Strong-arm tactics alleged in Oracle, reseller dispute

Reseller ITD claims Oracle "destroyed" its business, but Oracle says it is simply owed $19 million

Oracle explicitly said that it planned to sell products directly to its largest accounts after it acquired Sun Microsystems last year. But reseller Innovative Technology Distributors is claiming Oracle set about doing so in a way that "destroyed" ITD's business through unfair dealings, according to a lawsuit filed in U.S. District Court for the District of New Jersey.

Oracle, in turn, has filed a lawsuit against ITD in a California court, claiming the Edison, New Jersey, company owes it more than US$19 million for products it was given.

ITD, which filed its suit March 10, had resold Sun Microsystems software and hardware since 2005, with annual revenue "well in excess" of $100 million and a client list including Motorola and Alcatel-Lucent, according to its complaint.

Oracle strung ITD along for much of last year, telling it that a new contract to replace the one it had with Sun was forthcoming, but all the while Oracle was planning to phase the company out, according to the complaint.

Finally, Oracle offered an amendment to ITD's existing agreement on Dec. 29, according to the complaint. But it had to be signed within a day, and its terms were onerous, according to ITD. It covered only a six-month period, eliminated previously provided discounts on products, and limited ITD to "essentially only two customers: Alcatel-Lucent and Motorola," the complaint states.

The deal was a "stop-gap, intended to benefit Oracle by providing it with more time to take direct those customers where ITD was most entrenched," it adds.

Despite its misgivings, ITD was "forced to sign under duress" because Oracle would not process certain orders placed by Alcatel-Lucent unless it did so, the complaint alleges.

Apart from the contract issue, day-to-day business became more difficult for ITD after Oracle bought Sun, according to the complaint.

Previously, ITD was able to obtain price quotes for customers within 24 hours, with shipments occurring quickly, the complaint states. But Oracle put a number of new procedures in place that slowed the process down considerably, according to ITD.

Product shipments were also hit by significant delays because Oracle "stopped ordering parts it needed in advance based on forecasts, and instead only ordered parts after customer purchase orders were received," the complaint states.

In addition, Oracle reneged on a promised deal that would have seen ITD take over some integration work done by its Customer Ready Systems division, the complaint alleges. The opportunity would have been worth $60 million to $80 million per year, according to ITD.

In anticipation of the work, ITD spent more than $1 million, including for a new 18,000-square-foot facility, it adds. But Oracle "turned its back" on ITD, and even used the company's integration business plan "as the model for a new integration facility plan that it would embark on without ITD's involvement," it states.

Finally, the lack of a new "workable contract" with Oracle caused ITD to lose its line of credit with Wells Fargo bank, as well as to default on an outstanding loan with the lender, the complaint adds.

All told, ITD has been "essentially destroyed," it states.

But in a separate suit filed this month in U.S. District Court for the Northern District of California, Oracle tells a decidedly different story, alleging that ITD owes it $19 million for hardware products. ITD resold the products for more money than that sum, yet refuses to pay, according to the complaint.

Last July, ITD placed hundreds of orders for Oracle products and services totaling more than $19 million. In November, Oracle placed ITD on "credit hold" because it owed millions of dollars in outstanding invoices, the complaint states. Oracle refused to sell ITD more products until it brought its account current, it adds.

Oracle made efforts in February to resolve the dispute, culminating in a March 1 meeting between executives and legal counsel from both companies, but ITD is still refusing to pay, according to the complaint.

ITD claims the sum Oracle wants is "drastically inflated." It is seeking compensatory damages from Oracle for violation of state franchising law, breach of contract, tortious interference and other alleged violations, as well as a declaratory judgment that it does not owe the $19 million.

Oracle's complaint demands ITD pay the $19 million plus interest and attorney's fees. It does not address the allegations laid out in ITD's suit. As of Monday, Oracle had not filed a response to ITD's complaint in New Jersey.

An Oracle spokeswoman declined comment.

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

Join the Good Gear Guide newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesMotorolastorageSun Microsystemshardware systemsCivil lawsuitslegalInnovative Technology DistributorssoftwareOraclealcatel-lucent

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Chris Kanaracus

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?