Tech Industry

First Y2K lawsuit filed is settled

TEC America and Produce Palace settle a legal dispute that included alleged Year 2000 problems in TEC's cash register system.

A Detroit-area retailer and the maker of its computerized cash register system have settled their dispute over alleged flaws in the system--including Year 2000 recognition problems on credit cards--for $260,000.

Sources familiar with the case said TEC America, which made the system purchased by Produce Palace International three years ago, Back to Year 2000 Index Page had offered to settle its part of the case for $250,000 after mediation, but the plaintiff rejected the offer. TEC will pay that amount to settle, with codefendant All American Cash Register, the system installer, adding another $10,000.

Tec America said in a statement today that claims for $5 million were settled for the $250,000 with the computer system being returned to the Canadian company.

Tec America continues to claim its computer systems work well, insisting its products have accepted credit cards for dates on and beyond year 2000, but now insists its systems in this situation were mis-installed by an independent dealer. The company has filed cross claims against the dealer, All American Cash Register.

The lawsuit, filed a little more than a year ago, is the first to be brought regarding the Year 2000 problem and the second to be closed. There are still 16 Y2K lawsuits circulating through the U.S. judicial system, according to the law firm of Hancock, Rothurt, and Bunshoft, which manages a database on the cases.

As previously reported, the owners of Produce Palace said it filed the case because its cash registers can't handle sales billed to credit cards expiring in the year 2000.

Mark Yarsike and Sam Katz, owners of the retail company in Warren, Michigan, said at the time the suit was filed that they were tired of losing business due to the problem, and have filed a lawsuit against Tec America and its local service vendor, All American Cash Register, seeking $10,000, plus damages, interest, costs, and attorney's fees.

The problem, according to Yarsike and Katz, was that their cash registers couldn't recognize the year 2000 as a valid credit card expiration date. They said that between April 30, 1996 and May 6, 1997 their registers crashed 105 times when they attempted to ring up sales billed to credit cards expiring in 2000.

Problems include tripped-up modems, crashed computers, and fouled-up records, according to the two store owners.

The Year 2000 problem, or the millennium bug, boils down to this: Many computer systems use software which only uses the last two numbers of the year, such as "97" instead of 1997, to track dates. So when "00" comes up for the year 2000, computers will view it as 1900 instead, causing widespread problems.

Patches and upgrades to new systems are fine for businesses with packaged software, but for much of the older, custom software on mainframes and "hard-coded" software resident in cash registers and other systems, diagnoses and solutions will prove much more troublesome and costly.

Brian Parker, the attorney for Produce Palace, said today that his clients are glad the case is over. "Everyone wanted to put this behind them...even Tec America," he said. "The trial would have been a mess for everyone."

He said his clients, as well as Tec America, had already had enough of the press coverage surrounding the case. Had it gone to trial, they feared the coverage would have escalated.

Produce Palace has installed a new computer system built by NCR, a data warehousing and computing firm based in Dayton, Ohio.

Yarsike and Katz are ready to move on and leave behind their brief tryst with technology litigation history. "They have been calling me every day asking where their check is," Parker said.

The settlement follows the announcement earlier this month by Intuit that a Y2K lawsuit filed against it that alleged some of its products did not recognize the Year 2000 was dismissed.

The Intuit case marks what observers believe is the first dismissal of such a case in a group of class-action suits regarding the Y2K technology problem.

The lawsuit, Alan Issokson vs. Intuit, was filed in regard to the Year 2000 readiness of the online banking functionality of Intuit's Quicken 5 and 6 for Windows and versions 6 and 7 for Macintosh. It was dismissed by the court on August 27 because no damages could be proved, according to the company.