SingularDTV GmbH v. LeBeau

Background

The court had entered a January 25, 2022 consent order requiring Zachary LeBeau and Kimberly Jackson to deliver the device storing the Cold Wallet, charging devices, and authorizations—including login information and passwords—to an escrow arrangement agreed upon by the parties. After Defendants did not deliver the device, SingularDTV sought expedited discovery about what happened to the Cold Wallet device or devices.

On April 6, 2022, the court ordered Defendants to produce nonprivileged documents concerning the Cold Wallet device and the Paper Wallet, including documents about acquisition, configuration, dismantling, destruction, abandonment, printing, and storage. After SingularDTV reported that Defendants had not complied, the court issued another order on May 2, 2022, requiring production by May 5, 2022, a written description of the document-search process, and an expedited deposition of LeBeau.

Court’s Findings

Based on LeBeau’s testimony, the court found that he violated the January 25 consent order by failing to deliver all authorizations to the Escrow Agent. LeBeau testified that he had memorized the seed phrase that allowed access to the Cold Wallet through various platforms, including Tokit.IO, but had not provided the seed phrase to the Escrow Agent or disclosed its existence.

The court also found that LeBeau and Jackson violated the April 6 order by failing to produce all responsive nonprivileged documents. The court further found that LeBeau violated the May 2 order because his testimony showed that he had not conducted a thorough search for responsive documents.

Orders

The court ordered LeBeau to comply with the prior orders requiring delivery of all Cold Wallet authorizations and production of all nonprivileged documents related to the cold storage of SingularDTV’s cryptoassets. The court stated that those orders covered every form of access to the Cold Wallet, including access through Tokit.IO.

By July 15, 2022, LeBeau was required to provide the Escrow Agent with all previously unproduced nonprivileged documents concerning his use of Tokit.IO or any other application or software to access the Cold Wallet. For electronically stored documents, he had to use search terms reasonably calculated to find responsive documents, including at least “Tokit” and “Tokit.IO,” and provide an affirmation explaining the search and listing the terms used. He also had to deliver the Cold Wallet’s seed phrase in writing. The court warned that failure to comply fully could result in contempt, other sanctions, or a default judgment.

The court found that Defendants’ noncompliance was not substantially justified and that no other reason made a fee award unfair. It therefore GRANTED SingularDTV’s motion for reasonable attorney’s fees under Federal Rule of Civil Procedure 37. LeBeau and Jackson were ordered to jointly pay the costs and fees for preparing SingularDTV’s April 26, 2022 letter motion. LeBeau alone was ordered to pay the costs and fees for other steps needed to obtain his compliance, including SingularDTV’s June 1 and June 23, 2022 letter motions and LeBeau’s deposition. The parties were required to meet and confer about the amount and notify the court by July 18, 2022, if they could not agree.