Jury Awards Software Company $100 Million : Courts: Harris Corp. broke a contract with PLS Inc. by not marketing its software, which is now worthless.
A Superior Court jury ordered a Fortune 500 company to pay a local software development firm nearly $100 million in damages Thursday because it failed to abide by a contract to market a computer program.
“It’s mind-boggling enough that it will take me some time to assimilate,” said Fred C. Wellington, the president of PLS Inc., the San Diego firm that won the lawsuit.
After deliberating for two days, the jury found that Harris Corp. and two of its subsidiaries had violated a contract and committed fraud against PLS.
The jury verdict awarded PLS Inc. $13.38 million to compensate it for losses suffered when Harris did not follow through on its promises.
The jury also assessed the Florida-based firm $85 million in punitive damages.
“We felt that Harris, by the actions of their officers, just acted real heinously,” said Clark Pond, the jury foreman. “It won’t put them out of business, but we’ll get their attention.”
Roger Nielsen, an attorney representing Harris Corp., said the judgment would be appealed.
PLS filed suit against Harris Corp. and two of its subsidiaries, Lanier Business Products Inc. and Lanier Worldwide Inc., after signing a contract in 1989 which called for a division of the corporation to market a software package designed for use in law firms.
Wellington said the product, called Penultimate Legal System, meshed with Lanier hardware and software to create a system that would have performed all aspects of day-to-day office management, from voice mail to word processing to the specialized needs of law offices.
“They obligated themselves, that is Harris Corp. and their subsidiaries, to market the Penultimate Legal System and they didn’t perform,” said Anthony A. Ferrigno, one of the attorneys representing PLS.
PLS executives first approached Harris to market their product because they wanted to be affiliated with a firm that had nationwide reach. However, the jury found that the marketing arm of the two affiliates, Lanier Business Systems Division, was losing money while Harris officials were negotiating the contract with PLS.
Furthermore, Harris officials had already determined by the time the contract was signed in August, 1990, that the marketing division would be sold--thus leaving PLS without the corporate support it had sought out so carefully, according to the jury.
“We felt Harris misrepresented itself to PLS in that they didn’t really intend on disclosing that Lanier Business Systems was for sale,” Pond said.
Less than six months after the PLS contract was signed, Lanier Business Systems Division was sold to Syntrex Inc. of New Jersey, which filed for Chapter 11 bankruptcy protection.
Eight months after the sale, PLS was forced to close its doors. The Penultimate Legal Systems software now sits on a shelf, worthless because it is nearly three years behind current technology.
