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My client's company has sued the Costa Rican representative of AT&T
after a long and arduous study involving the telephones purchased by
my client's company. The lawsuit speaks for itself and is of public
record in Costa Rica. The following translation of the case is a
LITERAL TRANSLATION by a professional legal translator, however, it
loses some of its meaning in the process and is difficult to read. It
would be better for anyone with a knowledge of the Spanish to read
the document in its original language.
IN SUMMARY, my client believes AT&T's representative was selling (and
may still be selling) telephone systems in Latin America with
obsolete technology while selling telephone systems in the USA with
the same model numbers with the newest ISDN Digital technology. This
fact and the misrepresentation has caused my client
significant monetary damages and lose of image in a country where my
client has lead the market for over 20 years.
My client is interested in any other similar types of lawsuits in the
world against AT&T or other communications vendors. This legal matter
is of particular interest to any purchaser of telephone equipment
outside the USA. A Spanish translation of this lawsuit is available
and/or if anyone should want a copy of the complete lawsuit including
exhibits, please e-mail me at gbaker@sol.racsa.co.cr. Your interest
and/or comments would be appreciated.
SOTO BALTODANO & ASSOC. LAW FIRM
SUMMARY PROCEEDINGS
Calypso Tours S.A. vs. Datagrama Comunicaciones S.A.
In accordance with Article 43 of the Law for Promotion of Competition
and Effective Defense of Consumers, N° 7472.
CIVIL COURT OF SAN JOSÉ
I, David Reid, of age, married twice, a businessman, resident of
Puntarenas, a U.S. national, bearer of resident card number
175-81690-8633, President of CALYPSO TOURS S.A., corporate
identification number three - one hundred and one - zero twenty-eight
thousand seven hundred and seventy - thirty-three, do hereby initiate
summary proceedings against DATAGRAMA COMUNICACIONES S.A., corporate
identification number three - one hundred and one - one hundred and
ten thousand nine hundred and sixty-six, represented by Mr. ALAN KELSO
MACHADO, of age, married once, resident of San José, a Business
Manager, bearer of identity card number one - five hundred and one -
two hundred and fifteen, as Vice President, having the authority as
granted by a universal power of attorney with no restrictions as to
the amounts involved, based on the following facts:
FIRST: Datagrama Comunicaciones S.A. submitted an offer on January,
1995, to Calypso Tours, by means of which it promised the following:
"It is our purpose to contribute to the development of your company,
supplying state-of-the-art technology in voice and data communication
and international services, with the quality that has characterized
AT&T for more than 100 years". (See Exhibit 1, Offer of Datagrama
Comunicaciones S.A., evidence of a commercial contract, in accordance
with Article 413 of the Commerce Code, in the form of a letter.) The
fraud begins here, because, as will be seen in the catalogues, the
merchandise offered to us looked as if it was state-of-the-art
technology at world level as of that date and for said type of system.
SECOND: As noted in the same offer, page 2, we were offered MERLIN
LEGEND technology, clearly specifying on page 3 a MERLIN LEGEND
DIGITAL COMMUNICATIONS SYSTEM.
This offer, in accordance with the Law for Promotion of Competition
and Effective Defense of Consumers, entails the following
responsibilities for the defendant:
Article 31 of said Law provides on relevant matters:
Article 31 -Duties of merchants.
Merchants and producers have the following duties towards consumers:
a) To respect the contractual conditions.
b) To inform consumers in a clear, true and sufficient manner about
all elements that may have a direct influence on their decision to
consume, and also about the nature, composition, contents, weight, if
appropriate, and the characteristics of goods and services, the cash
price on the package, the container or the label of the product, in
the stand or the shelf at the commercial establishment, and about any
other relevant data. When the product sold or the service rendered is
paid on credit, it is necessary to clearly indicate, in accordance
with the Regulations to this Law, the term, the annual interest rate
on balances, the base, the commissions, and the physical or legal
person that is providing financing, if a third party.
c) To offer, promote or advertise the goods and services in
accordance with the provisions of Article 34 of this Law.
d) To provide consumers with the instructions for a proper use of the
goods and inform about any risks involved in the intended use or
normally foreseeable for the health and security of consumers or the
environment.
l) To comply with the provisions of Articles 35, 36, 37, 38, 39, 40
and 41 of this Law.
m) To comply with the provisions on quality standards and the
technical regulations that must be compulsorily complied.
o) To issue invoices or purchase vouchers which clearly identifies
the goods or services, as well as the price actually charged. In case
of mass sales, the Ministry of Economy, Industry and Commerce is
empowered to authorize the establishment of other systems to verify
purchases.
All information, advertising or offering to the public of goods to be
offered or services to be rendered, broadcasted or published in any
way, does link the producer or manufacturer with the person
broadcasting, using or ordering it, and is a part of the contract.
Failure to comply with any of the duties listed in this article
empowers the interested party to go to the National Consumer
Commission created by this Law or to the competent jurisdictional
bodies to assert his/its rights, in the terms set forth in Article 43
of this Law. (The emphasis is not made in the original).
In turn, Article 34 of this Law provides on pertaining matters:
"The offering, promotion and advertising of goods and services must be
done in accordance with their nature, characteristics, conditions,
contents, weight when appropriate, usefulness or purpose, in such way
as not to lead consumers to commit errors or deceive them. This
information cannot be omitted if this may result in damages or danger
to the health or security of consumers."
FOURTH: Calypso Tours purchased the MERLIN LEGEND DIGITAL
COMMUNICATIONS SYSTEM and the rest of the package detailed in the
aforesaid offer and the enclosed catalogues (Exhibit 2). This shows
that the system offered in English (the one offered in the USA) was
not the one delivered to us, even if it has the same identification
characteristical of the model, that is, AT&T MERLIN LEGEND. These
MLX-28D, MLX-20L, MLX-10D and MLX-10 telephones correspond to the
pictures that appear in the manual in Spanish. However, experts
informed us that the equipment delivered is not digital, as offered.
Said catalogues show the same characteristics promised by Datagrama
Comunicaciones S.A., the ones that offered, diffused and promoted with
regard to conditions, contents, usefulness and purpose. But this was
not the system delivered. Even the maintenance technicians of
Datagrama showed surprise when they arrived to provide maintenance and
install a type of equipment finding in fact another.
FIFTH: The activities of our company require constant and efficient
communication by phone in order to manage the system of reservations
at international level, in particular because of the technical
conditions that INTERNET requires for an optimal performance. That is,
we need exactly what was deceitfully offered by Datagrama:
"state-of-the-art technology in voice and data communication and
international services with the quality that has characterized AT&T"
Since we handle a high number of reservations made by means of
computer systems, if the telephone exchange is not compatible with
other international systems with which we have communication, the
operation and the results for our clients are not the ones desired.
SIXTH: On March 31, 1995, we gave them a check in the amount of five
thousand dollars ($5,000.00), legal tender of the United States of
America, as a down payment. The balance amounted to nine thousand two
hundred and fourteen dollars and 30 cents, which payment was secured
by means of bills of exchange. (I have attached hereto the credit
invoice, a copy of the cashed check, the receipt and a copy of the
bills of exchange -3-.)
At that time, since the merchandise had the same appearance of the one
offered to us, we were not aware of any irregularity.
SEVENTH: We were therefore deceived. It was a transgression of the
provisions for protection of consumers and a breach of contract by the
Seller, because at the time of using the equipment, we never enjoyed
the MERLIN LEGEND DIGITAL technology, as indicated by the experts.
However, the equipment was duly identified as if it included said
technology. In accordance with the offer, it had to be digital and
state-of-the-art. But actually it was not. We were sold a product that
in accordance with its identification corresponded to a type of
technology, but which, in accordance with its operation and components
actually corresponds to an electronic phone communication system that
the same parent company, AT&T, did manufactured and sold a few years
ago.
The best explanation is given by the following expert opinion:
"_Through the years, there have been various technologies with regard
to equipment: From the first magnet system to the cord exchanges, the
Crossbar and Crosspoint systems, the multi-button equipment, the
hybrid exchanges, analogous exchanges, the analogous-digital exchanges
and the digital exchanges. The equipment in question, in view of its
technical characteristics, is a system that meets the current
requirements of some companies, but that was constructed several years
ago (In fact, it is an analogous-digital system, which, as mentioned
above, uses more than two pairs, requires the incorporation of extra
cards for many functions. The manufacturers of a more advanced
technology have built this into a single system, which operates with a
single pair and is known as a digital system_) (Study of the Telephone
Exchange, made by Marvetel S.A., subscribed by Miguel Angel Montero
Araya).
As can be clearly seen, the seller offered a MERLIN LEGEND DIGITAL
TELEPHONE EXCHANGE and the equipment is identified in accordance with
it. However, the machine corresponds to an ANALOGOUS-DIGITAL
equipment, a technology manufactured years ago, and not
state-of-the-art technology, that is, a DIGITAL system, the one
offered by them in bad faith, with intend to deceive, because their
purpose was at all times to sell analogous-digital technology, which
is old and useless for our needs of a constant and efficient
communication, causing us damages with regard to the price and
operation of the equipment. I have also enclosed similar technical
opinions to demonstrate that the matter is perfectly clear from an
expert's point of view (See documents subscribed by: Engineer Víctor
Hugo Chacón P., Gerardo Sánchez Martínez).
We learned about the transgression committed by Datagrama
Comunicaciones S.A. when we received the reports made by the experts,
which informed us that we were offered one thing and delivered another
with dissimulation. The final expert's opinion was submitted in
January, 1996. We were then fully aware of the fraud. On September 6,
1995, the defendant filed action at Court to collect the bills of
exchange, in spite of their lack of compliance. These proceedings will
end soon, in a few days, and we have repeatedly claimed the
irregularity we have suffered. We have exercised our right to claim
this, but the scope for the affected parties is very limited. It is
now that we can file action following the procedures established by
law for these cases, which permit to know the substance of the matter.
In these proceedings, the merchant cannot simply claim the literal
application of a bill of exchange.
In brief, Datagrama Comunicaciones S.A. offered a digital equipment,
identified in the catalogues as such, but it actually delivered an
analogous-digital equipment, old, of obsolete technology, and
identical model numbers. It received then an economic benefit, that
is, the price, and caused damages to my client, that is, the delivery
of an equipment of less quality than the one requested and paid, which
also provided a defective operation, as can be demonstrated by the
various visits of technicians, duly certified by means of the
documents enclosed (Visits of technicians of Datagrama Comunicaciones
S.A.), which visits were ultimately unsuccessful because the problem
was the lack of identity between the assumed model and the real
components of the equipment, as demonstrated by the experts. In this
way, the defendant misled us and destroyed the fair cause of the
agreement, that is, the goal of the interests protected by the legal
system.
NINTH: The credit invoice also specifies the sale of "software
casandra" 25 persons, for a price of C63,867.85 (as part of the goods
listed). This software was never delivered, probably because it was
for the true equipment, and it would have led to the discovery of the
fraud in time and prevented such a transgression.
TENTH: Furthermore, Datagrama Comunicaciones S.A. initiated two
summary proceedings against my client, in spite of their evident and
premeditated failure to comply, to collect with great cynicism the
bills of exchange, first some of then, and then another, asking for
attachment of the same assets in both cases, although we had already
lifted the first attachment by depositing more than 50% of the
principal, and we have now done the same with regard to the second
attachment, thus complying in full with our obligations. This is the
most evident damage caused to my client, because it has been forced to
pay a price for an asset that was not the one promised and offered for
sale. (I attached hereto a copy of both deposits and of the advance of
$5,000 (five thousand U.S. dollars) paid for the equipment). Our
obligations have been then fully complied before initiating these
proceedings.
These proceedings are conducted: the first one before the Second Civil
Court, already completed; the second one, before the Fifth Civil
Court, as case number 172-96-4. The second proceedings were initiated
for collection of bill of exchange number 1831, in the amount of one
thousand eight hundred and forty-two dollars, with eighty-eight cents.
In the meanwhile, the equipment of Datagrama Comunicaciones S.A. is
constantly failing, to such an extent that during the Holy Week season
last year, it suffered a total breakdown, leaving us without means of
communication to make reservations by fax or phone. It caused in this
sense clear damages to my client because the Holy Week is usually the
best week of the year. Therefore, Datagrama Comunicaciones S.A. caused
us the loss of thousands of dollars, and we also suffering permanent
inconveniences with the deficiency of the system, which are difficult
to compute.
LIABILITY:
Article 32 of said Law provides:
"Producers, suppliers and merchants must be jointly liable,
notwithstanding who the guilty party is, if the consumer is damaged
because of the good _"
Therefore, Mr. Alan Kelso, as general agent of Datagrama
Comunicaciones S.A. is liable as a supplier or merchant, because he
has damaged Calypso Tours S.A. by means of the good that was sold.
FOUNDATIONS OF LAW: The provisions quoted in connection with the
facts.
EVIDENCE: The aforesaid documents indicated in connection with the
facts and the expert's evidence we have also mentioned and indicated
in the documents produced.
TESTIMONIAL EVIDENCE: Alicia María Calderón Suazo, of age, single, an
accountant, resident of El Carmen de Guadalupe, bearer of identity
card number 1-606-270, and Garland M. Baker, of age, single, a
financial analyst, bearer of resident card number 175 - 110 756 -
10647, who will testify with regard to the tenth fact indicated in the
complaint.
EXPERT'S EVIDENCE: I pray that a mathematical expert be appointed by
the Court to assess the amount of the damages caused during the Holy
Week of 1995 to my client, when by a breakdown of the equipment
provided by Datagrama Comunicaciones S.A., we were left without a
reservation system by fax or phone. The records of the company for
previous seasons and the past season will be available to this expert,
in order to permit him to establish the differences in income from one
season to the other.
PETITION: I pray that violation of Articles 31 and 34 of the Law for
Promotion of Competition and Effective Defense of Consumers, N° 7472,
be declared by the Court, and that, in accordance with Article 50,
subsection e) of said Law, the reimbursement of the money we have
paid, as recorded in the respective deposit slips and receipts, that
is, the amount of twenty-two thousand nine hundred dollars, be
ordered. We also pray that the defendant be ordered to pay all the
damages caused including consequential as well as punitive, and the
costs of the suit for both parties.
We also pray that in accordance with Article 463 of the Commerce Code
and Article 692 of the Civil Code, the purchase and sale agreement be
considered rescinded because of breach of contract by the seller, and
that we be reimbursed the amount paid. We also pray that the defendant
be ordered to pay the damages caused, as well as the costs of the suit
for both parties.
ASSESSMENT OF VALUE: Forty thousand dollars, legal tender of the
United States of America.
BONDING: I pray that the defendant be ordered to deposit a bond
covering the amount of the costs of the suit.
SERVICE OF PROCESS:
The defendant can be served at its offices, located in this city, 40th
street, between 7th and 9th avenues, that is, 50 meters North of Hotel
Torremolinos, house with visible signs of Datagrama. We can be served
at the offices of Soto Baltodano & Assoc. Law Firm, located at N°
1928, 9th avenue, between 19th and 21st streets.
San José, August 27, 1996.
(signed: "David Reid")
DAVID REID
THE SIGNATURE IS GENUINE: (signed)