[§663M-6] Liability. (a) All alternative dispute resolution awards and all judgments in a court proceeding which award damages on a claim arising out of a year 2000 error shall state whether the claimant and the respondent engaged in commercially reasonable efforts to avoid the impact of year 2000 errors.
(b) The trier of fact shall make an independent determination that the actions taken by a claimant or respondent constitute commercially reasonable efforts, based on the totality of the circumstances, and notwithstanding that the party's efforts failed to avoid all year 2000 errors affecting its computer-based systems. In making the determination, the trier of fact shall examine the party's efforts as a whole and shall take into consideration the sophistication of and resources available to the party. The burden of proof shall be on the party claiming that it engaged in commercially reasonable efforts, and the standard of proof shall be a preponderance of the evidence.
(c) A claimant or respondent shall not be found to have undertaken commercially reasonable efforts unless it has, at a minimum:
(1) Implemented the remediation steps in timely fashion; and
(2) Complied with any data formats established by a government regulation, a governing body (such as the National Automated Clearing House Association for certain financial transactions) or reasonably requested by the other party where the parties exchange electronic information which was impacted by the alleged year 2000 error.
(d) "Remediation steps" means, for a person addressing potential year 2000 errors, awareness, assessment, renovation, validation, and implementation. The reasonableness of those steps shall be determined by the circumstances, including the sophistication of and resources available to the person carrying them out.
(1) The awareness step generally includes providing any supervisory personnel with information about the year 2000 problem and the designation of personnel to deal with the person's potential for year 2000 errors.
(2) The assessment phase generally includes a determination of the impact of potential year 2000 errors on the person (including those caused by computer-based systems controlled by the person and those controlled by others), identification of core activities, a physical inventory of potentially affected computer-based systems supporting core activities, prioritization of items with potential year 2000 errors to create a remediation schedule, determining whether the item records dates or processes date information, identifying and obtaining resources to address potential year 2000 errors, the development of a remediation strategy for each item with the potential for year 2000 errors, and the development of a recovery plan to handle those year 2000 errors which are reasonably likely to occur.
(3) The renovation step generally includes the conversion, upgrade, replacement, or elimination of computer-based systems supporting core activities which are subject to year 2000 errors.
(4) The validation step generally includes validating existing, converted, or replaced computer-based systems supporting core activities. "Validating" means:
(A) Testing the item to actually simulate the transition from December 31, 1999, to January 1, 2000, the processing of other date data which may reasonably be expected to trigger a year 2000 error, and a determination that no year 2000 error occurs; and
(B) Where the item has been renovated to correct known or suspected year 2000 errors, testing to assure that the item continues to properly perform its functions without error. This testing includes but is not limited to integration and acceptance testing. When testing is not reasonably possible, the validation step consists of securing documentation from the developer or vendor of a computer-based system supporting core activities that it is free of potential year 2000 errors. This includes vendors of core business functions, services, or supplies to understand the risk posed by the person's supply chain.
(5) The implementation step generally includes the placing of renovated or replaced computer-based systems into production use. Where a computer-based system cannot reasonably be renovated, the implementation step generally includes the implementation of a work-around designed to avoid the effect of the potential year 2000 error. Additionally, this step includes the implementation of contingency or recovery plans for those year 2000 errors which are reasonably likely to occur.
Where applicable, the person's highest level of management should determine what efforts are to be made and what resources are to be used in carrying out the remediation steps, and should monitor the progress of the remediation steps.
(e) Upon a finding that the respondent engaged in commercially reasonable efforts, the respondent's liability shall be limited to the claimant's out of pocket expenses directly caused by the year 2000 error.
(f) Upon a finding that the respondent failed to engage in commercially reasonable efforts, the respondent shall be liable for economic damages directly caused by the year 2000 error.
(g) The amount awarded to any claimant shall be reduced to the extent that the claimant's failure to engage in commercially reasonable efforts contributed in whole or part to the damages sustained. Where two or more respondents are found liable for the claimant's damages, the proportion of liability assessed against each respondent shall be proportionately adjusted based on the extent to which it engaged in commercially reasonable efforts. [L 1999, c 115, pt of §2]