Epic Systems Corp. v. TATA CONSULTANCY SERVICES LTD. & TATA AMERICA INTERNATIONAL CORP. d/b/a TCS AMERICA

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued February 22, 2023
Decided July 14, 2023
Before
DAVID F. HAMILTON, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
DORIS L. PRYOR, Circuit Judge
No. 22-2420
EPIC SYSTEMS CORP.,
Plaintiff-Appellee,
v.
TATA CONSULTANCY SERVICES
LTD. & TATA AMERICA
INTERNATIONAL CORP.
d/b/a TCS AMERICA,
Defendants-Appellants.
Appeal from the United States District
Court for the Western District of
Wisconsin.
No. 3:14-cv-00748
William M. Conley,
Judge.
O R D E R
This is the second time this case has come before the court. In the first appeal, we
held, among other things, that a $280 million punitive damages award in favor of Epic
Systems Corporation (“Epic”) and against Tata Consultancy Services (“TCS”)1 exceeded
1 Tata Consultancy Services Limited is an Indian company; Tata America International Corp. is a New
York corporation that is wholly owned by Tata Consultancy Services. We refer to these companies
collectively as “TCS.”
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with F ED. R. APP . P. 32.1

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the outermost limit of the Fourteenth Amendment’s due process guarantee. We
remanded for the district court to “reduce punitive damages to, at most, $140 million.”
Epic Sys. Corp. v. Tata Consultancy Servs. Ltd., 971 F.3d 662, 688 (7th Cir. 2020), as
amended, 980 F.3d 1117, 1145 (7th Cir. 2020). The district court did so, concluding that
the case warranted a punitive damages award equal to that constitutional ceiling. No.
14-cv-748, 2022 WL 2390179 (W.D. Wis. 2022).
TCS now argues that the district court failed to follow this court’s directives
when it declined to further reduce the punitive damages award to an amount between
$10 and $25 million. Because the district court properly justified the $140 million
punitive damages award, we affirm.
BACKGROUND
Epic and TCS are competitors in the electronic-health-record-software field.
From 2012 to 2014, TCS employees accessed Epic’s confidential customer web portal
without authorization and downloaded thousands of documents containing Epic trade
secrets. Armed with this stolen information, TCS created a “comparative analysis”
outlining the differences between its software and Epic’s. TCS then used this analysis to
try to persuade one of Epic’s largest customers to abandon Epic in favor of TCS. To
make matters worse, when Epic filed suit, TCS failed to preserve relevant evidence,
resulting in an adverse inference sanction at trial. The jury ruled for Epic on all counts,
including multiple Wisconsin tort claims. The jury then awarded Epic $240 million in
compensatory damages—$140 million for TCS’s use of Epic’s information to create the
“comparative analysis” and $100 million for TCS’s “other uses” of the confidential
information—as well as $700 million in punitive damages.
Although the district court upheld the jury’s liability verdict and the $140 million
in compensatory damages based on TCS’s use of Epic’s confidential information in the
“comparative analysis,” it struck the $100 million compensatory award for “other uses”
of Epic’s information. The district court also reduced punitive damages to $280 million
to comply with a Wisconsin law capping punitive awards at two times the amount of
compensatory damages. Wis. Stat. § 895.043(6).
On the first appeal, we applied the guideposts established in BMW of North
America, Inc. v. Gore, 517 U.S. 559 (1996), to determine whether the $280 million punitive
damages award entered by the district court was constitutionally sound. Considering
“(1) the reprehensibility of the defendant’s conduct; (2) the disparity between the actual
harm suffered and the punitive award; and (3) the difference between the award

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authorized by the jury and the penalties imposed in comparable cases,” Rainey v. Taylor,
941 F.3d 243, 254 (7th Cir. 2019) (citing Gore, 517 U.S. at 575), we concluded that $140
million—a 1:1 ratio relative to the compensatory award—was the maximum
constitutionally permissible punitive award in this case. Epic, 980 F.3d at 1140–45. See
also Trinity Evangelical Lutheran Church v. Tower Ins. Co., 661 N.W.2d 789, 800 (Wis. 2003)
(explaining that Wisconsin courts apply a “virtually identical test”).
We reasoned that although TCS’s conduct warranted punishment, it was not
reprehensible “to an extreme degree.” Epic, 980 F.3d at 1142. Courts apply five factors to
evaluate reprehensibility, considering whether: (1) the harm caused was physical as
opposed to economic; (2) the tortious conduct evinced an indifference to or a reckless
disregard for the health or safety of others; (3) the target of the conduct was financially
vulnerable; (4) the conduct involved repeated actions or was an isolated incident; and
(5) the harm was the result of intentional malice, trickery, or deceit, or merely an
accident. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003). Here,
three of these factors weighed against deeming TCS’s conduct reprehensible. In
particular, TCS caused financial, rather than physical, harm; its actions did not evince
an indifference to or reckless disregard for the safety of others; and Epic was not a
financially vulnerable victim. Looking to the remaining factors, however, we found that
TCS’s wrongdoing was not an isolated incident and the harm Epic suffered was a direct
result of TCS’s deceit.
We further agreed, upon examining Gore’s second guidepost, that the disparity
between the $280 million punitive damages award and the harm suffered by Epic was
too great. As for the third guidepost, we observed that the award entered by the district
court complied with Wisconsin’s statutory cap on damages, which implied that it was
not an outlier in the state. Still, considered together, the Gore factors supported a finding
that the $280 million award was unconstitutional. We remanded for the district court to
reduce the punitive damages to, at most, $140 million.
On remand, the district court did precisely that. TCS now asserts that the court’s
analysis was insufficient because it simply rehashed the Gore factors already considered
by this Court in the first appeal. We disagree.
L EGAL STANDARD
We review a district court’s determination of the scope of remand de novo.
United States v. Purham, 795 F.3d 761, 764 (7th Cir. 2015). We also review challenges to
punitive damages de novo when constitutional issues are raised. Cooper Indus. Inc. v.

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Leatherman Tool Grp., Inc., 532 U.S. 424, 436 (2001). If no constitutional issue is raised, our
review of punitive damages is for abuse of discretion. Gracia v. SigmaTron Int’l, Inc., 842
F.3d 1010, 1022 (7th Cir. 2016).
A NALYSIS
When punitive damages arise out of state law claims, as the award in this case
did, “the Constitution imposes the only federal restraint.” Beard v. Wexford Health
Sources, Inc., 900 F.3d 951, 955 (7th Cir. 2018); see also Gasperini v. Ctr. for Humanities, Inc.,
518 U.S. 415, 430 n.12 (1996) (“For rights that are state created, state law governs the
amount properly awarded as punitive damages, subject to an ultimate federal
constitutional check for exorbitancy.”). We have already identified the line over which a
punitive damages award would be unconstitutionally excessive here: $140 million.
Still, as TCS notes, “the Constitution is not the most relevant limit to a federal
court when assessing punitive damages, as it comes into play ‘only after the assessment
has been tested against statutory and common-law principles.’” Saccameno v. U.S. Bank
Nat’l Ass’n, 943 F.3d 1071, 1086 (7th Cir. 2019) (quoting Perez v. Z Frank Oldsmobile, Inc.,
223 F.3d 617, 625 (7th Cir. 2000)). We are satisfied that the district court thoroughly
assessed the relevant principles on remand and concluded that the award was sensible
and justified. See Perez, 223 F.3d at 625 (“Federal judges may, and should, insist that the
award be sensible and justified by a sound theory of deterrence.”).
First, the court revisited the question of reprehensibility. It described how TCS
employees—knowing full well that they were unauthorized to view Epic’s web portal—
deliberately and repeatedly accessed and downloaded confidential information that
Epic had spent years developing, and then used that information to attempt to compete
with Epic. The district court also described the steps TCS leadership took to conceal
their scheme: disciplining an internal whistleblower, failing to preserve relevant
documents, lying when questioned by Epic, and then lying again when questioned
under oath. The court described this conduct as “repeated, deliberate, and cynical.”
Turning to other considerations, the court noted that the punitive damages were
proportional to the compensatory damages and the harm Epic suffered; that but for
being caught, TCS would have gotten away with a massive gain; and that the cases TCS
cited to support further reduction were “not at all comparable” to this one. The court
emphasized that TCS is one of the largest companies in the world and, therefore, only a
significant punishment would have a deterrent effect.

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Now, on appeal, TCS repeats many of the same arguments that have already
been considered by this court. It suggests that its conduct was not especially
reprehensible and that the deterrent purpose of punitive damages was adequately
served by the $140 million in compensatory damages.
Insisting that this case is an outlier for punitive damages, TCS cites various
opinions ordering lower awards. Generally, however, these cases involved much
smaller compensatory awards than the $140 million used as a denominator here. See,
e.g., Synergetics, Inc. v. Hurst, 477 F.3d 949, 954, 959 (8th Cir. 2007) (awarding $1.75
million in compensatory damages and about $600,000 in punitive damages). As we
noted in our earlier decision, TCS “waived any argument that the compensatory award
is the incorrect denominator in the ratio analysis.” Epic, 980 F.3d at 1143. TCS also cites
cases in which courts applied the Gore guideposts to conclude that the Constitution
mandated reducing the punitive damages to an amount lower than that awarded to
Epic. See, e.g., Inter Med. Supplies Ltd. v. EBI Med. Sys., Inc., 181 F.3d 446, 467 (3d Cir.
1999). But this court already determined that a $140 million award would be
constitutional here. TCS does not ask us to overturn that decision and we see no reason
to. Finally, TCS opines that it could find only two Wisconsin cases in which juries
awarded more than $100 million in damages, both of which involved physical harm.
Critically, neither of the defendants in those cases were nearly as large as TCS. When
the goal of punitive damages is “to punish the defendant and deter outrageous
conduct,” Welty v. Heggy, 429 N.W.2d 546, 550 (Wis. 1988), such matters must be
considered.
In sum, we agree with the district court that, given TCS’s repeated and brazen
misconduct, a $140 million punitive damages award is constitutional, as well as justified
under Wisconsin law.
AFFIRMED.

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