Jury Awards Pet Food Maker $61 Million in ERP Suit

A jury in Alabama last week awarded pet food maker Sunshine Mills $61 million in connection with its lawsuit over a problematic Ross Systems ERP (enterprise resource planning) software package.

Some $16 million of the damages were compensatory and $45 million were punitive. Sunshine Mills originally paid $235,000 in licensing fees, according to Ross Systems, a subsidiary of CDC Software. The company plans to appeal the verdict, which it called unjust.

Sunshine Mills “knowingly purchased a beta version of the software” and its claims were “subject to various limitations contained in the agreement between the parties,” according to Ross Systems. In addition, the company continues to use the software and it is being used successfully at many companies around the world, according to Ross Systems.

“This is a sad day for the software industry,” Ross Systems president Sherri Rodriguez said in a statement. “These types of unfair judgments make it more and more challenging for software companies to operate.”

The company’s version of events doesn’t jibe with that of Daniel McDowell, one of the attorneys who represented Sunshine Mills in the case, which was filed in 2008.

The jury “sent a message to the software industry” that it must treat customers fairly, he said in an interview.

Ross Systems tricked Sunshine Mills by demonstrating software that supposedly would work out of the box, but failed miserably once it went live, McDowell said.

The Red Bay, Alabama, company expected to get big savings from the software, but instead had to hire additional people and dealt with assorted headaches, such as system lockups and an inability to print invoices, McDowell said.

Ross Systems handled the training of Sunshine workers on the system, he said. In an internal e-mail, one Ross employee called Sunshine workers “clueless fools” who were unable to learn how to use it, McDowell said.

Another Ross Systems defense argument blamed item scanners Sunshine had purchased, he said.

Sunshine Mills is in fact still using Ross software, but “it’s really running the same thing their legacy system ran,” McDowell said. Other promised functionality, including a dashboard that would give Sunshine’s CEO real-time data from the company’s plants, is not operational, he said.

Ross Systems told Sunshine the system was in beta at the time of purchase, “but the only reason it was beta was that it was new to the US,” he said. Once the system actually went live, it was considered to be in general-availability form, according to McDowell.

In addition, Ross Systems’ $235,000 figure is misleading because it doesn’t include the roughly $2 million Sunshine spent on recommended hardware and other matters, he said.

Now, the company is looking at changing to other systems, but the switch won’t necessarily be easy, McDowell added.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris’s e-mail address is Chris_Kanaracus@idg.com