Salesforce, the pillow maker and the $125,000 AmEx bill
Salesforce.com, a pillow manufacturer and an employee of the pillow maker are caught up in a complex three-way legal battle, with a $125,000 American Express bill and an allegedly failed software implementation at the center of the dispute.
In March 2012, My Pillow signed a three-year deal for Salesforce.com’s software predicated on a Salesforce.com salesman’s pledge that in the “worst case,” it would be ready for use by June 1 of that year, according to a suit filed earlier this month by My Pillow’s vice president of show management, James Furlong, in U.S. District Court for the District of Minnesota.
The promised go-live date was important to My Pillow because it wished to begin running shorter ads than the half-hour infomercials it had used to market its products, and needed technology “that could be used to track the short-form media and determine the profitability of each advertisement,” according to a separate filing by My Pillow.
However, the system hadn’t gone live by June 1, and the Salesforce.com partner that was to implement the system told My Pillow the integration work would be far greater than the $63,000 estimate, My Pillow’s filing states.
During a meeting in July, a Salesforce.com salesman, Greg Kokoefer, told My Pillow the system could be operational by Aug. 1, but only if the company could immediately make a payment of $125,000.
My Pillow offered to pay the amount with a company check but Kokoefer said he “could not carry a check in that amount” and asked that payment be made immediately with a credit card, according to filings.
Furlong is a long-time American Express cardholder and had a credit limit higher than $125,000, so he agreed to put the payment on his card in July, according to his suit.
On Aug. 1, Salesforce.com “attempted to take its systems live for My Pillow” but more than 100 components “were not functional,” his suit adds. Furlong subsequently disputed the $125,000 charge with American Express, and Salesforce.com credited back the amount, the filing states.
Salesforce.com then sent My Pillow an invoice asking for payment. With the system still not having gone live, My Pillow told Salesforce.com on Sept. 17 that it was not willing to pay because the contract had been obtained “through fraudulent misrepresentations by Kokoefer and it still had no working system.”
My Pillow purchased “substantial” amounts of short-form advertising time but due to Salesforce.com’s failure to deliver a system as planned, the ads “were not successful,” according to its filing.
My Pillow also had to “layoff employees, hire other vendors and implement other systems to cover the failure of the Salesforce system,” an attorney for My Pillow wrote in the Sept. 17 letter, which was filed in court.
Furlong’s card was subsequently re-charged for the $125,000 but this time American Express refused to credit his account, saying that Salesforce.com had provided “authorization for the charge and a signed contract and order form stating that no cancellations or refunds would be allowed,” according to his suit.
Despite further efforts by Furlong, American Express refused to remove the charge, the suit states.
Furlong is asking the court to confirm that he is not liable for the money, as well as for Salesforce.com to credit the $125,000 back to his card.
For its part, Salesforce.com has filed a motion to dismiss his case, saying Furlong isn’t making an effective legal argument.
While not disputing that Furlong isn’t a party to the contract between Salesforce.com and My Pillow, “a finding by the Court that plaintiff personally did not owe money to Salesforce is meaningless,” Salesforce.com said in a filing. Under Minnesota “voluntary payment doctrine,” people who make payments voluntarily, as Furlong did, “cannot seek return of that payment on the grounds [they were] not obligated to make it in the first place,” the filing states.
Salesforce.com has also sued My Pillow for breach of contract and is seeking more than $550,000 in damages, according to a case filed this week in U.S. District Court for the Northern District of California. The initial filing doesn’t specifically respond to My Pillow’s allegations about delays and flaws in its Salesforce implementation.
My Pillow denies it owes any money to Salesforce.com, American Express or Furlong, and is seeking unspecified damages from Salesforce.com.
What wasn’t clear from the court filings is why My Pillow apparently had no other options but to use Furlong’s personal credit card.
In a June 2012 article in the Minneapolis/St. Paul Business Journal about My Pillow, company founder and CEO Mike Lindell said sales were on track to hit $150 million that year, up from just $3 million two years prior, thanks to the wild success of its infomercial.
Lindell and Furlong couldn’t be reached for comment.