IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

STEVEN E. SCHWARTZ ,

Plaintiff,

v. COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION, a Delaware Corporat i on

Defendant

. ) ) ) ) ) ) ) ) ) ) ) C.A. No. 20 21

- 06 34

- LWW

MEMORANDUM OPINION Date Submitted: January 12, 202 2 Date Decided: March 2 5 , 2022 Bartholomew J. Dalton and Michael C. Dalton , DALTON & ASSOCIATES, P.A. , Wilmington, Delaware; Adam Balick and Michael Collins Smith , BALICK & BALICK, LLC , Wilmington, Delaware ; Counsel for Plaintiff Steven E. Schwartz David E. Ross and Anthony Calvano , ROSS ARONSTAM & MORITZ LLP, Wilmington, Delaware; J. Christian Word , LATHAM & WATKINS LLP , Washington , DC ; Luke Nikas, QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, New York; William A. Burck and Ben A. O’Neil, QUINN EMANUEL URQUHART & SULLIVAN, LLP; Counsel for Defendant Cognizant Technology Corporation

WILL, Vice Chancellor1

The plaintiff, a former officer of Cognizant Technology Solutions Corporation, asks this court to enjoin Cognizant from pressing fraud claims against a law firm representing the plaintiff in other matters. The plaintiff previously sought
advancement in this court after Cognizant had accused the firm of fraudulent billing practices and stopped advancin g the firm ’s fees

. In April 2020, the court entered an
order largely in the plaintiff’s favor

. Cognizant has since honored its advancement obligations. In July 2021, Cognizant again accused the plaintiff’s counsel of fraudulent billing practices and sue d that counsel in New York federal court, invoking diversity jurisdiction. The plaintiff subsequently filed the present action, seeking an anti

- suit injunction an d a finding of civil contempt. Meanwhile, his counsel has moved to
dismiss the New York federal action on grounds including forum non conveniens
because the plaintiff’s indemnification agreement contain ed a Delaware forum selection provision.
For the reasons explained in this opinion, I deny the plaintiff’s motio n for an
anti

- suit injunction . It is well settled that a state court lacks the power to enjoin a party from proceeding with in personam litigation in a federal court that has jurisdiction . The plaintiff asserts that this case is different because of the potential application of a Delaware forum s election provision. But the New York federal2

court

— not this court

— must determine whether it is a proper forum for Cognizant’s
fraud claims.
I also decline to hold Cognizant in contempt. T he plaintiff has not identified
any violation of this court’s advancement orders that could support su c h relief.
I. BACKGROUND The plaintiff, Steven E. Schwartz, is the former Executive Vice President, Chief Legal and Corporate Affairs Officer of defendan t Cognizant Technology Solutions Corporation (the “Company”). 1 Cognizant is an American multinational information technology services and consulting company headquartered in Teaneck, New Jersey and incorporated in Delaware. 2
Schwartz and Cognizant signed an Indemnification Agreement on June 4,
2013 that requires Cognizant to advance legal expenses incurred by Schwartz by
reason of the fact that he was a Cognizant officer

. 3 The Indemnification Agreement
contains a Delaware forum selection provision:

This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commended by Indemnitee

1 Verified Compl. for Inj. Relief (“ Compl. ”) ¶ 4 (Dkt. 1)

. 2 Cognizant, About Cognizant , https://www.cognizant.com/us/en/about

- cognizant (last visited March 24, 2022)

. 3 Pl.’s Opening Br. Ex. C (“Advancement Compl.”) ¶ 3 (Dkt. 29) ; Compl. Ex. G (“ Indemnification Agreement ”) § 10 (Dkt. 2)

.3 pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agree ment shall be brought only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country [and] (ii) consent to submit to the exclusive jurisdiction of the Delaware court for purposes of any action or proceeding arising out of or in connection with this Agreement

. . . . 4
A. Schwartz Is Investigated and Cognizant Begins Advancement Payments . In April 2016, Cognizant began investigating potential internal violations of
the Federal Corrupt Practices Act (the “FCPA ” ) involving alleged bribery payments to government officials in India

. 5 Schwartz initially led the investigation. 6 He was removed from that role in August 2016 when Cognizant learned that he may have
been involve d in un lawful conduct. 7 In September 2016, Cognizant reported certain findings from its internal investigation to the Department of Justice and the Securities and Exchange Commission, and each began its own investigation. 8 Schwartz retained counsel and

4 Indemnification Agreement § 23.
5 Advancement Compl. ¶ 21.
6 Id. ¶ 22.
7 Id. ¶ 23.
8 Id

. ¶ 25.4

resig ned soon after. 9 The Company acknowledged its obligation to advance fees to Schwartz’s counsel in connection with the investigations in late October 2016. 10
B. Cognizant Stops Advancement Payments and Schwartz Sues
. In the summer of 2018, Schwartz hired Jeremy Bohrer and Bohrer PLLC ( together, “ Bohrer”) and Paul, Weiss, Rifkind, Wharton & Garrison LLP to represent
him in the DOJ and SEC investigations. 11 Cognizant initially expressed reluctance
to advance fees to Boh rer but agreed to advance the fees after Schwartz’s counsel certified by affidavit that the expenses were reasonable. 12 On February 1 4 , 2019, t he Department of Justice indicted Schwartz in the United States District Court for the District of New Jersey for alleged violations of
the FCPA. 13 The Securities and Exchange Commission filed a civil enforcement action against Schwartz the next day. 14 Schwartz w as also named as a defendant in
a securities fraud class action and two stockholder derivative actions. 15

9 Id. ¶¶ 24, 29.
10 Id. ¶ 28.
11 Id. ¶¶ 1, 33

- 3 4

. 12 Id. ¶ ¶ 38

- 42 ; see Indemnification Agreement § § 2(g) , 10

. 13 Advancement Compl. ¶ 43; see United States v. Coburn , No. 19

- cr
- 120 (D.N.J.)

. 14 See S.E.C. v. Coburn , Civ. No. 19

- cv
- 5820 (D.N.J.).
15 See Compl. ¶ 14; In re Cognizant Tech. Sols. Corp. Sec. Litig. , No

- 16

- cv
- 6509 (D.N.J.) ; In re Cognizant Tech. Sols. Corp. Deriv. Litig. , No. 17

- cv
- 1248 (D.N.J.).5

In November 2019, t he Company informed Schwartz that it would discontinue advancing fees to Bohrer based on its suspicions that Bohrer ’s fees were unreasonable and, in some cases, fraudulent. 16 Schwartz responded by filing an
advancement action in this court on December 16, 2019. 17
C. Cognizant Is Ordered to Continue Advance ment Payments . Schwartz moved for summary judgment , which Chancellor Bouchard granted in part o n April 7, 2020

. The court found that the Indemnification Agreement required Cognizant to continue advancing fees for Bohrer ’s services because “ the conclusive presumption [of reasonableness] in the indemnification agreement applies to the invoices of the Bohrer firm at issue [t] here .” 18 A n order implementing
the c ourt’s s ummary j udgment ruling was entered on April 17, 2020 (the “Implementing Order”)

. 19 The parties subsequently reached an agreement to settle the remaining issues in the ca se. On September 22, 2020, t he court entered an order dismissing the action (the “Dismissal Order”) and retaining jurisdiction to enforce
the Implementing Order. 20

16 See Advancement Compl. ¶¶ 4 4

- 46

. 17 C.A. 2019

- 1004

- CB, Dkt. 1

. 18 C.A. 2019

- 1004

- CB, Dkt . 54 at 23

- 24. Chancellor Bouchard did not require Cognizant to advance fees to Bohrer with the respect to the use of its contract attorneys. Id. at 25

- 29.
19 C.A. 2019

- 1004

- CB, Dkt. 53.
20 C.A. 2019

- 1004

- CB, Dkt. 82.6

D. The Federal Action a nd This Litigation On June 16, 2021, Cognizant filed a lawsuit in the United States District Court for the Southern District of New York against Bohrer (the “SDNY Action”)

. 21 Cognizant alleg ed that Bohrer had engaged in fraud and civil conspiracy and was unjust ly enrich ed with regard to the firm’s billing practices. 22 Bohrer moved to dismiss or stay th e SDNY A ction on grounds including forum non conveniens given the forum selection clause in the Indemnification Agreement. 23 That motion is currently pending. 24 On July 21, 2021, Schwartz filed a n action in this court seeking an anti

- suit injunction and an order holding Cognizant in civil contempt for violating th e court’s Implementing and Dismissal Order s
. 25 Schwartz moved to expedite the proceedings,
which I de nied on August 23, 2021 for failure to demonstrate irreparable harm. 26 On October 18, 2021, Schwartz filed a Motion for Anti

- Suit Injunction and Civil Contempt. 27 After briefing, oral argument was held on January 12, 2022. 28

21 Cognizant Tech. Sols. Corp. v. Bohre r PLLC , Civ. No. 1:21

- cv
- 05340 (S.D.N.Y).
22 See Compl. 2; Pl.’s Opening Br. Ex. I.
23 Pl.’s Opening Br. Ex. AA at 8

- 12.
24 See Pl.’s Opening Br. Exs. AA, BB, CC.
25 Dkt. 1.
26 See Dkt. 24.
27 Dkt. 29.
28 Dkt. 44.7

II . LEGAL ANALYSIS
Schwartz asks this court to enjoin Cognizant from prosecuting its claims in
the SDNY Action and to hold the Company in civil contempt for filing t hat action

. I first evaluate the plaintiff’s request for an anti

- suit injunction before considering his contempt arguments

. A. The Anti
- Suit Injunction Motion “Black letter principles of law recognize that an anti

- suit injunct ion is appropriate (1) to address a threat to the court ’ s jurisdiction; (2) to prevent evasion of important public policy; (3) to prevent a multiplicity of suits; or (4) to protect a party from vexatious or harassing litigation.” 29 Schwartz ’s arguments primarily fall into the first and second categories

. He argues that the SDNY Action violates the Delaware forum provision in the Indemnification Agreement and this court’s jurisdiction

. I need not reach those argument s . Simply put, t his court cannot grant the anti

suit injunction Schwartz seeks

. As the United States Supreme Court explained in Donovan v. City of Dallas , it is a “well

- established judicially declared rule that state

29 In re TransPerfect Glob., Inc. , 2019 WL 5260362, at *14 (Del. Ch. Oct. 17, 2019 ) (quoting In re Liquidation of Freestone Ins. Co. , 143 A.3d 1234, 1249 (Del. Ch. 2016)) (internal quotations omitted)

.8

courts are completely without power to restrain federal

- court proceedings in
personam actions” where the federal court has jurisdiction. 30
In Donovan , the plaintiffs brought a class action in Texas s t ate court that sought to enjoin the City of Dallas from building a n airport runway and issuing municipal bond s for that purpose

. 31 After losing in state court and exhausting their appeals, the plaintiffs filed a n action seeking similar relief in the United States
District Court for the Northern District of Texas

. 32 The City of Dallas filed a motion
to dismiss in federal court but also successfully applied to the Texas state court for a writ of prohibition barring the federal plaintiffs from prosecuting their action. 33 The United States Supreme Court granted certiorari and subsequently reversed the
Texas Supreme C ourt , finding that the state court was “without power” to enjoin the plaintiffs from invoking t heir right to prosecute the federal court action

. 34

30 Donovan v. City of Dallas , 377 U.S. 408, 4 12

- 13 (1964) ; see Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 21 n.24 (1983) (noting that the state court’s injunction c ould not prevent a litigant from filing or prosecuting a lawsuit in the federal court) ; see also Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1838 (3d ed.) (“[T]he [United States] Supreme Court h a s h e ld that a state court is without authority to enjoin the prosecution of a concurrent federal action. ” )

. 31 Donovan , 377 U.S. at 40 8

- 0 9 ; see also Gen. Atomic Co. v. Felter , 434 U.S. 12, 1 2 (1977) ( “It is therefore clear from Donovan that the rights conferred by Congress to bring in personam actions in federal courts are not subject to abridgment by state

- court injunctions, regardless of whe ther the federal litigation is pending or prospective.”).
32 Donovan , 377 U.S. at 409.
33 Id. at 40 9

- 10

. 34 Id. at 41 3

- 14 (explaining that the Texas state court lacked that power regardless of whether “the prohibition . . . was addressed to the parties rather than to the federal court itself”) ; see Gen. Atomic , 434 U.S. at 17 (“Donovan presented as compelling a case as there9

That rule was reiterated by t he United States Supreme Court in General
Atomic Co. v. Felter , where the Court held that a New Mexico state court’s injunction restraining a party from prosecuting actions in federal court was in “direct conflict” with the Supremacy Clause of the United S tates Constitution

. 35 The Court
observed that it was “clear from Donovan [that] the rights conferred by Congress to bring in personam actions in federal court are not subject to abridgement by state

court injunctions

. ” 36
T h is court has consistently fol lowed the doctrine set forth in Donovan on the
few occasions it has addressed it

. I n Malonado v. Flynn , the Court of Chancery held
that a request to order a party to withdraw two motion s to dismiss in different federal

court s was “without legal foundation, [was] therefore improper, and never should have been filed in this Court.” 37 The court explained that “[t]he law has been clearly settled since 1964 when the Supreme Court in Donovan . . . held that a State Court cannot enj oin litigants from proceeding in a pending federal in personam action.” 38
I n Paul N. Gardner Defined Plan Trust v. Draper , the court determined to grant the plaintiffs’ request to voluntarily dismiss litigation in Delaware so that they
could be for permitting a state court to enjoin the further prosecution of vexatious federal proceedings.”).
35 Gen. Atomic , 434 U.S. at 15.
36 Id. at 17.
37 1979 WL 4632, at *1 (Del. Ch. Dec. 14, 1979).
38 Id.10

could become part of proceedings in California state and federal court. 39 The court remarked that it did not “h ave the power to enjoin a litigant from prosecuting an
action in personam in a federal court that has jurisdiction over both the parties and the subject matter.” 40
And i n Zeneca, Inc. v. Monsanto Co. , then

- Vice Chancellor Jacobs considered whether to dismiss an action for lack of subject matter jurisdiction where a plaintiff seeking legal relief proposed to amend its pleading to add a claim for injunctive
relief. 41 Specifically, the plaintiff sought to enjoin the defendant from interfering with its efforts to register with the United States Environmental Protection Agency. 42
The court dismissed the action on other grounds but noted that even if the plaintiff “could persuasively claim a genuine need for injunctive relief, this Court’s power to grant that relief is open to serious question.” 43 Citing Donovan and General Atomic , the court explained that “[i]t is well established that under the Sup remacy Clause of
the United States Constitution, a state court is without power to enjoin a litigant from

39 1993 WL 125517, at *4 (Del. Ch. Apr. 8, 1993).
40 Id.
41 1996 WL 104254 , at *3

- 5 (Del. Ch. Mar. 7, 1996).
42 Id. at *2.
43 Id. at *4 n.3.11

litigating a claim in a federal court ” where “ the right to litigate in a federal court [has been] granted by Congress .” 44
Schwartz does not contend that the federal court lacks jurisdiction over the
SDNY Action

. He has not cite d to any authority where a state court

— in Delaware
or otherwise

—has enjoined a litigant from proceeding with an in personam action
in a federal court exercising diversity jurisdiction

. And this court is aware of none.
T he closest authority Schwartz relies on is Munich American Reinsurance Co. v. Crawford , where the United States Court of Appeals for the Fifth Circuit found
that a n Oklahoma state court ’s injunction of a federal court arbitration order was authorized by a federal statute. 45 But that case does little to advance Schwartz’s position. T he re, the circuit court required the dismiss al of an action under a federal

statute that granted primary responsibility over the insurance industry to the states and pre empted the Federal Arbitration Act , leaving the district court “without the power to compel arbitration.” 46 The circuit court was explicit, however, that it was “not saying that a State has the power to enjoin a party generally from pursuing

44 Id. For the sake of completeness, I note that Donovan was also cited by this court , without discussion , in Sinclair Can

. Oil Co. v. Great N. Oil Co. , 233 A.2d 746, 751 (Del. Ch. 1967).
45 141 F.3d 585, 59 5

- 9 6 (5th Cir. 1998).
46 Id. at 596.12

federal remedies in federal court ” or “ that Oklahoma law divested the district court of its diversity jurisdiction.” 47 In this case, no federal statute empower s this court to grant the requested anti

suit injunction

. Schwartz asserts that the court can nonetheless enjoin Cognizant from prosecuting the SDNY Action because the parties “waived federal jurisdiction”
over claims arising from the Indemnification Agreement by agreeing to a Delaware forum provision

. 48 I n M/S Bremen v. Zapata Off

- Shore Company , however, the United States Supreme Court held that a forum selection clause does not “ oust ” a federal district court of its subject matter jurisdiction over an action. 49 Instead, a forum selection clause present s a question of whether a “ court should

. . . exercis e[] its jurisdiction t o . . . give effect to the legitimate expectations of the parties .” 50

47 Id. at 595

. 48 Mot. for Anti

- Suit Inj. Hr’g Tr. Jan 12, 2022, at 13 (Dkt. 44) ; see Pl.’s Opening Br. 51

- 5 4

. The plaintiff cites to Murakami v. E.L. DuPont De Nemours & Co. to argue that a state court can enjoin a party from prosecuting a federal action when “a forum selection clause may bar federal jurisdiction.” 191 F.3d 460 at * 3 (9th Cir. 1999) (TABLE) . In Murakami , a state court did not enjoin plaintiff s from litigating a claim in federal court. Instead, the court held that the plaintiffs had plausibly claimed that the defendant improperly removed the action to federal court because an operative forum selection provision mandated that litigation be filed in Hawaii state court. Id.
49 407 U.S. 1, 12 (1972) ; Licensed Prac

. Nurses, Technicians & Health Care Workers of N

. Y, Inc. v. Ulysses Cruises, Inc ., 131 F. Supp. 2d 393, 402

- 03 (S.D.N.Y. 2000)

. 50 Bremen , 407 U.S. at 12.13

That is not a question for this court to answer

. 51 It is a matter for the Southern District of New York, where Bohrer has moved to dismiss the SDNY Action on forum non conveniens grounds

. 52 That court is “fully capable” of preventing any misuse of the “right to pursue federal remedies and take advantage of federal procedures and defenses in federal actions

. ” 53
Schwartz’s motion for an anti

- suit injunction is therefore denied.
B. The Civil Contempt Motion
Schwartz also asks that Cognizant be held in civil contempt

. Court of Chancery Rule 70(b) authorizes the court to find a party in contempt for failing “to obey or to perform any order.” 54 “ To be held in contempt, a party must be bound by an order, have notice of it, and nevertheless violate it .” 55

51 See Donovan , 377 U.S. at 411 ( “ [W] hether or not a plea of res judicata in the second suit would be good is a question for the federal court to decide

. ”). This c ourt has previously recognized its inability to enjoin a party from pursuing litigation in federal court , despite the existence of a Delaware forum selection provision

. See In re Alarm.com, Inc. v. Comcam Int’l, Inc. , C.A. No. 2017

- 0012

- JRS, at 35

- 40 (Del. Ch. Feb. 22, 2017) (TRANSCRIPT) ; Ford Motor Co. v. Paice , LLC , C.A. No. 9143

- VCP, at 10

- 15 (Del. Ch. Feb. 11, 2014) (TRANSCRIPT).
52 Federal courts have enforce d forum selection clauses “through the doctrine of forum non conveniens .” Lee v. Fisher , 2021 WL 165 9842 (N.D. Cal. Apr. 27, 2021); see Ocegueda v. Zuckerberg , 526 F. Supp. 3d 637, 648 (N.D. Cal. 2021) (“Courts enforce a forum

- selection clause through the doctrine of forum non conveniens.”); but see Seafarers Pension Plan v. Bradway , 23 F.4th 714 (7th Cir. 2022)

. 53 Gen. Atomic , 434 U.S. at 18

- 19.
54 Ct. Ch. R. 70(b).
55 Aveta Inc. v. Bengoa , 986 A.2d 1166, 1181 (Del. Ch. 2009).14

Schwartz contends that the SDNY Action contravenes this court’s Implementing and Dismissal O rders in the advancement action. A fter failing to prevail on its arguments about Bohrer’s fees here , he argues that Cognizant raised
the same issues in the SDNY Action despite this court retaining jurisdiction to enforce the Implementing Order. He maintains that the facts presented closely parallel those in In re TransPerfect Glob al , Inc. , where the court found a party to be in contempt of an order retaining jurisdiction. 56
The facts at issue in TransPerfect are very different from the present matter.
In TransPerfect , the c ourt issued an order retaining “continuing and exclusive jurisdiction” over all matters relating to the case, including the interpretation and
enforcement of all orders of the c ourt. 57 By cont rast, t he Dismissal Order entered by
Chancellor Bouchard did not retain exclusive jurisdiction over every related matter

. I t retained jurisdiction solely to enforce the Implementing Order which, in turn, requires Cognizant to advance legal fees to Schwartz as required by the Indemnification Agreement and the Company’s bylaws. 58 Cognizant did not violate the Dismissal Order by filing the SDNY Action.
Nor did it “fail to obey” the Implementing Order. 59 Schwartz acknowledges that

56 Pl.’s Opening Br. 53

- 58 ; see TransPerfect , 2019 WL 5260362, at *1.
57 TransPerfect , 2019 WL 5260362, at *5.
58 C.A. 2019

- 1004

- CB, Dkts. 53, 82.
59 Ct. Ch. R. 70(b).15

Cognizant has continued to advance his fee s as required by the Implementing Order

. T h erefore, this court has no basis to hold Cognizant in contempt.
III. CONCLUSION For the reasons explained above, the plaintiff’s motion for an anti

- suit injunction is denied. The plaintiff’s request that Cognizant be held in c ivil contempt
is also denied.