Let The Lawsuits Begin! Lawsuit could set crucial Y2K precedent


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From InfoWorld:

September 7, 1998

Lawsuit could set crucial Y2K precedent

Question of when vendor should warn users of Y2K problems at stake By Blaise Zerega

By asking a Massachusetts State Superior Court for a declaratory judgment against retailer J. Baker Inc., Andersen Consulting fired the first salvo in what many lawyers say will be a full-scale war between vendors and companies over the year-2000 problem. This case may either intimidate companies from suing vendors, or it may trigger a barrage of similar lawsuits.

"It has broader implications of how consulting firms are approaching [year-2000 litigation]," said Scott Nathan, a partner at Nathan & Voltz, a law firm in Franklin, Mass. "Arguably, there are hardware and software vendors watching this."

The case revolves around $3 million that retailer J. Baker spent to make a mainframe-based merchandising system, which was installed by Andersen between the years 1989 to 1991, year-2000 compliant. According to legal documents, Andersen asked the court to rule that it had fulfilled its contractual obligations and that it is not responsible for upgrading the system.

"If any other organization was placed in our shoes, it is so overwhelmingly in our favor, that not to take this action would raise eyebrows," said Eric Jackson, a representative for Andersen Consulting, in New York.

Whether Canton, Mass.-based J. Baker, which could not be reached for comment, will countersue for the monetary damages is unclear.

Attorneys and analysts questioned the wisdom of Andersen dragging a customer into court from a public relations point of view, but said that the legal precedent it sets may be worthwhile.

"This is a calculated decision by Andersen Consulting to put what they perceive to be a marginal case into the system," Nathan said. "They're sending a message to those companies who are thinking of suing them."

Andersen, however, denied that its action was undertaken to ward off other litigation.

"We're taking this action to specifically deal with the J. Baker situation," Jackson said.

Analysts said that this case may be the beginning of the onslaught of year-2000 lawsuits.

"This could be a watershed event in [year-2000] litigation. In the event that J. Baker does win, the floodgates will open," said Kazim Isfahani, an analyst at Giga Information Group, in Cambridge, Mass.

Sources close to the case who asked to remain anonymous, said Andersen's strategy was that first, by filing this declaratory judgment, other companies would take notice of the seriousness with which the consultancy intends to litigate claims. And second, an out-of-court settlement would deny the possibility of publicity and jury settlement should the case be decided in J. Baker's favor, sources said.

Some attorneys and industry watchers, however, would like to see the case go to trial in order to help define a "standard of care" regarding how much year-2000 information vendors must disclose.

"There's a real question in 1989 whether the standard of care would have contemplated year-2000 compliance," said Jim Kalyvas, a partner at Foley & Lardner, in Los Angeles.

Analysts suggest 1995 as a pivot date for this standard of care.

barb butrym

Quite Involved in Discussions
absolutely, Marc....design life will be the key factor. This is just one of many many more to come..and with fiscal year 2000, it will even hit sooner than most people expect!!!! This has got to be the best case of "opps" in business today. The government is one of biggest problems. Not very much attention...in relation to the impact..is being paid to the trickle down effects, and their potential litigations. I have to admit until a year ago I was not paying much attention either until I had my eyes opened by am IT consultant I met from New Zealand. What happens when your line goes down because your supplier's MRP system misses the mark due to date confusions..and you miss your contract deadline and your customer cancels...who pays? Just one very simple scenario...but oh so possible...especially with JIT so prevelant.

barb butrym

Quite Involved in Discussions
Hey ya know what else???????? all those consultants out there making their millions on the fix? Who is guaranteeing the impact analysis? NO-ONE..Who is watching the cookie jar? NO-ONE....Who among them have a quality system to prevent "opps"? NO-ONE..who among them make you sign a 'not responsible' statement? probably all of them......what a racket....Where are the quality system people? Who audits their work?...damn ... anothe opportunity missed !!!!


Fully vaccinated are you?
I thought the article was interesting but I wonder. If it was 1988 (for my point) spending probably hundreds of thousande (if not millions) of dollars and the company (Anderson in this case) was putting together a software solution estimated with a 'life' of 10 to 15 years, year 2000 issues, even though it was 1988, should have been foreseen and addressed.

I'm wondering if the 'designed life' of the software will be a floating decision factor in litigation.
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