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Federal judge scolds Avaya in awarding Fife-based Continuant an unprecedented $2.6 million interest in antitrust case

Add $2.6 million to the $60 million owed to Fife-based Continuant by Avaya.

A New Jersey federal judge on Thursday referred to telecommunications services company Continuant as “a peanut of a company” compared to telecommunications giant Avaya.

In March, after eight years of litigation, a jury awarded that peanut $20 million in a case against Avaya. Those damages were automatically tripled.

And on Thursday, Judge Joseph E. Irenas added an unprecedented additional penalty — known as “prejudgment interest” — to Continuant.

That brings the total owed to $62,613,052.10, with interest building and with an estimated $40 million in attorneys’ fees yet to be decided.

The jury in the original case found that Avaya, a manufacturer of telecom equipment, violated antitrust laws. At issue was Continuant’s ability to offer repair and other customer services to owners of Avaya systems.

Continuant CEO and co-founder Doug Graham said Friday he found the latest judgment a pleasing relief.

“Avaya wrapped us up in litigation for eight years,” he said. “It was rewarding to see that the judge saw what was really happening.”

Avaya spokeswoman Deb Kline responded Friday by email, “We continue to disagree with the jury’s verdict, as well as (the) ruling awarding prejudgment interest, and intend to pursue our rights on appeal.”

A transcript of Thursday’s ruling shows a strong judicial rebuke for Avaya’s behavior.

“I can talk to somebody at a cocktail party, and in three minutes I could tell them what the case was all about and get them to understand what the issue is,” Judge Irenas said.

And he asked, “Why did it take eight years?”

Noting the flood of paperwork that helped delay the case, he said, “I called you all into my chambers and I showed you where the cartons were, and I said, ‘Did you actually expect me to read 30, 40,000 pages of this?’ ”

“I took a case that should be tried in three years, and it takes eight years until it’s finished,” he scolded.

Anthony LaRocco, an attorney with K&L Gates, which represents Continuant, said the core reason for the delay was, “We were chasing ghosts for eight years.”

LaRocco’s team had filed a motion for the award of prejudgment interest.

Judge Irenas said the federal law governing such a penalty is allowed if “defendants engaged in bad faith conduct that caused a material delay in the litigation.”

Also, a judge could order the prejudgment interest if any party “engaged in conduct primarily for the purpose of delaying the litigation or increasing the cost thereof.”

Not since the relevant law was amended in 1980 has any antitrust suit resulted in a successful motion for prejudgment interest.

Avaya made “a baseless claim,” said the judge. Avaya “pursued illusory secondary claims at trial.” Avaya brought “meritless claims.” Twenty-nine of Avaya’s 32 witnesses were “grossly unprepared” for depositions. Avaya “dumped documents on (Continuant) and served pointless discovery requests.”

Graham, Continuant CEO, said in a previous interview that he believed Avaya was using such tactics to force him to surrender, so great was the expense for travel and legal fees.

The peanut did not crack.

Judge Irenas again: “There have been no reported cases in which a court has awarded prejudgment interest to a successful antitrust plaintiff. Few courts have even considered the issue.”

But here, he said, “it took far too long to move these claims forward to trial. … Avaya’s claim cast a shadow over (Continuant’s) business and extending the litigation, in my view, could only work to Avaya’s benefit.

“We’re not talking about a 12-page motion,” he said. “We’re talking about cartons and cartons and cartons of motions. … The driving-up of costs, I think, benefited only Avaya and I think delay benefited Avaya.”

The delaying tactics, he ruled, “arises to bad faith.”

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