Earlier this month, Judge Cote entered a default judgment against Dmitry Starovikov and Alexander Filippov in Google’s action seeking a permanent injunction against them as the operators of a blockchain enabled “botnet.” Judge Cote had entered a Temporary Restraining Order against the Defendants on December 7, 2021, covered here.

Google first sought entry of a default judgment in February after the named Defendants failed to respond to the Complaint, despite service by the methods authorized in the TRO. The default was entered by the Clerk of Court on February 8, but vacated by Judge Cote on Defendants’ motion, which argued “that they had not been served, that the Court lacked jurisdiction over them, and that they had meritorious defenses, including that Google had failed to state a claim against them.”

After the default was vacated, the parties proceeded with discovery. Google’s discovery requests included discovery from Defendants’ electronic devices. In response, Defendants claimed that the only relevant discovery was on devices held by their former employer, Valtron LLC (“Valtron”), which Google alleged operated many of the Defendants’ criminal schemes. Defendants refused to sit for depositions, while simultaneously seeking discovery of Google’s electronic devices. Multiple discovery conferences ensued, eventually resulting in both parties filing motions for sanctions.

In granting Google’s motion for sanctions and denying Defendants’ motion, Judge Cote found that the Defendants:

intentionally withheld information and misrepresented their willingness and ability to engage in discovery in order to disadvantage Google in this litigation, avoid liability, and further profit off of the criminal scheme described in the complaint. . . .  [T]he Defendants were aware of this action before the dates on which they assert they left Valtron and turned over their work laptops. As a result, they had an obligation to preserve discoverable evidence upon becoming aware of it. Rather than complying with that obligation, however, the Defendants either got rid of (or more likely have refused to produce) any incriminating devices, and have consistently disclaimed any ability to recover them during discovery.

Judge Cote held that “the Defendants’ resistance to discovery and spoliation of electronically stored information requires the entry of default judgment against them.”

Judge Cote also found that Google was entitled to recoup its reasonable expenses and attorney’s fees expended in the litigation, stating:

The Defendants’ misconduct has caused Google to incur significant expense since they moved to vacate the default. Aside from the normal expense that would attach litigating any case, Google has also had to engage in additional conferences and motion practice regarding the Defendants’ misrepresentations and resistance to discovery. Had the Defendants been honest from the start, it is likely that the default against them would not have been vacated, and that Google would have been able to secure judgment against them immediately.