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Are retailers liable for Y2K warnings?

A lawsuit claims major retailers, including Circuit City, CompUSA, and others, are responsible for informing consumers as to whether the computers it sells are Y2K compliant.

3 min read
A lawsuit has been filed in California that claims major retailers, including Circuit City, CompUSA, and others, are responsible for informing consumers as to whether the computers it sells are Y2K compliant.

The thrust of the case against Circuit City and five other major retailers is that selling computer products without advising consumers on whether the products are Year 2000 compliant amounts to an "unfair business practice," according to an attorney for the plaintiff.

Back to Year 2000 Index Page The lawsuit comes as debate rages on Capitol Hill on how far to limit litigation related to the Year 2000 computer problem.

The action, the first of its kind, according to legal observers, seeks to compel Circuit City to make such disclosures to present and past customers.

The lawsuit, Johnson v. Circuit City, et al., claims that major retailers of computer software and hardware have violated the California Unfair Business Practices Act by failing to disclose to customers whether products they purchase are Y2K compliant.

The defendants in the suit are Circuit City, CompUSA, The Good Guys, OfficeMax, Staples, and Fry's.

While no formal response has yet been filed by any of the retailers, counsel for Circuit City said they will make a motion to the court claiming that Circuit City has no obligation to provide such disclosures.

A Circuit City spokesman said: "We absolutely believe the suit is without merit, and we will respond accordingly."

The suit comes the same day a congressional committee discusses legislation that looks to severely limit "frivolous" lawsuits from taking place, and whether to delay Year 2000 bug lawsuits during a 90-day "cooling-off" period. The committee is also debating whether to cap punitive damages and limit the personal liability of company executives.

Debate is raging in state legislatures and in Congress over how to control Y2K litigation costs that, by some estimates, could reach $1 trillion. But consumer advocates and some members of Congress fear this desire to control litigation may strip consumers of their legal rights.

According to the new lawsuit, thousands of California consumers have purchased computer products that are not Year 2000 compliant, and manufacturers and retailers have known about the problem for years.

While most computer vendors disclose on their Web sites which products are compliant, the suit argues that the retailers are in the best position to disclose to consumers at the point of purchase whether the money they are spending is for a product that could malfunction 10 months from now.

"We're not interested in holding a specific company responsible for not providing a compliant product," said Richard Ergo, the lead attorney at law firm Bowles & Verna, of Walnut Creek, California, which is representing the suit. "We're saying this is the best way to way to disclose to consumers what is and what isn't compliant."

He insisted it is highly unlikely that his client will receive any money at the end of the case.

The suit also claims that Circuit City should contact previous customers to let them know that products they have purchased could cause problems if not replaced or fixed.

Ergo said it is simple to fix some noncompliant products. Manufacturers, such as Microsoft have free upgrades that can be downloaded from their Web sites for many of their noncompliant products.

He argues that if consumers ask a retailer to fix a noncompliant product, they will most likely advise the consumer to buy the most recent version, giving the retailer more profits and leaving the customer without the knowledge of a free upgrade.

The issue is larger than consumers unnecessarily spending money to fix their computer systems.

According to Ergo, the biggest issue is ensuring that consumers learn of the need to fix or replace noncompliant products before it's too late.

"We think it needs to happen before 2000, so a bunch of consumers in California don't wake up New Year's Day 2000," with disabled products.