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Tuesday, June 18, 2024 | Back issues
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Deloitte Fights Discovery in Software Case

SAN FRANCISCO (CN) - With a trial coming up, Deloitte Consulting is fighting against the use of potentially damaging evaluations tied to the installation of software for Levi Strauss.

The famous maker of American jeans says that Deloitte's work served as a road to ruin, and that Deloitte used Levi Strauss' U.S. operations as a training ground to furnish its own inexperienced employees with trial-and-error experience in how to implement SAP software. It is suing for $100 million for the extensive business damage allegedly resulting from the software.

Separately, Deloitte sued Levi Strauss in an attempt to collect about $8 million in fees under the same deal.

In another software deal, Deloitte is currently working for the California courts on a massive and widely criticized computer software project, called the Court Case Management System. That project has subjected the Administrative Office of the Courts to intense criticism and was a driving force in the Assembly's vote in favor of AB 1208 on Monday.

The legislation would greatly limit the power of the administrators to embark on similar projects in the future.

On yet another software project, Deloitte Consulting has been sued by Marin County over the installation of payroll software. Deloitte has successfully argued the claims are subject to arbitration but the case continues in federal court against SAP, the software maker in that case as well as the Levi Strauss case.

The two Levi Strauss actions have now been combined and the two sides are fighting over evidence. In a January hearing, the lawyer for Levi Strauss argued that its executives should get the chance to read Deloitte's internal performance reviews of its consultants in order to prepare for deposition.

"The reviews are among the best evidence that Deloitte lacked the requisite skills to implement the software," said Mark Ressler, a Levi Strauss attorney with Kasowitz, Benson, Torres & Friedman in New York.

"I have a right to show [Levi Strauss executives] the performance evaluations in which Deloitte rips its own employees for poor performance on prior projects," Ressler said.

Deloitte's attorney disagreed, "It's really a breach of contract case and why a contract is breached is not an element."

Why is there any argument that anybody at Levis should look at the performance reviews of anybody at Deloitte Consulting?" asked Robert Lewis of Bingham McCutchen in San Francisco.

The performance reviews are "important and secret documents for Deloitte," Lewis said in arguing for a higher level of confidentiality.

San Francisco Superior Court Judge Richard Kramer called the performance reviews "a necessary tool" for Levi Strauss executives, "I mean, if you think about it, that's the whole case, whether these people performed competently," Kramer said.

For Deloitte, Lewis said performance reviews would be shown to be irrelevant. Under contract law, he said, the issue is "not whether we were qualified, sleepy or drunk that day, but whether we did something wrong under the contract."

Ressler called Deloitte's argument "frivolous."

But the judge said Deloitte deserved the chance to support its argument by filing a motion, ruling that if Deloitte files a motion for a protective order the prevailing party will be due "reasonable attorneys fees as sanctioned unless the non-prevailing party's position has been shown to be substantially justified."

At an earlier hearing in December, Kramer ordered both sides to conduct all discovery through noticed motions filed with him.

Lewis said Deloitte may or may not bring a motion on the matter, but insisted that because the case was a contract case, not a fraud case, his argument that the reviews are irrelevant would prevail.

"And all we've done so far, we've spent a lot of money, both sides, wastefully on these issues, and that will become clear later on too. Listen to opposing counsel get up and rant and rail on this. That's fine. But the day will come," Lewis said.

Kramer set a hearing on the motion for protective order in early March and if Deloitte decides against making a motion to restrict Levi Strauss executives from viewing the performance evaluations, then Kramer will change the September protective order to allow it.

Levi Strauss also challenges the redaction from the performance reviews of financial projections for the Levi Strauss project.

"How much money senior Deloitte people intended to secure through the Levis project goes to numerous issues in the case, including motive, including why senior managers would assign completely incompetent people to the project, because there was no concern about quality. There was a concern only about hitting a go-live date that almost brought Levi Strauss to its knees," Ressler said.

Kramer said either party could file a motion on the redaction issue, which he would also rule on in early March.

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