As Avaya and C1 wade through arbitration, the companies continue to keep the lid shut on why Avaya sued its multi-time partner of the year.
A month and a half after the cloud communications giant took C1 to court for allegedly interfering with customer relationships, the companies are still deciding on the terms of their arbitration. Avaya originally sued with the goal of entering arbitration. It also asked for a temporary restraining order against C1; the United States District Court, Southern District of New York, granted both. Avaya and C1 have stayed quiet about the situation, fueling speculation from partners and analysts.
“It takes a lot to sue a partner,” CTPros Co-CEO Joe Rittenhouse told Channel Dive last month.
A letter dated Feb. 9 from C1 and Avaya representatives to the United States District Court, Southern District of New York, offered a status report. The American Arbitration Association has appointed an arbitrator for their case, but the parties haven’t decided on a procedural schedule. Most importantly, C1 and Avaya “have been unable to reach agreement on the scope of discovery,” the companies told the court.
Nevertheless, the two parties have agreed to seal evidence from the case, and C1 counsel specifically requested that the court seal their Jan. 19. hearing transcript.
Why did Avaya sue C1?
The dispute revolves around Avaya’s claim that C1 marketed products from other vendors to customers in a manner that violated their reseller agreement.
Multiple sources confirm that C1 sales and marketing motions aligned with contact center vendor Genesys drew the ire of Avaya. C1 removed a previously published a white paper detailing how to migrate from Avaya to Genesys.
But the notion that Avaya would sue a partner simply for non-monogamy has left other partners scratching their heads.
“If the board of directors got upset about a white paper to the point that they're actually going to take them to court, I don't even know where their standing would be on that,” said a partner who supported joint Avaya and C1 implementations.
A source involved in Avaya’s arbitration proceedings, who spoke under the condition of anonymity, said C1 had engaged in a sophisticated plan to mass-migrate its Avaya clients to other vendors. According to the source, Avaya learned of a document within C1 called The Great Migration. The scope of the plan was "easily in the 9-figures range."
C1 told Channel Dive that it denies the claims made by our source. “The matter is now in confidential arbitration, per our shared contract,” the spokesperson said. “We respect that process, where the claims will rightfully be resolved.”
A fork in the road
An industry-wide migration to cloud-based technologies frames the legal dispute.
Communications-focused resellers that historically focused on hardware vendors like Avaya, Mitel and NEC have adopted unified-communications-as-a-service and contact-center-as-a-service, as clients ditch their legacy telephony systems and on-premise revenue plummets.
Avaya’s up-market push in the contact center left C1 looking for alternatives. In 2024, under new CEO Patrick Dennis, Avaya instituted a 200-seat requirement for contact center customers, advancing a goal of directing Avaya’s focus to its top 1,500 clients. C1’s smaller customers would need to look elsewhere.
Maintaining support levels for Avaya products has also grown more daunting for partners. Avaya cut many of its contracts with outsourced service partners, who handled tier 3 support. Then, two large layoffs in 2024 reduced Avaya’s in-house support team.
“All of a sudden, Avaya is effectively abandoning their product,” said a partner, who claimed their outsourcing contract was cut by Avaya. “And customers who are probably not really in a position to really move off something that's an on-prem solution, and they're going to be like, 'What are we supposed to do if Avaya is not even going to be around to support C1?'”
C1 was still closely linked with Avaya, with the vendor sponsoring its sales kickoffs.
A former C1 sales leader, who asked not to be named, said it was impossible to obtain the list of Avaya accounts, even though they had been hired to drive cloud migrations from on-premise to the cloud. The source said they never heard of a document titled “The Great Migration.”
