Oracle America, Inc. and its partners Kbace Technologies,
Cognizant Worldwide and Cognizant Technology were sued by Barrett
Business Services, Inc. ("BBSI") in San Francisco
Superior Court, for among other things, negligent misrepresentation
and breach of contract arising out of one of Oracle's Cloud
service offerings. The Complaint seeks damages, restitution and
rescission of the Cloud Services contract and a related
agreement.
According to the Complaint, Oracle touted on its website and in
various marketing materials that Kbace and the Cognizant companies
demonstrated outstanding and innovative solutions with Oracle's
Human Capital Management ("HCM") Cloud Products and that
Kbace was a leading Oracle Cloud implementation partner. BBSI
sought to implement an integrated enterprise system for its
customers that would integrate complex payroll and invoicing, and
made these requirements clear to Oracle and its partners. Oracle is
alleged to have praised Kbace and assured BBSI that with Kbace as
its implementation partner, Oracle's HCM Cloud Product would
meet all of BBSI's requirements. BBSI contends that Oracle
represented to BBSI that Kbace was its best payroll implementation
partner, and that Kbace had implemented over 300 payrolls and was
currently implementing a customer with payroll needs similar to
BBSI. According to the Complaint, Oracle and the other Defendants
represented that the cost of the project would be between $5.4 and
$5.95 million with a "go live" date of mid-2018 for Phase
I and an Accounts Receivable/Platform as a Service go live date of
January 2019. Throughout the process, the Complaint alleges that
BBSI stressed to Defendants the importance of quality and
timeliness in the roll-out of the product.
In April 2018 BBSI discovered for the first time that the Oracle
software product did not manage local tax configurations and that
the HCM Cloud System did not include Oracle's Time & Labor
Application. According to the Complaint, BBSI could not use another
payroll software due to the lack of functionality in Oracle's
HCM Cloud. It was not until June of 2018 that BBSI learned that
Oracle's HCM product simply did not include the functionality
that BBSI required. At this time Kbace also admitted that contrary
to the representations made by itself and Oracle, it had actually
been eleven years since it had implemented a similar product, and
that it did not currently have the capability to propose a solution
that would meet BBSI's needs.
In June 2018 Cognizant proposed a new plan for implementing the
functionality sought by BBSI. However, the price of this new plan
mushroomed from $5.4 million to over $33 million. In addition, the
completion of Phase I was pushed from July 2018 to April 2019 and
Phase II from January 2019 to May 2021. Despite the price jump the
new plan failed to provide a solution as to how to customize
Oracle's HCM Cloud to meet BBSI's needs. BBSI was forced to
hire an independent consultant to advise the company on the
situation. The independent consultant concluded that Oracle's
HCM Cloud was not a suitable solution as it (1) lacked required
functionality; (2) had a poor user interface; (3) had minimal
API's; and (4) needed significant customization.
In the lawsuit, BBSI asserts claims against Oracle and its
implementation partners for negligent misrepresentation, breach of
contract and rescission of both agreements. BBSI claims damages in
the form of the costs of hiring its own consultant as well as the
costs of re-deploying internal resources to address the problems
due to the defective performance, and related opportunity costs.
BBSI also seeks restitution for monies it paid to the Defendants
plus pre-judgement interest.
The case is Barrett Business Services, Inc. vs. Oracle America,
Inc., Cognizant Worldwide, Cognizant Technology and Kbace
Technologies, Inc., Case No. CGC-19-572574, San Francisco
Superior Court. Tactical Law will continue to monitor the case.
Check back for periodic updates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
