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Epic Systems Corp. v. Tata Consultancy Services Ltd.

United States District Court, W.D. Wisconsin

March 22, 2019



          WILLIAM M. CONLEY District Judge

         After summary judgment, a 10-day trial, an order entering an injunction, and an extensive opinion addressing remaining post-trial motions, the court entered judgment in favor of plaintiff Epic Systems Corporation in the amount of $420 million. In response, defendants Tata Consultancy Services Limited and Tata America International Corporation (collectively “TCS”), filed a sweeping motion pursuant to Federal Rules of Civil Procedure 50(b) and 59, largely repeating the same arguments previously raised in its Rule 50(a) motion and previously rejected by the court. (Dkt. #996.) In more cursory fashion, defendants also move for reconsideration of the court's order granting plaintiff's motion to dismiss defendants' counterclaims. For the reasons that follow, the court will deny both motions.


         I. Challenges to Liability Findings

         Under Rule 50, judgment may be granted as a matter of law where there is no “legally sufficient evidentiary basis” to uphold the jury's verdict on that issue. Fed.R.Civ.P. 50(a). More specifically, the court is to “examine the evidence presented, combined with any reasonably drawn inferences, and determine whether that evidence sufficiently supports the verdict when viewed in the light most favorable to the non-moving party.” E.E.O.C. v. AutoZone, Inc., 707 F.3d 824, 835 (7th Cir. 2013). In doing so, the court is not to make credibility determinations or weigh the evidence. Rather, the court must assure that more than “a mere scintilla of evidence” supports the verdict, Hossack v. Floor Covering Assocs. of Joliet, Inc., 492 F.3d 853, 859 (7th Cir. 2007), reversing “only if no rational jury could have found for the prevailing party, ” AutoZone, Inc., 707 F.3d at 835. Moreover, “[b]ecause the Rule 50(b) motion is only a renewal of the preverdict motion, it can be granted only on grounds advanced in the preverdict motion.” Wallace v. McGlothan, 606 F.3d 410, 418 (7th Cir. 2010); see also Thompson v. Mem'l Hosp. of Carbondale, 625 F.3d 394, 407 (7th Cir. 2010) (refusing to consider the defendant's argument that plaintiff failed to demonstrate that he suffered an adverse employment action, in part, because the defendant did not raise argument in Rule 50(a) motion); Fed.R.Civ.P. 50 cmt. 1991 Amendments (“A post-trial motion for judgment can be granted only on grounds advanced in the pre-verdict motion.”).

         Defendants also move for a new trial under Rule 59, which “may be granted only if the jury's verdict is against the manifest weight of the evidence.” King v. Harrington, 447 F.3d 531, 534 (7th Cir. 2006) (citing ABM Marking, Inc. v. Zanasi Fratelli, S.R.L., 353 F.3d 541, 545 (7th Cir. 2003)). To meet this standard, defendants must demonstrate that no rational jury could have rendered a verdict against them. See King, 447 F.3d at 534 (citing Woodward v. Corr. Med. Servs. of Ill., Inc., 368 F.3d 917, 926 (7th Cir. 2004)). Here, again, the court must view the evidence in a light most favorable to plaintiff, leaving issues of credibility and weight of evidence to the jury. King, 447 F.3d at 534. “The court must sustain the verdict where a ‘reasonable basis' exists in the record to support the outcome.” Id. (quoting Kapelanski v. Johnson, 390 F.3d 525, 530 (7th Cir. 2004)).

         As further context, during the course of this bifurcated trial, defendants moved for judgment as a matter of law under Rule 50(a). The court implicitly denied these motions by allowing both the liability and the damages phases to go to the jury. After the verdict, the parties extensively briefed defendants' arguments, with full knowledge of the jury's verdicts, and the court ruled on that motion before entering judgment. As such, it is odd for defendants to file another motion, largely repeating verbatim their prior arguments, without, for the most part, acknowledging the court's prior rulings. Rather than repeat its prior explanation for rejecting defendants' arguments, the court, for the most part, will simply refer to its Rule 50(a) opinion and order.

         A. Proof of “Actual Damages”

         Defendants argue that the court should enter judgment in their favor on any claims that require a showing that Epic suffered “actual damages” in the form of “losses or other comparable harm.” (Defs.' Opening Br. (dkt. #997) 18.) Defendants contend that plaintiff's sole ground for compensatory damages was a disgorgement of benefit theory in connection with its unjust enrichment claim. As such, defendants argue, plaintiff failed to present evidence of actual damages to support its breach of contract, fraudulent misrepresentation, unfair competition, Computer Fraud and Abuse Act (“CFAA”) and deprivation of property / civil theft claims.

         As an initial matter, defendants continue to blur the distinction between a finding of injury, required for some but not all of the claims, and a finding and measurement of damages. See United States v. Sapoznik, 161 F.3d 1117, 1119 (7th Cir. 1998) (“But the question of causation is different, in criminal as in civil law, from the question of quantification. (In tort law the difference is between the fact of injury and the amount of damages.)”). For example, to prove a breach of contract claim under Wisconsin law, the plaintiff need not prove any injury, as this court previously explained. (See 3/2/16 Op. & Order (dkt. #538) 46 n.36.) The fact that the jury found defendants liable as to all of these claims does not mean the jury was obligated to award damages on all claims. Indeed, the actual damages award more likely reflects the finding of liability on the unjust enrichment claim, and, specifically, plaintiff's disgorgement of benefit theory. Regardless, as plaintiff points out in its response, none of these claims required proof of the type of damages defendants contend is necessary for a finding of liability.

         As for proof of damages specifically, while defendants are correct that a plaintiff may recover out-of-pocket losses for its fraudulent misrepresentation and unfair competition claims, that is the not the sole available basis of recovery. Instead, a plaintiff may seek damages in the form of the value of the benefit received through the commission of the tort, which is essentially the same as the unjust enrichment disgorgement of benefits theory. See Pro-Pac Inc. v. WOW Logistics Co., 721 F.3d 781, 786 (7th Cir. 2013) (damages for the “value of the benefit” unjustly received are available for tort claims regardless of whether the plaintiff formally alleged an unjust enrichment claim). Similarly, plaintiff's deprivation of property / civil theft claim under Wis.Stat. § 895.446 requires that a person suffer “damage or loss, ” but the statute provides that “actual damages” can include the retail value of stolen property, which is analogous with a damages claim premised on the value of the trade secrets and confidential information taken by defendants.

         Defendants' challenge to an award on plaintiff's CFAA claim fails for an additional reason. While the CFAA requires that a civil plaintiff suffer “damage or loss, ” 18 U.S.C.A. § 1030(g), the term “loss” includes:

any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service.

Id. at § 1030(e)(1). Here, defendants stipulated to plaintiff's evidence of a $9, 277 loss. (Pl.'s Opp'n (dkt. #1007) 26 (citing Trial Tr. (dkt. #896) 89 (counsel for defendants stating that they are going to “drop the whole matter of . . . the loss” under CFAA claim and the court responding that it will delete the instruction)).) Having stipulated to this loss, defendants cannot now challenge plaintiff's failure to prove “actual damages.”

         B. Failure to Instruct on “Actual Damages” Element

         Closely related to the first challenge, defendants further argue that the court should grant judgment in their favor on the above-mentioned claims because the jury was never asked to find, and never found, that Epic suffered “actual damages.” Because the court has rejected defendants' argument that such a finding was required as to each of these claims, however, the court similarly rejects any argument based on the court's failure to instruct the jury or the lack of a jury finding. Critically, with respect to the damages award, the jury was instructed properly that they could award damages for “the value of the benefits obtained by TCS because of TCS's wrongful conduct.” (Damages Instr. (dkt. #872) 3.)

         C. Misappropriation of Trade Secrets Claim

         Next, defendants again challenge the jury's finding of liability as to the misappropriation of trade secrets claim, Wis.Stat. § 134.90, on the basis that plaintiff failed to demonstrate that it protected the secrecy of these alleged trade secrets. The court previously considered and rejected this argument, and defendants offer no meritorious basis for revisiting it. (See 9/29/17 Op. & Order (dkt. #976) 4-5.)

         D. Unfair Competition and Unjust Enrichment Claims

         Defendants offer three bases for judgment in their favor as to these claims. First, Defendants contend that plaintiff's unjust enrichment claim fails as a matter of law because the contract between TCS and Epic bars such a claim. Plaintiff contends that this challenge has been waived, having failed to raise it in their original Rule 50(a) motion. However, where the challenge is purely a legal challenge -- not a sufficiency of the evidence or a jury instruction challenge -- the court agrees with defendants that it need not be raised in a Rule 50(a) motion. See Havco Wood Prod., LLC v. Indus. Hardwood Prod., Inc., No. 10-CV-566-WMC, 2013 WL 1497429, at *3 (W.D. Wis. Apr. 11, 2013) (explaining that where a matter of law is raised as a basis for relief, there is no prejudice to the nonmovant) (citing Warlick v. Cross, 969 F.2d 303, 308 (7th Cir. 1992)).

         Even so, this first challenge fails on its merits. The parties' contract did not govern TCS's impermissible access through the Epic UserWeb portal. Indeed, the record demonstrates that TCS was denied direct access to the UserWeb despite its repeated requests. (Trial Ex. 296 at 3 (TCS presentation explaining that because “TCS is not an Epic partner . . . they are not allowed to access Epic Systems Userweb Portal”); Trial Ex. 303 at 6 (TCS acknowledging that because it “could not reach an agreement with EPIC, ” TCS associates are not “allowed to connect to the EPIC User Web”).) Because of this, not only did the contract not cover TCS's impermissible use, but there was no reason for Epic to negotiate away a contractual remedy for unjust enrichments arising out of a fundamental breach of that contract. Regardless, even if recovery were only available as a breach of contract damage, the jury found just such a breach and was entitled to find the benefit conferred on defendants as a result of that breach was the best measure of damages. (See Damages Instr. (dkt. #872) 3 (instructing the jury that they may award Epic “the value of ...

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