Continuant CEO looks back at legal battle with Avaya and what’s next for his company

Staff writerApril 6, 2014 

Doug Graham, CEO of Continuant, thought he was doing the right thing for his company, his industry and his customers.

Continuant repairs and maintains communications systems, and at one time had a strong relationship with telecommunications giant Avaya. As that relationship soured, Graham realized he could either give up or move ahead.

Led by good lawyers and the Lord, Graham said, he decided to continue the fight.

That fight began some eight years ago, and the most recent phase ended last month with a jury verdict in a New Jersey federal court.

On that March morning the jury found Avaya guilty of anti-competitive behavior. The judgment: $20 million, which by statute would be trebled. An Avaya spokeswoman has said the verdict will be appealed, so the struggle is not complete.

Graham met last week with The News Tribune in his office at Continuant’s Fife headquarters.

Question: Continuant and Avaya once cooperated. There have since been claims and counter-claims, arguments and counter-charges. They sued you, you sued them. At one point, you were almost alone in your industry standing up to a billion-dollar company that wanted to control the way you did business. Why fight?

Answer: I don’t like getting pushed. It didn’t feel like it was appropriate. I believe I was a little Pollyanna-ish, and I know that I had underestimated their resolve. They gave us an ultimatum. At that point, I wasn’t being Pollyanna-ish. I’m a bare-knuckle wrestler and I realized they had brass knuckles. I did not take the decision lightly. When I realized that I was going lose 80 percent of my pipeline, and I knew if I made the wrong decision it could cost me the company. It almost did.

Q: At that point, how did you survive?

A: (Another company) expanded into the marketplace. They made a full-court press. They offered to contract with us (and) guaranteed several hundred thousand dollars of service work. We agreed to go out and sell (their) products.

Q: But the problems with Avaya didn’t go away.

A: From early on, we realized that Avaya was playing for keeps. We were one of the only companies that really stood up to them, and they were going to take us down. I think — it is just my opinion — that it was important for them to make an example of us.

In 2003, I had no idea of what happens when you deal with billion-dollar companies. At first, it slowed us down and it cost us money, but we were successful.

Q: Around that time you sued Avaya for anti-trust actions, but the suit was withdrawn.

A: We thought it would take a couple of years and a few hundred thousand dollars. When I realized we weren’t going to go broke, we withdrew the suit and we went on our own happy way. Then, in 2006, Avaya sued us with the kitchen sink. They’d gone from downsizing us to stopping us. When they sued, for us it was either capitulate and surrender or fight. This was our first rodeo. Every motion takes time and money. I did not know it was possible to take a two-year case and stretch it into an eight-year process.

Q: You spoke in a previous interview about one night of terrible dread in a New Jersey hotel room, and how your belief in God resurrected your resolve. Is that moment still a big part of your decision to continue?

A: I started walking back and forth and did some hard praying. It was hours, quoting every psalm I could think of. Somewhere in the middle of the night, the Lord showed up. You get a peace you cannot explain. Something happened that night and I knew I was on the right course. I just knew. And I slept like a baby that night and every night since.

Q: Have you totaled the cost to Continuant, especially for travel and attorneys’ fees?

A: I think we’re north of $40 million. The $60 million won't actually cover the money we lost over the years. And the growth -- where should we be and where are we? You never get that back.

Q: Will they be required to pay legal fees?

A: That’s pending.

Q: You were at home when you heard about the verdict from your attorneys.

A: We got the news over the phone. Guilty. Twenty million dollars, which was tripled. At that moment, I think it was almost surreal. I realized that this finish line has been crossed. ... I don’t think I’m going to feel the real emotion until this is finally over with. At this point, it’s a matter of endurance.

Q: What was the reaction at the office?

A: It was a joyous event. I announced it, and I got a standing ovation. It was great, a euphoric feeling.

Q: What comes next?

A: For the case, with appeals, I’ve heard anything from two to three years, to 10 years. For the industry, and for companies outside the industry, this is a good victory. I do think there will be long-term ramifications for small businesses and for consumers at large.

Q: And what’s the situation at Continuant now?

A: We have significantly been damaged. Avaya has cost us a lot of money. I know the $60 million will actually cover the money we lost over the years. But the growth — where should we be and where are we? You never get that back, but I think there are a number of businesses that may have wanted to go with us, and now they will give us a shot, allowing us to maintain their systems.

I’m going to focus on business. I think the team will focus on going out into the market and getting back to what we do best.

Q: Is there any lesson that you’ve learned since this began?

A: You have to have a good legal team, and Safeco has been tremendous. You have to be willing to stay the course once you figure out what the Lord has said.

C.R. Roberts: 253-597-8535
c.r.roberts@thenewstribune.com

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