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Bridgestone vs. IBM – Judge Says Let’s Get It On

On March 30, 2018, a judge cleared the way for what both Bridgestone and IBM have apparently both been itching to do – get in front of a jury.   After almost 9 months of court-ordered arbitration, Senior United States District Judge Barnard Friedman ordered the following:

  • All motions by either party to dismiss or for a summary judgment are denied
  • Each side is to provide its list of witnesses by June 11, 2018
  • The trial is to be scheduled to begin on July 9th, 2018 (Nearly 1,700 days since Bridgestone’s suit was filed against IBM).

UpperEdge has been analyzing this case since the beginning:

A Quick Summary for Those Not Familiar with the Suit

Bridgestone went live with the solution in January of 2012, $30M over budget and five months later than planned.  In the lawsuit that was filed, Bridgestone alleged that the implementation created a major disruption to its ability to serve customers and threw its logistics and supply chain operations into chaos.

Bridgestone estimated that profits of $75M were lost in the first six months of 2012 and that it incurred an additional $38M in additional expenses to bring the situation under control.  At the foundation of Bridgestone’s complaint is the assertion that IBM did not apply talent that was consistent with contractual obligations and that IBM was fraudulent in its reports regarding the ongoing status of the program.  Bridgestone claims that with sufficient information regarding the situation, different decisions would have been taken regarding the readiness for a go-live.

The Saga Continues

Prior to court-ordered arbitration, both parties believed that an out-of-court settlement was not in reach and that resolution could only come through a trial.  Each side presented its theory of the case that I will summarize below.

Bridgestone claims IBM:

  • Misrepresented itself as an SAP OTC (Order-to-Cash) expert before and throughout the implementation
  • Violated provisions of the Tennessee Consumer Protection Act
  • Was negligent in execution
  • Breached contractual agreements

In its defense, IBM cites that Bridgestone:

  • Signed agreements for change orders that impacted both costs and schedules
  • Made the call to go-live against IBM’s advice
  • Contractually agreed to not rely on any IBM representations outside the contract and that it would not seek damages beyond fees paid to IBM
  • Did not fulfill its contractual obligations.

This is likely to be a long trial with an extensive list of witnesses.  It will delve into plenty of nuances of contract law and lay bare both IBM and Bridgestone management teams to result in plenty of second guessing.

I believe the jury’s decision on this case will turn on four questions:

  • Did IBM intentionally deceive Bridgestone?  This could be the overriding question for the jury.   Intentional deception is something to which the jury will be able to relate.
  • How aware should have Bridgestone been with regards to its own project?  Bridgestone is a multi-billion-dollar global organization with tons of talent.  How could they not have known this was as bad as it appeared to be?
  • How will the jury weigh Bridgestone meeting its own obligations as a balance of IBM meeting theirs?  This was a very large project with each side carrying certain responsibilities for implementation.  If the jury concludes that both parties are equally at fault, it is unlikely they will reward Bridgestone.
  • How important is the language of the contract?  Based upon my reading of the various court filed documents, the contract language appears to favor IBM.

Lawsuits Like These Rarely Make it to Trial

It is typically in the interest of the system integrator not to be dragged through the mud.  It is clear that in this case that some level of corporate testosterone is flowing.  UpperEdge will continue to monitor this project closely and incorporate learnings into our playbooks for negotiation.

Comment below, follow me on Twitter @jmbelden98 and find my other UpperEdge blogs.

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