Hello. I am a Project Manager for a Y2K "business partner" project. One of my responsibilities is to track critical business partners' progress in their Y2K projects. Hence my inquiry outlined below:

It seems to be a silent contention (according to some best practices literature and through articles on the Internet), that no disclosure be a company can be potentially translated to mean not ready. This interpretation is substantiated through the argument that organizations and companies that really have prepared adequately for Y2K have no reason not to disclose their readiness. This viewpoint is somewhat factually backed by the depth and detail of disclosure vendor business partners claiming Y2K readiness are currently disseminating.

By a similar argument, due to the interdependence of business partners, vendors/suppliers, and related service organizations, resistance to providing information can potentially be detrimental to the business partner requesting disclosure.

Therefore my questions are:

1. Is there exposure incurred from a corporate decision to "not disclose" year 2000 readiness information, due to the potentiality of a interdependent partner's disruption?

2. Can nondisclosure be construed as withholding information, particularly if there has been a request from a business partner that has defined the partner of inquiry as critical to business processes?

3. Were these the issues that the legislation protecting disclosure was based on? Is there any clarity this legislation provides?

Personally, this is out of my area of qualifications to address, yet it seems these issues have significant impact to those of us managing projects in the trenches...

thanks in advance for all responses... christine

-- Christine Einhorn (Christine_einhorn@hmsa.com), March 11, 1999

Answers

This isn't an answer to Christine's question. But for anyone interesting in following business Y2K progress, see these two links.

This one for the Fortune 500:

http://www.flybyday.com/y2k/

This one from the SEC itself:

http://www.sec.gov/edaux/formlynx.htm

-- Kevin (mixesmusic@worldnet.att.net), March 11, 1999.

Christine,

Here's an article on liability I think you'd be interested in:

http://www.abcnews.go.com/sections/tech/CNET/cnet_y2kwarnings990311.ht ml

Are retailers liable for Y2K warnings?

Erich Luening

CNet.com

A lawsuit has been filed in California that claims major retailers, including Circuit City, CompUSA, and others, are responsible for informing consumers 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.

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. ---------------------------------------------------------------------

-- Kevin (mixesmusic@worldnet.att.net), March 11, 1999.