Suit says ECi is forcing unwanted services on clients and attempting to prevent competition
COLUMBUS, Ohio. Nov. 9, 2018 – Macola Channel Partners and resellers recently filed a multi-count lawsuit against software developer ECi Macola/MAX, LLC, (“ECi”) alleging antitrust violations, tortious interference, breach of contract, and other claims.
On October 1st, 2018, resellers of Macola Software received a notification from ECi Software Solutions, Inc., the parent corporation of ECi Macola/MAX, that in the coming months it would be discontinuing its partner channel that had been running for more than 25 years. The notification also stated that customers would no longer be allowed to work with their reseller partners on ECi products in the future.
Macola resellers have for many years provided sales, support, and consulting services for users of Macola, an enterprise resource planning software system used primarily by small- to mid-sized businesses in manufacturing. According to the lawsuit, ECi has decided to cut out its former reseller partners and prevent them from offering support and consulting services to businesses using Macola. By preventing competition, the lawsuit says, ECi will create a monopoly for itself in the markets for support and consulting of Macola. The complaint contends that ECi is already exercising monopoly power over Macola users, forcing them to purchase services they do not want in exchange for continuing to receive routine Macola software updates.
According to the lawsuit, ECi is attempting to prevent competition by fraudulently telling Macola users that they will breach their software license agreement with ECi if they continue to do business with their reseller. At the same time, the complaint alleges, ECi is pressuring Macola users to sign new software license agreements that contain restrictive language that would prohibit Macola users from hiring anyone other than ECi to perform support or consulting on Macola software. In addition, the lawsuit claims that ECi has committed or threatened multiple breaches of its contract with the resellers, including cutting off earned commissions and other benefits under the contract.
On November 7th, 2018, a seasoned group of Macola resellers with hundreds of combined years of service, represented by the law firm Organ Cole LLP, filed suit against ECi in the U.S. District Court for the Southern District of Ohio, alleging that ECi’s conduct constitutes breach of contract, tortious interference, unfair competition, and violates state and federal antitrust law.
“It’s a daunting task for a handful of small businesses to take on ECi’s millions, but we made a promise to help our customers grow their businesses and we’ve become an integral partner with those companies,” said Michael Oswalt, CEO of Algorithm, Inc., one of the plaintiffs in the lawsuit.
“We believe every customer is valuable,” agreed Jeff DeSchon, Vice President of iPro, another of the plaintiffs. “We will continue to serve them, and we will protect our employees and their families. That is why we’ve taken this action.”
Chuck Wise, President of another plaintiff in the lawsuit, Copious Solutions, added, “We believe that our customers should carefully review any new contract documents put in front of them by ECi, including click-through documents and sales order footnotes, and seek legal counsel where appropriate.”
Currently pending before the court is the Macola resellers’ request for a temporary restraining order. If that request is granted, the order would prevent ECi both from telling Macola customers that they are prohibited from doing future business with the resellers and from requiring customers to purchase unwanted services as a condition of receiving software updates.
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