Lungren Role in Computer Lawsuit Criticized : Courts: Case alleged false advertising by makers. Merced County official says attorney general tried to settle without restitution for consumers.

State Atty. Gen. Dan Lungren is at the center of controversy surrounding his office’s handling of a consumer fraud case against several major computer makers over the advertised size of computer screens.

A compromise deal was worked out that requires the companies to give $1.5 million worth of computer equipment to California schools and to be accurate in advertising the size of monitor screens on their products.

But left in the wake of a settlement of a lawsuit accusing such companies as IBM, Apple and Packard Bell of false advertising are charges from prosecutors at the county level that Lungren deliberately intervened to try to go easy on the industry giants and their powerful lawyers.

If the case had concluded as Lungren originally sought, the local prosecutors said, the computer giants would have been let off with a warning and no monetary sanctions imposed. Lungren’s office disagreed with the criticism.

Speaking on condition that they not be named, some prosecutors said in interviews that they suspected Republican Lungren was playing political favorites in siding with the manufacturers. They noted that former Republican Gov. George Deukmejian, now a lawyer, represented Dell Computer Corp. and former Los Angeles Dist. Atty. Robert Philibosian represented Packard Bell in fighting the lawsuit charging them with false advertising.

Deukmejian and Philibosian have been contributors to Lungren’s political fund as he positions himself to be the likely front-runner for the Republican gubernatorial nomination in 1998. He has also been mentioned as a possible running mate for Bob Dole in next year’s presidential race.

“For Deukmejian to come into this case, he [was] dealing with an attorney general who he’s been a political patron for,” said one county assistant prosecutor. “We were kind of raising our eyebrows at that.”

A spokesman for Lungren, Steve Telliano, denied that the attorney general sought to soften the legal blow to the computer makers out of any motives of political favoritism, and said it was mainly through Lungren’s leadership that agreement was reached.

Included as parties to the settlement are the district attorneys from seven counties, including Los Angeles County, who joined in bringing the suit against 18 manufacturers that constitute practically the entire computer-making universe.

The agreement reached this week and filed in court late Wednesday in Merced County, where the case has generated the most heat, represents a compromise between the full force of the law sought by the district attorneys and the manufacturers who contested the lawsuit.

If the manufacturers had been subjected to legal penalties initially sought by the district attorneys, the companies’ costs could have been substantially higher--up to $2,500 for a single violation, according to legal experts.

Merced County became the focus of the battle that developed between Lungren and the county prosecutors both because the first complaint against a manufacturer was lodged there almost two years ago and because the county’s district attorney, Gordon Spencer, took the lead in challenging Lungren.

Spencer was still disputing Lungren’s version of events and criticizing his actions even after the legal settlement was headed to the courthouse to officially close the case.

The Central Valley prosecutor called the settlement a “good resolution,” but--contrary to the credit taken by Lungren--Spencer said it was the “stance taken by the district attorneys [that] ultimately prevailed.”

Spencer said he “remains troubled” over Lungren’s earlier maneuvering before he agreed to the settlement. The attorney general, he said, “attempted to settle this case without restitution on behalf of California’s consumers” and only failed to get his way because “a number of district attorneys stood firm . . . to ensure an adequate settlement.”

Other counties that were parties to the settlement, besides Los Angeles and Merced, were Alameda, Fresno, Kern, Napa and Ventura.

Spencer said the other counties had deferred to him for comment. But internal memos obtained by The Times said several of the prosecutors’ offices were concerned that Lungren, in the words of one official, was seeking a “sweetheart deal” for the companies.

At one point, said one source who spoke on condition of anonymity, Lungren went back on his word that he would “not take over the case” with the announcement from his office that the attorney general intended to impose no serious sanctions against the companies and would exercise his authority to supersede county district attorneys if necessary.

The timing of that decision, the source said, led to suspicions of political pressures at work because it came shortly after Deukmejian and Philibosian entered the case representing computer companies that were involved.

But Telliano said the impression that Lungren was showing a bias to the companies arose solely over a “misunderstanding” on the part of those in his office who actually delivered the message to the district attorneys. Lungren had no intention of snapping up the case or going easy on the companies, Telliano said.

As for Deukmejian’s part, Lungren told The Times, “for anyone to say that George Deukmejian is involved in partisanship is laughable. He is the pillar of integrity.” Deukmejian was unavailable for comment.

The district attorneys and Lungren disagreed over the consequences of computer companies advertising the diagonal measurement of screen sizes being larger than the actual area available for viewing.

Telliano said the inaccurate advertising was unintentional and fell in a “gray area” of business law that had not yet addressed computer technology as it had, for example, the demands placed on television makers to stick to actual screen sizes in their advertising.

But district attorneys said the computer makers had continued misleading the public throughout the several months that the present case was being argued, and that the differences in screen sizes were more significant than Lungren’s office was admitting.

“In some cases, the viewable area of the monitor screens was 30% less than advertised,” Spencer said Wednesday. Investigators in Merced County, he said, found that some monitors advertised as 15 inches actually had less viewable area than some with 14-inch monitors.

Under terms of the agreement filed Wednesday, computer makers agreed to inform the public of the viewable measurement, and Telliano said some companies had begun to make the changes in their advertising claims.

Lungren said he was “extremely pleased” with the settlement and with the ability of his office and the district attorneys “to resolve our concerns.” He noted that besides the $1.5 million in computer equipment, the companies also are required to pay Merced County $200,000 in legal fees that were run up in pursuing the case.

Some district attorneys, however, said that had it not been for their strength in numbers, Lungren would have brokered a political settlement instead of a consumer settlement.

“If someone looked at this and said what have you learned from this case,” Spencer commented, “I really think that the state of California needs a law that permits the appointment of a special prosecutor where the attorney general has a real or apparent conflict of interest.”