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ITT Accused of Consumer Fraud : Suit Centers on Unavailable Phototypesetting Machines

March 12, 1986|DOROTHY TOWNSEND | Times Staff Writer

Buyers of a package of products and services they thought would enable them to operate typesetting businesses out of their homes filed a consumer fraud suit Tuesday against ITT Corp., claiming the huge conglomerate left them in the lurch by reneging on the promised availability of phototypesetting machines crucial to the operation.

According to the suit, filed in Los Angeles Superior Court, the purchasers received assurances that specially programmed phototypesetting machines, located only at dealers' offices, would remain available to them for a period of at least two years.

The cost of the package, which included personal home computers, hardware and software with which to initiate the typesetting process, ranged from $9,000 to $16,000, the suit states.

The suit seeks $1 million in general damages for each of the buyers of the package and $1 billion in punitive damages.

Patricia Patterson of Long Beach, one of the 104 plaintiffs in the suit, bought her product package last June on a contract for $16,000. In July she learned that the typesetting machine was no longer available.

Patterson said she telephoned an ITT representative in St. Louis and was told, "That's your problem."

The representative also told her that she would have to keep up the payments on the contract "or we will be forced to sue you," she said.

Plaintiffs Include Dealer

Attorney Bruce A. Friedman, who filed the suit, said the plaintiffs are from all parts of the state and include a dealer who maintained offices in Van Nuys and San Francisco, each equipped with a phototypesetting machine until last summer.

According to the suit, the dealer, Ronald C. Broyles, arranged with ITT prior to Jan. 1, 1985, to offer the products and services. Under the arrangement, ITT authorized Broyles to represent that the package would enable buyers to operate a typesetting business out of their homes.

But ITT knew that the purchasers could do only the preliminary steps on their home computers and had to transmit their data to machines in the dealer's offices to complete the work, the lawsuit alleges.

The defendants--ITT, several of its subsidiaries and officers--were to provide financing for the package sales and provide a continuous supply of components as inventory, according to the suit.

But last Aug. 10, the defendants refused to provide any further financing and removed the dealer's inventory, forcing him out of business, the suit contends, and "thus (he) no longer had the ability to make the special phototypesetting machine available."

The suit asks $10 million in general damages for Broyles and his partners and $100,000 each for two employees who lost employment when the dealer shut down.

The Times' efforts to obtain comment on the suit from a corporate spokesman in New York City and an ITT Commercial Finance Corp. attorney in St. Louis were unsuccessful.

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