DXC Technology launches legal action against Data#3

DXC Technology has pulled Data#3 into the legal action it is taking against several former employees from its Connect business over alleged confidentiality breaches.

DXC Technology launched the legal action earlier this year against several members of its Connect business's leadership ranks in Australia who, it is understood, may have been in a position, it is alleged, to migrate, potentially en masse, to fellow systems integrator, Data#3.

Among those at the receiving end of the case, which has been brought by DXC Technology in the NSW Supreme Court, is national solutions manager of the company’s DXC Connect business – formerly UXC Connect – Stephen Deibe, along with former DXC Connect general manager, Rob McCabe.

The seven defendants named in the case are largely from DXC Connect’s leadership and upper management ranks.

A judgement handed down on 31 August by the NSW Supreme Court’s Justice Ashley Black, granted DXC Technology an interlocutory injunction restraining McCabe from disclosing or using “specified information” belonging to the integrator.

According to Justice Black, affidavits presented to the court by DXC Connect interim director, Rob Kohler, who stepped in to fill McCabe’s role when he departed, suggest an alleged “degree of planning and coordination as to the circumstances in which several employees of DXC would resign from DXC and join Data#3”.

Now, it has emerged that Data#3 has been named as the eighth defendant in the case against Deibe and the other six individuals tangled up in the case.

ARN sources indicate that Data#3 was formally joined to the legal action in early October, with the matter listed for directions in the court in mid-December.  It is understood that DXC is set to submit an amended statement of claim by 20 October.

According to documents filed with the court earlier this year, DXC Technology's legal action dwells largely on alleged contractual breaches associated with its sensitive commercial information and whether it was shared with other parties.

It should be noted that McCabe’s legal team disputes the bulk of DXC’s claims relating to any alleged disclosure and denies any wrongdoing in that particular matter.

According to the DXC claim before Justice Black, McCabe allegedly prepared a presentation document at Data#3’s request, after meeting with the fellow integrator’s CEO, Laurence Baynham. The presentation was headed “Data#3 Investment Opportunity June 2017”.

“That document identified the purpose, presumably of the business to be created within Data3, as: ‘an agile and customer focused Infrastructure Practice specialising in the design, implementation, and support of customised solutions to meet our customers [sic] business needs’,” Justice Black said in his judgement from August.

DXC Technology had previously sought an order restraining McCabe from using or disclosing its confidential information and restraining him from being employed, engaged or contracted by or working for potential rival, Data#3, directly or indirectly, until further order or by March next year.

Although Justice Black granted DXC an interlocutory injunction restraining McCabe from disclosing or using its “specified information”, McCabe's legal team maintains that the information in question was already in the public domain and, therefore, not commercially sensitive.

This point of view was backed to some degree by Justice Black in his August ruling.

“On the evidence as it stands, I am not persuaded that there is a seriously arguable case that the information contained in the Data3 presentation was not either publicly available information (so far as the information related to government contracts or the identity of DXC employees) or information such as sales targets that would readily have been created by persons within the relevant industry,” Black’s judgement stated.

At the same time, Justice Black also said in his ruling that, "it seems to me that DXC must be treated as the successful party in the application before me, on the basis that it succeeded in obtaining relief as to confidentiality (although not in the form that it had initially proposed) and relief as to the restraint of trade in a wider form than Mr McCabe had been prepared to accept".

While the case presses on, sources indicate that, with Data#3 now named in the action, a counter-claim is likely to ensue, which could see the two integrators go head-to-head over the matter.

It is understood that, while DXC's claim against the former Connect employees largely revolved around the call for injunctions, the joining of Data#3 to proceedings is likely to see the case bring in claims of damages.

As reported by ARN, the exodus of employees from DXC Technology’s Connect business that led to the court case may have allegedly been triggered by disagreements over a major project named Moondust, if documents submitted to the court by McCabe's legal team are anything to go by.

McCabe, like many other DXC Connect personnel, was with the business since before its acquisition by CSC in early 2016.

The organisation was then folded into the DXC Technology brand when CSC merged with Hewlett Packard Enterprise’s (HPE) Enterprise Services business in April, creating IT services powerhouse, DXC Technology.

An affidavit by McCabe, which was submitted to the court as part of the case, alleges that disagreements between Connect and its parent company, DXC Technology, over a multimillion-dollar project, named "Moondust Defence Deal", came at the tail end of a period of increased dissatisfaction among the Connect team and a subsequent exodus of the business's leadership team.

DXC Technology refutes the claim, and denies that this was the case.

The case continues.