Hewlett Packard Enterprise Co. has lost out on a bid to knock out fraud claims brought by Russian telecom company MegaFon PJSC, which has accused the Silicon Valley tech company of overselling its ability to complete a nationwide upgrade of MegaFon’s cellular network.
U.S. Magistrate Judge Nathanael Cousins of the Northern District of California on Monday turned back HPE’s contention that MegaFon’s lawsuit fell outside the three-year statute of limitation for fraud and negligent misrepresentation claims and the four-year statute of limitations for unfair competition claims.
HPE’s lawyers at Covington & Burling had argued that MegaFon was aware of problems with the upgrade of the company’s user data repository, or UDR, to integrate its eight regional networks into a single national network as early as 2013. The dispute, the Covington lawyers pointed out, rose to the point that MegaFon made financial claims for contractual penalties against HPE in February 2014.
Yet on Monday, Cousins ruled the Russian company had adequately alleged that HPE officials had continuously misrepresented the tech company’s ability “to deliver the UDR system it had represented it could deliver.” HPE proposed a “do-over” of the project on June 20, 2017, according to the amended complaint, and MegaFon hired two consulting firms to look into the network problems whose reports weren’t completed until July and August 2017.
“By forming its claims around the ‘catastrophic failures’ of early 2017, MegaFon has adequately pled that it could not have known about those failures before they happened,” Cousins wrote.
The ruling comes after Cousins dismissed an earlier complaint in the case in March finding that MegaFon hadn’t sufficiently alleged “how and when the alleged fraud was discovered” or “why it could not have been discovered earlier despite reasonable diligence.” Cousins found Monday that the six additional pages of allegations in the amended complaint filed by MegaFon’s lawyers at Winston & Strawn—which included assurances from HPE officials that they had identified the problems and had a plan to fix them—had sufficiently addressed those issues.
“This is enough detail to explain how MegaFon’s discovery of the alleged fraud happened in the first place in order to ‘give defendants notice of the particular misconduct,’” Cousins wrote.
The judge also on Monday denied HPE’s request to revisit his earlier ruling finding that HPE Russia isn’t a necessary party to the lawsuit and to allow an interlocutory appeal on that issue.
Representatives from HPE and Covington’s Clara Shin didn’t immediately respond to messages Tuesday. The company has previously said that it doesn’t comment on ongoing litigation.
Winston & Strawn’s W. Gordon Dobie and David Bloch, who represent MegaFon in the suit, weren’t immediately available for comment.