*1 In the latest chapter of this very contentious dispute, this matter came before me on the allegations of the plaintiff, Pacific Packaging Products, Inc., that the defendants, Packaging Partners, LLC, James Barenboim, Andrew Slater, Steven Slater, David Guild, J.M .S. Packaging, Inc., and Sandra Zeraschi violated the preliminary injunction entered by Judge Billings, spoliated evidence, and committed fraud upon the Court in the course of previous proceedings in this matter. As a sanction, the plaintiff seeks the entry of judgment against the defendants. Ten days of hearings were held on the allegations and voluminous exhibits were introduced in the course of those hearings. The parties submitted proposed findings of fact and conclusions of law. For the reasons which follow, I find that the defendants did violate the terms of the injunction issued by Judge Billings on April 20, 2010; that certain evidence was spoliated by the defendants; and that the defendants committed fraud upon the court.

FINDINGS OF FACT

Based on the credible testimony and other evidence at the hearings before me, on the reasonable inferences from that testimony and other evidence, and on my review of the docket and of the rulings made by others and by me, I make the following findings of fact.

Background and Prior Proceedings

1. The plaintiff, Pacific Packaging Products, Inc. (Pacific Packaging), is a distributor of packaging products and is located in Wilmington, MA.

2. The defendants, James Barenboim, Andrew Slater, Steven Slater, and David Guild (the Defendants) were salesmen at Pacific Packaging until their resignation from that company on October 15, 2009. The Defendants formed Packaging Partners, LLC and commenced operating it on October 16, 2009.

3. The defendant, Sandra Zeraschi (Zeraschi), was a sales correspondent at Pacific Packaging and she worked with several salesmen there, including the defendants Guild and the Slaters. She resigned her position at Pacific Packaging on October 16, 2009, and went to work with the Defendants at Packaging Partners.

4. On November 4, 2009, Pacific Packaging filed the complaint in this matter.

5. By motion, Pacific sought an order for expedited discovery and for the preservation of evidence. (Paper # 5.)

6. As part of their opposition to that motion, the Defendants submitted an Affidavit of Sandra Zeraschi dated November 6, 2009. (Exhibit 41.) Countering an allegation in the plaintiff's complaint, Zeraschi denied any solicitation of her by the Defendants before her resignation and stated that she initiated contact with them after she had learned that they had resigned their employment with Pacific.

7. In an order dated November 19, 2009, Judge Inge allowed the plaintiff's motion for expedited discovery and ordered: the production of documents called for in the plaintiff's request for production of documents, the taking of certain depositions, the preservation of all documents and electronically-stored data relating to the claims in the complaint, the provision of such electronically-stored information to plaintiff's counsel and their experts, and, within five business days, the provision of any and all computers, laptops, removable storage and other devices used in connection with the Defendants' businesses to plaintiff's counsel and experts for examination and copying. The order did not prohibit the use by the Defendants of Pacific documents or information. (Paper # 14; Exhibit 3.)

*2 8. Pursuant to that order forensic images of the Defendants' computers, laptops, and electronic devices were made by a company called Evidox. Among the devices imaged were David Guild's Toshiba laptop, Seagate external hard drive, and Blackberry; Andrew Slater's Sony Vaio laptop, Dell Mini, and Palm Treo; and laptops of James Barenboim and Steven Slater.

9. In November and December of 2009, over 1,400 files were copied from the laptops of Guild and Andrew Slater onto various USB drives, which devices were provided for analysis. Some of that activity is consistent with the defendants' testimony that they were copying documents for production to the plaintiff.

10. In early December 2009, the Defendants produced a large quantity of documents in response to the plaintiff's request for production and objected to production of other documents. Among documents produced in December of 2009 were 29 emails from Guild's computer. Pacific Packaging moved to compel production of the withheld documents and the Defendants opposed production. Judge Inge issued an order on December 29, 2009, ordering production of certain documents and denying other relief. That order did not prohibit the use by the Defendants of Pacific documents or information in their possession.

11. In early January 2010, the Defendants produced some additional documents to the plaintiff pursuant to the order of Judge Inge.

12. Depositions of Andrew Slater, David Guild, and James Barenboim were conducted by counsel for the plaintiff.

13. On February 8, 2010, Pacific Packaging moved for a preliminary injunction. (Paper # 25.) Seeking an order requiring the Defendants to turn over all of the Pacific Packaging documents, in paper or electronic form, in their possession and barring the Defendants for one year from making sales to any of the Pacific Packaging customers for which the Defendants had taken information which Pacific Packaging asserted was confidential. The Defendants opposed the request for injunctive relief and submitted affidavits of Barenboim, Guild, and the Slaters. The Defendants argued that the information which they took when they left Pacific Packaging was not confidential; that Pacific Packaging had unclean hands; and that they would suffer greater irreparable harm if the injunction was granted than Pacific Packaging would if it were denied. (Paper # 41, p. 4.)

14. On March 4, 2010, Judge Billings heard oral argument on the motion of Pacific Packaging seeking a preliminary injunction.

15. Judge Billings issued a Memorandum and Order on March 5, 2010 (Paper # 41), which allowed, in part, the requested relief. Among the provisions of that memorandum and order are the following:

16. As noted by Judge Billings, before their departure from Pacific Packaging the defendants Guild and Andrew Slater created spreadsheets of information concerning Pacific Packaging customers which they did not service.

17. Judge Billings issued the following orders on March 5, 2010:

(Paper # 41, pp. 12–13.)

18. The Defendants delivered computers, laptops, and other devices to their attorneys, in response to Judge Billings' orders of March 5, 2010.

19. David Guild testified before me that he turned in a Sony Viao laptop, a Toshiba laptop, a Seagate hard drive, and two thumb drives or USB devices on Monday, March 8, 2010.

20. Andrew Slater testified before me that he turned over two computers late in the afternoon on Friday March 5, 2010, and stated that he had so testified before Judge Billings at the preliminary injunction hearing.

21. The evidentiary hearing regarding injunctive relief eventually took seven days to complete: March 15, 16, 29, 30, 31 and April 1 and 2, 2010.

22. Judge Billings at the beginning of the first day of the hearings on March 15, 2010, inquired as to whether there was any issue or question regarding the Defendants' compliance with the provisions of his orders of March 5, 2010. Counsel for the Defendants represented that there would be no issue in that regard and that they intended to have their clients testify that they had turned over their computers to their counsel, that they had made no downloads or copies, and that they had again conducted searches of their cars, homes, offices and “everywhere else” and had in fact turned over all documents in their possession. Judge Billings indicated that counsel would be allowed to make whatever record they wished to make in that regard. (See Appendix of Record Excerpts, 1(A)(i).)

23. At the evidentiary hearing before Judge Billings on March 15, 2010, Guild testified that he was aware of the orders issued by Judge Billings on March 5, 2010, and that he had complied with those orders. Specifically, he indicated that he had searched his home and his office in Lawrence and that he turned over his computers and hard drives to his counsel on March 8, 2010, and that he had retained no documents whether in hard copy or in computer records pertaining to Pacific Packaging. (See Appendix of Record Excerpts, 1(B)(I).)

*5 24. At the evidentiary hearing before Judge Billings on March 16, 2010, Andrew Slater testified that he was aware of Judge Billings' orders of March 5, 2010, and that he had complied with those orders. Specifically, he testified that he had searched his office, his home, and his car for any documents and had turned in his two personal computers to counsel. He denied copying or downloading or transferring files or documents from those computers before delivering the computers to his counsel. (See Appendix of Record Excerpts, 1(C)(i).)

25. At the evidentiary hearing before Judge Billings on March 30, 2010, James Barenboim testified that he was aware of the orders issued by Judge Billings on March 5, 2010, and that he had complied with those orders. Specifically, he testified that he had searched his files, his home, and his office and that he had turned over everything to his counsel, including his computers, with the exception of a computer that he kept in Florida and which he did not believe contained any Pacific Packaging documents. (See Appendix of Record Excerpts, 1(D)(I).)

26. At the evidentiary hearing before Judge Billings on March 30, 2010, Steven Slater testified that he was aware of the orders issued by Judge Billings on March 5, 2010, and that he had complied with those orders. Specifically, he testified that he had searched his office and his car and looked for anything that he may not have turned over to his counsel and found nothing. He also testified that he had turned in his computers and did not make any copies of anything on his computer. (See Appendix of Record Excerpts, 1(E)(i) .)

27. On April 20, 2010, Judge Billings issued his 65–page Findings of Fact, And Further Memorandum and Order, On Plaintiff's Motion For Preliminary Injunction (Paper # 42). In setting forth factors which he considered in reaching his decision regarding the requested injunctive relief, Judge Billings stated:

(Paper # 42, p. 5.)

28. Among the findings made by Judge Billings in his decision of April 20, 2010, were the following:

29. Judge Billings reviewed the sales activities, post-October 15, 2009, of each of the Defendants and made findings as to whether they had misused information of Pacific Packaging in recruiting or selling to Pacific Packaging customers. With respect to just one customer, Reynolds Food Packaging Corp., Judge Billings found that the Defendants had misused confidential information of Pacific Packaging in selling products (other than hotdog baking cup inner cartons) to Reynolds and that they had not shown that they would have obtained the business (other than the hotdog baking cup business) without that misuse. He enjoined the Defendants for one year from selling products to Reynolds other than inner cartons for hot dog baking cups and any newly developed custom products. His specific findings with respect to Reynolds stated, in bold print in the decision:

Judge Billings' order stated: “... the defendants are enjoined for a period of one year from selling products other than (a) inner cartons for bakery cups and hotdog baking cups, and (b) any custom products that may be developed hereafter, to Reynolds Packaging Products.”

30. I find that order to be clear and unambiguous. I find that the defendants were aware of that order.

31. Judge Billings further ordered that “Paragraphs 1, 2 and 3 of the March 5, 2010 Order shall remain in full force and effect until further order of the Court.” (See ¶ 16, above.)

*8 32. On or about January 14, 2011, in the course of subsequent proceedings and pursuant to a Stipulation Regarding Mediation, Pre–Mediation Discovery and Extension of Discovery Deadlines, defendant James Barenboim submitted an affidavit to the plaintiff in which he stated: “The defendants have not sold to Reynolds Packaging Products since April 20, 2010, products other than (a) inner cartons for bakery cups and hotdog baking cups or (b) any other custom products developed after April 20, 2010.” The affidavit was amended by striking out the words “any other” after the letter (b), which change was initialed by Mr. Barenboim. (Exhibit 19.)

The Zeraschi Affidavit of March 10, 2011

33. Sandra Zeraschi resigned from Packaging Partners, LLC on November 10, 2010. Subsequently, there were proceedings before the Department of Workforce Development in which Zeraschi and Packaging Partners were on opposite sides of the issue of her eligibility for unemployment benefits. Initially, there was a decision adverse to Zeraschi, which decision was dated on or about March 7, 2010. Zeraschi appealed that decision. I do not credit Guild's testimony that Zeraschi threatened him with “consequences” if he did not change Packaging Partners' position that she had resigned her position there. I do not find that Zeraschi fabricated the assertions in her second affidavit as a “consequence” for Packaging Partners' position regarding her eligibility for benefits.

34. On March 11, 2011, Pacific Packaging filed its Emergency Motion For Judgment On All Claims Based on Defendants' Fraud On The Court. (Paper # 69.) In support of its motion the plaintiff submitted the Affidavit of Sandra Zeraschi dated March 10, 2011. (Exhibit 13.)

35. In her later affidavit, and contrary to her earlier affidavit (see ¶ 6, above), Zeraschi stated that she had been solicited by the defendants Guild and Barenboim to leave Pacific Packaging beginning in February of 2009 and continuing through the late summer. (Exhibit 13, ¶¶ 4–9.) According to Zeraschi's later affidavit, on November 6, 2009, Guild presented her with the earlier affidavit and said “You have to sign it.” and assured her that “It wouldn't be a problem.” She signed the earlier affidavit feeling she had no alternative. (Exhibit 13, ¶ 17.)

36. Zeraschi related in the later affidavit the plan proposed for how she should handle her departure from the firm. (Exhibit 13, ¶ 10.) Zeraschi indicated that she had been told by the defendant Guild to “make it difficult” for Pacific Packaging to figure things out and “to make things disappear” on the accounts he serviced at Pacific Packaging. She removed account records, price lists, and quotations for various customers. Later, she offered those materials to Guild and he indicated that he did not need them as he already had that information. (Exhibit 13, ¶ 11.) She still had those documents as of the time of her affidavit. (Id.)

37. Zeraschi also stated in her later affidavit that she had taken sales order forms to her home on two occasions six and three months before she resigned from Pacific Packaging. She had taken those forms home to prepare for filing them, but did not get around to doing so. When the Defendants were ordered to produce all Pacific documents in their possession, she told Guild that she had the documents and asked whether she needed to turn those over. Guild asked her who knew that she had those documents and when she said “No one” he told her “Then don't turn them over.” (Exhibit 13, ¶¶ 18–19.)

*9 38. According to Zeraschi's affidavit, Guild approached her in January 2010, and asked her to review the sales order forms and to bring him accounts belonging to other Pacific Packaging salesmen which might be good accounts to pursue. She did so and a list of potential leads was developed. About a month before she left her employment at Packaging Partners, Guild asked Zeraschi to give him the sales order forms she had at home and she did so. (Exhibit 13, ¶¶ 20–26.) I do not credit Guild's testimony to the extent that it contradicts that of Zeraschi on the issue of retained Pacific documents and their use of those documents.

39. On a number of occasions, according to her affidavit, Zeraschi observed the defendant Steven Slater using Pacific Packaging Sales History Reports, even after the time when the Defendants had been ordered to turn over all such documents and through the time of her departure from the company. (Exhibit 13, ¶¶ 27–31.)

40. Zeraschi also observed Pacific Packaging cost and vendor information in use at Packaging Partners in hard form (Exhibit 13, ¶ 32), was aware of it being on laptops of Guild and of Andrew Slater, and knew of its use by them. Information from those laptops was printed out by Guild and Andrew Slater before they turned over their laptops in March of 2010. (Exhibit 13, ¶¶ 35–38.)

41. Zeraschi further stated in her affidavit that Packaging Partners sold stretch film and cornerboard to Reynolds after May 20, 2010, in violation of the injunction issued by Judge Billings. Barenboim told her that “whatever we get purchase orders for, we're selling.” (Exhibit 13, ¶¶ 39–48.)

42. Zeraschi reported in her affidavit that Andrew Slater stated to her that there were emails between him and Bemis, which had been a Pacific Packaging customer, that he had not turned over as part of document productions, and which would have shown a different story about when and how he had approached Bemis about soliciting their business. (Exhibit 13, ¶ 49.)

43. Lastly with respect to the Zeraschi affidavit, she stated that in December of 2010 or January of 2011, after she had left her employment with Packaging Partners in November of 2010, Guild phoned her and told her that Pacific was planning to take her deposition and that her best answer was to say that she did not remember. He also told her that as long as she did not go against them, her legal bills would be paid. At that point she felt threatened and decided to obtain her own lawyer. (Exhibit 13, ¶ 52.)

44. Zeraschi's later affidavit was prepared after she had retained her own lawyer and after meeting with counsel for the plaintiff.

Additional Procedural Background

45. Subsequently, I disqualified the Defendants' then counsel from further representation of the Defendants and ordered that new counsel be retained by them. I also issued orders regarding discovery and the forensic examination of the Defendants' computers.

*10 46 The defendants, with support from their forensic consultant, sought to limit the proposed forensic analysis to whether printing had been done from the laptops of Guild and Andrew Slater during a limited time period and argued that no other analyses was necessary. (Paper # 102 and # 111.) I find that such a limitation on the scope of the examination, had I so limited it, would have led to little or no useful information. As established at the hearing before me, any such large scale printing would not have been discoverable on the forensic analysis proposed by the defendants.

47. On December 9, 2011, I issued a procedural order regarding the forensic analysis of the Defendants' computers and other devices. I ordered that the Defendants were to turn over all computers and other devices used by the defendants Guild and Andrew Slater which were in the possession of their counsel as a result of the March 5, 2010 order of Judge Billings and any such computers or other devices used by Guild and Andrew Slater for business purposes since December 1, 2009. I further ordered the Defendants to provide a list of all such computers or other devices which they had used and which had been lost or destroyed or which were not in their possession, custody or control. (Exhibit 6.)

48. Guild and Andrew Slater provided affidavits indicating that since December 1, 2009, they had not used any computers or devices other than those that they turned over to Elysium for analysis.

49. Various devices were turned over by the Defendants on December 19–21, 2011, for analysis by Elysium Digital, LLC. Ultimately, sixteen devices were imaged and analyzed by Elysium. Eight of those devices were produced by Guild; seven were produced by Slater; and the producer of the last one was unknown, according to Michael Perry, a certified forensic computer examiner from Elysium who testified for the plaintiff at the hearing before me regarding the analysis of the devices.

50. The analysis indicated, among other things, that there were additional USB devices which had been connected to the laptops of Andrew Slater and David Guild which had not been turned over to Elysium for analysis and that there were one or more Apple MacIntosh computers to which some of the devices which were produced had been connected at some point. None of those additional USB devices or those Apple Mac computers were turned over by the Defendants for analysis.

51. On January 25, 2012, I ordered the Defendants Guild and Andrew Slater to produce copies of certain emails, which were produced several days later.

Plaintiff's Contentions of Fraud, Contempt, and Spoliation of Evidence

Pacific Packaging makes a number of allegations of contempt by the Defendants of the injunction issued by Judge Billings, of fraud on the Court, and of spoliation of evidence. I will address further findings of facts to each of the specific issues raised in the plaintiff's motion.

Allegations of Contempt

*11 Pacific alleges that the defendants, in contempt of the provision of the preliminary injunction issued by Judge Billings, sold products to Reynolds Food Packaging Corp. (Reynolds) that they were prohibited from selling. With respect to these allegations, I make the following findings of fact.

52. Judge Billings clearly and unequivocally enjoined the Defendants for one year from selling products to Reynolds other than inner cartons for bakery cups and hotdog baking cups and any custom products developed after the date of the order. I find that there was no ambiguity at all in that order.

53. I find that the defendants were aware of that order.

54. Among the products that the Defendants were barred from selling to Reynolds were clipboard and cornerboard products that Guild had sold to Reynolds while he was at Pacific.

55. I credit Zeraschi's testimony that at some point after the injunction was ordered by Judge Billings she received a purchase order from Reynolds for cornerboard. I find that Zeraschi asked Barenboim whether they should be processing the order given the recent restrictions [imposed by Judge Billings' order] and he responded: “Did we get a purchase order? Then we're going to process every purchase order we get from them.” or words to that effect.

56. After the date of Judge Billings' order, and in direct violation of that order, the Defendants sold chipboard and cornerboard products to Reynolds. The defendants were aware of that order at the time that they made sales of chipboard and cornerboard to Reynolds.

57. I do not find credible the testimony before me of Guild and Barenboim that they misunderstood Judge Billings' order. As previously noted, on or about January 14, 2011, Barenboim submitted an affidavit to the plaintiff in which he stated: “The defendants have not sold to Reynolds Packaging Products since April 20, 2010, products other than (a) inner cartons for bakery cups and hotdog baking cups or (b) any other custom products developed after April 20, 2010.” The affidavit was amended by striking out the words “any other” after the letter (b), which change was initialed by Mr. Barenboim. (Exhibit 19.) That statement was not true and, given my finding that Barenboim's assertion that he misunderstood the order is not credible and given Barenboim's statement to Ms. Zeraschi, I find that the statement was deliberately false. I note that the affidavit was not submitted to the Court, but was provided to the plaintiff's counsel in response to a Stipulation which was entered as an order of the Court (Exhibit 20.)

58. I find that the defendants deliberately and willfully violated the terms of the injunction issued by Judge Billings on April 20, 2010.

Allegations of Spoliation of Evidence

Pacific makes several allegations that the defendants spoliated or suppressed evidence during the course of the proceedings in this matter. The following findings of fact relate to those allegations.

Documents Taken By Zeraschi

*12 59. Shortly before she left Pacific Packaging, Zeraschi was told by Guild to make it difficult for Pacific Packaging to figure things out and to make things disappear on accounts he serviced. She disposed of some files in the trash and brought some materials home with her. She retained those documents and had them when she worked at Packaging Partners. Guild was aware that she had those materials and advised Zeraschi after October 15, 2009, that he did not need them because he had copies of everything already. These documents were not used by Zeraschi at Packaging Partners but she retained them through November of 2010 when she left Packaging Partners and thereafter. They were not provided to the plaintiff as part of any discovery response or to the Court before the preliminary injunction hearings. They were brought to the hearing before me and were identified by Zeraschi but were not offered as an exhibit.

60. At the time she left Pacific Packaging, Zeraschi also had a large stack of Sales Orders which she had previously brought home to sort before filing. Those documents related to sales by the different salesmen that she worked with at Pacific Packaging. Guild was aware that she had those documents. Zeraschi asked Guild if she should turn over those documents at the time documents were being gathered in November or December of 2009 for production to the plaintiff. Guild asked her who was aware that she had those documents and she indicated that no one was. Guild told her not to turn the documents over and she did not do so. Those documents have not been provided to the plaintiff as part of any discovery response or to the Court.

Andrew Slater's E–Mail

61. In an order dated November 19, 2009 (Exhibit 3), Judge Inge ordered that the defendants were to preserve any and all documents and electronically-stored data and information and that they were to suspend any deletion or other destruction of electronic data and information, including e-mails and other electronic communication. That order required the defendants to make all such information available to plaintiff's counsel and to plaintiff's experts for examination and copying.

62. The defendants were also ordered to make their electronic devices available to the plaintiff for imaging. That was done by a company called Evidox. (See ¶¶ 7 and 8, above.)

63. In an order dated March 5, 2010 (Exhibit 5), Judge Billings ordered the defendants to turn over to their counsel any documents in written or digital form which were taken from or generated by the plaintiff relating to several areas of the plaintiff's business. The order required the defendants not to retain any hard or electronic copies of those documents. The defendants were permitted to use such documents in consultation with their attorneys, but they were not to retain any originals or copies of the documents.

64. Andrew Slater maintained a Yahoo! E-mail account from which he communicated with clients both before and after his departure from Pacific Packaging. He utilized that account for the storage of both personal and business e-mails and documents. Before leaving Pacific, Andrew Slater sent e-mails from his Pacific account to his Yahoo! account for the purpose of accessing them after he left Pacific. A “Drafts” folder on Andrew Slater's Yahoo! account contained over 1300 entries as of February 25th and March 18th of 2010, the last of those dates being after the date on which he turned over his laptops to counsel pursuant to Judge Billings' order of March 5, 2010. Other folders in existence according to screen shots of Andrew Slater's Yahoo! account on those dates appear to be for Cardinal Health and Iron Mountain, two of his clients at Pacific. I find Andrew Slater's assertions of a lack of memory regarding these folders and the “Drafts” folder to be less than credible.

*13 65. After Judge Billings' order of March 5, 2010, Andrew Slater searched through over 13,000 e-mails in his Yahoo! account and deleted those that had any Pacific Packaging information on them. He did not recall how many such e-mails were deleted. Copies were not provided to counsel for the plaintiff before they were deleted.

66. The deletions of the Yahoo! e-mails violated Judge Inge's order. While Andrew Slater testified before me that the deletions were done in order to comply with Judge Billings' order of March 5, 2010, I find the explanation disingenuous. Andrew Slater knew or should have known of the potential importance of those e-mails and should have sought court approval before deleting information from his devices. Copies were not made before the deletions. Due to the deletions, the plaintiff and the Court have been deprived of the e-mails, the importance of which is not possible to determine on the state of the evidence before me.

67 Andrew Slater testified before me that in response to Judge Inge's order in November of 2009 he produced his Yahoo! e-mails from October 15, 2009, through the date of the production in November or December of 2009. That testimony was not effectively challenged by the plaintiff, nor were such e-mails made part of the voluminous record at the hearing.

68. While it may be possible to retrieve the e-mails from Yahoo!, that effort has not been pursued by the plaintiff since June of 2010. Before then, the plaintiff had subpoenaed materials from the email providers, including Yahoo!, and the defendants had declined to indemnify those providers before the release of the subpoenaed materials. The plaintiff filed a motion to compel which addressed those materials, but it appears that no decision was rendered on that motion and there is no indication in the docket that further follow-up on that motion was sought.

Devices Not Produced

69. I credit Michael Perry's testimony that the defendants did not produce several devices for imaging in response to various court orders. There were seven unknown USB devices that were connected to the computers belonging to Guild and Andrew Slater over the period of time from October 18, 2009, through January 3, 2011. What information those devices contain is not possible to determine since they were not provided. Those devices were used by Guild and Andrew Slater after this litigation had commenced and, for most of them, after there had been orders issued regarding the preservation of materials and devices.

70. For some of those devices, their use was for a very limited time period and it does not appear that they were used after Judge Billings' order of March 5, 2010. However, there were several devices used over the weekend after that order of Judge Billings and the failure of the defendants to produce them is unexplained.

71. Two of Guild's USB devices were connected to Apple Macintosh computers(s) which were never produced for imaging. Guild's wife and both of his children have Apple Macintosh computers at their home, according to Guild. Those computers were not provided for imaging. Again, without those computers it is not possible to know what information was contained on them.

Allegations of Fraud on the Court

*14 With respect to the allegations of fraud on the court, the plaintiff asserts that the Defendants provided a false affidavit regarding their solicitation of Ms. Zeraschi and provided false testimony at the preliminary injunction hearings before Judge Billings. Specifically, the plaintiff charges that, contrary to their testimony at those hearings, the Defendants had not completely divested themselves of paper documents that contained Pacific's confidential information by mid-November 2009, and all electronic versions as of March 8, 2010. The plaintiff further asserts that the Defendants provided false testimony about their prior use of confidential Pacific data in reports which they took when they left Pacific and about their use of Sales Orders and abstracts they prepared containing confidential Pacific data. They assert that the false testimony was relied upon by Judge Billings in denying the bulk of Pacific Packaging's request for a preliminary injunction. (Plaintiff's Bench Memo For Hearing On Defendants' Fraud On The Court, Contempt And Spoliation, pp. 1–2.)

With respect to the fraud on the court allegations, I make the following findings of fact.

Solicitation of Zeraschi

72. I find that in her testimony at the hearing before me Zeraschi was, in general, a credible witness. While there are some unsupported assertions in the later affidavit, there are others which I find credible based on all of the information before me and on her testimony at the hearing in front of me.

73. In November of 2009, Zeraschi signed an affidavit that was in large part not true. She was told by Guild that she had to sign the affidavit and she did so. I find that the statements in ¶¶ 2 and 3 of the earlier affidavit were not true and that Zeraschi and Guild knew that they were not true. I credit Zeraschi's testimony before me that she was solicited by Guild in the months before her resignation and that Guild and Barenboim offered her employment in their new venture when they met for dinner at the Cheesecake Factory in Burlington. I do not credit the contrary testimony before me of Guild and Barenboim. That false affidavit of Zeraschi was submitted to the court by the Defendants in support of their opposition to the Emergency Motion For Expedited Discovery and Order On Preservation of Evidence.

74. I find that Zeraschi and Guild and Barenboim met as indicated in the later Zeraschi affidavit and that they spoke over the telephone regarding the plan for Zeraschi's departure from Pacific Packaging. I do not credit the testimony before me by Guild and Barenboim concerning the timing or the reasons for those telephone calls and meetings.

75. Guild admitted that the issue of whether the Defendants had solicited Zeraschi to join their new venture was an important issue in the case. I find that the affidavit was submitted in an effort to deceive the Court regarding the Defendants' pre-departure activities and to influence the Court's decision on the motion being considered at the time.

Retention and Use of Pacific Packaging Materials and Information by the Defendants

*15 76. As noted above in ¶ 60, Zeraschi had a large stack of Pacific documents which she had taken home at some time before her departure from Pacific. In approximately January 2010 (see Exhibit 13, ¶ 20), Guild and Zeraschi used those documents to get information about accounts serviced primarily by Nick Constas, a salesman at Pacific Packaging who had visited some of Guild's customers, and some others. Eventually, Zeraschi gave all of the Sales Orders to Guild before she left Packaging Partners. Those were not provided to the plaintiff in discovery, nor to the court prior to or as part of the preliminary injunction hearings.

77. Among the documents which were taken by the Defendants from Pacific Packaging when they left was a Sales History Report. That report was kept by Steven Slater in his office and was used from time to time by him. While it appears that the original of the Sales History Report was turned over to counsel for the Defendants and a copy was produced by the Defendants as part of their document production, I credit Zeraschi's testimony that a Sales History Report was used by Steven Slater after the time when all such Pacific documents were supposed to have been turned over to the Defendants' lawyers and through the end of Zeraschi's employment at Packaging Partners. Steven Slater on more than one occasion used the Pacific Sales History Report to assist Zeraschi in obtaining information she needed to complete orders from customers.

78. I credit Zeraschi's testimony that Barenboim retained Pacific cost information in the form of a Cost Book obtained shortly before his resignation from Pacific. I accept Zareschi's testimony that Barenboim showed her that book at some unspecified time during her tenure at Packaging Partners. There was no indication that the Cost Book was produced in response to any of the discovery orders in this matter.

79. The retention and use by the defendants of the Sales History Report and the Cost Book was in contravention of the orders of the Court that the defendants were to turn over all Pacific documents in their possession. The retention by the defendants of the Sales History Report and the Cost Book contradicts the assurances given to the Court at the preliminary injunction hearings by Mr. Barenboim and by Steven Slater that they had turned over all of the Pacific Packaging materials in their possession.

80. While I credit Zeraschi's testimony that she had observed printing of materials shortly before the turnover by Guild and Andrew Slater of their laptops, it is not clear what was being printed or what was done with those printed materials.

Andrew Slater's Turnover of His Laptops

81. Andrew Slater indicated at the hearing before Judge Billings that he had turned over both his Sony Vaio and his Dell Inspiron Mini laptop computers to his counsel and that he had done so on Friday, March 5, 2010. He stated to Judge Billings then that he had not copied, downloaded, or transferred any files or documents of any kind from those computers before turning them in to his counsel and that he had not retrieved those computers at any time between the day he turned them in and the date of his testimony (March 16, 2010). At the hearing in front of me Andrew Slater reiterated that he had turned over his laptop computers on Friday, March 5, 2010, and indicated that if he used those computers again after that date he did so only with his counsel present. He stated that he did not recall if he met with counsel over the weekend after turning over his computers on March 5, 2010. I do not credit Andrew Slater's testimony with regard to when he turned over his computers and the access he had to those computers on the days following March 5, 2010. I find that Andrew Slater did not turn over his laptop computers on March 5, 2010, and that he had unlimited access to those computers through Monday morning on March 8, 2010.

*16 82. I credit the testimony of Michael Perry that internet activity occurred on Andrew Slater's Dell Inspiron Mini every day from Friday, March 5, 2010, through Monday, March 8, 2010. I find that Andrew Slater did not turn in his computers on Friday, March 5, 2010, and I find that he accessed his Packaging Partners' Webmail and his Yahoo! account in that time period from March 5–8, 2010. I find that on March 6, 2010, Andrew Slater opened Excel spreadsheets and a Powerpoint presentation concerning two customers he had serviced at Pacific, Bemis Worldwide and Cardinal Health. At least some of those documents had been prepared prior to October 15, 2009. I find that on March 7, 2010, Andrew Slater accessed websites for Staples Industrial and Bemis Worldwide and a Powerpoint document named “Price Adjustment Overview Able To Share 2008.” I find that on March 8, 2010, Andrew Slater accessed both his Packaging Partners Webmail and his Yahoo! accounts and that he opened Excel spreadsheets and Powerpoint documents containing the names Bemis, Northcoast, and Cardinal Health, all of which had been customers of Pacific. It does not appear that Andrew Slater created or saved any files on his Dell Mini on these dates.

83. I find that a SanDisk U3 Cruzer Micro USB was attached by Andrew Slater to his Dell Inspiron Mini laptop on March 6, 2010. That SanDisk U3 Cruzer Micro USB was never turned over to counsel for the plaintiff in response to any of the orders of the Court requiring such production. I find that within minutes of that USB's attachment to the laptop that both the Packaging Partners Webmail and the Yahoo! account belonging to Andrew Slater were accessed and accessed, I infer, by Andrew Slater. I find it highly likely that information from Andrew Slater's Dell laptop was copied onto the USB device on March 6, 2010, contrary to his testimony to Judge Billings and his testimony before me. What was copied onto that USB device is not known as it was never turned over by Mr. Slater. I note, however, that there was no evidence at the hearing before me that the SanDisk U3 Cruzer Micro USB device was ever attached to the laptops that were used after March 8, 2010, and which were turned over by Andrew Slater for analysis.

84. Andrew Slater did not produce any computer which indicated activity by him during the period from March 18, 2010 until July 11, 2010. I do not find it credible that Andrew Slater did not use a computer for nearly four months. Even accounting for his wedding and honeymoon, I do not find it credible that he took a hiatus from work or from the use of a computer for that period of time. Such a hiatus is not consistent with his previous use of his computers and with the realities of the business world in which he participated.

Bemis E-mails

85. With respect to Sandra Zeraschi's testimony regarding statements by Andrew Slater about e-mails to Bemis, I find no evidentiary support that there were such e-mails. While there was evidence that a Bemis employee was listed as a contact on Andrew Slater's Yahoo! home page, there was no evidence that e-mails were sent to or received from that employee or anyone else at Bemis.

Guild's Use of His Computers and Other Devices

*17 86. At the hearing before Judge Billings, Guild testified that he reached a point where his old Pacific computer with all of the Pacific information on it did not get used; it just sat; it was never opened; it was unnecessary.

87. I find that such was not the situation. I credit Michael Perry's testimony that Guild continued to use his Pacific laptop after he left Pacific and that he did so on two out of every three days between when he left Pacific and when the computer was turned over to his counsel in March 2010. While at the hearing before me Guild characterized his testimony before Judge Billings as “overly definitive,” I find that his statements at the preliminary injunction hearing were deliberately misleading.

88. I find that Guild's suggestion that it may have been his children who had used his Pacific laptop after he had left Pacific, when they each had their own laptops, lacks credibility.

89. At the hearing before Judge Billings, Guild testified that his Customer Sales History Report was not a valuable document and that it was stored in the deep, dark recesses of his computer. I credit the Elysium report and Mr. Perry's testimony that Guild had that document not only on his Pacific laptop but also on his Seagate external hard drive, on his PNY USB drive, and on his Sony Vaio laptop that he had purchased for his use at Packaging Partners. That sales history report was copied onto the Sony Vaio on January 27, 2010, three and one-half months after Guild started Packaging Partners. That document was also copied onto two different USB devices after Guild left Pacific. Contrary to his suggestion to Judge Billings that the document was essentially useless, I find that Guild saved the document and opened it on ten occasions between November 27, 2009, and March 18, 2010.

90. I credit Michael Perry's testimony that of the 30,500 files on Guild's Seagate external hard drive 27,550 had creation dates prior to October 15, 2009, and over 3,800 of those had “Pacific” in the file name and over 2,600 had “Pacific” in the metadata. I credit Mr. Perry's testimony that Guild's Seagate hard drive was attached to a Macintosh computer, which I infer was one of those at the Guild home, on February 3–4, 2010. That Macintosh computer was not provided to the plaintiff for imaging and there is no evidence before me of what Pacific information, if any, was on those Macintosh computers.

91. Guild's Seagate hard drive was subsequently attached to his current Sony Vaio laptop on March 7, 2010. I note that there was no testimony from Michael Perry that Pacific documents were found on Guild's current laptop. Given the issues involved in this matter and the reasons given by the plaintiff for seeking to analyze the current laptops of Guild and Andrew Slater, I infer that no Pacific documents were found on Guild's laptop by Mr. Perry.

92. I find it probable that it was Guild who attached the Seagate hard drive to the Macintosh computers and to the Sony Vaio on the dates noted above. I do not credit Guild's testimony that he does not know how to operate a Macintosh computer.

*18 93. Guild did not produce the Macintosh laptop computers from his home for imaging and there was no evidence offered by the defendants regarding the contents of those Macintosh computers.

Guild's Computer Activity March 5–9, 2010

94. On March 5, 2010, Guild's PNY Attache USB thumb drive was connected to his older Sony Vaio laptop. That thumb drive contained, among other things created at Pacific, versions of his Sales History and Leads documents. A sales leads document was created or modified on that date on Guild's laptops and I infer that it was Guild who was using the computers at that time. That thumb drive was then connected to Guild's new Sony Vaio on March 7, 2010. I note, however, that there was no evidence that the Sales History or the Leads documents were found on Guild's current Sony Vaio laptop.

95. On March 7, 2010, I find that Guild was using three laptops (his old Pacific laptop and his two Sony Vaios), as well as his Seagate external hard drive, his PNY Attache USB thumb drive, and a SanDisk Cruzer Gator USB device, which was never turned over for imaging. Guild opened a number of documents on this date. He recalled transferring his income taxes from his Toshiba laptop to a USB device and then to his new laptop, but had limited recall of anything else done on that date. Among the materials accessed or created or modified was a file named “Pacific Invoices” and within that file a particular invoice to Analog Devices was opened. That was done on Guild's older Sony Vaio laptop. Again I note that there was no indication that Pacific documents, such as the “Pacific Invoices” file were found on Guild's current Sony Vaio laptop.

96. On Monday, March 8, 2010, Guild's older Sony Vaio laptop was opened and several customer spreadsheets were accessed, along with an attorney-client document created by Guild. Shortly thereafter, a USB 2.0 FlaskDisk device was attached to Guild's older Sony Vaio laptop, which was turned over that day to his counsel. That same USB 2.0 FlashDisk device was attached the next day, March 9, 2010, to Guild's new Sony Vaio laptop, which was not provided to counsel with the materials turned over on March 8, 2010. The FlashDisk was last connected to Guild's laptop on October 27, 2010. I find it probable that the USB 2.0 FlashDisk device belonged to Guild and that it was Guild who attached it to those laptops on those occasions to preserve information or documents contained on the older Sony Vaio laptop. That device has never been produced for imaging in response to the Court's orders regarding production of such devices.

97. I credit the testimony of Michael Perry that between March 5, 2010, and March 9, 2010, six USB connections were made to Guild's laptops using four different devices and I infer that those connections were done by Guild.

98. There was no evidence that any Pacific documents were found on Guild's current Sony Vaio laptop.

Use of the So–Called “699 List”

*19 99. Before leaving Pacific in October 2009, Guild and Andrew Slater prepared a spreadsheet or list of 699 Pacific customers serviced by salespeople at Pacific other than the defendants. That list contained customer, product pricing, cost, and vendor information. Various iterations of that document were entered as exhibits at the hearing before me. (Exhibits 8, 10, 43, and 60.) Both Guild and Andrew Slater testified at the preliminary injunction hearing before Judge Billings that they had not used that document. Andrew Slater testified at that hearing that he had not even looked at the document after leaving Pacific. Guild testified similarly at that hearing that he had not used the list or even looked at it.

100. Contrary to that testimony, I find that Guild looked at and used the “699 List” documents after leaving Pacific. He had copies of those documents on his Toshiba laptop and on his Seagate external USB drive and on his PNY external USB drive. Exhibit 10 was copied onto his PNY external USB drive on December 6, 2009. I do not credit Guild's testimony before me that he looked at the “699 List” documents only for litigation purposes. I find that Guild edited those documents after he had left Pacific and had begun working at Packaging Partners. I find it probable that Guild used information from the “699 List” for at least one client: in preparing a Packaging Partners quote for The Field Company in January 2010 (Exhibit 50). I note however that the information provided by Michael Perry's analysis did not reveal any changes in the size of the “Leads.xls” file after the turnover of the defendants' devices in March of 2010.

RULINGS OF LAW

To find a party in contempt of a court order, “there must be a clear and undoubted disobedience of a clear and unequivocal command ... Where the order is ambiguous or the disobedience is doubtful, there cannot be a finding of contempt.” Birchall, petitioner, 454 Mass. 837, 851–52 (2009). The contempt must be established by clear and convincing evidence. Id. at 852.

Pacific asserts that the defendants violated the terms of the preliminary injunction issued by Judge Billings on April 20, 2010. Specifically, it contends that the defendants deliberately sold items to Reynolds that were barred by the prohibition which stated: “A preliminary injunction will therefore enter, barring the defendants from selling products other than (a) inner cartons for bakery cups and hotdog baking cups, and (b) any custom products that may be developed hereafter, to Reynolds.” That order is clear, unambiguous, and unequivocal and the defendants were aware of it.

There is no dispute that after that order was entered the defendants did in fact sell cornerboard and chipboard products to Reynolds, products that are covered by the preliminary injunction. While they admitted selling those products, in their defense, the defendants Guild and Barenboim testified that they misinterpreted the order. As noted above, I do not find that testimony to be credible.

*20 As previously noted, on or about January 14, 2011, Barenboim submitted an affidavit to the plaintiff in which he stated: “The defendants have not sold to Reynolds Packaging Products since April 20, 2010, products other than (a) inner cartons for bakery cups and hotdog baking cups or (b) any other custom products developed after April 20, 2010.” The affidavit was then amended by striking out the words “any other” after the letter (b), which change was initialed by Mr. Barenboim. That statement was not true and I find that the statement was deliberately false. While I note that the affidavit was not submitted to the Court, but rather was provided to the plaintiff's counsel in response to a Stipulation which had been entered as an order of the Court, its execution by Barenboim makes the deliberate nature of the contempt very clear.

Therefore, I find that the plaintiff has established by clear and convincing evidence that there was a deliberate, clear, and undoubted violation of the clear and unequivocal order of Judge Billings by these defendants.

Spoliation of Evidence

The plaintiff has asserted that the defendants destroyed or suppressed documents, e-mails, and electronic devices before and during this litigation. “The doctrine of spoliation permits the imposition of sanctions and remedies where a litigant or its expert negligently or intentionally loses or destroys evidence that the litigant (or expert) knows or reasonably should know might be relevant to a possible action, even when the spoliation occurs before an action has been commenced.” Scott v. Garfield, 454 Mass. 790, 798 (2009). “The threat of a lawsuit must be sufficiently apparent, however, that a reasonable person in the spoliator's position would realize, at the time of spoliation, the possible importance of the evidence to the resolution of the potential dispute.” Kippenhan v. Chaulk Servs., Inc.,428 Mass. 124, 127 (1998).

The defendants spoliated evidence which they knew or reasonably should have known might be relevant to this matter. That spoliation occurred in the following ways:

Fraud On The Court

The plaintiff has charged the defendants with widespread fraud on the Court. “A ‘fraud on the court’ occurs where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense.” Rockdale Mgmt. Co. v. Shawmut Bank, N.A., 418 Mass. 596, 598 (1994), quoting from Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir.1989). Fraud on the court has been found where there is “bribery of judges, employment of counsel to influence the court, [and] involvement of an attorney (an officer of the court) in the perpetration of fraud.” Will of Crabtree, 449 Mass. 128, 149 (2007), quoting from MacDonald v. MacDonald, 407 Mass. 196, 202 (1990); where a party or his attorney has perjured himself to the court and the court relied upon the perjury in reaching its judgment. See Matter of Neitlich, 413 Mass. 416, 423 (1992); where a party has submitted a forged or fabricated document to the court. Rockdale Mgmt., 418 Mass. at 598–99; Munshani v. Signal Lake Venture Fund II, L.P., 60 Mass.App.Ct. 714, 719 (2004). “The doctrine embraces ‘only that species of fraud which does, or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication.’ “ Paternity of Cheryl,434 Mass. 23, 35–36 (2001), quoting from Pina v. McGill Dev. Corp., 388 Mass. 159, 165 (1983).

Based on the following evidence, which I find to be clear and convincing, and on all of the findings of fact made above, I find that the Defendants have committed fraud upon the Court:

All of these acts by each of the individual defendants, the spoliation of evidence, the misrepresentations in affidavits and in sworn testimony, the suppression of documents and other evidence, the deliberate violation of the injunction show, clearly and convincingly, that the defendants “sentiently set in motion [an] unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate [this] matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense.” Rockdale Mgmt., 418 Mass. at 598. The defendants' actions noted above show a blatant disregard for the judicial process and a disrespect of this Court and its orders. The defendants' actions attempted to interfere with this Court's capacity to decide this case fairly and impartially and to prevent the plaintiff from obtaining a fair adjudication of its claims. Therefore, sanctions are in order.

SANCTIONS

*26 Having found that the Defendants have committed fraud upon the Court, have spoliated evidence, and have deliberately ignored the preliminary injunction ordered by Judge Billings, I must determine what sanctions are appropriate. “When a fraud on the court is shown through clear and convincing evidence to have been committed in an ongoing case, the trial judge has the inherent power to take action in response to the fraudulent conduct. The judge has broad discretion to fashion a judicial response warranted by the fraudulent conduct. Dismissal of claims or an entire action may be warranted ... as may the entry of a default judgment.” Rockdale Mgmt., 418 Mass. at 598. This Court has the inherent power to take measures “to protect the integrity of the pending litigation and the Superior Court, as well as to send an appropriate message to those who would so abuse the courts of the Commonwealth.” Munshani v. Signal Lake Venture Fund II, L.P., 60 Mass.App.Ct. 714, 721 (2004).

After much consideration, I find that the appropriate sanctions here are the entry of default, as to the defendants Packaging Partners, LLC, Guild, Barenboim, Zeraschi, and both of the Slaters, with respect to some of the issues in some of the counts of the Verified Amended Complaint; the dismissal of the defendants' counterclaims; and an order that the defendants compensate the plaintiff for the attorneys fees and costs incurred by the plaintiff in litigating the Plaintiff's Emergency Motion For Judgment On All Claims Based On Defendants' Fraud On The Court.The full extent of the default judgment will be further defined after the Status/Scheduling Conference discussed below.

There will be a Status/Scheduling Conference on March 5, 2014, at 2:00 P.M. to discuss the extent of the default against the defendants, establish a schedule for the filing of an application for attorneys fees and of any oppositions thereto, to discuss the future course of this litigation, and to establish a schedule for future events, including dates for hearings on the application for fees and costs and for any assessment of damages hearings needed as a result of these findings. By the close of business on February 24, 2014, the parties are to serve and file memoranda setting forth their views regarding the extent of the default established by this decision (i.e. what parties, what issues, and what counts of the complaint are impacted by the decision); the future course of this litigation, including what discovery, if any, is necessary; the scheduling of any hearings; and any other matters that the parties feel need to be discussed at the Status/Scheduling Conference.

ORDER

For the foregoing reasons, the Plaintiff's Emergency Motion For Judgment On All Claims Based On Defendants' Fraud On The Court (Paper # 69) is ALLOWED, in part. Judgment shall enter for the plaintiff on the counterclaims of the defendants and those counterclaims are dismissed. There will be a Status/Scheduling Conference on March 5, 2014, at 2:00 P.M. to discuss the extent of the default against the defendants, establish a schedule for the filing of an application for attorneys fees and of any oppositions thereto, to discuss the future course of this litigation, and to establish a schedule for future events, including dates for hearings on the application for fees and costs and for any assessment of damages hearings needed as a result of these findings. By the close of business on February 24, 2014, the parties are to serve and file memoranda setting forth their views regarding the extent of the default established by this decision (i.e. what parties, what issues, and what counts of the complaint are impacted by the decision); the future course of this litigation, including what discovery, if any, is necessary; the scheduling of any hearings; and any other matters that the parties feel need to be discussed at the Status/Scheduling Conference.