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Jury awards $61M to Sunshine Mills over botched ERP project

Jaikumar Vijayan | Dec. 6, 2010
Pet food maker claimed Ross Systems defrauded the company with false claims

FRAMINGHAM 6 DECEMBER 2010 - A jury in Alabama's Franklin County Circuit Court has ordered Ross Systems Inc. to pay $61.4 million in damages to pet food maker Sunshine Mills over a botched Enterprise Resource Planning (ERP) implementation.

The verdict, on Friday, came after a three-week trial during which jurors heard Sunshine Mills' President Alan Bostick describe how Ross' software had failed to deliver promised benefits and had cost millions in lost sales and repairs.

The verdict requires Ross to pay Sunshine $16.4 million in compensatory damages and $45 million in punitive damages.

Sherri Rodriguez, president of Ross Systems, today that the company will appeal the award. "A lot of the claims are erroneous. We most definitely deny any allegations of fraud," she said. "We have treated [Sunshine Mills] fairly in trying to solve any problems and we continue to support them."

Ross Systems is a subsidiary of CDC Software of Atlanta.

The project began in 2005 when Sunshine hired Ross to completely replace its aging AS/400-based back-end systems with a more integrated ERP suite.

In pitching for the project, Ross executives misrepresented the capabilities of their software, said Danny McDowell one of the attorneys who represented Sunshine. In making its case, Ross claimed that its software would help Sunshine cut warehousing and distribution costs by up to 50% and eliminate product waste, McDowell said.

"It was a sale based on deception," he said. "The software did not do what it was represented to do." Instead, just days after the software was implemented, it started wreaking havoc on Sunshine's operations. "It was like Murphy's Law. Everything that could go wrong, did go wrong," McDowell said.

In its lawsuit, Sunshine claimed that Ross' software disrupted operations across all of its plants, caused wrong products to be shipped to customers, failed to generate invoices for shipped orders and led to numerous other problems.

"They had shipments going to the wrong people, the wrong places," McDowell said. "They had shipments that they did not even know they had sent." At one point, Sunshine had to resort to manually writing out thousands of invoices because the system was unable to.

According to McDowell, Ross itself claimed that the problems stemmed from Sunshine's improper use of the software, a lack of training on the part of its employees and other issues. "Ross kept telling Sunshine that they were the only customers in the world that had these problems," McDowell said.

"They blamed a lack of training, they said Sunshine executives hadn't bought into the system, they blamed the scan guns that Sunshine employees were using, they blamed Microsoft, they blamed everybody but themselves," he said.

 

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