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Legal Experts See Difficult Road for Sitel in “Stolen Business” Suit

The odds might not favor Sitel Group in the next chapter of its legal battle with Sutherland Global Services, which accused the former of allegedly stealing confidential company information and using it to obtain business with at least one major customer.

After more than a year of investigations, court hearings and legal paperwork, the two giants of the business process outsourcing (BPO) industry will meet in court. The trial –scheduled for April 23, 2023, in Austin, Texas– will be held without a jury, a format known as a “bench trial”.

In a bench trial, the responsibility of evaluating evidence and giving a verdict falls solely under the appointed judge. Senior US District Judge David Ezra, in this case.

Given that Sutherland’s lawsuit against Sitel et al involves the alleged stealing of “trade secrets” and the supposed violation of non-compete and confidentiality agreements, having a jury present might prove counterproductive to the process, say legal experts. 

Elisaveta Dolghih, Founder at Dolghih Law Group

Nevertheless, experts say the format might make the battle more difficult for Sitel and the rest of the defendants.

“Statistically speaking, in trade secrets cases that get to a verdict stage, about 70% of the time the verdict is in favor of a plaintiff”, said Elisaveta Dolghih, a Texas attorney that handles commercial, employment, non-competition and trade secrets litigation.

Legal sources told NSAM that, under a normal trial, success would be determined in part by the perceived credibility of both parties. In a bench trial, though, it all comes down to the facts available and also to the quality of the experts summoned by the plaintiff and the defendants to help their case.

Even before a trial was scheduled, expert lawyers consulted by NSAM saw Sitel’s defense as a “tough sell” and found little hope in the defendants attempts to prevent the case from going to trial. 

In its complaint to the court, Sutherland alleges that a former employee of theirs (Ratul Sengupta) and a then executive of Sitel (Mike Small) conspired to steal Sutherland’s pricing strategies and other confidential company information to win more clients for Sitel. According to the plaintiff, this resulted in Sitel acquiring business with a major customer, which according to sources is the large mobile operator, T-Mobile

“Statistically speaking, in trade secrets cases that get to a verdict stage, about 70% of the time the verdict is in favor of a plaintiff”—Elisaveta Dolghih, Founder at Dolghih Law Group

Although the defendants deny that any trade secrets were stolen, they admit that Small and Sengupta verbally agreed to the latter’s employment by Sitel in mid-2020; that both remained in contact and discussed work-related matters for months while Sengupta still worked for Sutherland; and that Sengupta left the company without disclosing that he would be working almost immediately for Sitel, a direct competitor of his former employer.

Lawyers consulted by NSAM stressed that documented exchanges between Sengupta and Small by themselves don’t prove that both men conspired to steal corporate information from Sutherland in order to benefit Sitel. Nevertheless, they agreed that these materials will add pressure on the defense. Efforts were made to reach both Small and Sengupta via Linkedin, but neither replied. Sitel issued a ‘no comment’ email several weeks ago when asked about the suit. 

A Question of Losses

While Sutherland has ample evidence on the interactions between Sengupta and Small, the matter of monetary compensation is still in the air, according to legal sources.

Sutherland claims that the company lost a juicy contract with a major, longtime customer due to the information allegedly acquired by Sengupta and Small for the benefit of Sitel. This contract would have been awarded in the summer of 2021 to Sitel after a request for proposal (RFP) launched in January of that year.

Due to the open nature of RFPs, the fact that Sutherland lost the contract to Sitel doesn’t necessarily mean that the latter succeeded thanks to allegedly stolen corporate information, explained the lawyers. This point was part of the arguments presented by the defense in its original response to the complaint.

Even if Sutherland manages to prove that the actions of the defendants caused monetary damages to the company, defining the extent of such damages will be a long process on its own.

In the complaint, the plaintiff alleges damages “well over US$75,000”, the minimum amount required by federal courts to deal with cases under what is known as “diversity jurisdiction”. Nevertheless, a precise amount of alleged damages hasn’t been defined in court. NSAM reached out to Sutherland’s legal team asking for a specific number, but received no response.

Kellen Scott, lawyer and shareholder at law firm Chamberlain Hrdlicka

The contract awarded to Sitel amounts to US$50 million a year, according to a source familiar with the case who spoke to NSAM under condition of anonymity. 

If Sutherland manages to win the case, it will have to bring in damages’ experts to assess the extent to which the company’s finances were impacted, explained Dolghigh. The defendants, for their part, will most probably try to dispute that amount, she added.

Kellen Scott, a lawyer and shareholder at law firm Chamberlain Hrdlicka, commented that, if Sutherland is successful in claiming monetary damages, the issue could turn particularly messy.

“I don’t think Sutherland would be entitled to 100% of a contract amount without taking into account the costs that would be incurred to achieve that, like a net profit amount”, he said. “Although the facts here appear to be very bad for Sitel, I don’t know that a judge would be likely to grant damages in the form of the contract amount without taking into account what cost would be incurred to receive or generate that amount.”

 Who’s Paying?

“Winning is only half the battle. The other half is collecting on the judgement,” commented Joshua Redelman, a Texas attorney who specializes in non-competes.

According to Redelman, assuming that Sutherland wins the case and is entitled to being compensated for monetary damages, the process of collecting could be long and painful, especially if it can’t be decided who among the defendants will pay for such damages.

“Winning is only half the battle. The other half is collecting on the judgement,” —Joshua Redelman, Associate at Stibbs & Co. Attorneys

The rest of the lawyers opined that the party responsible for paying for damages would have to be Sitel. Nevertheless, considering that the actions of Sengupta and Small might be determined as cause of the alleged monetary damages, they could be at risk as well.

“There is a possibility that the individual defendants are judgement proof. So, if they don’t have any other assets outside of what is protected, whether it’s your home, a certain amount of cash, your bank accounts, your car, there’s nothing to collect that judgment on, somebody has to fork out the cash,” said Redelman.

Why Not Settle?

All three experts consulted by NSAM agreed that there’s a high probability of the case being settled outside of court even though a trial has already been scheduled.

“The parties can settle at any time, even during the trial,” Dolghih pointed out.” It is likely that they will engage in at least one round of mediation (settlement talks) before trial”.

Kellen Scott sees a high probability for a settlement, though he underlined that there are several possible outcomes for the settlement talks.

Joshua Redelman, Associate at Stibbs & Co. Attorneys

“It is more likely than not that, at one point, this case will settle. It may or may not be confidential; it may or may not include Sitel paying Sutherland an amount they agree on,” said Scott. “It appears that it would not include additional restrictions on these former employees, but it could.”

The settlement might include other terms besides money. Sutherland could try to keep Sitel away from certain customers of theirs. Then again, that could raise controversy over matters of antitrust, he added.

 “If the defendant is convinced that they are going to lose the case, the question then becomes three fold: how much is it gonna cost me to defend, all the way to a trial? What is Sutherland requesting Sitel to pay? How much do I think a judge or jury is going to award in this case?,” Redelman pointed out. “If it’s gonna cost me US$1 million, I think the jury is going to award US$500,000 and they want $US10 million, I’m not gonna settle that.”

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With the trial being scheduled for April of next year, both parties have enough time to convene and come to an agreement. In fact,“having a trial date can certainly motivate parties to get to the settlement table”, said Dolghih.

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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