152 F.Supp.2d 95 (D.Mass. 2001), 95-10284, Tingley Systems, Inc. v. CSC Consulting, Inc.

Docket Nº95-10284-RCL.
Citation152 F.Supp.2d 95
Party NameTINGLEY SYSTEMS, INC. Plaintiff v. CSC CONSULTING, INC. f/k/a CSC PARTNERS, INC. Defendant.
Case DateJuly 18, 2001
CourtUnited States District Courts, 1st Circuit, United States District Courts. 1st Circuit. District of Massachusetts

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152 F.Supp.2d 95 (D.Mass. 2001)

TINGLEY SYSTEMS, INC. Plaintiff

v.

CSC CONSULTING, INC. f/k/a CSC PARTNERS, INC. Defendant.

No. 95-10284-RCL.

United States District Court, D. Massachusetts.

July 18, 2001

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G. Donovan Conwell, Jr., Guillermo A. Pernas, Jr., Brent J. Gibbs, Fowler, White, Gillen, Tampa, FL, Edward P. Leibensperger, Nutter, McClennen & Fish, Boston, MA, G. Wrede Kirkpatrick, Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, FL, for Plaintiff.

Michael A. Walsh, Griesinger & Walsh, LLP, Andrew C. Griesinger, Greisinger & Walsh, LLP, Boston, MA, for Defendant.

Marc K. Temin, Foley, Hoag & Eliot, Boston, MA, for Interested Party.

MEMORANDUM ORDER ON MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION TO DISMISS

LINDSAY, District Judge.

Before the court is the Motion by CSC Consulting, Inc. to Dismiss. (Docket No. 17). The motion was referred to Magistrate Judge Marianne B. Bowler for a report and recommendation. In her report and recommendation, Magistrate Judge Bowler has recommended that counts I, IV, VII and VIII of the plaintiff's eight-count complaint be dismissed in their entirety, and that counts V and VI in part.1 (Docket No. 47). The plaintiff objects to the magistrate judge's report and recommendation solely with respect to counts IV and VII. By contrast, the defendant objects to the magistrate judge's report and recommendation that counts II, V, and VI not be dismissed in their entirety.

After conducting a de novo review of the issues raised by the motion, I accept the magistrate judge's recommendation and order the following.

The motion by CSC Consulting, Inc. to dismiss (Docket No. 17) is ALLOWED as to counts I, IV, VII and VIII and DENIED as to count II. With respect to counts V and VI, the motion to dismiss is DENIED to the extent those counts are based on the allegation in the complaint of trade secrets misappropriation, and otherwise ALLOWED.

SO ORDERED.

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REPORT AND RECOMMENDATION RE: DEFENDANT'S MOTION TO DISMISS (DOCKET ENTRY # 17, 95-10284)

ORDER RE: TINGLEY SYSTEMS, INC.'S MOTION TO SUPPLEMENT BAY STATE'S DEPOSITION EXCERPTS (DOCKET ENTRY # 83, 93-11283); TINGLEY SYSTEMS, INC.'S MOTION FOR ENTRY OF DEFAULT JUDGMENT (DOCKET ENTRY # 23, 95-10284); TINGLEY SYSTEMS, INC.'S MOTION TO STRIKE MATERIAL DEPOSITION TESTIMONY ALTERATIONS MADE IN BAY STATE'S WITNESSES' ERRATA SHEETS (DOCKET ENTRY # 69, 93-12230); TINGLEY SYSTEMS, INC.'S MOTION FOR CONSOLIDATION OF RELATED ACTIONS (DOCKET ENTRY # 94, 93-12230); TINGLEY SYSTEMS, INC.'S MOTION FOR LEAVE TO FILE AMENDMENT TO COMPLAINT (DOCKET ENTRY # 74, 93-12230)

BOWLER, United States Magistrate Judge.

Pending before this court are the above styled motions filed in the already consolidated case (Civil Action Nos. 93-11283 and 93-12230) ("the TSI action") and in the later filed action brought by Tingley Systems, Inc. ("TSI") against CSC Consulting, Inc. ("CSC"), Civil Action No. 95-10284 ("the CSC action" or "95-10284"). After conducting an all day hearing on June 5, 1995, this court took the motions under advisement.

I. TINGLEY SYSTEMS, INC.'S MOTION FOR CONSOLIDATION OF RELATED ACTIONS (DOCKET ENTRY # 94, 93-12230)

On March 13, 1995, TSI filed a motion to consolidate the CSC action into the TSI action. (Docket Entry # 94, 93-12230). Prior thereto in February 1995, TSI filed a motion to consolidate (Docket Entry # 7, 95-10284) in the CSC case but thereafter withdrew the motion inasmuch as it contravened the provisions of LR. 40.1(H) (Docket Entry # 20, 95-10284). CSC opposes consolidation and submits two affidavits in support thereof by Andrew C. Griesinger ("Griesinger"). 1 (Docket EntryË 14, 15 & 28, 95-10284; Docket Entry # 88, 93-11283). Bay State Health Management, Inc. ("Bay State") and Blue Cross and Blue Shield of Massachusetts, Inc., ("Blue Cross"), defendants in Civil Action No. 93-12230 ("93-12230"), 2 also oppose consolidation. (Docket Entry # 81, 93-11283).

BACKGROUND 3

The first complaint brought in these related cases was filed on June 11, 1993, by Bay State against TSI in this district, the 93-11283 case. (Docket Entry # 1, 93-11283). On January 10, 1994, TSI filed an answer and a "counterclaim" which essentially seeks to preserve its claims by incorporating by reference all of the allegations

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in the 93-12230 case which, by that time, had been consolidated into the 93-11283 case. (Docket Entry # 44, 93-11283). TSI's counterclaim in the 93-11283 case, therefore, is unnecessary and Bay State properly ignored it.

On June 17, 1993, a few days after Bay State filed the 93-11283 case, TSI filed a complaint against Bay State in the United States District Court in the Middle District of Florida, Case No. 93-933. In October 1993 the Florida case was transferred to this district and assigned the 93-12230 civil action number. On August 15, 1994, TSI filed a motion to amend its complaint to add Blue Cross as a defendant in the 93-12230 case. On September 21, 1994, the district judge allowed the amendment. Accordingly, on September 21, 1994, the verified amended complaint was filed in 93-12230. (Docket Entry # 10, 93-12230). On November 15, 1994, Bay State and Blue Cross filed amended answers to the verified amended complaint. (Docket EntryË 15 & 16, 93-12230).

Prior thereto, on October 22, 1993, Bay State filed a motion to consolidate the 93-12230 case into the 93-11283 case. (Docket Entry # 36, 93-11283). By Endorsed Order of December 17, 1993, the district judge allowed the consolidation.

Thus, the two cases, 93-11283 and 93-12230, are consolidated as the TSI action, albeit with the aforementioned complaints (Docket Entry # 1, 93-11283; Docket Entry # 10, 93-12230) and answers (Docket Entry # 44, 93-11283; Docket EntryË 15 & 16, 93-12230).

In September 1994 the district judge set a discovery schedule. (Docket Entry # 68, 93-11283). The schedule, as reflected on the docket sheet, 4 extended discovery to November 30, 1994, established a number of other deadlines, including a deadline for dispositive motions, and set a final pretrial conference for May 16, 1995, with trial to commence on May 30, 1995. Dispositive motions have been filed. The May 30, 1995 trial date is no longer in effect and the parties do not have a substitute trial date.

On December 2, 1994, after conducting numerous depositions during the discovery extension period, TSI filed another motion to extend the discovery schedule. (Docket Entry # 22, 93-12230). In an Endorsed Order of December 16, 1994, the district judge denied TSI's motion for an extension. Undeterred, TSI filed a motion for reconsideration of the December 16, 1994 Endorsed Order (Docket Entry # 39, 93-12230) which the district judge denied on March 13, 1995. Also, on December 21, 1994, the district judge denied TSI's motion to take in excess of 15 depositions (Docket Entry # 33, 93-12230) without prejudice to be renewed once the court rules on TSI's motion to compel. (Docket Entry # 9, 93-12230).

After repeatedly being denied leave to conduct additional discovery in the TSI action, on February 9, 1995, TSI filed an action against CSC, which overlaps the subject matter of the TSI action, i.e., the CSC action. As yet, there is no discovery schedule in the CSC action. The parties refuse to comply with the provisions for automatic discovery in the Local Rules of the United States District Court for the District of Massachusetts absent an agreed upon protective order. At the June 5, 1995 hearing, the parties represented that they had resolved their differences over the terms of a protective order. This court then directed the parties to comply with the automatic discovery provisions within 14 days.

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Having reviewed the complaints in the TSI action and the complaint in the CSC action, it is apparent that both actions stem from the same set of factual circumstances revolving around Bay State's use of certain software licensed to it by TSI. The TSI action arises out of a March 1989 software licensing agreement between Bay State and TSI ("the licensing agreement") whereby TSI licensed certain of its software to Bay State ("the TSI software") subject to the terms and conditions of the licensing agreement. One such condition prohibited access to third parties for data conversion. (Docket Entry # 10, 93-12230).

In 1990 Bay State began developing two software packages known as point of sale ("POS") and decision support system ("DSS"). The complaint in the 93-11283 action alleges that Bay State developed these packages with CSC and that they performed functions not performed by and independent of the TSI software. In contrast, the 93-12230 action represents that Bay State used the source code to the TSI software to develop the POS and DSS software packages. TSI and Bay State dispute whether Bay State's development of the POS and DSS software was an authorized modification within the meaning of the licensing agreement.

The TSI action also concerns Bay State's development of an HMO computer system known as the Baystar project in contravention of the licensing agreement in or around 1993, after Bay State became a subsidiary of Blue Cross in September 1992. 5 According to the complaint in 93-12230, Blue Cross instructed Bay State to take the position that it owned the POS and DSS software. Using "consultants" to assist Bay State in its development of the POS and DSS software packages, Bay State purportedly disclosed the confidential features of the TSI software to such "consultants" and copied numerous features of the TSI software into the POS and DSS software packages.

TSI therefore seeks to impose liability on...

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