Dell vs. NY Attorney General: What's the risk?

Dell went on the offensive to get ahead of a coming lawsuit from the New York Attorney General. Erica Ogg reports the suit, which will be announced formally today at a press conference, accuses Dell and Dell Financial Services of fraud, false advertising and deceptive business practices, including offering misleading financing, and failing to honor rebates, warranties and service contracts.

Dell went on the offensive to get ahead of a coming lawsuit from the New York Attorney General.

Erica Ogg reports the suit, which will be announced formally today at a press conference, accuses Dell and Dell Financial Services of fraud, false advertising and deceptive business practices, including offering misleading financing, and failing to honor rebates, warranties and service contracts.

The state of New York is asking for an injunction of Dell's practices and penalties. Dell will fight the suit.

The big question: Is this a risk to Dell's turnaround? Probably not. The only wild-card is whether other states join in on the scrum and distract the company.

Why the skepticism? The New York attorney general's office files lawsuits with abandon. In fact, that approach is what got Elliot Spitzer enough attention to wind up as New York governor.

However, these suits--mostly against Wall Street types--haven't exactly played out in the state's favor in court. Exhibit A: Spitzer filed a lawsuit in 2004 against former New York Stock Exchange Chairman Richard Grasso for a pay package that was allegedly excessive.

On May 9, an appeals court dismissed four of the six legal claims against Grasso.

Dell will suffer from a few bad headlines today as the state of New York launches its allegations, but like many of New York's suits it may ultimately fall apart.