Service Provider Avazpour Filed Lawsuit Vs. FalconStor

The national plaintiffs’ law firm Lieff Cabraser Heimann & Bernstein, LLP announced that Avazpour Networking Services, Inc. (ANS), a Kansas-based small business that provides information technology services, together with its founders Jim and Kristy Avazpour, filed a lawsuit late against Melville, New York-based FalconStor Software, Inc. – the self-described "market leader in disk-based data protection" – in the United States District Court for the Eastern District of New York.

The complaint alleges that ANS and the Avazpours suffered significant damages – including loss of revenues, customers, and employees, as well as harm to the company’s professional reputation – due to FalconStor’s misconduct in preparing for and performing an upgrade (at its recommendation) of ANS’s SAN in July 2010.

Based in Overland Park, Kansas, ANS is an IT service provider for small and medium-sized businesses that offers networking, cloud computing, managed hosting, data protection, DR and security services. ANS relied on FalconStor’s specialized knowledge and expertise in the areas of data security and storage virtualization to help protect the data ANS’s clients entrusted to the company in connection with its management of their networks.

The complaint alleges that FalconStor misrepresented the technological capabilities of the hardware it recommended for the upgrade, and recklessly handled the upgrade process – including by disregarding ANS’s express instruction about how to properly reboot its SAN. Plaintiffs further allege that as a result of FalconStor’s improper actions, ANS clients experienced severe interruptions of their ability to access important network applications, as well as corruption of their data, leading to numerous clients demanding credits to their accounts or altogether terminating their relationships with ANS. In the months and years that followed, ANS saw its business – which before the disastrous events of July 2010 was strong, and growing – virtually disappear.

Jim Avazpour, who has witnessed the company he and his wife Kristy founded collapse due to the July 2010 SAN failure, described commencing this case as "the first step in what we hope will be a path toward obtaining recovery for the devastating losses FalconStor caused, including rehabilitating our professional reputation."  

Avazpour added: "Through this litigation, we are attempting to vindicate the rights of our once-thriving small business – built through years of hard work and dedication to our customers – by holding FalconStor accountable for its misconduct, which has driven my company, as well as Kristy and me personally, to dire straits."

Lieff Cabraser partner Jonathan Selbin, counsel for plaintiffs, stated: "This case is about holding FalconStor responsible for the damage it did to a once-successful small business." 

As alleged in the complaint, Selbin continued: "FalconStor failed to inform ANS that the hardware FalconStor recommended and used for the upgrade did not support a critical feature of ANS’s storage-area-network capabilities. FalconStor then recklessly mishandled the upgrade process, including disregarding ANS’s express instruction – which was consistent with standard practice in the data security and storage virtualization industry – that FalconStor should refrain from rebooting ANS’s storage area network until ANS cleanly shut down its systems."

Plaintiffs assert claims for gross negligence, negligent misrepresentation, breach of contract, and breach of the implied covenant of good faith and fair dealing, for which they seek compensatory and punitive damages.

The case is Avazpour Networking Services, Inc., et al. v. FalconStor Software, Inc., No. 12-3574 (E.D.N.Y.).