Sagy Law Associates LLP

Utopy Inc. v. etalk Corporation Inc., et. al.

Sagy Law Associates LLP recently brought a December 2005 lawsuit it filed on behalf of Utopy Inc. to a favorable mediated resolution. The lawsuit sought over $20 million in damages sustained as a result of defendants’ fraudulent “bait and switch” scheme. (Utopy, Inc. v. etalk Corporation, et. al., San Francisco Superior Court, Case No. CGC-05-447399).

The complaint alleged that in 2003, Utopy was a start-up poised to lead and dominate the nascent field of speech analytics, a software technology that translates and analyzes recorded consumer calls into actionable business insights. Utopy had an award-winning product, the potential for generating immediate revenue and a critical jump on the competition—its SpeechMiner® software had capabilities that would take its closest competitors tens of thousands of man-hours and over a year to develop, and it had already made successful presentations to some of the largest players in the call center industry, including Sprint and IBM.

Believing that it was building on this potential, the Complaint further alleged, Utopy entered into an October 2003 Reseller Agreement with defendant etalk Corporation, an established manufacturer of call center recording equipment, that contemplated the joint marketing and sale of an all-inclusive recording and speech analytics solution. Utopy’s First Amended Complaint alleged that etalk never intended to advance the parties’ joint agenda but sought instead to exploit Utopy’s superior technological expertise and brand recognition to “bait” the marquee clientele, then “switch” to a different, less expensive speech analytics product. Etalk’s ultimate goal, it appeared, was to position itself for a favorable acquisition. In the end, etalk achieved its goal—it was acquired in April 2005 by a British conglomerate, defendant Autonomy Corporation plc, which had its own speech analytics product. Etalk immediately embarked on installation of Autonomy’s speech analytics products in an effort to fulfill the contracts Utopy had worked to procure. As a result, Utopy had nothing to show for the two years it had in good faith devoted to the “joint” project, time it could have profitably spend pursuing other opportunities.

Defendants’ counsel, Morgan, Lewis & Bockius LLP, demurred to Utopy’s First Amended Complaint on the theory that the Reseller Agreement was not exclusive, and thus it imposed no enforceable obligations on etalk. Defendants also alleged that there were no sustainable allegations against Autonomy. Sagy Law Associates successfully opposed the demurrer, framing the principal allegations of the Complaint as fraud, and relying on its allegations of successor liability to maintain Autonomy’s ongoing presence and exposure in this lawsuit. Sagy Law Associates’s aggressive pursuit of discovery ultimately yielded convincing evidence of the “bait and switch” scheme, precisely as alleged in the Complaint.

Building on its reputation for achieving consensual resolution of complex claims as soon as discovery prudently permits, Sagy Law Associates succeeded in bringing all the parties to mediation in December 2006—less than a year after the Complaint was served—that resulted in an all-party settlement of Utopy’s claims.