Contract dispute pits Wynn Las Vegas against IBM

By Steve Green

Thursday, June 24, 2010 | 9:44 a.m.

Wynn Las Vegas LLC on Wednesday sued technology giant IBM Corp. over a $9.7 million contract dispute.

Attorneys for Wynn, owner of the Wynn Las Vegas and Encore casino hotels on the Las Vegas Strip, charged in the suit that IBM has tried to overcharge Wynn for use of MAXIMO software provided by IBM subsidiary MRO Software Inc.

The lawsuit, filed in federal court in Las Vegas, says the software was purchased to facilitate the logging and tracking of work orders, equipment maintenance needs, inventory of maintenance materials and for other maintenance purposes.

Wynn says that after it paid hundreds of thousands of dollars for the software and upgrades, and endured problems including crashes of the MAXIMO system, IBM conducted an audit in late 2009 and early 2010 of Wynn's use of the system.

While Wynn and Encore each had been set up for 500 "casual or Tier-1 users," IBM claimed none of the actual user configurations implemented by IBM for Wynn met IBM's definition of a Tier-1 user, the lawsuit says.

The lawsuit says IBM has asserted the hotels were required to purchase nearly 2,000 additional licenses at a cost of $2,310 to $4,600 apiece.

"According to IBM's apparently revised understanding of Wynn's license, every Wynn employee who had been using MAXIMO -- including every housekeeper who merely used the software to report and follow up on guest maintenance requests -- was required to have his or her own multi-thousand dollar software license," the lawsuit says.

The suit claims IBM engaged in "bait and switch deceptive acts and practices" by offering upgrade software without the intention to honor Wynn's right to use the software at user levels Wynn had previously purchased.

"IBM's demands are absurd, unjustified, and unconscionable; yet, IBM continues to press them. For several months now, IBM has consistently demanded that Wynn pay $9.7 million for past and anticipated future use of MAXIMO software. IBM's unwavering demands have created an urgent situation of legal and financial uncertainty for Wynn that calls out for judicial intervention," says the lawsuit, which alleges breach of the covenant of good faith and fair dealing and deceptive trade practices.

A request for comment on the allegations was placed with IBM.