SAP wants racketeering claims thrown out

SAP says Marin County's suit claiming it and Deloitte engaged in racketeering should be dismissed

SAP wants a judge to toss out allegations by the government of Marin County, California, that it engaged, along with Deloitte Consulting, in a racketeering scheme meant to bilk the county out of more than US$20 million in connection with a troubled ERP (enterprise resource planning) project.

Marin County has already decided to rip out the SAP system and replace it with an alternative. It initially filed suit last year against Deloitte, which consulted on the project, and later also sued SAP.

SAP's motion, filed Wednesday in US District Court for the Northern District of California, argues that "the vast majority of the factual conduct alleged in the Complaint does not involve SAP."

Although SAP's Public Services division sold the software to Marin County, it "is not alleged to have been defective or to have been misrepresented. Nor is SAP alleged to have been engaged to implement the software," it states. "The allegations sound like a claim for breach against Deloitte, as the County separately has alleged in another proceeding."

"The County thus must spin -- to an almost unrecognizable state -- the few 'facts' it can allege against SAP," it adds.

Marin County has also sued Ernest Culver, a former county worker who acted as project director and later took a job at SAP. The county has alleged Culver was "approving Deloitte's deficient work on the project, approving payments, and causing Marin County to enter into new contracts with Deloitte and SAP" while he was interviewing for jobs at both companies.

In addition, Deloitte wined and dined Culver repeatedly, according to the county.

But in its motion, SAP said the county gave it written consent to discuss employment with Culver before any talks with him began.

"The County represented that Culver had informed the County that he intended to pursue employment opportunities with SAP and, should a job offer result from discussions to which the County was consenting, it would not affect the County's and SAP's relationship," the motion adds.

SAP's motion also attacks the county's racketeering claim on grounds that it would be ludicrous for SAP to join Deloitte in such a pattern of behavior.

"There is no plausible reason -- much less factual support -- for a scheme in which SAP would partner with Deloitte knowing that Deloitte could not implement its software correctly and intending that the County be damaged," it states. "It strains the imagination to suppose a business rationale that could exist for such a plan."

An attorney for Marin County said Thursday the county had just received SAP's motion and could not immediately comment on its contents.

"We'll review it and respond," said Sheila Lichtblau, deputy county counsel. "[The motion] doesn't surprise me. That's just the way litigation goes."

She declined to comment on SAP's characterization of the county's allegations as specious, but noted that the original complaint goes through the claims in "extreme detail."

Marin County's complaint alleges violations of the federal RICO (Racketeer Influenced and Corrupt Organizations act). The county wants $35 million in damages, which would be tripled under RICO to $105 million, along with punitive damages.

But Lichtblau indicated the county is open to settling the case out of court. "Obviously the county is always interested in talking to the parties and trying to see if there is a way short of litigation to resolve these type of issues," she said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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Tags business issuesDeloitteserviceslegalCivil lawsuitsSAPsoftware

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Chris Kanaracus

IDG News Service

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