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Function One Wins $11.4 Million Jury Verdict Against Accudata Systems

A Harris County jury awarded Function One $11.4 million in a civil case alleging Accudata spread false worker-classification accusations. The parties later settled for a confidential amount.
From TheFinanceBase Team3 min to read
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A Harris County jury awarded Houston IT consultancy Function One Consulting Group $11.4 million on March 13, 2014, in its civil business-disparagement case against Accudata Systems. The verdict included $1 million in punitive damages. The companies later reached a confidential settlement, so the jury award should not be treated as proof that Function One collected the full amount.

What the lawsuit was about

Function One Consulting Group L.L.C. sued Accudata Systems Inc. in Cause No. 2009-79590 in the 113th Civil District Court of Harris County, Texas. The dispute followed Function One’s hiring of several former Accudata employees. Function One’s lawyers characterized Accudata’s later actions as retaliation for those hires.

The central allegation was that Accudata circulated accusations that Function One had misclassified workers as independent contractors and violated tax laws. Reports said the accusations went to Function One’s then-largest customer, BG Group, and to the IRS, FBI and Texas Workforce Commission. The case was a civil lawsuit over alleged statements and resulting business harm—not a criminal prosecution or a tax-law enforcement judgment against Function One.

BG Group, a multinational oil-and-gas company based in the United Kingdom, was Function One’s largest customer at the time. According to trial coverage, after the allegations surfaced BG Group began renegotiating its arrangement with Function One and hiring some of its consultants directly. That customer relationship was central to the damages theory described in later case coverage.

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What the jury decided and awarded

After a trial lasting about two weeks, the jury returned an $11.4 million verdict for Function One. The award included $1 million in punitive damages; the reported sources do not provide a reliable item-by-item breakdown of the other $10.4 million. AZA, Function One’s trial counsel, later described the jury’s finding of actual malice as unanimous.

Jurors saw emails concerning the accusations and a Texas Workforce Commission letter stating there was no problem with Function One’s worker classification. Published accounts say the other agencies did not take action on the accusations. That reporting does not establish that every agency formally decided the allegations on their merits.

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Why the verdict is not the same as money collected

A jury verdict states the award a jury returned; it does not, by itself, establish the amount a party ultimately received. AZA’s case summary says Accudata paid a confidential settlement amount approximately two weeks after the verdict. The amount was not publicly disclosed in the cited accounts, so it is not accurate to say Function One ultimately received the full $11.4 million.

Accudata’s counterclaims and the lawyers

Accudata asserted a mental-anguish counterclaim tied to Function One’s use of a private investigator and its owner’s parking of a Lamborghini outside Accudata’s offices. Judge Michael Landrum dismissed that counterclaim by directed verdict. AZA’s case summary says Accudata brought four counterclaims and that two were dismissed on directed verdict; published accounts do not identify all four claims.

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Function One was represented at trial by Steven Mitby and Adam Milasincic of Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing (AZA). The Texas Lawbook identified Robert Ivey of Ogletree Deakins as Accudata’s lawyer.

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What the case does—and does not—establish

  • It was a civil verdict. Accudata was not found guilty; criminal guilt was not at issue.
  • The jury awarded $11.4 million. The later settlement was confidential, so the final amount paid is not established in the cited public accounts.
  • The agencies’ roles should not be overstated. Reporting identifies a Texas Workforce Commission letter and says the IRS and FBI took no action; it does not show that all three agencies issued formal findings clearing Function One.
  • The verdict concerned the alleged accusations and business harm. It was not a ruling that comprehensively resolved Function One’s worker-classification obligations under tax law.

AZA described the award as the largest Texas business-disparagement verdict “for at least the last 10 years.” The firm also said VerdictSearch ranked it as Texas’s top intentional-torts verdict in 2014 and 28th-largest verdict overall in the state that year. These are attributed rankings with defined time frames, not proof that it remains the state’s largest verdict.

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