As the district court, explained the “case present[ed] the Court with a disturbing and unfortunate situation. Puneet Chawla, Defendant Workspot, Inc.'s (“Workspot”) co-founder, former Chief Technology Officer (“CTO”), and former member of the Board of Directors, sent harassing and threatening email messages to executives of Plaintiff Citrix Systems Inc. (“Citrix”), and posted additional messages to intend sites. In connection with opposing Citrix's motion for a preliminary injunction and temporary restraining order (“PI Motion”), Workspot then filed a declaration from Mr. Chawla, which contained knowingly false statements, including denials of Chawla's harassing conduct. At a December 2018 hearing denying Citrix's PI Motion, the Court imposed monetary sanctions on Workspot, which ultimately totaled $271,963. The Court also ordered limited, expedited discovery relating to the sanctionable conduct and authorized Citrix to move for additional sanctions after the completion of that discovery.”
Citrix then moved for additional sanctions, including additional monetary sanctions, jury instructions and the striking of Workspot's equitable defenses. Although the district court denied the additional monetary sanctions and jury instructions, the district court did strike Workspot's equitable defenses.
In making this determination, the district court stated that “discovery established that Workspot (1) failed to timely investigate Citrix's claims about Chawla and other harassing conduct, (2) failed to notify Citrix or the Court in a timely manner after it learned of Chawla's actions, (3) seemingly chose not to examine its own network logs because purportedly “it would not be helpful,” and (4) allowed Chawla himself to image an MS Surface Pro laptop in his possession, which he did not do until December 7, after taking it on travel to India, all of which Workspot's counsel admitted “was not good in hindsight.” Generally, discovery revealed that while Workspot took steps to investigate Citrix's allegations, “it did not respond with the full diligence, cooperation, and candor the Court would expect.”
The district court also noted that it is axiomatic that “[h]e who desires equity must be willing to do equity.” Freck v. IRS., 37 F.3d 986, 989 (3d Cir. 1994); see also Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 241 (1933) (“He who comes into equity must come with clean hands.”); Bein v. Heath, 47 U.S. 228, 247 (1848) (“The equitable powers of this court can never be exerted on behalf of one who has acted fraudulently, or who by deceit or any unfair means has gained an advantage.”).
The district court concluded that Workspot came to the court with unclean hands: “Workspot, by submitting and relying on the false Chawla Declaration, has come to this Court with ‘unclean hands.' It would offend notions of equity for Workspot to prevail on any equitable defense moving forward. See, e.g., Leor Expl. & Prod, LLC v. Aguiar, 2010 WL 3782195, at *1, 13 (S.D. Fla. Sept. 28, 2010), on reconsideration in part, 2011 WL 4345294 (S.D. Fla. 15, 2011) (affirming magistrate judge's order striking defenses because defendant violated court's order and hacked plaintiffs privileged emails); see also Greatbatch Ltd v. AVX Corp., 179 F. Supp. 3d 370, 386 (D. Del. 2016) (granting sanction of removing issue of damages and patent validity and instructing jury to assume infringement), aftd, 813 F. App'x 609 (Fed. Cir. 2020).
The district court then summed up by explaining that “[s]triking these equitable defenses will, the Court hopes, serve as a deterrent to any future litigant who may consider filing a false declaration in any court, as well as those who would respond to the discovery that they filed a false declaration with the far from ideal approach exhibited here.”
Citrix Systems, Inc. v. Workspot, Inc., Case No. 18-588-LPS (D. Del. Sept. 25, 2020)
Originally Published by Jeffer Mangels, November 2020
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