Courts May Cut Punitive Damages and Enter Judgment Without Offering New Trial, Manhattan Judge Rules in Trade-Secrets Case

MANHATTAN (LN) — U.S. District Judge Lorna G. Schofield on Tuesday entered judgment against software company Syntel Sterling Best Shores Mauritius Limited for $139,955,626 in punitive damages — without requiring TriZetto to formally accept the remittitur — resolving a question the Second Circuit had explicitly left open at least twice in the past fifteen years.

The ruling caps a punitive damages dispute in a trade-secrets case between Syntel and The TriZetto Group, Inc., which along with Cognizant Technology Solutions Corp. had been named as defendants and counterclaim plaintiffs. Schofield had already concluded in a March 27 opinion that New York law required reducing the prior punitive award to $139,955,626, but that earlier order had given TriZetto the option of accepting the remitted amount or electing a third trial on punitive damages. TriZetto then asked the court to simply enter judgment in the reduced amount without going through the conditional remittitur procedure — and Syntel fought it.

The procedural wrinkle was real. In Thomas v. iStar Financial, Inc., the Second Circuit observed in 2011 that "traditionally . . . district courts may not unilaterally reduce [jury] awards that are excessive" and that "the law of this Circuit does not appear to distinguish between compensatory and punitive damages" on that point — but the court sidestepped the question by construing the parties to have stipulated to the outcome. Three years later, in Turley v. ISG Lackawanna, Inc., the Second Circuit again left "for another day the question of whether, if we decided that the punitive award was excessive on constitutional grounds, we could or would directly order a reduction in the punitive award rather than using the remittitur procedure," while noting such a procedure "might well be permissible."

With no binding Second Circuit answer, Schofield looked outward. Seven other circuits — the First, Third, Seventh, Eighth, Ninth, Tenth, and Eleventh — have all held that a court is empowered to decide the maximum permissible amount of punitive damages without offering a new trial. The Supreme Court added weight to that view in Cooper Industries, Inc. v. Leatherman Tool Group, Inc., stating that "the level of punitive damages is not really a fact tried by the jury" for Seventh Amendment purposes.

Schofield also found that the $139,955,626 figure represents the constitutional ceiling under federal law, not just the New York law cap she had applied in March — a ruling she reached by exercising her discretion to reconsider the Damages Opinion.

Syntel raised two procedural defenses, neither of which landed. First, it argued judicial estoppel barred TriZetto from seeking entry of judgment after previously taking a different position. Schofield rejected that argument because Syntel could point to no actual prejudice — and because Syntel itself had previously sought unilateral amendment of the judgment to reduce punitive damages. Second, Syntel argued that prejudgment interest should not accrue for any delay caused by TriZetto's refusal to accept conditional remittitur. Schofield called that argument unavailing, noting that prejudgment interest is mandatory under New York law and exists to make TriZetto whole.

Schofield directed the clerk to close the case after entering the amended judgment.

The ruling puts $139,955,626 in punitive damages on the books against Syntel — a figure that will continue to accrue mandatory prejudgment interest under New York law until it is paid.