Syntel Sterling Best Shores Mauritius Limited v. The Trizetto Group, Inc.

Background

The parties filed cross-motions for partial summary judgment, which asks whether the evidence presents a genuine dispute requiring a trial. Syntel Sterling Best Shores Mauritius Limited and Syntel, Inc. asserted claims for breach of contract, intentional interference with contractual relations, and misappropriation of confidential information. The TriZetto Group and Cognizant Technology Solutions Corp. asserted counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, misappropriation of trade secrets, unfair competition, tortious interference with prospective business relations, and copyright infringement.

The dispute arose from a Master Services Agreement under which Syntel provided customization services for TriZetto’s Facets software product. The agreement was terminated after Syntel exercised a termination right connected to Cognizant’s acquisition of TriZetto. Syntel alleged that the defendants violated the agreement’s non-solicitation provision by hiring Syntel employees and misappropriated confidential information about those employees. The defendants alleged that Syntel infringed rights in the Data Dictionary product.

Report and Review

Magistrate Judge Stewart D. Aaron recommended denying Plaintiffs’ partial summary-judgment motion and granting in part and denying in part Defendants’ partial summary-judgment motion. The recommendation also denied Defendants’ motion to strike portions of Plaintiffs’ summary-judgment filings. The parties objected to portions of the recommendation. Judge Schofield reviewed the challenged portions anew and reviewed the unchallenged portions for clear error.

Non-Solicitation Provision

The court granted Defendants’ motion on Syntel’s claim under Section 25.03 of the agreement. That provision barred TriZetto from hiring a person who was then, or had been during the previous six months, an “employee of Service Provider.” The court held that this phrase unambiguously referred to employees of Syntel Mauritius, the entity defined as the “Service Provider.” Because Syntel’s theory concerned employees of Syntel, Inc. and Syntel affiliates, the claim could not proceed on that theory. The fact that Syntel Mauritius had no employees did not make the contract language ambiguous.

Confidential Information Claims

The court denied Defendants’ motion on Syntel’s confidential-information claims. Syntel identified information such as employee salaries, assignments, project history, evaluations, grade levels, billing rates, and strategic placements. The court found that at least some of this information did not appear to be publicly available through employee LinkedIn profiles. The evidence also created a factual dispute about damages because Syntel’s expert estimated lost profits associated with employees allegedly hired by Defendants. The court stated that credibility issues and challenges to the expert’s methodology were for the factfinder or could be raised in anticipated challenges to expert testimony.

The court also held that Defendants waived an argument that the evidence did not show they used the information to hire Syntel employees because Defendants had not made that argument before the magistrate judge. The court stated that Defendants could raise that issue at trial.

Data Dictionary Copyright Counterclaim

The court denied Syntel’s motion on Defendants’ copyright counterclaim. The evidence created a factual dispute about whether Data Dictionary was part of Facets and whether Data Dictionary incorporated protected elements of Facets as an unregistered derivative work. The court held that customer documents describing Data Dictionary could qualify as business records and could support a reasonable jury’s finding that the products shared protected elements. The court also rejected Syntel’s challenge to the testimony of Chuck Sanders, explaining that he testified as a designated organizational witness based on his review of relevant TriZetto documents.

Other Claims and Final Disposition

The court found no clear error in the unchallenged portions of the recommendation. Defendants’ motion for summary judgment was granted in part and denied in part. It was granted on the breach-of-contract claim based on the non-solicitation provision and on Plaintiffs’ tortious-interference claims, except for the claim involving five employment agreements. It was denied on Syntel’s confidential-information claims and on Defendants’ trade-secrets counterclaim, which involved factual disputes about whether the Facets test cases and automation scripts were trade secrets and whether Plaintiffs misappropriated them.

Plaintiffs’ motion for summary judgment was denied as to their transition-rebates breach-of-contract claim and as to Defendants’ copyright-infringement counterclaim. The court therefore left for further proceedings claims and counterclaims involving confidentiality, transition rebates, the five employment agreements, alleged trade-secret misappropriation, unfair competition, tortious interference, and copyright infringement, among others identified in the order. Judge Schofield ordered that the magistrate judge’s report and recommendation be adopted in full.