SS&C Technologies Holdings, Inc. v. Arcesium LLC

Background

SS&C Technologies Holdings, Inc. and Advent Software, Inc. sued Arcesium LLC under the federal Defend Trade Secrets Act, alleging that Arcesium misappropriated trade secrets associated with SS&C’s Geneva portfolio-accounting software, used them to develop competing software, misappropriated trade secrets under common law, and breached the parties’ software-licensing contract. Arcesium filed counterclaims alleging breach of contract, tortious interference with a contract, common-law unfair competition, and tortious interference with prospective economic advantage.

SS&C later filed a separate lawsuit against D.E. Shaw involving alleged theft of trade secrets associated with Geneva, common-law trade-secret misappropriation, and breach of contract. SS&C moved under Federal Rule of Civil Procedure 42(a) to consolidate that newer action with the Arcesium action. SS&C also sought permission to file a reply letter supporting consolidation.

Positions of the Parties

SS&C argued that the two actions involved common legal and factual questions because both concerned the alleged misappropriation of Geneva trade secrets and the development of competing portfolio-accounting software. It argued that consolidation would avoid duplicative discovery and trials and reduce the risk of inconsistent verdicts.

Arcesium argued that consolidation would add a new party and new claims, greatly expand the case, and include technology allegedly created by D.E. Shaw before Arcesium existed. Arcesium also argued that SS&C was using consolidation and a proposed consolidated complaint to avoid the requirements for amending its complaint. D.E. Shaw also opposed consolidation, arguing that it was premature and would prejudice D.E. Shaw.

Court’s Analysis

Rule 42(a) allows consolidation when cases involve a common question of law or fact. The court explained that consolidation is discretionary and that the moving party must show that consolidation is appropriate. The court considered the risk of prejudice and confusion, the possibility of inconsistent decisions, the burden on the parties and witnesses, the effect on judicial resources, the time required to resolve the cases, and the relative expense of one trial compared with multiple trials.

The court recognized that the two actions were related and involved similar parties and legal and factual issues. But it concluded that consolidation would prejudice the defendants and would not promote efficient resolution. The court emphasized that Arcesium and D.E. Shaw had distinct defenses, that the motion to dismiss in the D.E. Shaw action had not been briefed, and that the two cases were at substantially different stages.

The court also noted that fact discovery in the Arcesium action had been scheduled to end on December 19, 2023, while the D.E. Shaw action had been filed only on October 18, 2023. The consolidation motion had disrupted the timetable for the Arcesium case, and discovery had been stayed. Although the court considered the possibility of duplicative proceedings, it concluded that the cases were best handled separately.

Disposition

The court denied SS&C’s motion for consolidation. It also denied as moot SS&C’s motion for leave to file a reply letter supporting consolidation. The opinion did not decide the underlying trade-secret, contract, or counterclaim merits.