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Date: July 27, 1998

Locator: Somers Point

Title: New Jersey”s First Y2K Class-Action Lawsuit

Author: By Dan Goldblatt

Subject: The turn of the century will do more than

baffle computers–it will fill courtrooms.

Time sure flies. It wasn”t very long ago that we first started to hear about the problems computers and software were going to have with making the transition to the new millennium. Now we have New Jersey”s first year 2000-related class-action lawsuit. Undoubtedly, the first of many.

The problem, also know as Y2K, is related to programming decisions made at the beginning of the computer age, when data storage was extremely expensive. Dates were stored as two-digit numbers so they would use less disk space. This worked as long as all dates were in the 1900s. Now, that choice is predicted to generate massive confusion for computers, which will think that 00 means 1900 instead of 2000. Huge sums of money are being spent to overhaul both hardware and software, and as always when huge sums are involved, there is disagreement about who ought to be shelling out.

In this case, Robert Courtney, a Somers Point physician, is suing Medical Manager, a software company. His suit accuses the Tampa, Florida firm of “breach of warranty claims and other related claims.” Medical Manager”s software is used to control the myriad administrative functions of a medical practice. According to the suit, the company didn”t release a version that is able to process dates after December 31, 1999 “until as recently as November 1997.”

Courtney”s contention, according to one of his lawyers, Harris Pogust, a partner with the Pennsauken law firm Sherman, Silverstein, Kohl, Rose & Podolsky, is that Medical Manager should not charge him for the upgrade. Says Pogust: “We are asking for them to provide the upgrade for free.” Additionally, the suit requests refunds for those who purchased the upgrade. Pogust estimates that the upgrade would cost Courtney between $5,000 to $10,000.

“We”re claiming they violated the New Jersey Unfair Trade Practices Act by not disclosing” the limitations of the previous versions, Pogust says. The suit maintains that Medical Manager has been peddling a defective product, because while its product description promises that “The Medical Manager excels at meeting your current needs and provides you with the ability to manage your future,” that future did not extend beyond 1999 until the recently released Version 9. This purported misrepresentation, Pogust says, entitles his client and other members of his putative class to such remedies as collecting triple damages and attorney fees.

According to Philip R. Sellinger, a partner and chair of the complex litigation department with Newark”s Sills Cummis Zuckerman Radin Tischman Epstein & Gross, “The complaint in this case alleges breach of an implied warranty.” Despite the high-tech trappings of the product involved, Sellinger, whose firm is representing the software company, says this is basically a contract case in which the question will be the wording of the software”s warranty and “whether contracts will be enforced by the courts” as written.

Sellinger, who prefers to speak in general terms about Y2K and class-action litigation, says, “In many class-action lawsuits, plaintiffs are looking to move away from” a contract”s wording and “focus on implied warranties.” Additionally, in a case such as this, Sellinger says, “You can infer that there will be an argument that the company implied some length of usefulness.” These arguments “are much harder for the plaintiffs to prove than they may suspect,” explains Sellinger.

In Pogust”s view, Medical Management is treating its “belated” development of a Y2K-compliant version as “a windfall.” Says he: “The majority of software companies are providing the Y2K fix at no charge.”

Pogust declines to offer a firm opinion on the difficult question of how long any particular version of a software product can be expected to last. He does say, however, that “we don”t expect it to last forever, but the useful life of it should be much longer than the little over two years” that customers who purchased the previous, non-Y2K-compliant version of Medical Manager”s package, could expect.

What both attorneys seem to agree upon is that this isn”t an arcane discussion of computer science. For Pogust, the case has to do with consumers saying, “You”re telling me the version I just bought for $10,000 to $20,000 won”t work?” To Sellinger, the question is a much drier, whether or not “there are contractual clauses that limit exposure, liability and remedies to specified time periods.” To all businesses, this should mean: read the fine print, ask the right questions and get it in writing.