Judge dismisses one Marin County suit versus Deloitte

County had filed two lawsuits contending Deloitte and others botched a major SAP implementation

A former judge hired to settle a protracted legal dispute between Marin County, Calif., and Deloitte Consulting over a botched SAP project last week dismissed all charges made by by the county in one of two lawsuits.

The action leaves Deloitte still facing some of the claims -- that it lied about its skills in order to land the project, and that it bribed a County official to get the deal -- included in the county's initial lawsuit against the consulting firm. Deloitte also still faces a claimed that it failed to supply properly trained SAP professionals to fulfill the job

News of the judicial referee's decision was first reported earlier this week by the Marin Independent Journal.

Mark Ressler, an attorney with Kasowitz, Benson, Torres & Friedman LLP, a New York-based law firm that represents Marin County, today called the ruling by former Santa Clara Superior Court Judge John F. Herlihy a procedural one, and contended that it will have little impact on the remaining claims.

Ressler said the judge dismissed the claims in the second lawsuit because he believed they were identical to the ones already raised in the county's initial lawsuit.

Jonathan Gandal, a spokesman for Deloitte, said the firm is satisfied with the decision to dismiss the claims against the firm in the second lawsuit.

"We are very pleased that the County's second case against Deloitte Consulting has now been completely dismissed," Gandale said in a prepared statement.

"We are gratified that two different judges both recognized that this County lawsuit was without merit. As we've said previously, the remaining action will be decided based on the facts and we will continue to defend our work vigorously."

Marin County filed the initial $30 million lawsuit against Deloitte in May 2010 charging that the consulting firm botched a 2005 project to install a SAP ERP system that would replace aging financial management, payroll and HR systems. That lawsuit charged that Deloitte lied about its SAP skills as well as its systems integration and change management skills.

The county also alleged the new system is error-prone and substantially worse than the legacy system it was to replaced.

County officials claimed that Deloitte -- which was fired from the project in 2007 -- used Marin County as a "trial-and-error public sector training ground" for inexperienced consultants.

Herlihy was hired to referee the initial legal battle as well, and dismissed many of the initial claims.

Prior to the initial decision, the county in December 2010 filed a second lawsuit in Marin Superior Court names Deloitte, SAP and former county auditor Ernest Culver as defendants.

The second lawsuit repeated many of the claims made in the first one, adding charges that all three defendants violated federal racketeering laws. The second suit sought $90 million in damages.

The second suit was first heard in a federal court, which dismissed several of the county's claims. It also ordered that the county file separate suits against SAP and Culver.

The federal court asked former Judge Herlihy to decide on the remaining charges against Deloitte.

Herlihy dismissed the remainder of the lawsuit, concluding that it raised the many of the same issues that were dismissed in the first lawsuit. "The two actions by the County against Deloitte involve the same injury to the County and the same wrongs by Deloitte," Herlihy wrote.

Ressler said the two sides are currently in the process of providing depositions in the matter involving the bribery, the breach of contract and breach of warranty claims that remain to be resolved.

Both sides have a right to appeal Herlihy's verdict, he added.

Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan, or subscribe to Jaikumar's RSS feed . His e-mail address is jvijayan@computerworld.com.

Copyright © 2012 IDG Communications, Inc.

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