SAP, Waste Management Settle Lawsuit

The rancorous lawsuit between SAP and Waste Management has been settled, with the software vendor making an undisclosed, one-time cash payment to the trash hauler, according to court documents and a regulatory filing.

Waste Management originally sued SAP for fraud in March 2008 over an allegedly failed implementation of its ERP (enterprise resource planning) software. The trash-disposal conglomerate had claimed it suffered significant damages, including more than US$100 million it spent on the project, which it has dubbed "a complete and utter failure," and more than $350 million for benefits it would have realized if the software had been successful.

SAP had fired back with charges that Waste Management didn't "timely and accurately define its business requirements" nor provide "sufficient, knowledgeable, decision-empowered users and managers" to work on the project.

Waste Management received "a one-time cash payment" in accordance with the settlement, according to a quarterly earnings filing it made with the US Securities & Exchange Commission last week. The terms of the settlement are confidential, said Jim Wetwiska, an attorney for Waste Management. A Waste Management spokeswoman referred IDG News Service to the SEC filing.

"The matter between Waste Management and SAP has been resolved, and the case has been dismissed," SAP spokesman Andy Kendzie said via e-mail. He declined to provide further details.

The settlement represents the final chapter in a colorful saga.

Waste Management wanted an ERP package that could meet its business requirements without large amounts of custom development, according to the trash company's second amended complaint, filed April 8 in the District Court of Harris County, Texas, 164th Judicial District.

SAP used a "fake" product demonstration to trick Waste Management officials into believing its software fit the bill, the complaint states.

In addition, SAP's technical team had "recommended that SAP deliver to Waste Management a later version of the software than the version SAP in fact delivered," according to the complaint.

If the newer version had been used instead, "the multi-million dollar sales price for the software could not be immediately recognized as revenue under the accounting rules for revenue recognition," and salespeople involved in the deal would not receive bonuses, the complaint adds. One employee stood to receive a bonus of more than $1 million, it adds.

SAP gave Waste Management software that it knew was "unstable and lacking key functionality," according to the complaint.

There had been little indication in recent months that a settlement was imminent, as lawyers for both sides continued to make a steady stream of pre-trial court filings.

SAP still faces a legal challenge from rival Oracle, which filed an intellectual-property suit against it in 2007. A settlement conference in that case is set for June 22.

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