21st Century Sys. v. Perot Sys. Govt. Svcs., 284 Va. 32

Background

Perot Systems Government Services, Inc. sued 21st Century Systems, Inc. and four former Perot employees (Dellinger, Fallone, Ballard, Hopkins) in a ten-count complaint in the Fairfax County Circuit Court, alleging breaches of fiduciary/non-disclosure/non-compete agreements, conspiracy, computer crimes, trade secret misappropriation, and conversion.
The case focused on alleged conspiratorial acts by former Perot employees to divert Perot business to 21CSI and misappropriate confidential information, seeking damages including lost revenue, lost goodwill, forensic investigation costs, and punitive damages.
Before trial, defendants moved to strike Perot’s damages expert Smigocki’s testimony as speculative; Perot had been sold to Dell in fall 2009, after the alleged acts.
The jury awarded compensatory and punitive damages across Counts I–X, including substantial amounts for lost goodwill and for computer forensics, with the trial court later imposing remittitur and striking duplicative awards.
The trial court ultimately awarded specific damages on Counts IV, VII, and IX, plus attorney’s fees; on appeal, the court reviewed the admissibility of the goodwill damages, the issue of duplicative damages, and the computer-forensics damages, and remanded for fee reconsideration.]
The majority affirmatively held that the trial court abused its discretion by admitting Smigocki’s lost goodwill damages and erred in not setting aside those damages, but affirmed punitive and treble damages and computer-forensics damages; the case was remanded for restructuring and final judgment consistent with the opinion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Smigocki’s goodwill damages model was admissible.	Smigocki used an Advanced Marine-like market-value approach, justified by prior Virginia precedent.	Smigocki’s method relied on post-injury sale data and was unprecedented, speculative, and unsupported.	No; the court held the goodwill damages evidence was insufficient and the trial court abused its discretion in admitting it.
Whether the defense was entitled to rebuttal on the goodwill model.	Defendants were entitled to challenge Smigocki’s model.	Rebuttal testimony on these topics was improperly limited.	The trial court did not err in limiting Dubinsky’s rebuttal testimony under evidentiary rules.
Whether the jury’s trebled and punitive damages were duplicative.	Counts VII (treble damages) and IX (punitive damages) were based on separate duties and injuries.	Treble and punitive awards could double recoveries if duplicative.	Not duplicative; punitive and treble damages may coexist when based on separate claims with different legal duties.
Whether computer-forensics damages were proper damages, not costs of litigation.	Stroz Friedberg invoices reflected damages from Defendants’ conduct needing investigation.	Fees were costs of litigation.	Damages for computer-forensics were proper, not costs of litigation.
Whether the trial court should set aside damages as duplicative or unsupported.	Damages were supported by the record and necessary to compensate.	Damages were duplicative or unsupported by evidence.	The court reversed in part on goodwill damages but affirmed other awards; remanded for fee reconsideration.

Key Cases Cited

Advanced Marine Enters., Inc. v. PRC Inc., 256 Va. 106, 501 S.E.2d 148 (Va. 1998) (frequently-used method for goodwill damages; distinguishable facts but similar methodology)
Wood v. Pender-Doxey Grocery Co., 151 Va. 706, 144 S.E. 635 (Va. 1928) (goodwill is real but difficult to value; not formulaic)
John Crane, Inc. v. Jones, 274 Va. 581, 650 S.E.2d 851 (Va. 2007) (gatekeeping of expert testimony under Rule 4:1; disclosure standards)
Bussey v. E.S.C. Rests., Inc., 270 Va. 531, 620 S.E.2d 764 (Va. 2005) (standard of review for jury verdicts; deference to jury when gaps in evidence)
Syed v. ZH Techs., Inc., 280 Va. 58, 694 S.E.2d 625 (Va. 2010) (necessity of a compensatory predicate for punitive damages)
Gasque v. Mooers Motor Car Co., 227 Va. 154, 313 S.E.2d 384 (Va. 1984) (principles for punitive damages and related standards)