United States District Court, S.D. New York
OPINION & ORDER
KATHERINE B. FORREST, UNITED STATES DISTRICT JUDGE
Memorandum Decision & Order resolves three motions in
this protracted litigation between PaySys International, Inc.
(“PaySys”) and defendants Atos Se, Worldline SA
(“Worldline”) and Atos IT Services Ltd.
(“Atos IT”) (collectively, “Atos”)
regarding the rights to CardPac, a computer program owned by
before the Court are PaySys's motion to voluntarily
dismiss the complaint with prejudice (ECF No. 275),
Atos's motion for summary judgment (ECF No. 280) and
PaySys's motion for partial summary judgment (ECF No.
286). For the reasons set forth below, the Court hereby
GRANTS PaySys's motion for voluntary dismissal and
dismisses the action with prejudice under Federal Rule of
Civil Procedure 41(a)(2), subject to the terms set forth
herein. The motions for summary judgment at ECF Nos. 280 and
286 are hereby terminated as moot.
case began in late 2014. After nearly three years of
litigation and several rulings on dispositive motions-the
history of which has been recounted elsewhere-this case was set
to proceed to trial on June 5, 2017 on the only remaining
claims: PaySys's first cause of action for breach of
contract (see ECF No. 103 (“SVAC”)
¶¶ 156-62) and Atos's second, fourth and fifth
counterclaims for declaratory judgments concerning the
parties' contract (see ECF No. 108
(“Answer”) ¶¶ 51-53, 57-59, 60-62).
issue here is a license agreement first executed in 1988 and
later amended in 1990 and 2001 (the Software Acquisition
Agreement, or “SAA”), pursuant to which
PaySys's predecessor licensed Atos certain rights to a
computer program known as “CardPac.” PaySys
alleges that Atos breached its agreements with PaySys by (1)
granting rights to licensees in violation of the
agreements' territorial restrictions, and (2) selling a
software known as “APS” and its derivatives
without following certain contractual procedures, including
paying certain fees to PaySys. (SVAC ¶¶ 156-62.)
Atos, in turn, contends that no such breach occurred (Answer
¶¶ 51-53 (second cause of action)), that PaySys
lacks ownership rights in certain programs (id.
¶¶ 60-62 (fifth cause of action)) and that the SAA,
as amended, confers no audit rights on PaySys (id.
¶¶ 57-59 (fourth cause of action)).
2001 amendment to the SAA (the 2001 Confidential Settlement
Agreement, or “CSA”) contains a fee-shifting
provision, Section 6(e). Section 6(e) provides that:
In the event of litigation between the parties with respect
to any claim that [Atos's predecessor] or any of [its]
[a]ffiliates has committed a territorial violation, the
prevailing party shall be entitled to an award of its
reasonable attorneys' fees.
(ECF No. 130 Ex. 4 § 6(e) (“Section 6(e)”).)
Court now must decide three dispositive motions filed on the
eve of the April 7, 2017 summary judgment deadline:
PaySys's motion to voluntarily dismiss the complaint with
prejudice (ECF No. 276) and two dueling summary judgment
motions seeking dismissal of all, in the case of Atos's
motion (ECF No. 280), or part, in the case of plaintiff's
motion (ECF No. 286), of PaySys's remaining contractual
parties' positions with regard to these motions are set
forth not only in their respective briefs, but also in
various letter submissions filed in response to the
Court's inquiries. PaySys seeks to voluntarily dismiss the
case with prejudice and, as a condition of dismissal, agrees
to grant Atos “an unqualified covenant not to sue with
an unrestricted, perpetual, assignable global license to
CardPac and CardPac derivatives with no further obligations
to PaySys.” (ECF No. 309 at 2 (alterations omitted);
see also ECF No. 276 at 6-8 (discussing offer to
grant license); ECF No. 303 at 4 (same).) Atos consents to a
dismissal on these terms, provided the Court additionally
finds that Atos, as the “prevailing party” under
Section 6(e), is entitled to its reasonable attorneys'
fees. (ECF No. 296; ECF No. 306 at 5; ECF No. 312 at 6-8. The
parties agree that granting PaySys's 41(a)(2) motion in
any form-that is, regardless of whether the Court awards Atos
attorneys' fees-moots the parties' pending motions
for summary judgment and defendants' remaining
counterclaims. (ECF No. 303 at 4; ECF No. 306 at 5.) The
Court therefore considers PaySys's Rule 41(a)(2) motion
motion under Rule 41(a)(2), and Atos's conditional
consent thereto, raises two key questions: First, does
PaySys's voluntary dismissal of its contractual claim
render Atos the “prevailing party” with regard to
“any claim that [Atos] . . . committed a territorial
violation, ” such that Atos is entitled to an award of
its reasonable attorneys' fees under Section 6(e) of the
parties' contract? Second, if so, may this court
condition approval of PaySys's Rule 41(a)(2) motion on
the award of reasonable attorneys' fees to Atos? For the
reasons set forth below, the Court answers both questions in
Interpretation of the Term “Prevailing
deciphering what the parties intended by the term
“prevailing party, ” the Court turns to
well-established principles of contractual interpretation. In
the absence of any alleged ambiguity or contrary intent,
contractual terms must be accorded their plain meaning.
E.g., Law Debenture Trust Co. of N.Y. v.
Maverick Tube Corp., 595 F.3d 458, 467-68 (2d Cir. 2010)
(“Thus, a written agreement that is complete, clear and
unambiguous on its face must be interpreted according to the
plain meaning of its terms, without the aid of extrinsic
evidence”) (alterations, quotation marks and internal
citations omitted); R/S Assocs. v. N.Y. Job Dev.
Auth., 771 N.E.2d 240, 242 (N.Y. 2002) (same). An
ambiguity does not exist merely because a term is undefined,
as courts in such cases will treat “an established
definition provided by state law . . . as a default rule, and
that definition will control unless the parties explicitly
indicate, on the face of their agreement, that the term is to
have some other meaning.” Hugo Boss Fashions, Inc.
v. Fed. Ins. Co., 252 F.3d 608, 617-18 (2d Cir. 2001).
If “neither the contract nor state law defines a
disputed term, ” courts should then turn to federal law
for guidance, provided the “contracting parties use
terms and concepts that are firmly rooted in federal law, and
where there are no explicit signals to the contrary.”
Id. at 618.
the SAA expressly states that it “shall be governed by
and construed in accordance with the laws of the United
States and of the State of New York.” (ECF No. 130 Ex.
1 § 17(a).) The Court understands this provision to mean
that the contract is governed by New York law-as the Court
has previously held (see ECF No. 232 at 3), as
PaySys has insisted (see ECF No. 345 at 4-6) and as
Atos has previously intimated (see Answer ¶
27)-and that federal law serves as a backdrop where state law
authority is lacking. Put differently, the Court reads the
parties' contract as perfectly tracking the interpretive
default rule set forth in Hugo Boss. New York's
established definition of the term “prevailing party,
” therefore, should govern the dispute at
Court also recognizes, however, that other courts in this
district have turned to federal law to define the term
“prevailing party” in New York-based contracts,
see, e.g., Great Earth Int'l Franchising
Corp. v. Milks Dev., Inc., No. 01-CV-141 (AKH), 2004 WL
2049268, at *2 (S.D.N.Y. Sept. 13, 2004), and the
parties' initial briefing on this motion focused on case
law analyzing the federal law interpretation of the term
(see ECF No. 312 at 7-8; ECF No. 327 at 2-3). Though
the Court believes New York law ought to govern this issue,
it matters little whether the parties intended New York or
federal definitions to apply, as Atos is the
“prevailing party” under either framework.
New York Law
New York law, “[i]n determining whether a party is a
prevailing party, a fundamental consideration is whether that
party has ‘prevailed with respect to the central relief
sought.'” Chainani v. Lucchino, 942
N.Y.S.2d 735, 736 (App.Div. 2012) (quoting Nestor v.
McDowell, 615 N.E.2d 991, 994 (N.Y. 1993)).
“[S]uch a determination requires an initial
consideration of the true scope of the dispute litigated,
followed by a comparison of what was achieved within that
scope.” Excelsior 57th Corp. v. Winters, 641
N.Y.S.2d 675, 676 (App.Div. 1996) (citing Solow v.
Wellner, 613 N.Y.S.2d 163 (1994), aff'd,
658 N.E.2d 1005 (N.Y. 1995)). “Prevailing party”
status is determined on the matter as a whole, not on a
claim-by-claim basis. See Wiederhorn v. Merkin, 952
N.Y.S.2d 478, 482 (App.Div. 2012) (“It is not necessary
for a party to prevail on all of his claims in order to be
considered ‘prevailing'”); see also
Matsumura v. Benihana Nat'l Corp., No. 06 CIV. 7609