SHERMAN, SILVERSTEIN, KOHL, ROSE & PODOLSKY
A Professional Corporation
Fairway Corporate Center, Suite 311
4300 Haddonfield Road
Pennsauken, New Jersey 08109
HARRIS L. POGUST, ESQUIRE
ALAN C. MILSTEIN, ESQUIRE
ATTORNEYS FOR PLAINTIFF, ROBERT COURTNEY, D.O.
(Additional counsel on signature page)
ROBERT COURTNEY, D.O. : SUPERIOR COURT
: OF NEW JERSEY
Plaintiff, : LAW DIVISION
v. : ATLANTIC COUNTY
MEDICAL MANAGER CORPORATION : Docket No.: ATLL 203198
Defendant. : CLASS ACTION
FIRST AMENDED COMPLAINT
- This is a class action brought by Robert Courtney, D.O., on behalf of a putative plaintiff class resulting from a breach of warranty and other claims in connection with the purchase of a defective computer software program, The Medical Manager. Plaintiff alleges that because versions of The Medical Manager, prior to Version 9.0 which was released on or about November 17, 1997, are not usable after December 31, 1999, and therefore, are not Year 2000 compliant, defendant has damaged the plaintiff and members of the Class.
- Defendant Medical Manager marketed computer software under the registered trademarked name, The Medical Manager, to solo practitioners, physicians’ practice groups, managed care organizations and other health care providers, despite knowing or being in a position where it should have known, that, except for Version 9.0, The Medical Manager software is not Year 2000 compliant. From on or around 1982 through the end of 1997, Medical Manager sold thousands of licenses for non-Year 2000 compliant software to individual physicians, practice groups and other businesses in the health care industry even though the software was defective when sold. Now, the physicians and other health care providers who have purchased and now rely on this software to operate their businesses will have to spend thousands of dollars to upgrade to Year 2000 compliant software to purchase Version 9.0 -- the only version of The Medical Manager software that is fully Year 2000 compliant.
- Plaintiff, Robert Courtney, D.O., is a physician in the State of New Jersey with his principal office and place of business located at 408 Bethel Road, Somers Point, NJ 08244.
- Defendant Medical Manager Corporation ("Medical Manager") is a Florida Corporation with its principal place of business located at 3001 North Rocky Point Drive East, Suite 100, Tampa, Florida 33607.
- Defendant Medical Manager is in the business of designing, producing, manufacturing, promoting, marketing, distributing and selling computer software to the health care industry throughout the United States.
- This is an action asserting breach of warranty claims and other related claims in connection with defective computer software (The Medical Manager) developed, marketed and sold by Defendant Medical Manager through various local vendors. The latent defects relate to the inability of the The Medical Manager software purchased by plaintiff and members of the Class (prior to Version 9) to recognize and process dates starting in the year 2000. In contrast to many other software companies, which are correcting "Year 2000" problems and providing those corrections free of charge to their customers, defendant Medical Manager is improperly requiring its customers to pay fees to purchase updates in order to remedy the latent product defects.
- At all relevant times, defendant knew or should have known that versions of The Medical Manager, other than the latest Version 9.0 software, were unable to process dates after December 31, 1999. Defendant, nevertheless, continued to market these versions of The Medical Manager software aggressively -- selling non-Year 2000 compliant Medical Manager software until as recently as November 1997. As a consequence of defendant's actions, thousands of physicians and other health care providers have invested in non-Year 2000 compliant versions of The Medical Manager software, unaware at the time of purchase that this software contained the Year 2000 defect which soon will render these versions of The Medical Manager software functionally inoperable and obsolete well before the end of their useful lives.
- This Court has jurisdiction over defendant Medical Manager, which is a corporation authorized to do business in the State of New Jersey, doing sufficient and continuing business in State of New Jersey, having minimum contacts with the State of New Jersey, and otherwise intentionally availing itself of the markets within the State of New Jersey, through the promotion, sale, marketing, and distribution of its products and services in the State of New Jersey, so as to render the exercise of jurisdiction by the courts of the State of New Jersey permissible under traditional notions of fair play and substantial justice. The claims asserted in this action have sufficient connection with the State of New Jersey to justify the application of New Jersey law to all claims asserted herein.
- Venue is proper in this Court because a substantial portion of the transactions complained of herein occurred in this county and the products at issue were advertised, promoted, sold, and distributed in this county. Defendant Medical Manager has received substantial compensation from the sale of Medical Manager software products in this county and by doing business that has had effects in this county.
- The Medical Manager is a computer software program used by over 25,000 health care practitioners throughout the United States. The Medical Manager is an integrated physicians’ practice management system encompassing patient care, clinical, financial and management applications. The Medical Manager is a leading practice management system for independent physician associations, management service organizations, physicians’ practice management organizations, managed care organizations and other providers of health care services.
- Medical Manager touts its The Medical Manager software as "allow[ing] clients to add incremental capabilities to existing information systems while preserving and minimizing the need for capital investments." (emphasis added).
- In November of 1996, Plaintiff Robert Courtney, M.D. purchased version 8.1 of The Medical Manager software manufactured and marketed by Medical Manager.
- Medical Manager recently informed plaintiff that Version 8.1 is not Year 2000 compliant and would not be functionally operable after December 31, 1999.
- Despite demand by plaintiff that Medical Manager remedy the defect and provide him with the Year 2000-compliant Version 9.0 at no charge to plaintiff, Medical Manager has refused to do so.
- Medical Manager has informed plaintiff that he would have to expend thousands of dollars to remedy the defect in Version 8.1.
- At the time of the sale of Version 8.1 to plaintiff, defendant was aware or should have been aware that Version 8.1 was not Year 2000 compliant. Since at least the mid-1970's, the computer industry has been aware of the software problems associated with the change of the century; namely, that computers and software which were only programmed to read two digit year dates would, as of January 1, 2000, read the year "00" as "1900", thereby fundamentally impairing the operation of computer systems and non-complaint Year 2000 software. The problem today is commonly referred to as the "Millennium Bug" or the "Year 2000" or "Y2K" problem.
- At no time prior to the sale of Version 8.1 did Medical Manager inform the plaintiff that Version 8.1 was not year 2000 compliant although defendant was aware or should have been aware of such facts.
- According to Medical Manager's Features and Reports for Version 8.1, The Medical Manager software is described as:
Flexibly designed for a rapidly changing industry, the system offers the ultimate in expandability. The Medical Manager excels at meeting your current needs and provides you with the ability to manage your future.
* * * * *
The Medical Manager was carefully designed by computer programmers, doctors and accountants. First introduced in 1982, the program is stable and free of many of the problems often found with other systems. Constant research, development, and continuous programming efforts have kept the program ahead of the industry. (emphasis added)
- Version 9 of The Medical Manager has been tested and certified as Year 2000 Compliant. Prior versions, including the versions purchased by plaintiff will not be certified, or even tested, for Year 2000 compliance.
- Medical Manager views the necessity of pre Version 9.0 purchasers to upgrade to Year 2000 complaint software as an opportunity to reap substantial profits from new sales. Commenting on the November 1997 release of Version 9.0, John Kang, President of Medical Manager, stated "This important upgrade will be highly beneficial for our existing customers and will also provide us with new sales opportunities to those physician groups currently using legacy systems which must be replaced by Year 2000."
- All versions of The Medical Manager software other than Version 9 are materially defective and will not function properly in processing date sensitive data after December 31, 1999. Plaintiff and other member of the Class who purchased earlier versions of The Medical Manager software accordingly must, at substantial cost, purchase Version 9 in order to correct the defect thus enabling The Medical Manager software to function properly after December 31, 1999.
- Medical Manager has not offered Version 9, or any other fix for the Year 2000 defect contained in The Medical Manager software, free of charge to plaintiff or other owners of The Medical Manager software. By comparison, many other companies are providing Year 2000 fixes free of charge to their customers. For example, Advanced Data Systems Corporation, another provider of software to the health care industry, provides this policy statement:
ADS CLIENTS ALWAYS HAVE - ALWAYS DO- AND ALWAYS WILL - RECEIVE ALL VERSION UPDATES, INCLUDING MEDICARE, BLUE SHIELD AND MEDICAID CHANGES AND YEAR 2000 COMPATIBILITY AT NO ADDITIONAL COST! You will never pay for expensive upgrades in order to obtain critical software changes.
- Medical Manager is attempting to and is profiting from its own misconduct by requiring plaintiff and Class members to purchase an upgrade to fix the Year 2000 problem.
CLASS ACTION ALLEGATIONS
- Plaintiff brings this action on behalf of himself and all others similarly situated. The class which plaintiff seeks to represent is composed of all persons or entities who purchased pre Version 9 of The Medical Manager software.
- For class members who have already upgraded to Version 9, plaintiff seeks a refund of their purchase price. For class members who have not yet upgraded to Version 9, plaintiff seeks an order requiring defendant to provide Version 9 of The Medical Manager, free of charge. Further relief is also sought, as described below.
- The Class is composed of thousands of medical professionals across the country. The joinder of all Class members individually in the action would be impracticable, and the disposition of their claims in a single class action will provide substantial benefits to both the parties and the Court. The Class is sufficiently numerous for class treatment as thousands of copies of Medical Manager software have been sold by defendant.
- As the owner of a defective version of The Medical Manager software plaintiff is asserting claims that are typical of the claims of the class, and plaintiff will fairly and adequately represent and protect the interests of the Class in that he has no interest antagonistic to those of the other members of the Class. Plaintiff has retained counsel who are competent and experienced in the prosecution of class action litigation.
- A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Since the damage suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impracticable for the Class members individually to seek redress for the wrongful conduct alleged herein. If class treatment of these claims were not available, defendant would likely unfairly receive payment for upgrades to remedy the Year 2000 defect in the software packages they sold, or would otherwise escape liability for their wrongdoing as challenged in this litigation, liability created as a result of defendant's conduct.
- Common questions of law and fact exist as to all members of the Class. The common questions predominate over any questions which may affect individual members of the Class. Among the questions of law and fact common to the Class are the following:
- Whether versions of The Medical Manager software, other than the latest Version 9.0, are incapable of handling transactions with Year 2000 dates;
- Whether defendant knew or should have known of the Year 2000 defect in The Medical Manager software;
- Whether defendant provided adequate and timely disclosure to physicians and other health care providers regarding the inability of numerous versions of The Medical Manager software, other than Version 9.0, to process dates after December 31, 1999;
- Whether, due to the Year 2000 defect, these versions of The Medical Manager software are not fit for the ordinary purposes for which such goods are used;
- Whether defendant, through its marketing efforts, fostered the expectations of plaintiff and the Class that these versions of The Medical Manager software could be used, as is, into the next millennium;
- Whether defendant earned substantial profits by continuing to market non-Year 2000 compliant versions of The Medical Management software with knowledge of the fact that these software systems were unable to process dates after December 31, 1999;
- Whether defendant is liable for violations of the Magnuson-Moss Consumer Protection Warranty Act, 15 U.S. § 2301 et seq.;
- Whether defendant’s activities constitute deceptive and unfair act or acts in violation of N.J.S.A. 56:8-1 to -20, or similar statues in effect in other jurisdictions, for which plaintiff and the members of the Class are entitled to recover damages;
- Whether defendant is liable for breach of implied warranties;
- Whether defendant should be ordered to disgorge, for the benefit of the Class, all or part of its ill-gotten profits from the sale of the defective software systems and/or to make full restitution to the plaintiff and the other members of the Class; and
- Whether defendant should be ordered to provide free software upgrades to plaintiff and the Class for the Year 2000 defect contained in the non-Year 2000 compliant versions of The Medical Manager software.
- The names and addresses of Class members are available from defendant and/or its agents. Notice can be provided to such owners by a combination of mail and published notice.
ESTOPPEL FROM PLEADING AND TOLLING OF
APPLICABLE STATUTES OF LIMITATIONS
- Defendant is estopped from relying on any statutes of limitation because of its fraudulent concealment of the true character, quality and nature of The Medical Manager software. Defendant was under a duty to disclose the true character, quality and nature of the software because this was non-public information over which defendant had exclusive control and because defendant knew that this information was not available to plaintiff or to Class members.
- Until shortly before the filing of this litigation, plaintiff and members of the Class had no knowledge that defendant was engaged in the wrongdoing alleged herein. Because of the nature of the software product and defendant’s nondisclosure and concealment of the defect with the product, plaintiff and the members of the Class could not reasonably have discovered the defect.
FIRST CAUSE OF ACTION
BREACH OF IMPLIED WARRANTY OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE
- Plaintiff repeats and incorporates the allegations set forth in paragraphs 1 through 32 above as though fully set forth at length herein.
- The Medical Manager software package purchased by plaintiff and the other members of the Class are "consumer goods" and are subject to an implied warranty of merchantability and fitness for a particular purpose pursuant to the New Jersey Uniform Commercial Code, N.J.S.A. 12A:1-101 et seq. There has been no effective disclaimer of this warranty by defendant.
- Due to the Year 2000 defect alleged herein, The Medical Manager software packages prior to Version 9 are not fit for the ordinary purpose for which such goods are used.
- Defendant has breached its implied warranty of merchantability by failing to certify that the Medical Manager software prior to Version 9 as Year 2000 compliant and by failing to remedy the Year 2000 defect alleged herein within a reasonable time and without charge.
- As a result of the foregoing, plaintiff and the members of the Class have suffered damages. Such damages include, without limitation, replacement costs of the software and costs for installing and implementing the replacement software.
- Plaintiff has provided Defendant Medical Manager with timely notice of the breach of warranty alleged herein on behalf of the Class shortly before the commencement of this action. Defendant has failed to provide plaintiff and the Class with an adequate, non-defective version of Medical Manager software as a warranty replacement without demanding payment in excess of $20,000.00.
SECOND CAUSE OF ACTION
VIOLATION OF MAGNUSON-MOSS CONSUMER
PRODUCT WARRANTY ACT
- Plaintiff repeats and incorporates the allegations set forth in paragraphs 1 through 38 above as though fully set forth at length herein.
- The Medical Manager software package purchased by plaintiff and the other members of the Class are "consumer products" and were subject to an implied warranty of merchantability pursuant to the Magnuson-Moss Consumer Product Warranty Act, 15 U.S.C. §2301 et seq. There has been no effective disclaimer of this warranty by defendant.
- Due to the Year 2000 defect alleged herein, the Medical Manager software packages prior to Version 9 are not fit for the ordinary purpose for which such goods are used.
- Defendant has breached its implied warranty of merchantability and violated the Magnuson-Moss Consumer Protection Act by failing to certify the Medical Manager products prior to Version 9 as Year 2000 compliant and by failing to remedy the Year 2000 defect alleged herein within a reasonable time and without charge.
- As a result of the foregoing, plaintiff and the members of the Class have suffered damages. Such damage includes, without limitation, replacement costs of the software and costs for installing and implementing the replacement software.
THIRD CAUSE OF ACTION
VIOLATIONS OF THE NEW JERSEY UNFAIR
TRADE PRACTICES ACT, N.J.S.A. 56:8-1, et. seq.
- Plaintiff repeats and incoroprates the allegations set forth in paragraphs 1 through 43 as though fully set forth at length herein.
- The unfair and deceptive trade acts and practices of defendant have directly, foreseeably, and proximately caused damages and injury to plaintiff and the other members of the Class in amounts yet to be determined.
- The actions and failures to act of defendant, including the false and misleading representations and omissions of material facts regarding defective nature of The Medical Manager software, and the above-described course of fraudulent concealment, constitute acts, uses, or employment by defendant of unconscionable commercial practices, deception, fraud, false pretenses, false promises, misrepresentations, or the knowing, concealment, suppression or omission of material facts with the intent that others rely upon such concealment, suppression, or omission, in connection with the sale or advertisement of merchandise, of defendant in violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.
- By reason of defendant’s unlawful conduct in violation of N.J.S.A. 56:8-2, plaintiff and the other members of the Class have suffered ascertainable losses of money and property in amounts yet to be determined.
PRAYER FOR RELIEF
WHEREFORE, plaintiff, on behalf of himself and on behalf of the members of the Class defined herein, prays for judgment and relief as follows:
- The certification of this action as a class action pursuant to Rule 4:32-2 of the New Jersey Rules of Court;
- Compensatory damages in an amount to be proven at trial;
- Equitable and injunctive relief as permitted by law or equity including disgorgement, imposition of a constructive trust, impounding or attaching Defendant's ill-gotten monies, and freezing Defendant's assets and requiring Defendant to pay restitution to plaintiff, all members of the Class and the general public and to restore to the public all funds acquired by means of any act or practice declared by this Court to be an unlawful, fraudulent or unfair business act or practice, a violation of laws, statutes or regulations, or constituting unfair competition or false, untrue or misleading advertising;
- Awarding plaintiff reasonable attorneys' fees, costs and expenses incurred in connection with this suit;
- Pre- and post-judgment interest;
- All damages recoverable under the New Jersey Unfair Trade Practices Act, 56:8-1, et. seq.; and
- Such other and further relief as the Court may deem necessary or appropriate.
CERTIFICATION PURSUANT TO R. 4:5-1
The undersigned hereby certifies the following:
- That, to the best of my knowledge and belief, this matter in controversy is not the subject of any other action pending in any court or of a pending arbitration proceeding, nor is there any such proceeding contemplated at this time by the Plaintiff.
- That, to the best of my knowledge and belief, there are no other parties who must be joined in this action.
SHERMAN, SILVERSTEIN, KOHL, ROSE & PODOLSKY
A Professional Corporation
Dated: By: Harris L. Pogust, Esquire
Alan C. Milstein, Esquire
ATTORNEYS FOR PLAINTIFF
DEMAND FOR JURY TRIAL
PLEASE TAKE NOTICE that the Plaintiff demands trial by jury as to all issues in the above matter.
SHERMAN, SILVERSTEIN, KOHL, ROSE & PODOLSKY
A Professional Corporation
Dated: By: Harris L. Pogust, Esquire
Alan C. Milstein, Esquire
ATTORNEYS FOR PLAINTIFF
Seth R. Lesser, Esquire
BERNSTEIN LITOWITZ BERGER
& GROSSMANN, LLP
2050 Cedar Avenue
Fort Lee, New Jersey 07064
Telephone: (212) 554-1400
FAX: (212) 554-1444
Jonathan Shub, Esquire
SHELLER, LUDWIG & BADEY, P.C.
1528 Walnut Street
Philadelphia, PA 19102
Telephone: (215) 790-7300
FAX #: (215) 546-0942
Marc H. Edelson, Esquire
HOFFMAN & EDELSON
45 West Court Street
Doylestown, PA 18901
Telephone: (215) 230-8043
FAX: (215) 230-8735