TIG, FusionStorm Reach Settlement In Competitive Hiring Case4:36 PM EST Tue. Aug. 17, 2010
Solution providers Technology Integration Group (TIG) and FusionStorm have reached an out-of-court settlement in a case where a California Superior Court jury found FusionStorm liable for misappropriation of trade secrets, breach of fiduciary duty and breach of loyalty.
FusionStorm will pay TIG nearly $11.0 million to resolve the case, covering all damages, expenses and legal fees, said FusionStorm President Daniel Serpico, in an interview.
The two sides agreed to the settlement Tuesday and the judge in the case has given his approval. But it still requires some signatures from both parties and must be filed with the court to be complete.
TIG president and CEO Bruce Geier and TIG's lead attorney, Arturo Gonzalez, both declined to comment on the settlement, saying they would wait until it is filed with the court on Wednesday.
The settlement brings to a close a bitter court battle between two major VARs: TIG, which ranked 155 on the VAR 500 with $267 million in sales, and FusionStorm, which ranked 115 with $437 million in sales.
San Diego-based TIG sued San Francisco-based FusionStorm in 2007 charging that FusionStorm, several of its executives and several former TIG employees engaged in unethical business practices related to FusionStorm's move to set up a branch office in Tampa to compete with TIG.
The case revolved around FusionStorm's hiring of TIG employee Michael Dragoni in 2006 to establish the Tampa office. Dragoni went on to hire away a number of TIG employees, the suit charged, and also lured away a number of TIG customers and prospects.
TIG's Geier has said he believes the case could lead to ground rules for the VAR industry on what is acceptable in terms of recruiting from competitors.
The case went to trial in California Superior Court and on July 15 a jury delivered a verdict in favor of TIG, awarding the company $9.36 million in compensatory damages and $1.525 in punitive damages from FusionStorm and six individuals at the center of the case. But the judge in the case held off entering that judgment while the two sides negotiated a deal.
"This puts an end to all the litigation, and all the fighting and all the legal fees," Serpico said in a phone interview. He praised TIG president and CEO Bruce Geier for being "cooperative and responsive" in working to reach a fair settlement that he said will allow both solution providers to get back to business.
Serpico said all of the FusionStorm executives whose actions led to the lawsuit are no longer with the company and the current management team wants to put the case behind it. "My employees are working extremely hard and have been tarnished by a bad brush that was not of their doing," he said, noting that FusionStorm's sales are up 35 percent year-over-year.
The settlement, which includes a payment plan, covers all of FusionStorm's liabilities in the case, as well as TIG legal fees FusionStorm has agreed to pay, according to Serpico. But he declined to say how much of the settlement covered the six individuals who were also named in the suit.