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Yu v. International Business Machines Corporation

June 30, 2000

MARIO C. YU, INDIV. AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
PLAINTIFF-APPELLANT,
V.
INTERNATIONAL BUSINESS MACHINES CORPORATION AND MEDIC COMPUTER SYSTEMS, INC.,
DEFENDANTS-APPELLEES.



The opinion of the court was delivered by: Justice Quinn

Appeal from the Circuit Court of Cook County

Honorable Thomas Hett, Judge Presiding.

Plaintiff, Dr. Mario Yu, filed a class action complaint against defendants, International Business Machines Corporation and Medic Computer Systems, Incorporated, seeking to recover damages arising out of the sale of computer software that allegedly was not year 2000 (Y2K) compliant. The trial court granted defendants' motion to dismiss plaintiff's complaint pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 1998)) and found the suit was rendered moot. On appeal, plaintiff contends that the trial court erred in dismissing his complaint where he accepted defendant's upgrade of the computer system in order to mitigate damages. For the following reasons, we affirm.

The following facts are pertinent to this appeal. Plaintiff is a physician specializing in obstetrics and gynecology. On December 10, 1996, plaintiff purchased a bundled computer solution system (Medic system) from Medic Computer Systems, Inc. (Medic), and International Business Machines Corporation (IBM), which was to be used to schedule patients' appointments and to track their visits and treatments. The record indicates that the Medic system software is to be used in conjunction with the IBM AIX operating system. Plaintiff received the Medic system in 1997 at a total cost of $19,336.

On November 24, 1998, plaintiff received a letter dated November 13, 1998, from Medic regarding the Medic system. The letter stated the following: "This letter serves as notification that after March 1999, Medic will no longer be able to support the 4.1 AIX operating system revision and we encourage you not to delay your upgrade." The letter offered an upgrade from any AIX version 4.1 to version 4.3.1, which was allegedly Y2K ready, at a discount of 50% and added that the order had to be placed before December 31, 1998.

On December 4, 1998, plaintiff received an order form from Medic for an upgrade of the AIX operating system. The form listed the upgrade price as $2,410. Vivien Yu, plaintiff's wife and office manager, averred that on December 16, 1998, she spoke with a technical and sales representative from Medic who informed her that the Medic system would not process dates after the twenty-first century and would not allow twenty-first century dates to be entered into the computer. She also averred that she was not informed that a "free fix" of the Y2K defect was available.

On December 22, 1998, plaintiff filed a complaint in the United States District Court for the Northern District of Illinois. On February 23, 1999, the federal district court dismissed plaintiff's complaint for failure to establish a sufficient amount in controversy for diversity jurisdiction.

On February 24, 1999, plaintiff filed a complaint in the circuit court of Cook County and alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1998)) and The Illinois Uniform Deceptive Trade Practices Act (815 ILCS 510/1 et seq. (West 1998)). Plaintiff's complaint also sought compensatory damages for breach of express warranty and breach of implied warranty and fitness for a specific purpose. Plaintiff stated in a footnote of the complaint that he was informed that an "alleged free fix" of the Y2K defect was available by downloading it from the internet or by receiving a CD ROM. Robert Hanson, IBM program director of year 2000 customer services, averred that the Y2K free fix of the AIX operating system has been available for downloading on IBM's website since October 1997 and that the CD ROM containing the Y2K free fix could be obtained by contacting the customer's marketing representative, calling the IBM 1-800 number, or by mail and facsimile. Plaintiff claimed that he did not have access to the internet and had not received the CD ROM.

Plaintiff's individual claim alleged that "[t]he failure or potential failure of the BUNDLED SOLUTION after December 31, 1999 creates a risk to all of his patients who are monitored as described in the preceding paragraphs."

Plaintiff's complaint also requested injunctive relief. Plaintiff sought a mandatory order to require defendants to notify all members of the class of the Y2K defect and to correct the defect free of charge to class members and a provision that defendants be prohibited from failing to support or refusing to support plaintiff and the class members' existing software.

In plaintiff's consumer fraud allegations, plaintiff alleged that defendants failed to disclose that the Medic system was not Y2K compliant and that "[d]efendant's [sic] failure to disclose, and their misrepresentations and/or concealment of the foregoing material facts may cause potential health care problems to patients of class members as well as result in financial harm to Plaintiff and other members of the Class." Furthermore, plaintiff claimed that "[t]he unlawful, unfair or deceptive acts or practices of Defendants may directly and foreseeably cause damages and injuries to Plaintiff and the class members' practices and may cause yet untold damages to Plaintiff's and the putative class members' patients."

Plaintiff filed a motion for preliminary injunction on March 5, 1999, and requested that defendants be required to notify all users of the software that there was a free upgrade available to cure Y2K compliancy problems. Plaintiff also filed his motion for class certification on March 5, 1999.

In a letter dated March 19, 1999, defendants sent a letter to plaintiff notifying him that they intended to send a letter to all Medic system owners that the upgrade was available at no charge to current customers and would be installed in the third quarter of 1999. Plaintiff then filed an emergency motion for a protective order to stop defendants from sending this letter. During the hearing on the protective order, plaintiff stated that he did not want to wait until the third quarter for the upgrade and demanded that Medic install the upgrade on his Medic system immediately. The trial court denied plaintiff's motion and Medic mailed the letter to its customers between March 26, 1999, and March 31, 1999. On March 30, 1999, with the knowledge and consent of his counsel, plaintiff received the free upgrade. Plaintiff's counsel advised the court that plaintiff's experts had performed "various tests, forwarding the time clock in the computer to assure it would work after December 31, 1999," and had verified that the free upgrade worked properly.

On May 11, 1999, defendants moved to dismiss plaintiff's class action complaint pursuant to section 2-615 of the Code of Civil Procedure. Defendants argued that plaintiff's claims were moot because he received the free upgrade to his Medic system and therefore suffered no injury. Defendants further argued that: (1) plaintiff's negligence claim was barred by the economic loss doctrine; (2) defendants' alleged misrepresentation was mere puffery; and (3) plaintiff failed to state any allegations against IBM. Defendants also filed a motion to dismiss pursuant to section 2-619(a)(9) on the ground that there was no justiciable ...


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