JDA Software To Challenge Dillard's Verdict (JDAS)

Oppenheimer is reporting today that JDA Software Group

sent a letter to shareholders, indicating the company plans to challenge the $246M verdict against the company tied to the unfavorable court ruling between i2 and Dillard's. Traders should recall that the Texas jury awarded Dillard's $246M in punitive damages related to $8M of software and services provided by i2. In the letter, JDAS CEO Hamish Brewer states that JDA finds "the jury decision inexplicable," noting: “Both of the i2 products—Replenishment Planner and Demand Planner—were implemented and were formally accepted by Dillard's; Dillard's used both products in production for many years, and one of the products is used in Dillard's business through a vendor today; Although it was found that i2 had reached the express warranty relating to the software contract, the jury also found that i2 had complied with the terms of both contracts between the two companies; and Our due diligence into this case, prior to entering an agreement to buy i2, was supported by independent advice from external litigators. Their conclusion regarding the Dillard's litigation was that there was potential financial exposure to i2, but that it was immaterial and that the chances of i2's actions being interpreted as fraudulent were not material.” Oppenheimer analysts said, “As a result of these findings, JDA plans to challenge the ruling to either reverse it or reduce the verdict amount, though the appeals process may take several years. The company also indicated that it has settled the two other outstanding litigation issues with two i2 customers whose settlements were "immaterial amounts," and that there are no other outstanding " i2 customer-related litigation" aside from the company's planned challenge of the Dillard's ruling. We believe it could take a few years for this case to wind its way through the appeals process.”