Cisco Systems, Inc. v. Sheikh

Background

Cisco Systems, Inc. and Cisco Technology, Inc. sued Shahid H. Sheikh, Kamran Sheikh, Farhaad Sheikh, Advanced Digital Solutions International, Inc. (ADSI), Purefuturetech, LLC, Jessica Little, K&F Associates, LLC, and Imran Husain. Cisco asserted claims involving trademark infringement, trademark counterfeiting, false designation of origin, violation of California’s Unfair Competition Law, and unjust enrichment.

ADSI brought a third-party indemnity claim against Rahi Systems, Inc., Masood Minhas, Nauman Karamat, Pure Future Technology, Inc. (PFT), Nabia Uddin, Karoline Banzon, and Kaelyn Nguyen. ADSI sought indemnification for any liability Cisco established against it. ADSI alleged that the third-party defendants were responsible for illegal sourcing of Cisco products, diverting sales to Rahi Systems, and sending commissions to PFT.

Summary-judgment standard

Summary judgment is appropriate when the evidence shows no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. A material fact is one that could affect the outcome, and a genuine dispute exists when the evidence could allow a reasonable jury to decide for the nonmoving party. The court must view the evidence favorably to the nonmoving party, but that party must identify admissible evidence creating a genuine dispute rather than rely on allegations or speculation.

Evidentiary rulings

The third-party defendants objected to deposition testimony from Shahid Sheikh recounting what Jessica Little allegedly told him about statements by Nabia Uddin. The court treated this as multiple-level hearsay, meaning each layer of the statement needed its own exception to the hearsay rule. The court rejected ADSI’s arguments for admitting the testimony and struck the comments concerning Uddin’s alleged statements to Little.

The court also struck Shahid Sheikh’s declaration. Shahid had invoked the Fifth Amendment protection against self-incrimination during the litigation, and the court concluded that ADSI and its affiliated defendants could not withhold unfavorable information while selectively submitting favorable testimony on the same subjects.

Fifth Amendment inference

The court concluded that an adverse, or negative, inference could be drawn from the ADSI parties’ invocation of the Fifth Amendment. In civil cases, a court may draw such an inference when the withheld information would ordinarily be unfavorable and the party seeking the inference provides additional evidence supporting it. The inference cannot by itself establish the absence of a factual dispute at summary judgment; independent evidence is required.

The court found such supporting evidence here. The record included evidence concerning addresses and post-office boxes associated with the alleged scheme, control or oversight of relevant contracts and accounts, and directions given to others in furtherance of the alleged counterfeiting operation. The court also emphasized that ADSI bore the burden of proving its indemnity claim and could not use the Fifth Amendment as a substitute for evidence it was required to provide.

Indemnity claim

Indemnity shifts responsibility for an injury from one person to another. Under the standard applied by the court, ADSI had to prove fault by each indemnitor in causing the underlying injury and resulting damages for which that party was contractually or equitably responsible. The court found that, after applying the negative inference, only limited evidence supported the indemnity claim as to the individual third-party defendants and entities.

- Nabia Uddin: Summary judgment was denied. Uddin admitted under oath to knowingly trafficking in counterfeit goods, while asserting that she was following Shahid’s orders. The court found evidence of her involvement, including her role in setting up a post-office box to receive counterfeit goods, and concluded that genuine disputes of material fact remained. - Kaelyn Nguyen: Summary judgment was granted. The court found no evidence that Nguyen, whom the opinion describes as a receptionist, was involved in the counterfeiting scheme. ADSI’s assertion that she was liable based on “just her participation” did not establish a genuine factual dispute. - Karoline Banzon: Summary judgment was granted. The only identified evidence was an email from Rahi Systems containing an introductory slide deck and a line card, which the court found insufficient to show involvement in the counterfeiting scheme. - Nauman Karamat: Summary judgment was granted. Emails about litigation costs and customer invoices listing Karamat as a salesperson did not establish a genuine factual dispute about his responsibility for the alleged counterfeiting scheme. - Rahi Systems, Inc.: Summary judgment was granted. The documents identified by ADSI did not show that Rahi Systems participated in a scheme to counterfeit Cisco products. The court characterized ADSI’s remaining assertions as conclusory or speculative. - Masood Minhas and PFT: Summary judgment was granted. The evidence concerning referral arrangements and related matters did not show a genuine factual dispute about responsibility for the alleged counterfeiting scheme.

Other rulings and disposition

The court granted in part and denied in part the third-party defendants’ motion for summary judgment. Judgment was to issue for Minhas, Karamat, Rahi Systems, PFT, Banzon, and Nguyen. The indemnity claim against Uddin would proceed beyond the summary-judgment stage.

The court denied the administrative motions to seal at Docket Numbers 131 and 135. It also denied the motion to seal at Docket Number 144 for the stated reasons, but reserved judgment on documents concerning Fifth Amendment issues and facts identified as 15, 40, 41, 42, and 43. The order terminated Docket Numbers 130, 131, 135, and 144.