HP Settles Sky Litigation for £318 million
LONDON - Hewlett-Packard has settled its litigation in a 5+ year legal battle related to Sky Subscribers Services Limited and British Sky Broadcasting Limited v. EDS and EDS Limited (UK) for £318 million.
The companies announced on 8 June that they have settled the litigation on all related claims for a total of £318 million. HP is now required to make a final payment to Sky of £48 million.
The lawsuit was originally filed on August 17, 2004 by Sky Subscribers Services Limited and British Sky Broadcasting Limited against EDS, which HP acquired in August 2008. Sky had allegeed deceit, negligent misrepresentation, negligent misstatement, and breach of contract. The claims related to a CRM project that was awarded to EDS in 2000. The primary role of EDS was that of systems integrator.
EDS filed its defense and counterclaim in November 2004 denying the claims and seeking fees outstanding under the contract. The trial commenced on 15 October 2007, with final arguments concluding on 30 July 2008. Sky claimed damages of more than £700 million at trial, with EDS and its UK affiliate claiming damages of around £5 million.
The court issued its final ruling on 26 January 2010 finding EDS UK liable to Sky for deceit, negligent misrepresentation, negligent misstatement, and breach of contract. The court dismissed all other claims. HP made a voluntary payment of £200 million to Sky in February 2010, and on 1 March 2010 the court ordered it to make another payment of £70 million.
Former EDS CRM practice Managing Director, Joe Galloway, was found to have lied to Sky in order to secure the contract as part of Sky's investment in the new customer management (CRM) system. Justice Ramsey of the U.K.'s High Court handed down the 468 page ruling on 26 January. Justice Ramsey found that Galloway lied repeatedly in his testimony about facts that included his own educational credentials.
Sky ultimately awarded the consulting contract to EDS in July 2000 to design, build, and implement an advanced customer service system at its customer contact centers in Livingston and Dunfermline, Scotland. The contract was signed in November 2000.
EDS's e.Solutions CRM practice was engaged to provide consulting services at Sky in the areas of implementation, integration and project management. This practice had been known as Centrobe, and included former SHL Systemhouse staff that came on-board after the 1999 acquisition by EDS of that group. Galloway was a former SHL executive.
After negotiations the project's consulting budget was set at £19,751,000 with the technology expenses set at £20,442,000 making the total project expenses £40,194,000, plus £7,440,000 for vendor profit, bringing the total project expense to £47,637,000.
EDS had originally bid the contract with a consortium of partners. That team included Chordiant Software, Interdec Working Spaces, Lucent, and Sun Microsystems/Forte Software. The CRM application was to be built around Chordiant. Call center modifications were made by Interdec.
Lucent was responsible for the Arbor billing application, and provided the computer telephony integration components and services. Sun was responsible for the application development platform, Forte, which was used in the project, and for other infrastructure software and hardware.
Arthur Andersen (AA) eventually joined EDS on the project in June 2000 after its bid independently was unsuccessful. It was AA staff that originally estimated the cost at from £60m to £90m, and the estimated implementation schedule at from 9 to 18 months. The decision came down to PwC, who was bidding a solution based on Seibel, and EDS/AA.
EDS contracted with AA for the 'Business Process' components of the project, and AA contracted with Sky directly for "Location" and "People and Change" elements of the project. According to Sky, the relationship was terminated by them in early 2002 after EDS failed to deliver under the terms of the contract. At that time, Sky then assumed direct responsibility for systems integration and eventually completed the project.
Sky initiated legal action against EDS in August 2004. Sky eventually finished the project in March 2006, at a cost of £265 million. The trial began in October 2007 and concluded July 2008, but the 468 page ruling was not handed down until 26 January 2010.
The trial ultimately turned on the testimony of Galloway. Galloway left EDS in December 2000 to form CRM consultancy ITIVITI. Several other EDS employees that had worked on the SKY project also left to join that firm. Galloway later re-joined EDS in 2006, but was found to have committed numerous acts of perjury during the trial.
Galloway was terminated by EDS after his perjury was discovered. In the most notorious incident, Galloway claimed during trial that he possessed an M.B.A. from Concordia University, which he claimed to have attended for two years. In fact, Concordia offers fake degrees, and Galloway was even listed on the school's Web site as a degree recipient.
After Galloway swore under oath that Concordia was a real institution, plaintiffs' council went on to apply for and receive fake M.B.A. credentials and transcripts for his dog that were identical to those presented by Galloway as evidence at trial.
January 2010 Court ruling
June 2010 HP SEC filing