From the San Francisco Daily Journal, July 26, 1999. Y2K SUIT MAY BRING EARLY TEST OF NEW FEDERAL LAW: A millennium bug defendant says the case of allegedly fraudulent advertising for
software belongs in U.S. court. By Craig Anderson/Daily Journal Staff Writer In the first-time attempt to invoke the recently signed federal law limiting year
2000 lawsuits, a group of national retailers accused of unfair business practices for selling software that might not work properly next year has removed the class action complaint to federal court.
David Phillips, an attorney at Phillips & Erlewine in San Francisco who represents Staples Inc., said the complaint belongs in federal court because its claims fall under the Y2K act, which
went into effect July 20. "We think it will get a closer look [in federal court]," Phillips said. "It clearly falls under the [Y2K] act." The Y2K law, approved
after intense lobbying by the software industry, mandates a 90-day cooling off period to give defendants an opportunity to correct any problems before litigation can be filed. Phillips said that clock should have
started running Thursday, when the case was removed to Federal court. But Kenneth Jones, an attorney at Bowles & Verna in Walnut Creek who represents the plaintiffs, said the case does not
fall under the new law. "We're not suing because of a Y2K failure," he said. "We're suing because these retailers are deceiving the California public." Jones said Staples' removal
of the case to federal court is a bid for tactical advantage in the ongoing settlement discussions. The lawsuit, Johnson v. Circuit City, 99-3573, is the first that targets retailers
for allegedly misleading consumers by failing to disclose potential Y2K problems in the computer products they sell. It was filed in January in Contra Costa County Superior Court. Last
month, one of the defendants, Office Depot, agreed to a settlement requiring it to post signs and include disclosures warning customers to check with manufacturers to make sure software products are Y2K-compliant.
The company also agreed to pay an undisclosed sum. The other defendants, Circuit City, Staples, Fry's Electronics, CompUSA, OfficeMax and The Good Guys, have not agreed to a deal. But
their attorneys plan to meet with the plaintiff's attorneys this week for mediation ordered by Contra Costa Superior Court Judge James Trembath. Phillips said he and the other defendants still
planned to attend Tuesday's mediation session, although they are not required to do so now that the case has been removed to federal court. Jones said Thursday's move by the retailers was
another in a series of what he described as "posturing" by both sides in preparation for the mediation session. "That's definitely what's going on," he said. Last week,
Trembath rejected a bid by the defendants to force the class action plaintiffs to include software manufacturers, including Microsoft, as defendants in their complaint. But he did give the retailers the option of
filing a motion to request the manufacturers' addition to the case. While the plaintiffs' attorneys could file a motion seeking to remand the case to Contra Costa County Superior Court, that
would take this a couple of months, Jones said. "This is a delaying tactic," he added. Phillips agreed that the issue of whether the Circuit City case falls under the new Y2K law is
unsettled but he said he believes the retailers would prevail in federal court. The law, he said, "gives an opportunity for those being charged with a violation to correct it." The
defense attorney said Staples already is posting signs warning of potential Y2K problems. Jones conceded that point but said some company employees are still making inaccurate claims about whether software they
sell will work next year. The much-hyped Y2K problem is caused by the fact that many computer programs were written with only two digits to indicate calendar years. This may cause
serious problems on Jan. 1 if computers assume "00" means 1900 instead of 2000. Government agencies and business are scrambling to fix the problem, and software companies have written new
programs that are Y2K-compliant. But many older programs, and even some newer ones, are not. |
