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EPIC Systems Corp. v. Tata Consultancy Services Ltd.

United States District Court, W.D. Wisconsin

September 29, 2017



          WILLIAM M. CONLEY District Judge.

         From the outset of this lawsuit, Epic Systems Corporation, a leading provider of medical records software to the U.S. healthcare industry, has asserted a variety of federal and state law claims arising out of defendants repeatedly accessing Epic's web portal without authorization while servicing a mutual client. Epic claims that Tata Consultancy Services Limited and Tata America International Corporation (collectively “TCS”), a much larger, India-based company and its smaller U.S. arm, respectively, used the confidential, propriety information obtained through that portal to help develop their own, competitive software product and for other improper purposes.[1] After this court granted partial summary judgment on liability as to certain of Epic's claims and on elements of other claims, the remainder proceeded to a jury trial. (3/2/16 Op. & Order (dkt. #538).) Following a 10-day trial, the jury returned a liability verdict in favor of plaintiff on all remaining claims (dkt. #855), and awarded compensatory damages of $240, 000, 000 and punitive damages of $700, 000, 000. (Dkt. #871.) The court also entered injunctive relief, permitting ongoing monitoring of TCS to assure no further use of Epic's stolen information. (Dkt. #888; Am. Injunction (dkt. #959).)

         There remain several, post-trial motions still pending before the court, the most significant being: (1) defendants' motions for judgment as a matter of law under Federal Rule of Civil Procedure 50(a) as to the jury's liability and damages verdicts (dkt. ##830, 843, 913); (2) plaintiff's motion for attorneys' fees and costs (dkt. #916); and (3) defendants' motion for clarification of the court's injunction order (dkt. #962). For the reasons that follow, the court will deny defendants' Rule 50(a) motion as to liability, and will deny in part and grant in part defendants' motion as to damages, reducing the jury's compensatory damage award to $140 million and the punitive damages award to the statutory cap of $280 million, but otherwise leaving the jury verdict intact. The court will further deny plaintiff's motion for attorneys' fees and costs, finding that the adverse inference instruction to the jury when coupled with the jury's sizeable punitive damages award is a sufficient sanction for TCS's discovery abuses. Finally, with respect to defendants' motion for clarification, the court will grant that motion and respond to the defendants' specific questions below.


         I. Rule 50(a) Motions

         Under Federal Rule of Civil Procedure 50(a), a court may “enter judgment against a party who has been fully heard on an issue during a jury trial if ‘a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.'” Schandelmeier-Bartels v. Chi. Park Dist., 634 F.3d 372, 376 (7th Cir. 2011) (quoting Fed.R.Civ.P. 50(a)). In considering a Rule 50 motion, however, the court is to “construe the facts strictly in favor of the party that prevailed at trial, ” including drawing “[a]ll reasonable inferences in that party's favor and disregarding all evidence favorable to the moving party that the jury is not required to believe.” May v. Chrysler Group, LLC, 692 F.3d 734, 742 (7th Cir. 2012) (internal citations and quotation marks omitted). In particular, the court is not to make credibility determinations or weigh the evidence; it need only determine whether “more than ‘a mere scintilla of evidence' supports the verdict.” Id. (quoting Hossack v. Floor Covering Assoc. of Joliet, Inc., 492 F.3d 853, 859 (7th Cir. 2007)). Said another way, the court's “job is to decide whether a highly charitable assessment of the evidence supports the jury's verdict or if, instead, the jury was irrational to reach its conclusion.” May, 692 F.3d at 742. Set against this high bar, defendants' motion largely falls short.

         A. Liability[2]

         i. Misappropriation of Trade Secrets Claim

         Defendants contend that plaintiff failed to prove by a preponderance of the evidence “(1) that TCS ‘used' the Alleged Trade Secrets and (2) that the Alleged Trade Secrets” satisfy the definition in the Wisconsin Uniform Trade Secrets Act. (Defs.' Mot. (dkt. #843) 2.) Defendants' first contention is the least persuasive since plaintiff had no obligation to demonstrate use or disclosure if the trade secrets were acquired using “improper means.” (See Closing Instructions at 8-9; see also 3/2/16 Op. & Order (dkt. #538) 57-58.) On the question of “improper means, ” plaintiff put forth ample evidence for a reasonable jury to find that TCS acquired trade secrets through misrepresentation, as well as through multiple breaches of its duty to maintain the secrecy of confidential information provided for the sole purpose of servicing a mutual client. Moreover, even if plaintiff were required to show actual misuse to prove its claim, the court again finds more than sufficient evidence from which a reasonable jury could find improper use for reasons explained in the court's opinion and order on summary judgment and in multiple orders on TCS's motions in limine. (See 3/2/16 Op. & Order (dkt. #538) 40-42, 58-59; 3/23/16 Op. & Order (dkt. #703) 20.) Indeed, in light of the jury's entitlement to reach an adverse inference, as it was free to do after TCS's repeated, egregious failures to maintain and allow timely access to relevant discovery materials (3/23/216 Op. & Order (dkt. #709)), the court is hard-pressed to understand defendants' argument to the contrary. Finally, and again contrary to defendants' suggestions, TCS's evidence that some of the wrongfully obtained, confidential documents were used for a “legitimate purpose” does not preclude a reasonable jury from finding that the documents were also used for an impermissible purpose. (Defs.' Br. (dkt. #843) 4 (describing TCS's expert's testimony about legitimate use of documents in servicing a mutual client).)

         Defendants' second basis for seeking a directed verdict on plaintiff's claim for misappropriation of trade secrets is premised on its claimed failure to take reasonable steps to maintain those secrets. (Defs.' Br. (dkt. #843) 7-10.) While the court agrees with defendants that they have put forth sufficient evidence from which a reasonable jury could have found that Epic failed to undertake reasonable efforts to maintain the secrecy of 30-some documents at issue, the evidence was certainly not so legally insufficient as to remove the issue from the jury's consideration. On the contrary, a reasonable jury could well have credited testimony by Epic employees about its efforts to protect the confidentiality of information related to software, both as to specific steps and general commitment to maintaining secrecy. (Trial Tr. (dkt. #889) 101-16 (Stirling Martin's testimony about efforts to maintain confidentiality); see also Trial Tr. (dkt. #900) 86-88 (Carl Dvorak testifying Epic is at the “top” of the industry in terms of protecting its confidential information).)

         ii. Unfair Competition and Unjust Enrichment Claims

         TCS also moves for directed verdict on Epic's unfair competition and unjust enrichment claims on much the same basis, arguing that Epic failed to demonstrate “use of something belonging to Epic . . . to benefit TCS at Epic's expense.” (Defs.' Opening Br. (dkt. #832) 10.) The court rejects this motion for the same reasons as well: there is more than sufficient evidence to support the jury's finding that Epic met its burden to prove liability on these claims, especially when considered in light of an adverse inference.

         iii. Injury to Business

         Defendants next seek judgment as a matter of law on plaintiff's claim of injury to business in violation of Wis.Stat. § 134.01. As the jury instructions explained, this claim requires plaintiff to demonstrate that the two defendants “acted together to injure maliciously another person's reputation, trade, business, or profession.” (Closing Instructions at 11.) However, after defendants submitted its Rule 50(a) motion, plaintiff withdrew this claim, thus mooting this isse.

         iv. Deprivation of Property

         TCS further moves for judgment on Epic's claims for deprivation of property/ civil theft claim in violation of Wis.Stat. §§ 895.446 & 943.20, arguing that the property at issue in this case does not constitute “moveable property” under § 943.20. The court previously considered this argument, rejected it and sees no basis to revisit that ruling. (See 4/1/16 Op. & Order (dkt. #776) 7-9.)

         v. Fraudulent Misrepresentation

         TCS also seeks a directed verdict on plaintiff's fraudulent misrepresentation claim, asserting that Epic neither demonstrated that TCS intended to induce Epic's reliance, nor that Epic's reliance was reasonable. Again, as explained in the court's summary judgment order, Epic's claim is premised on TCS employees misrepresenting that they were “Ramesh Gajaram” and then using his credentials to access Epic's UserWeb without authorization. (3/2/16 Op. & Order (dkt. #538) 54-56.) Epic put forth ample evidence for a reasonable jury to find that TCS and its employees intended to induce Epic to rely on that misrepresentation and that Epic's reliance was reasonable. In its brief, TCS contends that Epic failed to put forth any evidence that it intended to “induce Epic to do something that would cause it economic harm.” (Defs.' Opening Br. (dkt. #843) 17.) However, that is not the test. The test is whether Epic relied on that misrepresentation and whether its reliance was reasonable. TCS offers no basis for challenging the jury's determination as to either prong of that test.

         vi. Breach of Contract and Breach of Duty of Good Faith and Fair Dealing

         TCS moves for a directed verdict on these claims on the basis that the evidence foreclosed a finding of improper use. The court rejects this argument for the same reason as explained above with respect to TCS's motion on Epic's misappropriation of trade secrets claim.

         vii. Trafficking of Passwords (CFAA Claim)

         Finally, TCS moves for judgment on its trafficking of passwords, arguing Epic failed to put forth evidence from which a reasonable jury could conclude that TCS “acted knowingly with intent to defraud.” (Defs.' Mot. (dkt. #83) 16 (quoting Closing Instructions at 7).) Because the court continues to find sufficient evidence to support a jury's verdict that TCS employees were specifically motivated to improperly use other's passwords for an improper purpose (i.e., that TCS accessed UserWeb documents for a purpose other than to enable TCS employees to do their jobs for their mutual customer Kaiser), the court rejects this basis for its motion as well.

         B. Damages

         In addition to filing a motion for judgment as a matter of law with respect to liability, defendants move as to the jury's damages award, lobbing several challenges to the award of both compensatory damages ...

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