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Solution providers TIG and FusionStorm have settled a lawsuit over methods FusionStorm used to allegedly take TIG employees and business secrets in setting up a branch office in a case which could set legal precedents over such practices among VARs.
The legal dispute between San Diego-based TIG and San Francisco-based FusionStorm closed on Wednesday with the official filing of a stipulated judgment that lays out the monetary awards TIG will receive from FusionStorm and six individuals.
In the settlement, the two solution providers agreed FusionStorm and the six individuals will pay TIG $8,515,000. In addition, FusionStorm will by itself pay TIG an additional sum of $2,260,000, while the six individuals will pay TIG a separate $290,000.
FusionStorm declined to respond to questions about the settlement. However, the company in a statement thanked TIG for its cooperation in the case, and said both companies can now focus on business.
The lawsuit stems TIG's accusations in early 2007 that FusionStorm, several of its top executives, and some of TIG's own former employees, engaged in unethical business practices related to FusionStorm's decision to set up a Tampa, Fla. branch office.
Included in the list of FusionStorm executives who were found individually liable were CEO and Chairman John Varel; Tim Tonges, the company's former COO; and Brad Thompson, its former vice president of sales.
Former TIG employees found liable include Michael Dragoni, Randy Barber, and Charles King, according to the final stipulation document, a copy of which was examined by CRN.
The drama between the two solution providers started with a decision by FusionStorm to hire Dragoni in 2006 to set up a Tampa branch office to compete with TIG. Dragoni, while remaining on the TIG payroll, allegedly went on to hire a number of his TIG colleagues.
During the process, TIG employees hired by FusionStorm allegedly passed TIG confidential information, including details about customers and deals, and spread misinformation about TIG to customers and vendors, the lawsuit alleged.
TIG President and CEO Bruce Geier said he is happy to get the case over, and that it is one that is important for the entire industry.
"Now there's a stake in the sand," Geier said. "We have put some ethics in this business."
Geier compared the solution provider business to the automobile dealer industry.
"(The solution provider industry) is not that old," he said. "Auto dealers have territorial rights, and they are limited as to what lines they can sell. We don't have any protections. Someone can set up next door to you. In questioning, Varel said some things were unethical. But he did it anyway. Maybe 15 years from now, we can look back on this as a turning point."
Next: Setting A Legal Precedent