Twitter stiffed the software provider with $8 million left on the contract, the lawsuit says
A lawsuit alleges that Twitter has failed to pay a $1,092,000 bill on a software deal that doesn’t expire until the end of 2024, and the Elon Musk-led company apparently intends to impose additional payments on the supplier of $7 million.
Imply Data, Inc. sued Twitter in California Superior Court in San Francisco County, alleging breach of contract. The lawsuit was filed Tuesday (see Complaint) and was reported by Bloomberg today.
“For more than four years, Imply licensed its proprietary software to Twitter, and Twitter paid Imply more than $10 million,” the lawsuit said. “Twitter has always been very satisfied with the Imply product and its associated maintenance and support services, so in mid-2021, the parties extended the term of their software license and service agreement for three additional years from October 1, 2021 to September 30, 2024.”
In May, weeks after Musk reached an agreement to buy Twitter, the company informed Imply Data that it would not renew the contract, but “acknowledged that the licensing agreement will ‘continue in full effect’ until end of its term on September 30, 2024,” the lawsuit said.
The payments stopped after Musk’s takeover
Twitter continued to make quarterly payments on the contract until Musk completed the purchase in late October. “However, shortly after Musk’s purchase of Twitter closed, Twitter refused to pay the outstanding quarterly bill, due on November 30, 2022, and Twitter denied any obligation to pay future bills by Imply. , despite the unambiguous language of the software license. and a service agreement that requires Twitter to do so,” the lawsuit says.
Imply builds a database based on the open source Apache Druid software as well as Druid cluster management and monitoring products.
The New York Times reported on November 22 that Twitter has cracked down on some vendors. Imply’s complaint cites media coverage of Twitter refusing to pay sellers and says, “This case involves an outright lawsuit.”
Imply uploaded the $1,092,000 invoice to Twitter’s vendor portal, and the invoice was approved by Twitter on Oct. 5, according to the lawsuit. “On November 28, 2022, when Imply accessed the vendor portal, Imply learned that Twitter had deleted the invoice and closed the license agreement,” the lawsuit said.
“We will no longer pay Imply”
Imply said Twitter “has also uploaded an internal messaging channel to the Provider Portal to support these actions.” The lawsuit said the chain of emails included a message from Martin O’Neill, head of global strategic sourcing at Twitter, who said: “A warning that we will no longer pay Imply. If we can flag them on our AP system doesn’t route any of their invoices for approval, that’s good, thanks!”
The Twitter executive who received the email, Kristena Bravo, “forwarded this email to other Twitter employees and wrote: ‘Can you please cancel all invoices from Imply currently pending with Oracle (if applicable ) and deactivate the provider using the email below as proof?'” the lawsuit said.
After reviewing those emails, Imply asked Twitter about the status of the payment due on November 30. “Twitter’s Accounts Payable Department has informed Imply that the invoice has been ‘cancelled’ and if Imply has any concerns, it should ‘ contact Imply. [Imply’s] Business partner of Twitter.’ Imply contacted Twitter to discuss canceling the invoice; however, Twitter has yet to respond substantially to this outreach,” the lawsuit says.
Imply seeks damages for breach of contract. “Imply expects Twitter’s breach to continue, with the amount in default increasing each quarter through the end of the term of the license agreement…Twitter’s breach has and will damage Imply by an amount provable at trial, but that’s probably more than $8 million,” Imply told the court.
Dispute over the possibility for Twitter to terminate the contract
The lawsuit also alleges a breach of the covenant of good faith and fair dealing, and expected rejection. The latter term describes when a party to a contract declares that it does not intend to meet its contractual obligations.
“Twitter has clearly, unequivocally and completely rejected and renounced the License Agreement stating that Twitter will not pay Imply and instructing its employees not to approve any invoices and to disable Imply from Supplier Portal. Twitter violated the license agreement,” the lawsuit said.
Twitter can argue that it has the right to terminate the contract earlier. Imply’s complaint said there was a dispute between the companies about “whether Twitter has the unilateral right to terminate the license agreement before its term ends.” Imply sought declaratory relief that Twitter was not entitled to.
We reached out to Twitter about the lawsuit, but the company reportedly disbanded its PR team after Musk took over.