Court slashes punitive damages in Epic-Tata trade secrets suit
A federal district court has further reduced, to $140 million, the punitive damages owed Epic Systems in a long-running trade secrets dispute.
The court order filed Friday marks the latest chapter in the electronic health records vendor’s legal fight against India-based information-technology services and consulting firm Tata Consultancy Services. In 2016, a jury awarded Epic Systems $940 million, but subsequent court actions have substantially reduced the amount Tata must pay. A federal appeals court previously ruled that punitive damages should not exceed the amount of compensatory damages, which is also $140 million.
“Having witnessed Tata’s repeated efforts to stall discovery and the detailed record to Tata’s actual breach of any semblance of business ethics and institutional safeguards in favor of ill-gotten gains at other’s expense, this court readily understands the desire by the jury to try to send a message to Tata and other companies tempted to do the same about staying within the ethical lines of competition,” Judge William Conley wrote for the U.S. District Court for the Western District of Wisconsin in the order cutting the award.
Epic Systems sued Tata and its U.S. subsidiary in 2014, alleging the Indian firm had used Epic Systems’s internal documents to compare the company’s software to its own as it sought to enter the U.S. EHR market.
The complaint stems from an Epic Systems EHR implementation at Kaiser Permanente, for which the health system hired Tata as a contractor. Epic Systems alleged that Tata breached a contract that provided its employees limited access to Epic Systems’s proprietary information.
Epic Systems claimed that a Tata employee downloaded more than 6,000 Epic Systems documents and shared his credentials with coworkers in India.
Tata Consultancy Services denies the allegations. Neither company responded to requests for comment.
In 2016, a district court jury awarded Epic Systems $240 million in compensatory damages and $700 million in punitive damages. The court trimmed compensatory damages to $140 million and punitive damages to $280 million in 2017.
In 2020, the U.S. Court of Appeals for the 7th Circuit ordered the lower court to further reduce punitive damages. Although Tata’s actions injured Epic Systems, the harm “does not support the size of the punitive-damages award,” Judge Michael Kanne wrote for the appeals court.
“We agree with the district court that [Tata’s] conduct warrants punishment,” Kanne wrote. “But [Tata’s] conduct was not reprehensible ‘to an extreme degree.'”