OneWorld users have to arbitrate, not litigate

J.D. Edwards & Co. requires in its software licensing contracts that any lawsuits filed by users go to arbitration rather than to trial, according to a spokesman for the Denver-based business applications vendor.

That means the companies involved in legal proceedings related to early installations of its OneWorld software will ultimately have their cases heard by a panel of arbitrators from an organization such as the New York-based American Arbitration Association, said William McTaggart, an attorney who is representing Los Angeles-based Spectratek Technologies Inc. in its lawsuit against J.D. Edwards.

Arbitration proceedings are common in claims arising from the sale of software licenses or computer hardware, McTaggart said. But neither he nor Reese Morrel Jr., a lawyer for Park Hill, Okla.-based Greenleaf Nursery Co., want to go the arbitration route with J.D. Edwards.

Morrel said he expects Greenleaf's arbitration process to begin sometime this year. But he doesn't like the idea that the proceedings could take place outside of Oklahoma, where Greenleaf filed its breach of contract suit last July.

"We would rather have the lawsuit [heard] in Oklahoma," Morrel said. "The computers are there, the people are there and the work was performed there. If we have to produce the witnesses, we may have to buy a plane ticket [to] who knows where."

Morrel is trying to get the arbitration clause rendered invalid. "This is a tactic that [J.D. Edwards] is using to limit our damages in court," he claimed.

But the J.D. Edwards spokesman said the goal of arbitration is to resolve disputes "as quickly as possible with minimal impact to both companies." Resorting to arbitration makes it possible for cases to be heard by panels with technology expertise, allowing for a "more streamlined" process than a trial might provide, he added.

The arbitration provisions in J.D. Edwards' contracts specify that the defendant in a case gets to decide where the proceedings should take place. That's meant to ensure that requests for arbitration are "not taken lightly," the J.D. Edwards spokesman said. "But nobody is implying that has happened."

Other companies that ran into problems on planned OneWorld rollouts and are heading toward arbitration with J.D. Edwards include Arlington, Texas-based Doskocil Manufacturing Co. and Fremont, Calif.-based Supercom Inc.

Doskocil requested arbitration proceedings last November, while Supercom filed a notice of its intent to seek arbitration in June 2000. Supercom's U.S. operations were sold to Fremont-based Synnex Information Technologies Inc. last July, leaving its Markham, Ontario-based Canadian unit as a stand-alone company.

Copyright © 2002 IDG Communications, Inc.

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