Resellers, ASI Solutions and Webster Computer Systems, have won significant victories in the Federal Court of Australia over Fujitsu Ltd more than five years after first planning legal action against the hardware vendor.
The pair were among several OEM PC assemblers who claim to have been exposed to substantial commercial losses after selling faulty Fujitsu MPG3 and MPF hard drives between 2000 and 2002. Although steps were made to launch a class action suit on behalf of all the resellers effected in 2003, it was stymied when lawyers, Levitt Robinson Solicitors, failed to secure backing from at least seven parties.
As a result, ASI and Webster each filed their own lawsuit against Fujitsu’s Australian subsidiary and the global parent in 2007 for deceptive and misleading conduct under the Commonwealth Trade Practices Act and NSW Fair Trading Act. The companies allege the vendor Fujitsu made misleading and deceptive claims about the hard disk drive range, which contained a chip defect that caused over 50 per cent of the units to fail within 18 months of use. The heart of the case is the assertion that Fujitsu knew of the product fault as early as 2001 but failed to adequately inform its OEM customers of the fault, or take steps to remove the drives from the market.
The cases have been in and out of the Federal Court of Australia following counter legal action by Fujitsu Australia, a wholly owned subsidiary of Fujitsu Ltd, to prevent the resellers from pursuing its parent company based in Japan.
According to the latest court judgment, which was sighted by ARN, in the case between ASI’s business entity, Annabelle Bits Pty Ltd, and Fujitsu Ltd, dated September 25, 2009, Fujitsu Australia challenged claims its parent, Fujitsu Ltd, should face trial for its role in the faulty hard drives.
However, a judgment given in the Federal Court of Australia by Judge J Graham ruled against Fujitsu Australia and ordered Webster and Annabelle Bits be allowed to proceed with its case against Fujitsu Ltd. The court also ordered the vendor to pay both resellers’ costs.
The court documents show Annabelle Bits purchased 17,000 of the hard drives between December 2000 and September 2001. It is understood 14,000 hard drives were faulty. Webster meanwhile, bought approximately 1600 hard drives and reported faults with 1100. The latest ruling paves the way for Webster and Annabelle Bits to request documents from Fujitsu’s parent company, Fujitsu Ltd, which were previously offlimits, and pursue the matter to trial.
Webster and ASI were unable to comment on the case for legal reasons. Fujitsu Australia had not responded to a request for comment at time of press. ---P--- In the recent judgment between Annabelle Bits and Fujitsu, Judge J Graham noted the first attempts to serve Fujitsu Ltd in Japan were hampered after Fujitsu Australia submitted the wrong address.
“The problem with that order was that the Application unwittingly included as the first respondent’s address in Japan, the address given by the second respondent [Fujitsu Australia] to the Australian Securities and Investment Commission as the address of the first respondent [Fujitsu Ltd], which proved not to be its current address at the time of the attempt service,” Judge J Graham stated in the document.
Several local players, including Lincoln Computers, Annabelle Bits and Webster, previously told ARN they lost hundreds of thousands of dollars, as well as relationships with key customers, because of the faulty hard drives.
Many industry insiders also believe several channel companies that formerly dealt with Fujitsu, including Western Computers in Queensland and Maintain Access in Newcastle, NSW, were forced out of business after selling the fl awed hard drives.
Globally, at least 4 million units were thought to have been affected by the fault. Fujitsu Ltd also reached an agreement in 2005 with its original chip supplier, US-based Cirrus Logic, following a court battle regarding the defective hard drive chips. The settlement, according to Cirrus’ financial documents, was worth $US125 million.
A class action suit – similar to the one first proposed in Australia – was commenced in the US against Fujitsu, Gateway and HP on behalf of end users in October 2002. That case was also settled out of court when Fujitsu Ltd offered to pay $US42.5 million in damages.
Australian resellers became further aggrieved in 2004 after it was revealed Fujitsu offered a warranty credit system applicable to the faulty drives for several years, which they were unaware of. This claim was subsequently denied by Fujitsu and its distributor, Tech Pacific.