Syntel Sterling Best Shores Mauritius Ltd. v. TriZetto Grp.
| Decision Date | 20 April 2021 |
| Docket Number | 15 Civ. 211 (LGS) |
| Parties | SYNTEL STERLING BEST SHORES MAURITIUS LIMITED, et al., Plaintiffs and Counterclaim-Defendants, v. THE TRIZETTO GROUP, INC., et al., Defendants and Counterclaim-Plaintiffs. |
| Court | U.S. District Court — Southern District of New York |
This decision follows a six-day jury trial held in October 2020. The jury found in favor of The TriZetto Group, Inc. and Cognizant Technology Solutions Corporation (collectively, "TriZetto") on all claims and counterclaims that were tried. These included TriZetto's claims for trade secret misappropriation under the Defend Trade Secrets Act ("DTSA") and New York law, and a copyright infringement claim against Syntel Sterling Best Shores Mauritius Limited and Syntel Inc. (collectively, "Syntel"). The jury also considered claims that Syntel brought against TriZetto. The jury awarded TriZetto $284,855,192 in compensatory damages and $569,710,384 in punitive damages.
This Opinion addresses several motions. Before the case was submitted to the jury, both Syntel and TriZetto moved for judgment as a matter of law on all claims and counterclaims under Federal Rule of Civil Procedure ("Rule") 50(a). The Court reserved ruling on the motions. After the jury's verdict, Syntel renewed its motion for judgment as a matter of law under Rule 50(b), or in the alternative, a new trial or remittitur under Rule 59. TriZetto moved for a permanent injunction and pre- and post-judgment interest on the jury award.
For the reasons that follow, Syntel's motions are denied except its request for a new trial or remittitur on punitive damages. TriZetto's motion for permanent injunction and post-judgment interest is granted, and the motion for pre-judgment interest is denied. TriZetto's Rule 50(a) motion is denied as moot.
TriZetto develops software used by large health insurance companies. One software product is Facets, a healthcare administrative platform, which manages and automates processes for such companies, including the processing of claims. Installing, upgrading and customizing the software can take a significant amount of time and personnel. TriZetto created software tools to facilitate and improve Facets installation, customization and upgrade processes. As a part of its business, TriZetto also provides Facets customization and implementation consulting services to clients.
Syntel provides information technology services. In 2010, Syntel and TriZetto entered into a Master Services Agreement ("MSA"), under which Syntel agreed to provide software development, consulting services and other support to TriZetto's Facets customers, including Facets platform customization and management. In 2012, the parties amended the MSA and, among other things, deleted a provision that barred Syntel from competing with TriZetto. In 2014, TriZetto was acquired by Cognizant, a competitor of Syntel, and Syntel and TriZetto terminated the MSA and their relationship.
Syntel commenced this action on January 12, 2015, asserting breach of contract and other claims. TriZetto asserted counterclaims. Discovery was protracted. On January 31, 2017, the Court ordered a neutral forensic examination of Syntel's digital electronic devices and files. On August 25, 2017, the Court entered a preclusion order to sanction Syntel for continued discoverymisconduct (the "Preclusion Order"). The Preclusion Order barred Syntel from (1) "offering or presenting any evidence that it did not misappropriate and unlawfully copy TriZetto's Facets test cases and automation scripts" and (2) "offering or presenting any evidence that it independently developed any of the Platform Management Tools at issue in this case."
Syntel moves for judgment as a matter of law under Rule 50(b) on TriZetto's copyright infringement claim and trade secret claims under both the DTSA and New York law, and challenges the jury's damages award. Syntel alternatively moves for a new trial under Rule 59. As to damages, Syntel also asks the Court for remittitur or a new trial. Syntel's arguments regarding liability are addressed before damages.
Judgment as a matter of law under Rule 50(b) is appropriate "only if the court, viewing the evidence in the light most favorable to the non-movant, concludes that a reasonable juror would have been compelled to accept the view of the moving party." US Airways, Inc. v. Sabre Holdings Corp., 938 F.3d 43, 54 (2d Cir. 2019) (emphasis in original) (internal quotation marks omitted). "The court cannot assess the weight of conflicting evidence, pass on the credibility of witnesses, or substitute its judgment for that of the jury." Wiercinski v. Mangia 57, Inc., 787 F.3d 106, 113 (2d Cir. 2015) (internal quotation marks omitted). A Rule 50 motion may be granted only if "there exists such a complete absence of evidence supporting the verdict, that the jury's findings could only have been the result of sheer surmise and conjecture, or the evidence in favor of the movant is so overwhelming that reasonable and fair minded [persons] could not arrive at a verdict against [it]." Warren v. Pataki, 823 F.3d 125, 139 (2d Cir. 2016) (alterations in original) (quoting SEC v. Ginder, 752 F.3d 569, 574 (2d Cir. 2014)).
Under Rule 59, "[a] trial court should not grant a motion for a new trial unless it is convinced that the jury . . . reached a seriously erroneous result or that the verdict is a miscarriage of justice." Ali v. Kipp, 891 F.3d 59, 64 (2d Cir. 2018) (internal quotation marks omitted). "Remittiturs are a common procedure used by the courts to, in effect, reduce the amount of a damage award that the court concludes is impermissibly high." Turley v. ISG Lackawanna, Inc., 774 F.3d 140, 167 (2d Cir. 2014). Through this procedure, a court "compels a plaintiff to choose between reduction of an excessive verdict and a new trial." Anderson Grp., LLC v. City of Saratoga Springs, 805 F.3d 34, 51 (2d Cir. 2015) (internal quotation marks omitted).
Syntel seeks judgment as a matter of law or a new trial on the trade secret misappropriation and/or the copyright claims based on four arguments: (1) Syntel did not misappropriate 102 of the 104 asserted trade secrets because it was contractually authorized to use them; (2) TriZetto waived its rights to, and/or is estopped from, bringing trade secret misappropriation and copyright infringement claims; (3) the asserted trade secrets were inadequately specified as a matter of law and no reasonable jury could have determined whether any of them qualified as trade secrets; and (4) no reasonable jury could have found that Syntel engaged in trade secret misappropriation after May 11, 2016, the effective date of the DTSA. Under the rigorous standards of Rule 50(b) and Rule 59, these challenges are rejected.
Syntel argues that it was authorized to use the 102 trade secrets not subject to the Preclusion Order -- i.e., all but two of the trade secrets in this case -- following the 2012 Amendment to the parties' MSA. Specifically, Syntel argues that the amendment's deletion ofthe MSA's non-competition provision authorized Syntel to use TriZetto's confidential information. The jury heard the same argument at trial and rejected it. The jury's conclusion was not seriously erroneous or contrary to overwhelming evidence.
Syntel styles its argument as construction of an unambiguous contract, raising a question of law for the Court, and thus bypassing the jury. Compare Banos v. Rhea, 33 N.E.3d 471, 475 (N.Y. 2015) (), with Rhoda v. Rhoda, 110 N.Y.S.3d 35, 37 (2d Dep't 2019) ().1 Syntel presumably makes this argument now because Syntel, represented by new counsel at trial, did not raise this issue at summary judgment. Syntel cites no case law in support of this novel approach, and post-trial motions pursuant to Rule 50 and Rule 59 focus on the sufficiency of the evidence supporting the jury's verdict. Whether viewed as a question of law for the Court, or the sufficiency of the evidence before the jury, Syntel's argument provides no basis to overturn the jury's findings that Syntel misappropriated TriZetto's trade secrets.
The MSA restricted Syntel's use of TriZetto's "Confidential Information." The MSA's non-competition provision, section 29.17, separately prohibited Syntel from competing with TriZetto under certain circumstances "to prevent any misuse or disclosure of Confidential Information." PTX-27 at 62 (§ 29.17 ("Noncompetition")). In 2012, the parties agreed to amend the MSA to delete its non-competition provision and "any other provision in the [MSA] related to [Syntel] being restricted from competing with TriZetto." PTX-162 at 2. The deletion of the non-competition provision did not authorize Syntel to use TriZetto's asserted trade secrets inconnection with providing competing services. The 2012 Amendment left undisturbed the MSA's confidentiality provisions, sections 13.01 and 19.01, which unambiguously require that "TriZetto Data" not be used "[w]ithout TriZetto's approval . . . other than in connection with [Syntel's] providing the Services," PTX-27 at 35 (§ 13.01), and also that Syntel "hold any such Confidential Information as confidential." PTX-27 at 42 (§ 19.01). The 2012 Amendment did not amend the definition of "Services," which in substance means services to be provided by Syntel pursuant to the MSA. PTX-27 at 8 (§ 1.01(99)). As amended in 2012, the MSA is unambiguous -- as a matter of law -- that Syntel was free to compete with TriZetto but that Syntel was still obligated by the MSA's confidentiality provisions.
At trial, Syntel made the same argument to the jury --...
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