Mewawalla v. Stanley C. Middleman

Background

A jury entered a verdict for Plaintiff Rahul Mewawalla on February 12, 2025. The defendants moved under Federal Rule of Civil Procedure 60(b)(3), which permits a court to provide relief from a final judgment based on fraud, misrepresentation, or misconduct by an opposing party. They alleged that Mewawalla failed to produce emails between himself and Mawson Infrastructure Group, where he later worked as CEO and president. According to the defendants, the emails could have helped show that Mewawalla was dishonest toward his employers, that there was no pretext for his dismissal, and that his claims about his competence and leadership were subject to impeachment.

The emails were under seal in a Delaware court, and the defendants had not reviewed or provided them to this court. Mewawalla refused to provide them to the defendants. The defendants argued that the emails were responsive to Requests for Production Nos. 106 and 107, which sought documents and communications concerning the amount and source of Mewawalla’s income from January 21, 2021, forward.

Discovery-Misconduct Analysis

For relief under Rule 60(b)(3), the moving party must show by clear and convincing evidence that it acted diligently in pursuing the missing discovery, that the opposing party knew of and possessed the material, and that the opposing party did not disclose its existence. The moving party must also show that the conduct prevented it from fully and fairly presenting its case or defense, although it need not show that the outcome would have changed.

The court found that the defendants did not meet the diligence requirement. Mewawalla’s written responses said he was producing documents sufficient to show the amount and source of his income. The court concluded that Requests 106 and 107 appeared directed toward income information for possible damages offsets, rather than all communications concerning Mewawalla’s income or work at Mawson. The defendants were on notice of Mewawalla’s interpretation but did not follow up or move to compel production under their broader interpretation.

The court also noted that the defendants had used other requests to seek communications between Mewawalla and Mawson, including communications about his duties and compensation. Mewawalla objected to those requests, and the defendants chose not to pursue them further. The court held that later regret over discovery choices was not a proper basis for overturning the jury’s verdict. Because the defendants failed to show diligence, the court did not decide whether the missing emails prevented them from fully and fairly presenting their case. The court nevertheless observed that the emails concerned Mewawalla’s conduct at a different company and at a different time and might have faced substantial objections under evidence rules concerning unfair prejudice and character evidence.

Separate Bonus Argument and Disposition

The defendants separately argued that Mewawalla failed to disclose that he received a $2.5 million Mawson bonus, while an expert had referred to a bonus of approximately $1.05 million. The court stated that documents showing the bonus amount would have been within the scope of the discovery requests as Mewawalla interpreted them and that failure to provide the information could potentially constitute misconduct. However, the defendants first raised this theory at oral argument; their motion papers contained only a passing reference in their reply. The court held that the argument was waived because it was raised too late.

The court concluded that the defendants had not shown by clear and convincing evidence that Mewawalla’s failure to provide the Mawson emails constituted discovery misconduct warranting relief under Rule 60(b)(3). The defendants’ motion for relief from judgment was therefore DENIED.