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Federal Court Denies IBM’s Post-Judgment Motions; Trial Court Proceedings Conclude With $1.67 Billion Judgment Entered in Favor of BMC Against IBM

HOUSTON – Bracewell LLP secured the denial of IBM’s post-judgment motion on behalf of its client BMC Software, Inc. in BMC’s long-running dispute with IBM. The denial of IBM’s post-judgment motion effectively ends the trial court proceedings. With $21,615,144 in attorneys’ fees and costs now added to the judgment, the full amount of the judgment the Bracewell team achieved against IBM exceeds $1.67 billion.

On May 30, 2022, following a two-week trial handled by a team led by Sean Gorman and Christopher L. Dodson of Bracewell, federal District Court Judge Gray Miller in Houston found that IBM had committed fraud and breached its contract with BMC, and awarded BMC over $1.6 billion in damages. Judge Miller later added $21,615,144 in attorneys’ fees and costs to the damages award.

In denying IBM’s post-judgment motion on August 9, Judge Miller issued a detailed 20-page opinion rejecting each of IBM’s post-judgment arguments.

As to the massive damages, Judge Miller wrote that while the damages are large, they represent the benefit of the bargain IBM and BMC struck. “BMC offered a ‘stable foundation’ for a persuasively ‘reasonable estimate’ of the direct damage incurred by IBM’s breach,” wrote Judge Miller in his August 9 opinion, “and the court once more declines IBM’s invitation to ‘escape liability.’”

As to fraud, Judge Miller wrote that IBM’s arguments “would encourage fraudulent parties to gaslight their counterparts during contractual negotiations—what IBM did here—to evade subsequent accountably in a fraudulent inducement action. That principle finds no support in Texas law.” Judge Miller concluded that “IBM’s fraudulent, bad faith conduct privileged profit over the good faith that free contractual enterprise requires, eroding the public senses of justice and confidence.”

Addressing the punitive damages award, Judge Miller wrote that “IBM’s intentional, deceptive, and fraudulent misconduct was near the apex of reprehensibility for an entity of its size and sophistication.”

“Working together with the BMC legal team, we fought to reveal the facts and prevailed. We look forward to protecting this substantial judgment on appeal,” said Gorman, who led the Bracewell team representing BMC, along with Dodson.

Additional Resources:

Memorandum Opinion & Order (Aug. 9, 2022): BMC Software, Inc. v. International Business Machines Corporation

Amended Final Judgment: BMC Software, Inc. v. International Business Machines Corporation