SAP AG Lawsuit

Marc

Hunkered Down for the Duration
Staff member
Admin
#1
>Bankruptcy trustee sues SAP AG
>By Reuters,
>ZDNN
>August 27, 1998 5:45 AM PT
>
>
>WILMINGTON, Del, Aug 26 (Reuters) - The bankruptcy trustee appointed to
>oversee the liquidation of FoxMeyer Corp. and Foxmeyer Drug Co. has sued the
>companies' software supplier, SAP AG for $500 million for alleged "gross
>negligence."
>
>In papers filed Monday in the U.S. District Court in Delaware and made
>available to Reuters today, trustee Bart Brown said SAP's alleged fraud and
>negligence, "led to the demise of FoxMeyer, a once-thriving $5 billion
>wholesale drug distribution company."
>
>According to the lawsuit, although SAP's had historically made software for
>manufacturing, the Walldorf, Germany-based company, "assured FoxMeyer that
>its R/3 system was well suited to the needs" of the high volume and complex
>price structure of FoxMeyer's distribution business.
>
>Couldn't Handle Volume
>When the R/3 system was installed, its volume limitations made it usable at
>only six of FoxMeyer's 23 distribution warehouses, court papers said.
>
>"The failure of the R/3 system to perform as SAP had represented...was a
>significant factor contributing to Foxmeyer's August 1996 bankruptcy and
>subsequent liquidation."
>
>According to court papers, on September 30, 1993, FoxMeyer agreed to pay
>more
>than $5 million to license SPA's R/3 software system.
>
>Forced Back
>The software's first use was set for early 1995 at six warehouses built by
>FoxMeyer to handle a new contract. Under the contract, which the lawsuit
>says
>was worth $500 million to $1 billion in annual revenues, FoxMeyer was to
>distribute drugs for the University HealthSystem Consortium, a nationwide
>network of teaching hospitals.
>
>Instead, the R/3 system's alleged failure to meet FoxMeyer's volume needs
>forced the drug company to revert to its Unisys system.
>
>The lawsuit charges SAP and its U.S. unit, SAP America Inc., with breach of
>contract and of express warranties and with fraudulent and negligent
>misrepresentation and concealment.
>
>"(SAP) made misrepresentations of material facts regarding its ability and
>intention to correct problems with the R/3" software's capacity to process
>FoxMeyer's orders," court papers say.
>
>In addition to actual damages of $500 million, the suit seeks a jury trial
>and unspecified punitive damages.
>
 
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