TCS to record $125 million lawsuit expense in Q3 results
What's the story
The US Supreme Court has dismissed an appeal from Tata Consultancy Services (TCS) regarding a $140 million fine in connection with a trade secret lawsuit filed by American company Epic Systems.
The lawsuit, which began in 2014, alleged that TCS employees stole 6,000 critical data files containing system development information from Epic Systems by creating a fraudulent user account.
Consequently, TCS will allocate $125 million for the penalty in the third quarter of the fiscal year ending December 2023.
Details
Punitive damages reduced over time
Initially, the lawsuit awarded $700 million in punitive damages, but this amount was later reduced to $280 million.
In August 2021, a US Court of Appeals determined that the $280 million punitive damages award was "constitutionally excessive," and lowered the damages to $140 million in 2022.
TCS had already set aside $165 million for this legal claim in its financial statements for the quarter and year ending March 31, 2021.
What Next?
Supreme court decision and TCS statement
On November 20, 2023, the US Supreme Court delivered its verdict, which led TCS to issue a statement.
The statement clarified that the Supreme Court had dismissed their petition to appeal against the decisions made by the US Court of Appeals, 7th Circuit.
These decisions upheld the District Court of Wisconsin's ruling, affirming a punitive damages award amounting to $140 million in the Epic Systems Corporation case.