Google LLC v. Dmitry Starovikov

Background

Google sued Dmitry Starovikov, Alexander Filippov, and unidentified defendants over alleged operation of the Glupteba botnet, a malware network that infected computers and allegedly enabled the theft and sale of personal and financial information, disruptive advertising, cryptocurrency mining, and use of infected computers to route internet traffic. Google asserted claims under the Racketeer Influenced and Corrupt Organizations Act, the Computer Fraud and Abuse Act, the Electronic Communications Privacy Act, trademark and unfair-competition law, and state-law claims for tortious interference and unjust enrichment.

Starovikov and Filippov initially defaulted, but the court later vacated that default and allowed them to defend the case. They then provided very limited discovery. They asserted that relevant devices and information were held by their former employer, Valtron LLC. During discovery, their representations about their employment, access to devices, ability to provide information, and willingness to participate changed. They also refused to identify or produce other electronic devices and produced only 15 documents.

Google moved for sanctions against the defendants and Litvak, seeking monetary sanctions and default judgment. The defendants cross-moved for sanctions against Google, arguing that Google had misled the court and had improperly reported their settlement proposal to law enforcement.

Court’s Findings

The court found that the defendants had represented that they still worked for Valtron even though they later claimed that their employment had ended in December 2021. The court also found that Litvak failed to correct those representations promptly and negotiated a possible device exchange while knowing, or having reason to know, that the exchange would not be reciprocal.

The court found that the defendants knew about the litigation before they claimed to have returned their work laptops to Valtron. It concluded that they had a duty to preserve relevant evidence but either disposed of, or refused to produce, potentially relevant devices and electronically stored information. The court described the defendants’ conduct as a willful effort to resist discovery and mislead Google and the court.

The court also found that the defendants had offered to provide private keys associated with the Glupteba botnet in exchange for payments of $1 million per defendant and $110,000 in attorney’s fees, while later refusing to provide those keys in discovery. The court concluded that this conduct further showed a lack of good faith in the litigation.

Rulings

The court held that the defendants’ conduct justified default judgment as a discovery sanction under Federal Rule of Civil Procedure 37. It considered their willfulness, the length of their noncompliance, prior warnings, and the inadequacy of lesser sanctions. The court found that lesser sanctions would effectively produce the same result because the defendants had resisted nearly all discovery.

The court also held that monetary sanctions were appropriate under the court’s inherent authority and the Federal Rules of Civil Procedure. It imposed the same monetary sanction on Litvak because he made inconsistent representations, failed to correct the employment misrepresentation promptly, and did not adequately explain his compliance with evidence-preservation duties.

The court granted Google’s August 22, 2022 motion for sanctions and denied the defendants’ September 2, 2022 motion for sanctions. It entered default judgment against Starovikov and Filippov under Rule 37 and ordered Starovikov, Filippov, and Litvak, jointly and severally, to pay Google’s reasonable attorneys’ fees, costs, and expenses incurred litigating against the defendants since March 14, 2022. The opinion did not set a final dollar amount; a separate scheduling order addressed how that amount would be calculated.