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Judge Finds IBM Committed Fraud, Awards BMC $1.6B

A Houston federal judge Monday found that IBM committed fraud against Houston-based BMC Software in a dispute involving IBM’s removal of BMC’s mainframe products from their largest mutual client, AT&T, during an outsourcing project several years ago.

U.S. District Judge Gray Miller ruled that during contract negotiations with KKR-owned BMC IBM made a “material misrepresentation” that it would not displace BMC’s products from AT&T’s mainframe systems but did so anyway.

As a result, BMC is entitled to $1.6 billion in damages for fraudulent inducement claims, Judge Miller ruled, because IBM’s “business practices — including the routine eschewal of rules — merit a proportional punitive damages award.

“After five years of hard-fought litigation, we were grateful for the opportunity to have our day in court in this important case,” said Bracewell’s Sean Gorman in a statement to The Texas Lawbook.

In addition to Gorman, the Bracewell team representing BMC at trial included Chris Dodson, Tim Geiger and Andrew Zeve.

Click here to read more from The Texas Lawbook (subscription required).