Reference Title: year 2000; liability

AN ACT
AMENDING TITLE 12, CHAPTER 6, ARIZONA REVISED STATUTES, BY ADDING ARTICLE 14; RELATING TO LIABILITY FOR YEAR 2000 FAILURES.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 12, chapter 6, Arizona Revised Statutes, is amended by adding article 14, to read:

article 14. Liability for year 2000 date failures

12-741 . Definitions

IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES:

1. "BUYER" MEANS A PERSON WHO LEASES, LICENSES OR PURCHASES ANY PRODUCT, EQUIPMENT OR SERVICE.

2. "COMPUTER" HAS THE SAME MEANING PRESCRIBED IN SECTION 13-2301, SUBSECTION E.

3. "COMPUTER NETWORK" HAS THE SAME MEANING PRESCRIBED IN SECTION 13-2301, SUBSECTION E.

4. "COMPUTER PROGRAM" HAS THE SAME MEANING PRESCRIBED IN SECTION 13-2301, SUBSECTION E.

5. "COMPUTER SOFTWARE" HAS THE SAME MEANING PRESCRIBED IN SECTION 13-2301, SUBSECTION E.

6. "COMPUTER SYSTEM" HAS THE SAME MEANING PRESCRIBED IN SECTION 13-2301, SUBSECTION E.

7. "EQUIPMENT" MEANS ANY ITEM THAT CONTAINS A PRODUCT AND THAT IS USED TO PRODUCE OR DELIVER A PRODUCT OR SERVICE.

8. "PRODUCT" MEANS ANY ITEM THAT IS:

(a) DIRECTLY OR INDIRECTLY MANUFACTURED, CREATED OR DELIVERED BY OR THAT OPERATES THROUGH THE USE OF EMBEDDED CHIPS OR THROUGH THE MANIPULATION OF ELECTRONIC OR MAGNETIC IMPULSES, INCLUDING ANY COMPUTER, COMPUTER NETWORK, COMPUTER PROGRAM, COMPUTER SOFTWARE OR COMPUTER SYSTEM OR ANY CONSTITUENT COMPONENT, ANY ITEM THAT CONTAINS AN INTEGRATED CIRCUIT OR ANY OTHER ELECTRONICS COMPONENT.

(b) DIRECTLY OR INDIRECTLY MANUFACTURED, CREATED OR DELIVERED BY OR THAT OPERATES THROUGH THE USE OF AN INTEGRATED CIRCUIT OR ELECTRONIC COMPONENT.

9. "REMEDIAL MEASURES" MEANS AN ACTION THAT IS TAKEN TO IMPROVE THE EFFICACY OF ANY PRODUCT, EQUIPMENT OR SERVICE IN ORDER TO LESSEN THE LIKELIHOOD OR CONSEQUENCES OF A YEAR 2000 DATE FAILURE. THESE ACTIONS MAY INCLUDE:

(a) MODIFICATIONS TO THE PRODUCT, EQUIPMENT OR SERVICE.

(b) CHANGES IN QUALITY ASSURANCE PROCEDURES OR POLICIES.

(c) MODIFICATIONS THAT ARE MADE TO THE DESIGN OR METHOD OF MANUFACTURING, TO MANUFACTURING EQUIPMENT OR TO THE TESTING OF THE PRODUCT, EQUIPMENT OR SERVICE.

(d) CHANGES IN OR ADDITIONS TO TRAINING PROGRAMS OR SAFETY EDUCATION PROGRAMS.

(e) PERSONNEL OR HUMAN RESOURCES MEASURES THAT ARE RELATED TO THE PRODUCT, EQUIPMENT OR SERVICE.

(f) THE USE OR MODIFICATION OF WARNINGS OR NOTICES OR CHANGES TO OWNER MANUALS AND RELATED MATERIALS.

(g) THE RECALL OF PRODUCTS.

(h) THE CREATION OF A PLAN OR INSTRUCTIONS TO BE IMPLEMENTED IN THE EVENT OF OR TO AVOID A YEAR 2000 DATE FAILURE.

(i) ALTERNATIVE SERVICES THAT ARE OFFERED IN CONNECTION WITH A SERVICE TO PROVIDE THE BUYER WITH THE INTENDED RESULT OF THE SERVICE.

10. "SERVICE" MEANS ANY EFFORT, FUNCTION, LABOR, DELIVERY, PROCESSING OR TIME THAT DIRECTLY OR INDIRECTLY INVOLVES THE USE OF A PRODUCT.

11. "YEAR 2000 DATE FAILURE" MEANS EITHER:

(a) THE PRESENT OR FUTURE FAILURE OR INABILITY OF A PRODUCT OR ANY PRODUCT OR EQUIPMENT THAT USES A PRODUCT TO ACCURATELY ACCEPT, COMPUTE, COMPARE, DISTINGUISH, GENERATE, INTERPRET, PRODUCE, RECOGNIZE, SEQUENCE OR OTHERWISE PROCESS, STORE OR DISPLAY CORRECTLY DATE AND TIME DATA IN, FROM, INTO AND BETWEEN THE YEARS 1999 AND 2000 AND SUBSEQUENT YEARS, THE TWENTIETH AND TWENTY-FIRST CENTURIES AND LEAP YEAR COMPUTATIONS.

(b) THE PRESENT OR FUTURE FAILURE OR INABILITY OF A SERVICE THAT USES A PRODUCT OR EQUIPMENT THAT FAILS OR IS NOT ABLE TO ACCURATELY ACCEPT, COMPUTE, COMPARE, DISTINGUISH, GENERATE, INTERPRET, PRODUCE, RECOGNIZE, SEQUENCE OR OTHERWISE PROCESS, STORE OR DISPLAY DATE AND TIME DATA IN, FROM, INTO AND BETWEEN THE YEARS 1999 AND 2000 AND SUBSEQUENT YEARS, THE TWENTIETH AND TWENTY-FIRST CENTURIES AND LEAP YEAR COMPUTATIONS.

12. "YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW" MEANS ANY EVALUATION, INVESTIGATION, INQUIRY, REVIEW OR OTHER MEANS BY WHICH A PERSON SEEKS TO COMPUTE, DETERMINE, ESTIMATE, EVALUATE, PREDICT OR REPORT THE PERFORMANCE OF ANY PRODUCT, EQUIPMENT OR SERVICE AND THAT MAY BE CONDUCTED BY EMPLOYEES OR AGENTS OF THE PERSON, BY A YEAR 2000 CONSULTANT OR BY A GOVERNMENT AGENCY OR INSTRUMENTALITY.

13. "YEAR 2000 DATE STATEMENT" MEANS A STATEMENT THAT IS MATERIAL TO A TRANSACTION MADE ABOUT A PRODUCT THAT IS MANUFACTURED OR SOLD OR ABOUT A SERVICE THAT IS PROVIDED OR SOLD REGARDING WHETHER THE PRODUCT, EQUIPMENT OR SERVICE WILL RESULT IN A YEAR 2000 DATE FAILURE.

12-742 . Applicability; exceptions

A. THIS ARTICLE APPLIES TO BOTH:

1. ACTIONS IN WHICH A PERSON OR GOVERNMENTAL ENTITY SEEKS DAMAGES OR OTHER RELIEF BASED ON A YEAR 2000 DATE FAILURE.

2. ACTIONS THAT ARE BASED ON AN ALLEGED FAILURE TO PROPERLY DETECT, DISCLOSE, PREVENT, REPORT OR REMEDY A YEAR 2000 DATE FAILURE.

B. THIS ARTICLE DOES NOT:

1. APPLY TO ACTIONS TO COLLECT WORKERS' COMPENSATION BENEFITS UNDER TITLE 23.

2. ESTABLISH ANY CAUSE OR ACTION.

3. LIMIT THE RIGHTS OR OBLIGATIONS OF A PERSON TO ASSERT ANY LEGAL THEORY, RIGHT, DEFENSE OR AFFIRMATIVE DEFENSE THAT IS AVAILABLE UNDER ANY STATUTE, LAW, RULE, CONTRACT OR TARIFF.

4. WAIVE THE SOVEREIGN IMMUNITY OF THIS STATE OR A POLITICAL SUBDIVISION OF THIS STATE.

5. EXPAND OR LIMIT ANY OTHER LAW, STATUTE, RULE, CONTRACT OR TARIFF THAT PROVIDES IMMUNITY, LIMITS LIABILITY OR ESTABLISHES OTHERWISE AVAILABLE DEFENSES.

C. IF A CONFLICT BETWEEN THIS ARTICLE AND CHAPTER 6, ARTICLE 9 OF THIS TITLE ARISES, THIS ARTICLE CONTROLS.

12-743 . Notice; inspection; opportunity to cure

A. EXCEPT AS PROVIDED IN SUBSECTION B OF THIS SECTION, A PROSPECTIVE PLAINTIFF SHALL GIVE WRITTEN NOTICE TO A PROSPECTIVE DEFENDANT AT LEAST NINETY DAYS BEFORE COMMENCING AN ACTION FOR DAMAGES OR OTHER RELIEF CAUSED BY A YEAR 2000 DATE FAILURE. THE NOTICE SHALL IDENTIFY THE PROSPECTIVE PLAINTIFF AND SHALL DESCRIBE IN REASONABLE DETAIL THE YEAR 2000 DATE FAILURE AND THE DAMAGES OR OTHER HARM CAUSED BY THE DATE FAILURE. IF NOTICE IS GIVEN TO OTHER THAN A NATURAL PERSON, THE NOTICE SHALL BE GIVEN TO A PARTNER, AN OFFICER, A MANAGING OR GENERAL AGENT OR ANY OTHER AGENT WHO IS AUTHORIZED TO RECEIVE SERVICE OF PROCESS.

B. IF THE NINETY DAY WRITTEN NOTICE UNDER SUBSECTION A OF THIS SECTION CANNOT BE GIVEN BECAUSE THE ACTION MUST BE COMMENCED BEFORE THE EXPIRATION OF THE STATUTE OR LIMITATIONS OR BECAUSE THE CLAIM IS ASSERTED BY A COUNTERCLAIM, CROSS-CLAIM OR THIRD PARTY CLAIM, THE PERSON WHO ASSERTS THE CLAIM SHALL GIVE WRITTEN NOTICE WITHIN THIRTY DAYS AFTER THE DATE ON WHICH THE ACTION IS FILED OR THE COUNTERCLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM IS SERVED. THE COURT MAY NOT ENTER A JUDGMENT ON THE CLAIM FOR AT LEAST NINETY DAYS AFTER THE DATE OF THE NOTICE. A PARTY MAY NOT SEEK DISCOVERY FOR AT LEAST NINETY DAYS AFTER THE DATE OF THE NOTICE.

C. IF THE PLAINTIFF FAILS TO PROVIDE WRITTEN NOTICE, THE COURT SHALL DISMISS THE CLAIM. IF THE COURT ENTERS ITS DISMISSAL ORDER BEFORE THE EXPIRATION OF THE STATUTE OF LIMITATIONS THAT APPLIES TO THE CAUSE OF ACTION ASSERTED BY THE PLAINTIFF, THE DISMISSAL OF THE ACTION IS WITHOUT PREJUDICE AND THE NOTICE PROVISIONS OF THIS SECTION APPLY. IF THE COURT ENTERS ITS DISMISSAL ORDER AFTER THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS, THE PLAINTIFF MAY REINSTATE THE ACTION PURSUANT TO SECTION 12-504, SUBSECTION A AND THE NOTICE PROVISIONS OF THIS SECTION APPLY.

D. WITHIN SIXTY DAYS AFTER RECEIVING NOTICE UNDER SUBSECTION A OR B OF THIS SECTION, A PROSPECTIVE DEFENDANT MAY REQUEST IN WRITING TO INSPECT ANY PRODUCT, EQUIPMENT OR SERVICE TO ASSESS THE NATURE, SCOPE AND CONSEQUENCES OF THE YEAR 2000 DATE FAILURE IF THE PRODUCT, EQUIPMENT OR SERVICE IS SUBJECT TO A PROSPECTIVE PLAINTIFF'S POSSESSION OR CONTROL. THE PROSPECTIVE DEFENDANT SHALL CONDUCT THE INSPECTION IN A REASONABLE MANNER AT A REASONABLE TIME AND PLACE.

E. WITHIN NINETY DAYS AFTER RECEIVING NOTICE PURSUANT TO SUBSECTION A OR B OF THIS SECTION, THE PROSPECTIVE DEFENDANT MAY OFFER TO CURE THE YEAR 2000 DATE FAILURE THAT IS THE SUBJECT OF THE CLAIM. THE OFFER TO CURE MAY INCLUDE THE OFFER TO REPAIR, REPLACE, UPGRADE OR UPDATE THE PRODUCT, EQUIPMENT OR SERVICE, TO MAKE RESTITUTION OR TO PROVIDE REMEDIAL MEASURES.

F. THE INSPECTION AND THE RESULTS OF THE INSPECTION MAY BE OFFERED AS EVIDENCE OR ADMITTED INTO EVIDENCE CONSISTENT WITH THE STANDARDS APPLICABLE FOR YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW PURSUANT TO SECTION 12-748. AN OFFER TO CURE OR TO MAKE RESTITUTION AND THE CURE OR RESTITUTION OF A YEAR 2000 DATE FAILURE MAY BE OFFERED IN EVIDENCE PURSUANT TO RULE 408, ARIZONA RULES OF EVIDENCE.

12-744 . Affirmative defense; notice and repair

A. IT IS AN AFFIRMATIVE DEFENSE TO A YEAR 2000 DATE FAILURE IF ALL OF THE FOLLOWING APPLY:

1. THE DEFENDANT NOTIFIED THE BUYER OF THE PRODUCT, EQUIPMENT OR SERVICE THAT THE PRODUCT, EQUIPMENT OR SERVICE MAY MANIFEST THE YEAR 2000 DATE FAILURE. THE NOTICE SHALL BOTH:

(a) IDENTIFY THE PRODUCT, EQUIPMENT OR SERVICE THAT WAS SUPPLIED BY THE DEFENDANT AND THAT MANIFESTS OR MAY MANIFEST THE YEAR 2000 DATE FAILURE.

(b) EXPLAIN HOW THE BUYER MAY OBTAIN REMEDIAL MEASURES OR PROVIDE INFORMATION ON HOW TO REPAIR, REPLACE, UPGRADE OR UPDATE THE PRODUCT, EQUIPMENT OR SERVICE.

2. THE DEFENDANT UNCONDITIONALLY OFFERED AT NO ADDITIONAL COST TO THE BUYER TO PROVIDE, IMPLEMENT OR ENABLE THE BUYER TO IMPLEMENT EITHER:

(a) THE REPAIR, REPLACEMENT, UPGRADE OR UPDATE OF THE PRODUCT, EQUIPMENT OR SERVICE.

(b) REMEDIAL MEASURES.

3. THE UNCONDITIONALLY OFFERED ALTERNATIVE SERVICE, REPAIR, REPLACEMENT, UPGRADE OR UPDATE OR REMEDIAL MEASURES WOULD HAVE AVOIDED THE DAMAGES THAT WERE CAUSED BY THE YEAR 2000 DATE FAILURE.

B. FOR THE PURPOSES OF SUBSECTION A, PARAGRAPH 1, A DEFENDANT MAY GIVE NOTICE BY EITHER:

1. TIMELY SENDING THE NOTICE BY MAIL, COURIER, ELECTRONIC MAIL OR TELEFACSIMILE TO THE LAST KNOWN ADDRESS OR TELECOPIER NUMBER THAT WAS PROVIDED TO THE BUYER IF THAT INFORMATION IS IN THE POSSESSION OR CONTROL OF THE DEFENDANT.

2. IF SENDING NOTICE PURSUANT TO PARAGRAPH 1 OF THIS SUBSECTION IS IMPRACTICABLE, TIMELY PUBLISHING THE NOTICE IN AT LEAST TWO NEWSPAPERS OF GENERAL STATEWIDE CIRCULATION FOR THREE CONSECUTIVE WEEKS OR TIMELY PUBLISHING THE NOTICE ON THE DEFENDANT'S INTERNET WEB SITE.

12-745 . Affirmative defense; reliance; definition

A. IT IS AN AFFIRMATIVE DEFENSE TO A YEAR 2000 DATE FAILURE IF ALL OF THE FOLLOWING APPLY:

1. THE DEFENDANT REASONABLY RELIED ON A FALSE OR MISLEADING YEAR 2000 DATE STATEMENT MADE BY AN INDEPENDENT, UPSTREAM VENDOR OR SUPPLIER OF THE PRODUCT, EQUIPMENT OR SERVICE OR BY ANOTHER PERSON THAT THE PRODUCT, EQUIPMENT OR SERVICE WOULD NOT MANIFEST THE YEAR 2000 DATE FAILURE.

2. THE DEFENDANT DID NOT HAVE ACTUAL KNOWLEDGE THAT THE YEAR 2000 DATE STATEMENT WAS FALSE OR MISLEADING.

B. FOR THE PURPOSES OF THIS SECTION, "YEAR 2000 DATE STATEMENT" MEANS A STATEMENT THAT A PRODUCT, EQUIPMENT OR SERVICE IS YEAR 2000 COMPLIANT, IS MILLENNIUM BUG FREE OR OTHERWISE COMPLIES WITH A YEAR 2000 DATE STANDARD ESTABLISHED BY STATE OR FEDERAL LAW OR A NATIONAL OR INTERNATIONAL SERVICE ORGANIZATION OR ANY OTHER SIMILAR REPRESENTATION.

12-746 . Affirmative defense; compliance testing; definition

A. IT IS AN AFFIRMATIVE DEFENSE TO A YEAR 2000 DATE FAILURE IF ALL OF THE FOLLOWING APPLY:

1. THE DEFENDANT OR A GOVERNMENTAL ENTITY CONDUCTED A REASONABLE EXAMINATION OF THE DEFENDANT'S PRODUCT, EQUIPMENT OR SERVICE TO DETERMINE IF IT WOULD MANIFEST A YEAR 2000 DATE FAILURE.

2. IF THE EXAMINATION REVEALED A YEAR 2000 DATE FAILURE, THE DEFENDANT IN GOOD FAITH REPAIRED, REPLACED, UPGRADED OR UPDATED THE PRODUCT, EQUIPMENT OR SERVICE OR A COMPONENT OF THE PRODUCT, EQUIPMENT OR SERVICE THAT THE DEFENDANT REASONABLY BELIEVED TO BE NECESSARY.

3. THE DEFENDANT TESTED THE PRODUCT, EQUIPMENT OR SERVICE OR A COMPONENT OF THE PRODUCT, EQUIPMENT OR SERVICE AFTER MAKING ANY NECESSARY REPAIRS, REPLACEMENTS, UPGRADES OR UPDATES OF THE PRODUCT, EQUIPMENT OR SERVICE OR ANY COMPONENT OF THE PRODUCT, EQUIPMENT OR SERVICE TO DETERMINE IF IT WOULD CONTINUE TO MANIFEST A YEAR 2000 DATE FAILURE.

4. THE PRODUCT, EQUIPMENT OR SERVICE SUCCESSFULLY PASSED ANY NECESSARY TEST THAT WAS PERFORMED BY THE DEFENDANT PURSUANT TO PARAGRAPH 3.

B. FOR THE PURPOSES OF THIS SECTION, "DEFENDANT" INCLUDES THE DEFENDANT, AN AGENT OF THE DEFENDANT OR A GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

12-747 . Offset

A. IF THE DEFENDANT CURED THE YEAR 2000 DATE FAILURE OR MADE RESTITUTION, THE COURT MAY DEDUCT FROM THE DAMAGES ALLOWED AN AMOUNT THAT IS EQUAL TO THE VALUE THAT THE PLAINTIFF RECEIVED FROM THE CURE OR RESTITUTION.

B. IF THE PLAINTIFF REFUSED THE DEFENDANT'S UNCONDITIONAL OFFER TO CURE THE FAILURE OR TO MAKE RESTITUTION, THE COURT MAY DEDUCT FROM THE DAMAGES ALLOWED AN AMOUNT THAT IS EQUAL TO THE VALUE THAT THE PLAINTIFF WOULD HAVE RECEIVED FROM THE CURE OR RESTITUTION.

C. THE DEFENDANT HAS THE BURDEN OF PROVING BY A PREPONDERANCE OF THE EVIDENCE THE VALUE THE PLAINTIFF RECEIVED OR WOULD HAVE RECEIVED FROM THE CURE OR RESTITUTION.

12-748 . Remedial measures

A. IF A DEFENDANT CONDUCTED A YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW AND TOOK REMEDIAL MEASURES, THE PLAINTIFF MAY NOT USE THE YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW OR THE REMEDIAL MEASURES TO PROVE NEGLIGENCE, THAT THE PRODUCT, EQUIPMENT OR SERVICE WAS DEFECTIVE OR UNREASONABLY DANGEROUS OR OTHER CULPABLE CONDUCT. THE PLAINTIFF MAY USE THE YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW TO PROVE THE FEASIBILITY OF THE PRECAUTIONARY MEASURES, TO IMPEACH OR TO CONTROVERT ANY POSITION TAKEN BY THE DEFENDANT THAT IS INCONSISTENT WITH THE CONTENTS OF THE YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW OR THE REMEDIAL MEASURES.

B. THIS SECTION DOES NOT PREVENT THE PLAINTIFF FROM PROVING NEGLIGENCE, THAT THE PRODUCT, EQUIPMENT OR SERVICE WAS DEFECTIVE OR UNREASONABLY DANGEROUS OR OTHER CULPABLE CONDUCT BY OTHER INDEPENDENT EVIDENCE OR SOURCES EVEN IF THE OTHER EVIDENCE OR SOURCES ARE MENTIONED OR INCLUDED IN THE YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW OR THE REMEDIAL MEASURES.

C. THE EXISTENCE AND CONTENTS OF A YEAR 2000 COMPLIANCE ANALYSIS AND REVIEW ARE DISCOVERABLE AND SUBJECT TO DISCLOSURE UNLESS OTHERWISE PRIVILEGED. A PORTION OF A YEAR 2000 COMPLIANCE ANALYSIS OR REVIEW MAY BE DESIGNATED AND MAINTAINED AS CONFIDENTIAL AND MAY BE PROTECTED FROM PUBLIC DISCLOSURE PURSUANT TO THE ARIZONA RULES OF CIVIL PROCEDURE IF THE PORTION INVOLVES A TRADE SECRET AS DEFINED IN SECTION 44-401, PROPRIETARY MATERIAL OR COMPETITIVELY SENSITIVE INFORMATION. A COURT SHALL DETERMINE ANY CONFIDENTIALITY DISPUTE AFTER AN IN CAMERA REVIEW OF THE PORTION OF THE ANALYSIS OR REVIEW IN QUESTION.

Sec. 2. Applicability

This act applies to all civil actions that are commenced on or to any claims that are brought after the effective date of this act.

Sec. 3. Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.

APPROVED BY THE GOVERNOR APRIL 26, 1999.

FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 26, 1999.