FusionStorm has made the final payment of court-ordered damages to rival Technology Information Group two years after the company, along with some of its executives, was found guilty of illegal hiring practices.
Dan Serpico, president of FusionStorm, a San Francisco-based solution provider, said his company celebrated after making the final payment of its $10.9 million in compensatory and punitive damages in July.
"For FusionStorm, this removes a big cloud hanging over our heads," Serpico said. "Whether there were whisper campaigns about us or overt conversations, there were a lot of people who were unsure whether we would survive. But in fact, for the second quarter and first half of this year, we had record billings."
The ruling stemmed from San Diego-based 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 move to set up a Tampa, Fla., branch office.
In its lawsuit, TIG alleged that FusionStorm hired a TIG executive in 2006 to set up a branch office in Tampa, Fla. That executive, while still a TIG employee, allegedly hired other TIG personnel to join the office. Those employees then allegedly engaged in such unethical business practices as telling at least one vendor and several customers that TIG was going bankrupt in order to get registered TIG deals reassigned to FusionStorm.
Making the final payment of the judgment from the lawsuit meant lifting a weight off FusionStorm, Serpico said. There were concerns about the company among its vendor partners, and FusionStorm had to sell its Jeskell government business to help put the payment plan in place, he said.
"We solved a considerable problem and moved on to grow our business, make money and generate confidence with our vendors that we can make the kind of impact we had before," he said.
Bruce Geier, president and CEO of TIG, said the lawsuit helped the solution provider community better understand the issues related to unethical hiring and business practices.
"We set a stake in the sand about what behavior is acceptable and what is not," Geier said. "Our industry is relatively young compared to others like the auto industry. This helps our industry mature in the long run."
NEXT: Moving Past The Lawsuit To Focus On BusinessFor TIG, resolving the lawsuit did not result in a big financial boost, Geier said.
"They paid us some money," he said. "The fact is, we paid most of that money to our attorneys. But, we paid them over the last three to four years. So, getting paid by FusionStorm let us expand our business. We acquired three other businesses over the last year or so. We could have pressured FusionStorm to pay off immediately, but we agreed to do it over time with interest."
TIG also used part of the judgment to fund TIG's new cloud operations in China, he said.
Geier said he hopes other solution providers can learn from the lawsuit about how to deal with illegal hiring practices. "I talk to a lot of other VARs," he said. "I give them advice. You have to prove damages, which is not easy to do."
Geier said he appreciated the help Serpico provided in finally wrapping up the lawsuit.
"I have to hand it to Dan Serpico," he said. "He made payments in time. He was not involved in the lawsuit, but he did well as president of FusionStorm."
Geier and Serpico occasionally run into each other at industry events. "The reality is we're both in this market," Geier said. "But, we get along. There's so much market out there. There's no reason to be adversarial."
Serpico said he called Geier after the last payment was made to thank him for working to finalize the case.
"I've run into Bruce [Geier] a couple of times at different events," he said. "I enjoy my time with him. All the animosity of the past is gone. We compete, but on friendly terms."
PUBLISHED AUG. 24, 2012
This story was modified on Aug. 24, 2012, at 2:33 p.m. PST, in order to clarify that the lawsuit concluded in 2010, two years prior to FusionStorm's final court-ordered payment.