  8

  9         Section 1.  Short title.--This act may be cited as the

10  "Commerce Protection Act."

11         Section 2.  Definitions.--For the purposes of this act,

12  the following terms have the following meanings:

13         (1)  BUSINESS.--The term "business" means a person or

14  any entity, however organized, that is routinely engaged in

15  this state in providing goods or services in the stream of

16  commerce, but the term excludes any governmental agency.

17         (2)  DATE DATA.--The term "date data" means data that

18  contain dates or that contain both dates and times.

19         (3)  GOVERNMENTAL AGENCY.--The term "governmental

20  agency" includes the state or any of its political

21  subdivisions, or any agency of either.

22         (4)  INFORMATION TECHNOLOGY PRODUCT.--The term

23  "information technology product" includes software, firmware,

24  microcode, hardware, and embedded chips that create, read,

25  write, calculate, compare, sequence, or otherwise process date

26  data.

27         (5)  SOLUTION PROVIDER.--The term "solution provider"

28  means any entity that accepts compensation or other valuable

29  consideration from a business or governmental agency either to

30  assess whether it or any of its information technology

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  1  products is year-2000 compliant or to make it or any of its

  2  information technology products year-2000 compliant.

  3         (6)  YEAR-2000 COMPLIANT.--

  4         (a)  An information technology product is "year-2000

  5  compliant" if it processes all of its date data accurately and

  6  if it will do so even for data that contain dates occurring

  7  before February 29, 1996, and dates occurring after February

  8  29, 2000.

  9         (b)  A business or governmental agency is "year-2000

10  compliant" if all of its information technology products are

11  year-2000 compliant.

12         Section 3.  Remedies for failure to be year-2000

13  compliant; waiver of sovereign immunity; costs and attorney's

14  fees; limitation on class actions.--

15         (1)  Effective January 1, 2000, the exclusive remedies

16  in this state for recovering from a business or governmental

17  agency damages caused by its failure to be year-2000 compliant

18  are those provided by this act or by contract with the

19  business or governmental agency. However, if a contract

20  provides exclusive or limited remedies and circumstances cause

21  those remedies to fail of their essential purpose, remedy may

22  be had as provided in this act.

23         (2)  Effective January 1, 2000, any business that is

24  not year-2000 compliant is liable:

25         (a)  For compensatory damages caused by its failure to

26  be year-2000 compliant; and

27         (b)  For punitive damages in an amount equal to three

28  times the amount of any compensatory damages caused by its

29  intentional or grossly negligent misrepresentation that it is

30  year-2000 compliant.

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  1         (3)  Effective January 1, 2000, any governmental agency

  2  that is not year-2000 compliant is liable for compensatory

  3  damages caused by its failure to be year-2000 compliant:

  4         (a)  Within the limits on the waiver of sovereign

  5  immunity established in sections 282.4045 and 768.28, Florida

  6  Statutes; and

  7         (b)  Beyond the limits on the waiver of sovereign

  8  immunity established in sections 282.4045 and 768.28, Florida

  9  Statutes, if it is shown by clear and convincing evidence that

10  the damages occurred because of its gross negligence.

11         (4)  Compensatory damages awarded under this section

12  shall exclude any damages that the plaintiff should reasonably

13  have avoided as a result of any disclosure actually made to

14  the plaintiff before September 1, 1999, by the business or

15  governmental agency concerning whether it or any of its

16  information technology products were year-2000 compliant.

17         (5)  The prevailing party in an action brought under

18  this section is entitled to recover costs and reasonable

19  attorney's fees. However, a business or governmental agency is

20  not liable for such costs and fees if, before September 1,

21  1999, it has:

22         (a)  Exercised due diligence in assessing whether it is

23  year-2000 compliant and, based on that assessment, holds a

24  reasonable good-faith belief that it is year-2000 compliant or

25  has adequately disclosed to the other party before that date

26  that it is not year-2000 compliant; and

27         (b)  Exercised due diligence in assessing its legal

28  liability for failure to be year-2000 compliant, with respect

29  to both claims by its customers and claims by third parties,

30  and, based on that assessment, has before that date insured

31  itself against all foreseeable claims.

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  1         (6)  Effective January 1, 2000, a class action may not

  2  be maintained in this state:

  3         (a)  Against a governmental agency for damages caused

  4  by the failure of the governmental agency to be year-2000

  5  compliant.

  6         (b)  Against a business for damages caused by the

  7  failure of the business to be year-2000 compliant, unless each

  8  member of the class has suffered damages in excess of $50,000.

  9  However, the limitation in this paragraph does not apply to

10  class actions against a manufacturer or vendor of information

11  technology products for damages resulting from the failure of

12  those products to be year-2000 compliant.

13         Section 4.  Immunity from liability for directors and

14  officers of businesses.--A director or officer of a business

15  is not personally liable for any damages resulting from the

16  failure of the business to become year-2000 compliant if the

17  officer or director has in good faith and with due diligence

18  secured an assessment by qualified persons to determine

19  actions necessary for the business to become year-2000

20  compliant and that assessment can reasonably be expected to:

21         (1)  Allow the business to become year-2000 compliant

22  by September 1, 1999; and

23         (2)  Identify those persons who are likely to suffer

24  damages as a result of the failure of the business to be

25  year-2000 compliant and allow the business to disclose to them

26  by September 1, 1999, that it is not year-2000 compliant.

27         Section 5.  Lien in favor of lending institutions.--Any

28  financial institution as defined in section 655.005, Florida

29  Statutes, which holds an interest in any asset of a business

30  as security for a loan made to that business has a lien, in

31  the amount of the outstanding balance of the loan, on all

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  1  damages received by that business under any civil action,

  2  settlement agreement, insurance policy, or indemnity agreement

  3  as a result of the failure of that business or of another to

  4  be year-2000 compliant. The lien provided by this section is

  5  superior to all other liens and claims of creditors other than

  6  liens for the payment of taxes.

  7         Section 6.  Solution providers; warranties; remedies;

  8  insurance requirements.--

  9         (1)  A solution provider who represents to a business

10  or governmental agency that it or any of its information

11  technology products is year-2000 compliant or that the

12  solution provider will make the business or governmental

13  agency or any of its information technology products year-2000

14  compliant thereby gives an express warranty upon which the

15  business or governmental agency may rely; this express

16  warranty supersedes all warranty exclusions, modifications,

17  and disclaimers; and, if circumstances cause an exclusive or

18  limited remedy to fail of its essential purpose, remedy may be

19  had as provided in the Uniform Commercial Code.

20         (2)  Each solution provider must maintain liability

21  insurance in an amount that is not less than its annual gross

22  income to cover claims against it by its customers and third

23  parties.

24         Section 7.  Confidentiality of information provided to

25  solution providers; remedies regarding unlawful use or

26  disclosure; penalties.--

27         (1)  All information acquired by a solution provider

28  concerning the information technology operations, programs,

29  equipment, and data of a business or governmental agency

30  remain the property of the business or governmental agency.

31  The solution provider:

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  1         (a)  May use the information only in the manner

  2  expressly permitted by the business or governmental agency;

  3  and

  4         (b)  May not disclose the information to another

  5  without the express consent of the business or governmental

  6  agency.

  7         (2)  Notwithstanding the limitations of section

  8  688.008, Florida Statutes, a business or governmental agency

  9  may bring an action to enjoin any actual or threatened

10  violation of subsection (1) or to recover damages resulting

11  from a violation of subsection (1). These damages include:

12         (a)  Both the actual monetary loss incurred as a result

13  of the violation and any unjust enrichment caused by the

14  violation which is not otherwise considered in calculating the

15  actual monetary loss incurred; and

16         (b)  If the misuse or disclosure was intentional or

17  grossly negligent, punitive damages in an amount not exceeding

18  three times the award made under paragraph (a).

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20  The court shall award costs and reasonable attorney's fees to

21  the prevailing party in any action under this subsection.

22         (3)(a)  Any person who misuses or discloses information

23  in violation of subsection (1) is guilty of a misdemeanor of

24  the first degree, punishable as provided in section 775.082 or

25  section 775.083, Florida Statutes.

26         (b)  Any person who for pecuniary gain intentionally

27  misuses or discloses information in violation of subsection

28  (1) is guilty of a felony of the third degree, punishable as

29  provided in section 775.082 or section 775.083, Florida

30  Statutes.

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  1         Section 8.  Antitrust exemption with respect to

  2  exchanges of information.--The exchange of information among

  3  businesses and governmental agencies concerning measures that

  4  have been taken or are to be taken in order for a business or

  5  governmental agency to become year-2000 compliant does not

  6  constitute an activity or conduct in restraint of trade or

  7  commerce under chapter 542, Florida Statutes.

  8         Section 9.  Incentives to use alternative

  9  dispute-resolution procedures.--

10         (1)  VOLUNTARY BINDING ARBITRATION.--

11         (a)  Any party to a dispute under this act for which

12  there is no prior arbitration agreement may, before a lawsuit

13  has been filed, make an offer to the other party to submit the

14  dispute to voluntary binding arbitration under section 44.104,

15  Florida Statutes. An offer made under this paragraph must set

16  out the maximum amount of damages that may be imposed pursuant

17  to arbitration.

18         (b)  If at trial, the court finds that an offer was

19  made under paragraph (a) and was rejected, the court shall

20  award attorney's fees and costs in accordance with this

21  paragraph regardless of which party is determined to be the

22  prevailing party and notwithstanding the provisions of section

23  3(5).

24         1.  If the offer was made by the plaintiff and rejected

25  by the defendant, and if the defendant is ultimately found to

26  be liable for damages in an amount equal to or exceeding the

27  maximum amount of damages specified in the plaintiff's offer,

28  the defendant must pay the plaintiff's costs and reasonable

29  attorney's fees.

30         2.  If the offer was made by the defendant and rejected

31  by the plaintiff, and if the plaintiff is not ultimately

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  1  awarded damages in an amount exceeding the maximum amount of

  2  damages specified in the defendant's offer, the plaintiff must

  3  pay the defendant's costs and reasonable attorney's fees.

  4         (2)  MEDIATION.--The court may submit a claim for

  5  damages under this act to mediation upon its own motion or

  6  upon the motion of the parties. If the mediation reaches an

  7  impasse, the mediator shall file with the court, under seal,

  8  both the plaintiff's and the defendant's last best offer, and

  9  these offers may not be disclosed to the ultimate trier of

10  fact until after trial. Regardless of which party is

11  determined to be the prevailing party and notwithstanding the

12  provisions of section 3(5):

13         (a)  If the ultimate trier of fact does not award the

14  plaintiff more than 75 percent of the defendant's last best

15  offer, the plaintiff must pay the defendant's costs and

16  reasonable attorney's fees; and

17         (b)  If the ultimate trier of fact awards the plaintiff

18  125 percent or more of the plaintiff's last best offer, the

19  defendant must pay the plaintiff's costs and reasonable

20  attorney's fees.

21         Section 10.  This act shall take effect upon becoming a

22  law.

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  1            *****************************************

  2                          SENATE SUMMARY

  3    Creates the "Commerce Protection Act." Prescribes
      exclusive remedies against persons, businesses, and
  4    governmental agencies for damages caused by the failure
      of their information technology resources to function
  5    properly with respect to date data. Provides for punitive
      damages under specified circumstances. Expands the waiver
  6    of sovereign immunity for damages caused by the gross
      negligence of governmental agencies. Excludes from
  7    compensatory damages, those that should have been avoided
      as a result of disclosures made. Provides for the award
  8    of costs and attorney's fees under specified
      circumstances. Provides for immunity from liability for
  9    officers and directors of businesses under specified
      circumstances. Creates a lien in favor of lending
10    institutions on damages received by a business as a
      result of its failure or the failure of another to be
11    year-2000 compliant. Imposes insurance and warranty
      requirements on persons who undertake to assess whether
12    information technology resources are year-2000 compliant
      or to make such resources so compliant, and prohibits
13    such persons from misusing or disclosing certain
      information provided to them. Provides for remedies,
14    damages, and criminal penalties for misuse or disclosure
      of that information. Exempts the exchange of certain
15    information from action under the Florida Antitrust Act
      of 1980. Provides incentives for seeking voluntary
16    binding arbitration of disputes and for reaching
      agreement with respect to disputes submitted to
17    mediation.

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