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Passlogix, Inc. v. 2FA Tech., LLC, 2010 WL 1702216 (S.D.N.Y. Apr. 27, 2010)
Upon finding that defendants spoliated relevant information, including emails, Skype messages, and computer logs, the court declined to order an adverse inference, to preclude defendants from the presentation of arguments implicating the discarded documents, or to order defendants to pay plaintiff’s costs, but ordered monetary sanctions in the amount of $10,000, after balancing “2FA’s litigation conduct with its status as a small corporation.”
In this opinion, the court addressed plaintiff’s allegations that defendants, specifically defendant Gregory Salyards, committed fraud on the court by creating and sending an anonymous email “in an effort to expand discovery, cause Passlogix competitive harm, and garner a favorable settlement.” Defending against the accusation, Salyards proffered the affirmative defense of IP spoofing, “stating that a Passlogix employee may have ‘spoofed’ his IP address in an effort to impersonate him on the internet.” Passlogix also sought spoliation sanctions arguing that defendants failed to implement a legal hold and took part in intentional spoliation of data, including emails and text messages.
Although beyond the scope of this summary, the court’s lengthy discussion of the anonymous email(s) and Salyards’ defense of “IP spoofing” is fascinating and showcases how ever-advancing technology has created scenarios for consideration that, not long ago, seemed more the stuff of spy novels than of litigation in our federal courts.
It appears as if this article was either sponsored by or written by Passlogix’s legal team. This lawsuit is not about anonymous emails or spoliation of evidence it is about Passlogix’s clear misappropriation of 2FA intellectual property and breach of contract. Passlogix’s attempt to derail this litigation was stymied by the Court when the Court clearly indicated that Passlogix presented no evidence supporting its claim of fraud on the Court. Specifically, the Court stated, “After reviewing all of the evidence in this case, including Collier’s three-hour videotaped deposition, the Court holds that Passlogix has not presented clear and convincing evidence that Salyards authored the April 13 e-mail. Virtually every piece of evidence Passlogix presents is rebutted by 2FA. Importantly, the Court finds Collier’s admission to authoring the April 13 e-mail credible. Collier’s motive for sending the April 13 e-mail
is logical.”
This is not the more of a “spy novel” as the author of this article would lead you to believe it is purely old fashioned bullies and thugs. A Passlogix employee sent the email that Passlogix itself accused 2FA of sending – this fact is undisputed. The Passlogix employee admitted it under oath! Why does the author of this article not say that? Let’s just say that Passlogix is staring down the barrel of a $50M dollar IP misappropriation lawsuit and it is easier for them to talk about spoliation of evidence than to face the fact of what they did – steal a small company’s IP.
Lessoned learned for 2FA and me, save your emails, Skype logs and text messages if you are involved with litigation. Impairment a litigation hold policy. Don’t trust Passlogix.