Surreptitious Cyber-Conduct results in New York County Decision Striking Defendant’s Answer
July 05, 2017
In a decision dated May 26, 2017, Justice Chan of the Supreme Court of the State of New York, New York County, struck the defendant’s answer. Although the Court acknowledged that the imposition of this particular sanction was “severe,” Justice Chan deemed it warranted in light of the “egregious” and deliberate misconduct of the defendant.
The substantive allegations in the underlying lawsuit involve the parent company of an Indian programming channel (Mumbai-based Iris Mediaworks Ltd.,) accusing a former executive (“Vasisht”) and his company (“IKK Inc.”) of breaching fiduciary duties, competing unfairly and misappropriating trade secrets. Specifically, the suit claims that Iris owned a South Asian entertainment channel called Get Punjabi that DISH broadcast on its satellite in the U.S., and that Vasisht set up IKK, Inc., a competitor that now broadcasts extensive programming previously shown on Get Punjabi. The complaint names six defendants and includes 12 causes of action. That litigation was commenced on July 14, 2014.
The litigation was proceeding forward when, on October 26, 2016, the Chairman and Managing director of Iris (Rajendra Karnik) discovered that all the emails in his work account were being forwarded to another account (firstname.lastname@example.org) without either his knowledge or his consent. As a result, Karnik subpoenaed Google® requesting certain information about the email@example.com account. Karnik learned, among other things, that the “anonymous” account was created July 10, 2014 – four days prior to the instant lawsuit being commenced.
Karnik also learned – with the help of a computer forensic consultant – that the “auto-forward functionality” was enabled on his work email (without his knowledge or consent) to forward all of Karnik’ s emails to the “anonymous” account. Therefore, every email in the Karnik account was simultaneously accessible by the “anonymous” account owner. The consultant also determined that the “anonymous” account received Karnik’ s emails via the auto-forward functionality from July 10, 2014 through October 27, 2016 and, during that time forwarded 317 emails (including Karnik’ s communications with his attorney regarding the litigation strategy of this lawsuit) to another email account firstname.lastname@example.org. The consultant further demonstrated the existence of two other dummy accounts that received Karnik’ s emails and routinelyforwarded those emails to Vasisht.
Based upon the foregoing, plaintiffs moved by Order to Show Cause to have Vasisht’s Answer stricken based upon Vasisht’s intentional hacking of their emails and taking of protected materials. In opposition, Vasisht did not offer any evidence to contradict the computer forensic consultant’s findings. Rather, he interposed only a general denial of knowing about either the “anonymous” account or the dummy accounts, which Justice Chan categorized as “half-hearted.”
The Court in striking the answer, observed:
“There are no issues raised…as to whether the 2000 plus hacked emails were…protected material. However, even if there were an issue, the hacking of plaintiffs’ email during litigation can only be seen as an attempt to undermine plaintiffs’ case. It is also indicative of…[a] disregard for the judicial process. While striking a defendant’s answer is an extreme sanction, it is warranted here as hacking plaintiffs’ email to obtain information during litigation without going through proper discovery channels is an egregious act and sidesteps discovery procedures.” (internal citations omitted).
While this case is illustrative of unequivocal bad behavior that hopefully is infrequently encountered, it serves as an important reminder of the various sanctions – including the striking of a pleading – available to Judges. When parties/counsel engage in conduct deserving of sanctions.