Users of Intuit Inc.'s Quicken personal finance software must prove they have suffered specific year-2000-related injuries before suing the company, a California judge ruled last week.
Santa Clara Superior Court Judge John F. Herlihy dismissed the class action, saying it "does not adequately allege any injury."
The judge is allowing the plaintiff, Alan Issokson, to replead the case by Sept. 25.
"There is no contention that the defect has become manifest," Judge Herlihy said in his Aug. 25 ruling. "Therefore any benefit associated with the continuing functionality of the program has yet to be lost, if ever."
The suit, filed in April by the New York-based law firm Milberg Weiss Bershad Hynes & Lerach, charged that Intuit had sold Quicken knowing that its on-line banking feature was not year-2000 compliant and had to be fixed. The complaint called on the software company to correct the problem at no charge.
Intuit announced in May that it would offer a free fix but said the move had nothing to do with the lawsuit. The company will supply free upgrades to customers as well as participating financial institutions.
"The legal community is ahead of reality in filing these suits," said Intuit senior vice president Mark Goines. "The customers will receive fixes before they are injured and affected, and those fixes will be free."
Milberg Weiss partner Michael C. Spencer said he is confident the firm can show its client was injured because the software was defective. "All experts agree these problems need to be addressed immediately," Mr. Spencer said in an interview.
The Issokson case was the first of six class actions against Intuit to be heard.
Legal experts cautioned that year-2000 legal battles have only just begun, and that it is too early to draw broad conclusions.
"We are only in round one of a 10-round fight," said Ronald F. Lopez, a partner in San Francisco-based Thelen Reid & Priest's technology practice. "It is going to set a tone, but every court will look at every case on its own merits."
But Intuit and other California software companies can benefit from Judge Herlihy's order, said Scott S. Nathan, partner in Franklin, Mass.- based Nathan & Voltz.
"The software companies have erected a firewall and begun to set minimum standards," Mr. Nathan said.
Seth R. Lesser of the New York firm Bernstein Litowitz Berger & Grossmann, who filed a similar complaint against Intuit in Nassau County, N.Y., in May, said, "People purchased a product with an inherent defect, and it will not work.
The year 2000 will arrive, and the defect will arise. It's a given."