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Kemper Corporate Services, Inc. v. Computer Sciences Corp.

United States Court of Appeals, Fifth Circuit

January 10, 2020

KEMPER CORPORATE SERVICES, INCORPORATED, Plaintiff - Appellee
v.
COMPUTER SCIENCES CORPORATION; DXC TECHNOLOGY COMPANY, Defendants - Appellants COMPUTER SCIENCES CORPORATION, Plaintiff - Appellant
v.
KEMPER CORPORATE SERVICES, INCORPORATED; Defendant-Appellee

          Appeal from the United States District Court for the Northern District of Texas

          Before SOUTHWICK, WILLETT, and OLDHAM, Circuit Judges.

          LESLIE H. SOUTHWICK, CIRCUIT JUDGE

         This is an appeal of the district court's confirmation of an arbitral award over the objection that the arbitrator had exceeded his authority. We agree with the district court that no such defect in the arbitration exists. AFFIRMED.

         FACTUAL AND PROCEDURAL HISTORY

         Kemper Corporate Services, Incorporated ("Kemper"), an insurance company, hired Computer Sciences Corporation ("CSC"), a software developer and technology-services company, to update its insurance software. The parties entered into a multi-year software-services contract, known as the "Exceed Agreement." It contained provisions for arbitration. The Exceed Agreement consisted of a Master Software License and Service Agreement ("MSLSA"), Addendum No.1 ("Addendum"), two work orders, and a product order. Before the parties executed the Exceed Agreement, CSC advised Kemper that it planned to update CSC's existing Exceed computer program from COBOL language to a modern Java version.

         The parties agreed that "all disputes arising out of or relating to [the Exceed Agreement], or the breach thereof," must be submitted to nonbinding mediation. The MSLSA provided that if a dispute was not resolved by mediation, the parties could submit to binding arbitration for a final determination. Section 9.3(e) of the MSLSA specified:

With respect to any matter brought before the arbitrator, the arbitrator shall make a decision having regard to the intentions of the parties, the terms of this Agreement, and custom and usage of the insurance and data processing industry. Such decisions shall be in writing and shall state the findings of fact and conclusions of law upon which the decision is based, provided that such decision may not (i) award consequential, punitive, special, incidental or exemplary damages or any amounts in excess of the limitations delineated in Section 7 of this agreement . . . .

         The limitations referenced in the above quotation from Section 9 of the MSLSA were the following:

7.2.2.Even if [Kemper's] exclusive remedies fail of their essential purposes, CSC shall never be liable under this agreement to [Kemper] or others for any economic loss or consequential damages (including lost profits or savings) indirect, incidental, special or punitive damages arising out of this agreement . . . .
7.2.3. In no event shall [Kemper] be entitled to an award of punitive, exemplary or multiplied damages for any breach of this agreement by CSC.

(original in all capitals and boldface).

         Further, in the Addendum executed by the parties and incorporated into the MSLSA, the parties agreed that

if for reasons not caused by [Kemper], CSC fails to make the Java version of the [Exceed] program generally available to its licensees within [the contractually agreed upon time period, Kemper] may declare CSC in breach of the Agreements and will be entitled to all remedies set forth in this Addendum (including, without limitation, all payments made by [Kemper] pursuant to the Agreements but without any limitations based upon ...

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