QueTel Corp. v. Abbas
QueTel Corp. v. Abbas
2018 WL 8997471 (E.D. Va. 2018)
January 19, 2018
Trenga, Anthony J., United States District Judge
Summary
The Court found that Defendants had a duty to preserve the ESI related to the CaseGuard software, but had destroyed it in bad faith. As a result, the Court granted Plaintiff's Motion for Sanctions and entered judgment as to liability on the claims in Counts I and II against all Defendants. The ESI was important as it was the most probative direct evidence concerning Plaintiff's claims.
Additional Decisions
QUETEL CORPORATION, Plaintiff,
v.
Hisham ABBAS et al., Defendants
v.
Hisham ABBAS et al., Defendants
Civil Action No. 1:17-cv-471 (AJT/JFA)
United States District Court, E.D. Virginia, Alexandria Division
Signed January 19, 2018
Counsel
Timothy J. McEvoy, Matthew H. Sorensen, Patrick James McDonald, Cameron McEvoy PLLC, Fairfax, VA, for Plaintiff.John Andrew Baxter, Hailey Breanne Render, General Counsel PC, McLean, VA, for Defendants.
Trenga, Anthony J., United States District Judge
ORDER
*1 On October 27, 2017, the Magistrate Judge issued his Proposed Findings of Fact and Recommendations [Doc. No. 58] with respect to Plaintiff QueTel Corporation's (“Plaintiff” or “QueTel”) Motion for Sanctions for Destruction or Suppression of Discoverable Materials and for Failure to Comply with Court Order and Certification Pursuant to Rule 37(A) and Local Rule 37(E) [Doc. No. 35]. On November 10, 2017, Defendants filed Defendants' Objections to Magistrate Judge's Proposed Findings of Fact and Recommendations [Doc. No. 71] (“Objections”) and on November 13, 2017, Plaintiff filed Plaintiff QueTel Corporation's Partial Objection to and Appeal of Magistrate Judge's Report and Recommendation Regarding its Motion for Sanctions for Destruction or Suppression of Discoverable Materials and for to Comply with Court Order [Doc. No. 72] (“Partial Objection”) (“collectively referred to as the “Objections”). The Court held a hearing on the Objections on December 22, 2017, following which it took the matter under advisement.
The Court has reviewed in detail the Objections, and the evidence in the record presented in connection with the Objections, and has considered de novo the Magistrate Judge's Proposed Findings of Fact and Recommendations. Based on that review, the Defendants' Objection is OVERRULED, the Plaintiff's Partial Objection is SUSTAINED, the Magistrate Judge's findings of fact set forth in the Magistrate Judge's Proposed Findings of Fact and Recommendations are ADOPTED; and the Magistrate Judge's recommendation of a sanction is MODIFIED, as set forth in this Order.
Specifically, and by way of summary, the Court finds as follows:
1. Plaintiff QueTel is a software development company, who hired Defendant Abbas (“Abbas”) in June, 2007.
2. Beginning in 2009, QueTel has spent several years developing software known as the TraQ Suite 6, a portfolio of evidence management and asset tracking software solutions for law enforcement agencies.
3. In June, 2013, Abbas became the lead software developer at QueTel and held that position until he resigned in April, 2014.
4. Defendant Finalcover LLC (“Finalcover”) was established in January, 2014 by Abbas and his wife, Defendant Mansour (“Mansour”). Abbas claims that he began developing CaseGuard in May, 2014. CaseGuard is, like TraQ Suite 6, a web-based evidence management software program; and in January, 2015, Defendants launched a web-site advertising CaseGuard software.
5. There are substantial functional and structural similarities between the TraQ Suite 6 and the CaseGuard software.
6. As of May 16, 2016, Defendants were on notice of potential litigation between themselves and QueTel concerning Defendants' CaseGuard software.
7. Defendants had a duty as of May 16, 2016, to preserve the computer used to develop CaseGuard, the source code control system that was installed on the replacement computer and the CaseGuard-related files that were deleted from the replacement computer.
8. In approximately September, 2016, or approximately four (4) months after being placed on notice of potential litigation between the parties, Defendants disposed of the computer used to develop CaseGuard.
*2 9. Defendants failed to take reasonable steps to preserve that computer and the information on that computer; and their destruction of the computer used to develop CaseGuard was unreasonable.
10. The lost information on the destroyed computer used to develop CaseGuard cannot be restored or replaced through additional discovery.
11. In July, 2017, Defendants uninstalled the source code control system that had been installed on the replacement computer in September, 2016, at which time files were transferred from the computer that was destroyed in late 2016. This deletion of the source code control system occurred shortly before the Defendants prepared a forensic image of the hard drives for production to the Plaintiff and significantly after Plaintiff had raised as an issue in discovery Defendants' use of a source code control system. At the time that Defendants removed the source code control system on the replacement computer before making a forensic image, Defendants were on notice that any such source control system should be preserved.
12. Defendants deleted CaseGuard-related files from the folders of the replacement computer before the forensic images were prepared for production to the Plaintiff and after the Defendants had been served with discovery requests concerning all CaseGuard-related files.
13. Defendants' destruction of evidence was with the intent to deprive the Plaintiff of that evidence and information for use in this litigation and was done in bad faith, as evidenced by: (a) Defendants' complete destruction of the computer used to develop CaseGuard in 2016 after receiving a cease-and-desist letter earlier that year; (b) deleting the source code control system and substantial amounts of CaseGuard-related files from the replacement computer in July, 2017, during discovery disputes over the existence and production of such documents and shortly before a hearing on Plaintiff's motion to compel discovery; (c) Defendants' lack of candor in disclosing destruction of the computer used to develop CaseGuard, including variously representing that a source code control system did not exist or was not used in the development of CaseGuard when in fact it had existed and was used for at least a short period of time; and (d) Defendants' failure to disclose and provide forensic copies of all computers used to develop CaseGuard.
14. By engaging in the conduct described above, Defendants failed to obey an Order to provide discovery, as required by Federal Rules of Civil Procedure 37, including an explicit Court instruction to produce forensic images of all equipment used to develop CaseGuard [Doc. No. 31 at 18:20 – 19:11], and the Court's Order dated July 21, 2017, by failing to produce forensic images of all computers used in the development and operation of CaseGuard. [Doc. No. 29].
15. Plaintiff has been irreparable prejudiced by Defendants' destruction of core material evidence, since Defendants' spoliation (1) eliminated the most probative direct evidence concerning Plaintiff's claims that CaseGuard was developed from the TraQ Suite 6 source code, as well as other substantial and highly relevant and material evidence, such as the uninstalled source code control system and the deleted CaseGuard-related files from the replacement computer that would have reflected whether CaseGuard was derived from TraQ Suite 6.
*3 16. Defendants' spoliation has effectively deprived the Plaintiff of its ability to pursue its claims of copyright infringement and misappropriation of trade secrets.
Based on the Court's findings, the Court has reviewed the Magistrate Judge's recommendations concerning a sanction for Defendants' spoliation and finds and concludes that as a sanction a finding of liability shall be entered against all Defendants as to Counts I and II. No other less drastic sanction can adequately address the prejudice that the Plaintiff has suffered as a result of Defendants' spoliation; and no other less drastic sanction can adequately serve as a deterrent to the type of spoliation that has occurred in this case.
Wherefore, it is hereby
ORDERED that Plaintiff QueTel Corporation's Partial Objection to and Appeal of Magistrate Judge's Report and Recommendation Regarding its Motion for Sanctions for Destruction or Suppression of Discoverable Materials and for to Comply with Court Order [Doc. No. 72] be, and the same hereby is, SUSTAINED; and it is further
ORDERED that Defendants' Objections to Magistrate Judge's Proposed Findings of Fact and Recommendations [Doc. No. 71] be, and the same hereby is, OVERRULED; and it is further
ORDERED that Plaintiffs Motion for Sanctions for Destruction or Suppression of Discoverable Materials and for Failure to Comply with Court Order and Certification Pursuant to Rule 37(A) and Local Rule 37(E) [Doc. No. 35] be, and the same hereby is, GRANTED; and it is further
ORDERED that judgment as to liability on the claims in Counts I and II be, and the same hereby is, ENTERED against all Defendants.