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Strong-arm tactics alleged in Oracle, reseller dispute

Chris Kanaracus, IDG News Service | March 21, 2011
- 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.

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.

 

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