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Punching back: WL resident's small business triumphs

WL resident's small business triumphs in court against telecom giant


West Linn resident Bruce Shelby knew his company was in for a fight, but he didn’t see a lawsuit coming.

It was June 2006, and Shelby’s telecommunication maintenance company, Continuant, was winning more and more new customers in a race for maintenance contracts at large businesses. Continuant’s success was becoming a thorn in the side of the Fortune 500 telecommunication company Avaya, which responded by employing what Shelby now refers to as “anti-competitive tactics” to slow Continuant down.

by: TIDINGS PHOTO: VERN UYETAKE - Bruce Shelby, co-owner of tech firm Continuant, has lived in West Linn for more than a decade.

But a major lawsuit was an entirely different story, and one that became a reality during that summer of 2006. In June, Avaya filed a lawsuit against Continuant on a number of claims, arguing that Continuant was illegally accessing Avaya maintenance software when it performed repairs.

“They claimed that accessing the maintenance software on the systems to perform maintenance was something that we were unauthorized to do,” Shelby said. “That it was illegal for us to do and something (Avaya) controlled.”

Continuant fought back by filing a countersuit in August 2006, setting in motion an exhausting legal process that lasted nearly eight years. In the end, a U.S. District Court jury in Camden, N.J. ruled March 27 that Avaya had violated federal antitrust laws, and ordered Avaya to pay Continuant $20 million in damages.

By U.S. statute, those damages were automatically “trebled” to $60 million, and Avaya will also be on the hook for a portion of Continuant’s legal fees — though that exact amount has yet to be determined.

Shelby said Continuant’s legal fees hovered around $40 million.

To finally be out of the legal woods came as a relief for Shelby, to put it lightly. He lived out of a Marriott Residence Inn in Cherry Hill, N.J. throughout the six-month trial, and Continuant barely survived the extended period of uncertainty.

“We were still able to bring some customers on, but it was very difficult,” Shelby said. “Most system owners, when they find out that the company that manufactured the system is suing a smaller provider like us, they want to stay out of it. They want to wait until the litigation is solved.

“We’ve been able to win enough business to survive, but our growth was very negatively impacted by the anti-competitive behavior and the lawsuit.”

In Shelby’s eyes, the case was extended in large part due to Avaya’s deliberate delay tactics.

“Once Avaya realized they weren’t going to be able to quickly put us out of business, they started to delay litigation every way possible,” Shelby said. “We’re at about 280 people now, and we were at 100 people in 2006 — (they thought) that a company that size couldn’t possibly endure scorched earth litigation for eight years.”

Continuant fought through the obstacles, and the company is now free to operate as it did before the legal battle began eight years ago. Shelby’s wife, Carol, views the victory in court as one for “the little guy.”

“It’s so great when the little guy wins,” Carol Shelby said. “A small business up against a multi-billion dollar company — there were a lot of times when we didn’t think we would stand a chance.”

“When you’re a company our size,” Bruce Shelby added, “and you’re dealing with a $5 billion dollar company that’s got 15,000 employees, you could be right and still lose just because you’re outgunned.”

Continuant, which Shelby co-founded in 1996 alongside CEO Doug Graham, is based in Fife, Wash., but Shelby has an office in Tualatin and both he and Carol said community support helped them push through the legal troubles.

“We’ve lived here for 11 years, and we have had so much support and encouragement from our friends in the community,” Carol Shelby said.

“The support of the community was tremendous,” Bruce Shelby said.


By Patrick Malee
Reporter
503-636-1281 ex
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