Computer Sciences Corporation v. Tata Consultancy Services Limited et al

Filing 79

Order Accepting 75 Findings and Recommendation of the United States Magistrate Judge. the Court DENIES IN PART AND GRANTS IN PART Tata's 43 Motion to Dismiss. The motion to dismiss is DENIED as to Computer Sciences' Defend Trade Sec rets Act claim and is GRANTED as to Computer Sciences' state-law claims. Therefore, the Court DISMISSES WITHPREJUDICE Computer Sciences' state-law claims as preempted by the Texas Uniform Trade Secrets Act. (Ordered by Judge Brantley Starr on 3/24/2020) (rekc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
COMPUTER SCIENCES
CORPORATION,

§
§
§
§
§
§
§
§
§
§
§
§
§

Plaintiff,
v.
TATA CONSULTANCY SERVICES
LIMITED, TATA AMERICA
INTERNATIONAL CORPORATION,
DOE DEFENDANTS 1–10,
Defendants.

Civil Action No. 3:19-CV-00970-X

Referred to U.S. Magistrate Judge

ORDER ACCEPTING FINDINGS AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
After reviewing all relevant matters of record in this case, including the
Findings, Conclusions, and Recommendation [Doc. No. 75] of the United States
Magistrate Judge and plaintiff Computer Sciences Corporation’s (Computer Sciences)
Objection [Doc. No. 76], in accordance with 28 U.S.C. § 636(b)(1), the undersigned
District Judge is of the opinion that the Findings and Conclusions of the Magistrate
Judge are correct and they are accepted as the Findings and Conclusions of the Court.
Texas law preempts Computer Sciences’ state-law claims. The Texas Uniform
Trade Secrets Act (Trade Secrets Act) “displaces conflicting tort, restitutionary, and
other law of this state providing civil remedies for misappropriation of a trade
secret.”1 But what are “civil remedies for misappropriation of a trade secret”? The

1

TEX. CIV. PRAC. & REM. CODE § 134A.007(a).

1

statute’s context helps the Court understand what the statute’s text means.
Specifically, the Trade Secrets Act says that it does not preempt “other civil remedies
that are not based upon misappropriation of a trade secret.”2 Therefore, the Trade
Secrets Act’s text and context lead the Court to conclude that the statute preempts
all civil remedies that are based upon misappropriation of a trade secret.
This Court’s interpretation and application of the Trade Secrets Act means
that it is possible for claims that involve the misappropriation of non-trade secrets to
still be based upon the misappropriation of trade secrets. In other words: a claim for
the misappropriation of non-trade secrets could exist because of the alleged
misappropriation of trade secrets.

And, because they are based upon the

misappropriation of trade secrets, such claims are preempted by the Trade Secrets
Act. Computer Sciences’ state-law claims face this predicament.
The case law that Computer Sciences asserts the “Recommendation failed to
consider or address”3 confirms the Court’s interpretation. Unlike the plaintiff in
Downhole Technology LLC v. Silver Creek Services Inc.,4 Computer Sciences does not
plead independent, alternative theories of relief.5

Instead, each of Computer

Sciences’ four state-law claims are fundamentally based upon the alleged

2

Id. § 134A.007(b)(2) (emphasis added).

3 Plaintiff’s Objections to Findings, Conclusions and Recommendation of U.S. Magistrate
Judge, at 7 [Doc. No. 76].
4

2017 WL 1536018 (S.D. Tex. Apr. 27, 2017).

5 Id. at *4 (comparing the plaintiff to the plaintiff in AMID, Inc. v. Medic Alert Found. U.S.,
Inc., 2017 WL 1021685 (S.D. Tex. Mar. 16, 2017), who “essentially pleaded alternative theories of
relief”).

2

misappropriation of its trade secrets.6 It may be true that the Trade Secrets Act
plaintiffs may maintain “their causes of action for the misappropriation of
information that is not a trade secret,”7 and that “civil theft claims under Texas law
survive [the Trade Secrets Act] so long as the theft involves something other than the
trade secret or addresses the harm stemming from the loss of the tangible item itself,
rather than the trade secret it contains.”8 But Computer Sciences’ claims are based
on—and exist because of—the alleged misappropriation of its trade secrets. Even if
the Court’s fellow Texas federal district courts mentioned here are correct, the Court’s
interpretation of the Trade Secrets Act’s preemption provision does not conflict with
its sister courts’ interpretations. The facts of and allegations in this specific case lead
the Court to conclude that under these frameworks the Trade Secrets Act preempts
Computer Sciences’ state-law claims.
For these reasons, the Court DENIES IN PART AND GRANTS IN PART
Tata’s Motion to Dismiss [Doc. No. 43]. The motion to dismiss is DENIED as to

6 See Complaint and Jury Demand ¶ 42 (basing Count I, Trade Secret Misappropriation under
the Defend Trade Secrets Act, on the allegation that Computer Sciences’ trade secrets “constitute
protectable programs (including software and source code), processes, methods, techniques, formulas,
data, and know-how, such as calculations, rates of return, fund and policy valuations, and other
complex data processing, and compilations in the field of administering, processing and managing life
insurance policies and annuities including, but not limited to, those used by [Computer Sciences] to
achieve the functionalities found in Vantage, CyberLife, and Additional [Computer Sciences]
Products”) [Doc. No. 1]. See also id. ¶¶ 41, 50, 55, 60, & 64 (all five counts incorporating the same facts
and allegations of every other count, including Count I); ¶ 53 (basing Count II upon the allegation that
Tata is “improperly using [Computer Sciences]’s substantial investment” in its trade-secret software
systems); ¶ 56 (basing Count III upon the allegation that Tata conspired to misappropriate Computer
Sciences’ trade-secret source code and software); ¶ 61 (basing Count IV upon the allegation that Tata
interfered with Computer Sciences’ prospective economic advantage with its trade-secret software
systems, which “are the foundation” of Computer Sciences’ services); ¶ 66 (basing Count V upon the
allegation that Tata unlawfully took Computer Sciences’ trade-secret software).
7

DHI Grp., Inv. v. Kent, 397 F. Supp. 3d 904, 923 (S.D. Tex. 2019).

8

Myart v. City of San Antonio, 2019 WL 7067126, at *6 (W.D. Tex. Dec. 23, 2019).

3

Computer Sciences’ Defend Trade Secrets Act claim and is GRANTED as to
Computer Sciences’ state-law claims.

Therefore, the Court DISMISSES WITH

PREJUDICE Computer Sciences’ state-law claims as preempted by the Texas
Uniform Trade Secrets Act.
IT IS SO ORDERED this 24th day of March 2020.

_________________________________
BRANTLEY STARR
UNITED STATES DISTRICT JUDGE

4