DXC Technology Company v. Gen Digital, Inc.

Background

DXC sued Gen Digital for breach of contract. DXC alleged that Gen Digital was required under an Information Technology Services Agreement to indemnify, or cover, losses arising from certain third-party claims that Symantec proprietary software infringed another party’s rights. DXC alleged that it incurred losses connected to an earlier copyright lawsuit involving Solaris software and that Gen Digital failed to meet its indemnity obligations.

Gen Digital filed a third-party complaint against Sycomp and NASI. It alleged that, if Gen Digital owed DXC indemnity, Sycomp and NASI were required to cover Gen Digital under separate agreements: a Product Purchase Agreement with Sycomp and a Service Delivery Agreement with NASI. Gen Digital asserted claims for breach of contract, equitable indemnity, and declaratory relief against the third-party defendants.

Sycomp’s Motion to Dismiss

Sycomp moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a pleading fails to state a legally sufficient claim. Sycomp sought dismissal of Gen Digital’s equitable-indemnity and declaratory-relief claims.

The court granted Sycomp’s request for judicial notice of a publicly filed verdict form from the earlier copyright lawsuit. The court held that Gen Digital’s equitable-indemnity claim was barred because Gen Digital alleged that an express indemnity agreement in the Product Purchase Agreement governed the parties’ relationship. Under the court’s analysis, Gen Digital could not pursue equitable or implied indemnity while relying on that express contract and not alleging that the contract might be invalid or unenforceable. The court granted dismissal of the equitable-indemnity claim without leave to amend. The order’s conclusion states that this claim was dismissed with prejudice.

The court also held that Gen Digital’s declaratory-relief claim merely sought a determination that Sycomp had breached the Product Purchase Agreement. Because the claim concerned an alleged past breach, and Gen Digital did not allege an ongoing contractual relationship or future consequences requiring a declaration, the court found the claim duplicative of the breach-of-contract claim. The court granted dismissal of that claim with leave to amend. The order’s conclusion states that the declaratory-relief claim was dismissed without prejudice.

DXC’s Motion to Sever

DXC moved under Rule 14(a)(4) to strike or sever Gen Digital’s third-party complaint. The court found that Gen Digital’s claims against Sycomp and NASI were derivative of DXC’s claim against Gen Digital, but concluded that keeping them in the same action would add two parties, three additional agreements, and separate indemnity disputes. The court determined that these issues would complicate and lengthen trial and likely delay resolution of DXC’s claim.

The court granted DXC’s motion to sever. Gen Digital’s third-party complaint was severed from the underlying complaint, and Gen Digital was permitted to refile it as a separate complaint in a new action within 30 days. The filing fee for the new action was waived.

NASI’s Motion for a More Definite Statement

NASI moved under Rule 12(e) for a more definite statement, arguing that Gen Digital had not adequately identified the services, software, and contracts connected to the alleged breach. Rule 12(e) addresses pleadings so vague or ambiguous that a party cannot reasonably prepare a response.

The court found that Gen Digital’s third-party complaint identified the Service Delivery Agreement and alleged how NASI supposedly breached it. The court concluded that the pleading was clear enough for NASI to respond and that additional information about the services could be obtained through discovery. The court denied NASI’s motion. NASI was required to answer after Gen Digital refiled the third-party complaint, within the period specified by the order.

Disposition

The court granted Sycomp’s motion to dismiss; dismissed Gen Digital’s equitable-indemnity claim against Sycomp with prejudice; dismissed Gen Digital’s declaratory-relief claim against Sycomp without prejudice; granted DXC’s motion to sever; and denied NASI’s motion for a more definite statement.