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IBM joins Fujitsu in lawyer hit list

IBM joins Fujitsu in lawyer hit list

IBM has been named alongside Fujitsu as vendors that will be targeted by Selby Levitt, a law firm attempting to form class action suits on behalf of resellers and end users angry with faulty hard drives.

Selby Levitt senior associate Louise Steer is preparing legal action against IBM over its Deskstar 60GXP and 75GXP drives, and Fujitsu over its MGP drives. In recent weeks, ARN has been inundated with responses from readers upset with hard drive manufacturers over faulty products, poor returns processes and reduced warranties.

Steer was introduced to the issue of failing hard drives after an end-user customer approached the firm complaining of lost business opportunity. "We looked into it and discovered there was a wider picture," she said.

Steer recently posted an advertisement in The Australian, asking users and resellers if they had experienced losses from faulty hard drives and whether they would consider joining a representative group action.

Steer is confident she now has enough numbers to form a class action on both cases, but is certain that there are many more resellers who would feel they have lost considerable business opportunity through faulty hard drives.

The suits being prepared by the Sydney-based law firm mimic those pending in the US, where around six class action suits have been lodged against IBM over its Deskstar series, and at least one against Fujitsu over its MGP drives.

Should the cases go ahead, they will be a first for the Australian IT industry. In the past, class actions have been successful in both the medical industry (against the manufacturers of intra-uterine devices and silicone breast implants, for example) and in the agricultural industry (for the effects of pesticides, weeds and poisons). Drawing parallels to these, Steer expects that any class action concerning failed IT equipment is just as likely to succeed.

"IT product liability litigation has not been explored here as yet," she said. "But like the medical cases, the products were defective and caused serious problems for the users. And the agricultural cases would prove that loss of business opportunity is a valid claim to be made in a class action."

The challenge for Selby Levitt is that in order to run a class action in the Federal Court, Steer needs to prove that the manufacturers clearly breached the Trade Practices Act.

Her argument will be that the manufacturers engaged in misleading or deceptive conduct (a breach of section 52 of the Act), regardless of whether they actually intended to mislead or deceive. Their deception, she will argue, was in the promotion of their products as featuring enhancements in reliability, when in fact the products proved to be overly sensitive to temperature and humidity.

"Most class actions are successful if the right preparation is in place," Steer said, adding that the case may take 12 months to resolve. "You have to have the technical basis and grounds for the case -- you can't just run it as a matter of guesswork."

Fujitsu officials declined to comment. A spokesperson for IBM said that the company will not comment on "speculation".

Steer laughed off suggestions that solicitors act as "ambulance chasers" when taking on a class action, especially when they advertise for interested participants in major newspapers. "What has to be realised is that people are entitled to enforce their rights. They are entitled to redress for their losses," she said.

"Lawyers would be out of business if the manufacturers of these products took more responsibility for the performance of their products in the first place."


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