Arbitrator Rules in Experian's Favor

The American Arbitration Association last week ruled in favor of Experian Information Systems, Orange, CA, in a dispute with Database America, Omaha, NE, a subsidiary of infoUSA. Meanwhile, infoUSA is looking at its options to have the settlement reconsidered.

The arbitration award, which is final and binding, calls for DBA to pay Experian $4.47 million in damages, which must be paid along with interest to Experian within 45 days of the decision. The companies have been involved in a yearlong dispute over a license agreement between DBA and Experian before infoUSA's acquisition of DBA.

While DBA said Experian had breached the agreement by, among other things, providing data to third parties, Experian said DBA had improperly terminated the agreement. Both sides sought damages resulting from their claims of breach.

According to Experian, arbitrator Michael A. Williams issued a written opinion rejecting DBA's claims that Experian had improperly used data and found that DBA had improperly terminated the agreement without cause. A spokesman at the American Arbitration Association in Denver declined to comment on the issue and would not release any part of its decision to the public.

Experian said Williams had rejected each claim of breach that DBA advanced to justify termination. “The alleged breaches were not the true reason for DBA's actions with respect to the contract.” Rather, they were “after the fact justification to support a business strategy designed to compel Experian to renegotiate an arrangement to license a different and more costly business database.” Williams concluded, “This contract was breached and, indeed, DBA never demonstrated any intention of performing after [its] acquisition by [infoUSA].”

Vin Gupta, chairman/CEO of infoUSA did not return several calls for comment. In a prepared statement, infoUSA said it has reviewed the decision and thinks the amount of damages is not supported by either law or the facts. The company is reviewing its options for a petition to the arbitrator for reconsideration on the issue of damages and a potential appeal on the grounds that the arbitrator didn't apply the appropriate limitations of California law, where Experian is based, regarding damages claims.

Experian said the award represents the cost of developing a new business marketing database in a short period of time, as compared to the amount of time it would have had to do that given proper notice of termination under the contract.

“We are pleased with the results of this arbitration. It not only vindicated our position in this matter but avoided lengthy and pointless litigation,” Experian chairman/CEO D. Van Skilling, said in a prepared statement.

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