THE WITTERN GROUP, INC., Plaintiff, v. NOUFAL BABU PALLIPARAMBAN a/k/a NOUFAL BABU, Defendant No. 4:24-cv-00151-RGE-SBJ United States District Court, S.D. Iowa, Central Division Filed June 28, 2024 Ebinger, Rebecca G., United States District Judge AMENDED ORDER RE: DEFENDANT'S AND COUNSEL FOR DEFENDANT'S CIVIL CONTEMPT I. INTRODUCTION *1 Plaintiff The Wittern Group, Inc. sues Defendant Noufal Babu Palliparamban—its former employee—for misappropriation of trade secrets, breach of contract, and breach of fiduciary duties. Compl. ¶¶ 52–84, ECF No. 1. Now before the Court is The Wittern Group's motion seeking an order requiring Palliparamban to show cause why he should not be held in contempt for violating the preliminary injunction issued in this case. Pl.'s Mot. Order Show Cause 1, ECF No. 34. On June 25, 2024, the Court held a hearing at which the parties addressed The Wittern Group's motion alongside a separate order to show cause why Palliparamban's counsel should not be held in contempt for failing to comply with an oral order of the Court issued on May 20, 2024. Hr'g Mins., ECF No. 46. At that hearing, the Court found Palliparamban and his counsel in contempt of Court and issues monetary sanctions, including an award of attorneys fees to The Wittern Group, to coerce compliance with the Court's orders. See id. The Court now elaborates and amends in part the order issued orally at that hearing. II. BACKGROUND The following facts are evidenced by the procedural record, exhibits filed with the Court, or, where indicated, by the representations of counsel at the June 25, 2024 show cause hearing. See Chi. Truck Drivers v. Bhd. Labor Leasing, 207 F.3d 500, 504 (8th Cir. 2000) (noting a finding of civil contempt is warranted by clear and convincing evidence). On May 24, 2024, the Court entered a preliminary injunction. Order Granting Mot. Prelim. Inj., ECF No. 29. Among the directives included in the injunction were three commands pertinent to the pending motion. First, the injunction ordered Palliparamban to submit for inspection by The Wittern Group's forensic expert “any and all electronic devices, including ... computers, mobile devices ... utilized by Palliparamban ....” ECF No. 29 at 12. Second, the injunction ordered Palliparamban to provide “[t]o the extent necessary or applicable ... the credentials, passwords, and/or passcodes used to access to decrypt such devices, as well as provide information and login information for any email account and cloud-based storage accounts to which he has access.” Id. Third, the injunction ordered Palliparamban to provide a description of: The manner and location in which The Wittern Group's Confidential Information and Trade Secrets has been accessed [by Palliparamban], sent to, transferred, stored, saved, and/or downloaded ... and the names or identities of each individual who was involved in accessing, sending, receiving, transferring, storing, saving, and/or downloading or uploading The Wittern Group's Confidential Information and Trade Secrets .... Id. at 11–12. Palliparamban was ordered to comply with the preliminary injunction by June 3, 2024. See id. at 11–12 (ordering Palliparamban to comply within five business days of the entry of the Order). On June 3, 2024, Palliparamban delivered five USB Drives and one MacBook Pro laptop to Christopher Lester, The Wittern Group's computer forensics expert. Lester Decl. ¶¶ 1, 5, Pl.'s Attach. 6 Supp. Mot. Order Show Cause, ECF No. 34-6. Lester, however, did not receive login information for the MacBook Pro at that time, and without that information he was not able to access the computer or conduct a forensic analysis or mirror imaging of the laptop. Id. ¶¶ 9–10. Lester also did not receive Palliparamban's mobile phone or the login information for any of Palliparamban's email accounts or cloud-based storage accounts. Id. ¶ 11. Further, according to counsel for The Wittern Group, Palliparamban had not submitted a “detailed accounting,” compliant with the preliminary injunction, of the manner and location in which he accessed The Wittern Group's confidential information. See Herndon Decl. ¶ 5, Pl.'s Attach. 2 Supp. Mot. Order Show Cause, ECF No. 34-2. On June 6, 2024, The Wittern Group moved for an order against Palliparamban to show cause why he should not be held in contempt for violating terms of the preliminary injunction. Pl.'s Mot. Order Show Cause 1, ECF No. 34. Specifically, The Wittern Group alleged Palliparamban was in violation of the preliminary injunction because, despite the passage of the compliance deadline on June 3, 2024, Palliparamban had not produced his mobile phone, provided login information for his MacBook Pro, email, and cloud-based storage accounts, and had not delivered an accounting of the manner and location in which he accessed and transmitted The Wittern Group's Confidential Information and Trade Secrets. Pl.'s Br. Supp. Mot. Order Show Cause 4–5, ECF No. 34-1. The Court ordered Palliparamban to provide an expedited response. Text Order, ECF No. 36. *2 On June 13, 2024, lead counsel for Palliparamban, Zubair Khan, filed a resistance on behalf of his client. Def.'s Resist. Pl.'s Mot. Order Show Cause, ECF No. 37. In his resistance, Khan represented that, on June 5, 2024, “[c]ounsel provided the password for [Palliparamban's] laptop.” Def.'s Resist. Pl.'s Mot. Show Cause ¶ 9, ECF No. 37. Khan further represented that it was his “understanding” that Palliparamban “sent the mobile phone on June 12, 2024, to Plaintiff” and that Palliparamban “sent the remaining passwords with the phone.” Id. ¶ 13. Last, as to an accounting of the manner and location in which the confidential information was accessed, Khan represented “counsel ... made clear that the ‘Confidential Information and Trade Secrets’ were not accessed or sent anywhere except on the thumb drives that had already been sent to Plaintiff. Therefore, there was no additional information to provide concerning the location of the information.” Id. ¶ 10. Separately, on June 14, 2024, the Court ordered Palliparamban's counsel to show cause why they should not be held in contempt for failure to comply with an oral order issued by the Court on May 20, 2024. Order to Show Cause, ECF No. 38. On that date, at a hearing on The Wittern Group's motion for a preliminary injunction, the Court issued an oral order directing Palliparamban to file a document containing the spelling of all names referenced during the hearing. Id. at 1. Palliparamban was represented at the hearing by Adam Junaid and Khan. Id. By June 10, 2024, Palliparamban had not complied, so the Court's staff sent his counsel an email reminding them of this obligation, setting a deadline for compliance on June 11, 2024. Id. Neither Palliparamban nor his counsel filed a document with this information by this deadline.[1] On June 18, 2024, The Wittern Group filed a reply in support of its motion for an order to show cause, contesting representations in Palliparamban's resistance and reporting that the violations alleged on June 6, 2024, had not been rectified. Pl.'s Reply Supp. Mot. Order Show Cause, ECF No. 39. On June 19, 2024, The Wittern Group filed a notice updating representations in its reply. Pl.'s Notice Re: Mot. Order Show Cause, ECF No. 40. In the notice, The Wittern Group stated its forensic expert, Lester, received Palliparamban's mobile phone on June 18, 2024. Id. ¶ 1. The Wittern Group further represented that the phone was sent in a package with a shipping label indicating it was sent on June 17, 2024. Id. ¶ 2. The package also contained a pin number that allowed Lester to access the phone, which was imaged and returned to Palliparamban. Id. The Wittern Group further reported that the other alleged violations of the preliminary injunction had not been rectified. Id. ¶¶ 3–5. A hearing on The Wittern Group's motion and on the Court's sua sponte order to show cause was held on June 25, 2024. Hr'g Mins., ECF No. 46. The Wittern Group was represented by Lynn Herndon, Jeffrey Harty, and Dana Waterman Hempy. Id. Palliparamban was represented by Khan and Junaid. Id. At the hearing, counsel for The Wittern Group reported that no changes to the status of Palliparamban's compliance had occurred since the filing of its June 19, 2024 notice. Khan conceded that two representations in his client's resistance were false: contrary to the “understanding” represented to the Court, Khan conceded the phone was not sent on June 12, 2024, and all “remaining passwords” were not sent with the phone. Cf. ECF No. 37 ¶ 13. Khan maintained that he did provide counsel for The Wittern Group the password for Palliparamban's computer, but he conceded he never sent the password in writing and was unable to provide the password at the hearing. Counsel for The Wittern Group continued to deny they ever received the password to Palliparamban's computer from Khan in any form—orally or in writing. Khan further represented that he sent counsel for The Wittern Group an email stating the USB Drive containing the confidential information at issue was accessed through Palliparamban's laptop while the drive was connected to the laptop. He stated his client's position was that this email satisfied the obligation to account for the manner and location of accessing the confidential information. The Wittern Group's counsel stated they may have received such an email, but neither party produced the email at the hearing. *3 At the hearing, the Court concluded the evidence was sufficient to find Palliparamban and Khan in contempt of Court. ECF No. 46. This ruling is memorialized and elaborated below. III. LEGAL STANDARD Title 18, United States Code, § 401 provides the Court statutory authority to “punish by fine or imprisonment, ... such contempt of its authority ... as ... [d]isobedience or resistance to [a] lawful ... order ....” 18 U.S.C. § 401(3); see also Monterey Dev. Corp. v. Lawyer's Title Ins. Co., 4 F.3d 605, 610 (8th Cir. 1993) (citing 18 U.S.C. § 401). The Court is also vested with the “inherent power to enforce compliance with its lawful orders and mandates by awarding civil contempt damages, including attorneys fees.” Fisher v. Marubeni Cotton Corp., 526 F.2d 1338, 1340 (8th Cir. 1975). “Civil contempt may be employed to either coerce the defendant into compliance with a court order or to compensate the complainant for losses sustained, or both.” Chi. Truck Drivers, 207 F.3d at 505 (citing United States v. United Mine Workers, 330 U.S. 258, 303–04 (1947)). “Either incarceration or a fine may accomplish the purpose of coercion.” Id. “With compensatory contempt, the court attempts to compensate the plaintiff for the damage that the offending party has caused by its contempt.” Coleman v. Espy, 986 F.2d 1184, 1190 (8th Cir. 1998). When a party moves for a finding of civil contempt, the movant “has the burden of demonstrating by clear and convincing evidence that an Order of the Court was in effect, that Defendants knew of the Order, and that Defendants failed to comply with the Order.” C. Line, Inc. v. City of Davenport, 957 F. Supp. 2d 1012, 1027 (S.D. Iowa 2013); see also Chi. Truck Drivers, 207 F.3d at 504. It is not necessary, however, to establish the violating party intended to violate the Court's order. “The absence of wilfulness does not relieve from civil contempt.... Since the purpose is remedial, it matters not with what intent the defendant did the prohibited act.” McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949); accord Cedar Rapids Lodge & Suites, LLC v. JFS Dev., Inc., No. 09-CV-175-LRR, 2011 WL 4625661, at *3 (N.D. Iowa Oct. 3, 2011). IV. DISCUSSION There is no question Palliparamban and his lead counsel, Khan, have violated orders of this Court—orders of which they were undoubtedly aware—and one order with which they have not yet fully complied. Cf. C. Line, Inc., 957 F. Supp. 2d at 1027. As of May 20, 2024, the Court's oral order to file a document with the spelling of names referenced at the preliminary injunction hearing was binding on Palliparamban and his counsel, see ECF No. 38, and as of May 24, 2024, the preliminary injunction issued in this case was binding on Palliparamban, ECF No. 29. These orders were each filed on the docket and raised in email correspondence with Khan. See ECF No. 38; ECF No. 29; Exs. A–C Supp. Herndon Decl., ECF Nos. 34-3 to 34-5. Nonetheless, Palliparamban and his counsel failed to fully comply. First, as of the June 25, 2024 hearing, Khan had yet to file a document with the spelling of names referenced at the preliminary injunction hearing. Such a document was not filed until the day following the hearing, June 26, 2025, fifteen days after the deadline set by the Court. Def.'s Suppl., ECF No. 49; ECF No. 38. Second, as established at the June 25, 2024 hearing, Palliparamban did not send his phone to Lester until June 17, 2024—two weeks after the deadline on June 3, 2024. See ECF No. 40 ¶ 1. Third, although Khan has represented that he provided, during a phone discussion with The Wittern Group's counsel, the password to Palliparamban's laptop, the Court finds the absence of evidence of this transmission—and The Wittern Group's continued efforts in seeking this information—sufficient to support the finding that this information was never provided, in violation of the preliminary injunction. As of this filing, the Court has not received evidence that this password has been provided to The Wittern Group. Fourth, as of the June 25, 2024 hearing, Palliparamban had not yet satisfied his obligation under the preliminary injunction to provide a fulsome description of the “manner and location in which The Wittern Group's Confidential Information and Trade Secrets has been accessed, sent to, transferred, stored, saved, and/or downloaded or uploaded ....” ECF No. 29 at 11–12. Even assuming Khan sent an email with the generic accounting described at the hearing, such an email would not be sufficient to satisfy Palliparamban's duty under the preliminary injunction. As stated at the hearing, an adequate accounting would at least include a written statement identifying the time of each incident of access or transfer and a description of the location of access, including the storage facility on which the data was saved when accessed—such as the specific USB Drive—and the device used to access—such as Palliparamban's laptop. See id. If the data was saved on a cloud-based storage facility when accessed, the account utilizing that facility must be identified—along with the device or devices used to access that facility—and any credentials required to access the account and facility must be provided. See ECF No. 46. On June 26, 2024, Palliparamban filed a document stating the manner and location in which “certain files” were saved and accessed on “one of” multiple USB Drives. Def.'s Suppl., ECF No. 50. The Court reserves ruling on whether this filing satisfies Palliparamban's obligation under paragraph 2 of the preliminary injunction. See ECF No. 29 at 11–12. *4 In addition to finding Palliparamban has failed to fully and timely comply with the Court's orders, the Court finds Khan has failed substantially in his duty of candor toward the tribunal. See Iowa Rules of Pro. Conduct r. 32:3.3. This duty required that Khan not knowingly “make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.” Id. In Palliparamban's resistance, counsel represented “it is our understanding the [Palliparamban] sent the mobile phone on June 12, 2024[,] to Plaintiff.” ECF No. 37 ¶ 13. At the June 25, 2024 hearing, Khan indicated his understanding had changed—acknowledging the phone was not sent until June 17, 2024—but Khan did not correct his representation to the Court until asked, directly, by the Court whether he contested The Wittern Group's position. Further, Palliparamban's resistance stated “[c]ounsel provided the password for [Palliparamban]'s laptop.” Id. ¶ 9. As stated above, the record supports the Court's conclusion that this statement was false, and Khan did not seek to correct it at the hearing. At the hearing, Khan presented the position that Palliparamban had substantially complied with the preliminary injunction and that—to the extent he had not complied—this failure was not willful. Firstly, “[t]he absence of wilfulness does not relieve from civil contempt.” McComb, 336 U.S. at 191. The issue at hand is the failure to comply with the Court's orders. Further, due to the violations discussed above, the Court cannot find that Palliparamban and Khan had substantially complied with the orders binding on them as of the June 25, 2024 hearing. Moreover, because Palliparamban has not yet provided The Wittern Group with the login credentials for his MacBook Pro laptop, the Court finds he has still not fully complied as of the time of this filing. For these reasons, the Court finds Palliparamban and Khan were in contempt of Court as of the June 25, 2024 hearing, and the Court further finds Palliparamban and Khan continue to be in contempt of Court. At the June 25, 2024 hearing, the Court stated its finding that Palliparamban and Khan were in contempt of Court. See ECF No. 46. After the Court stated this finding, Khan argued a separate hearing should be held on whether he and his client were, in fact, in violation of the preliminary injunction. Id. He argued the proper scope of the June 25, 2024 hearing did not extend to the issue of compliance with the preliminary injunction because The Wittern Group's motion had only asked the Court to issue an order to show cause. At the time, the Court did not recognize the merit of this position. The Court now acknowledges this position properly raised a procedural error. The Wittern Group's motion asked the Court to order Palliparamban to show cause why he was not in contempt for failing to satisfy his obligations under the preliminary injunction. ECF No. 34 at 1. The Court set the motion for hearing on June 25, 2024, Text Order, ECF No. 42, and did not file an order to show cause. At the hearing, the Court found Palliparamban in contempt and then granted The Wittern Group's motion. See ECF No. 46. This sequence of proceedings was in error: an order to show cause why Palliparamban should not be held in contempt for violating the preliminary injunction should have been filed prior to the hearing at which the parties' offered arguments on whether Palliparamban was in violation of the injunction. The Court's error, however, was harmless, because The Wittern Group's filings provided sufficient notice of their request for a finding of contempt and the argument and evidence supporting that request. See ECF No. 34; ECF No. 34-1; ECF No. 39; ECF No. 40. Further, Palliparamban's briefing on The Wittern Group's motion and Khan's oral argument at the hearing provided adequate opportunity to be heard on the issue of contempt. This is evident from the fact that Khan's arguments in his client's resistance and at the motion hearing addressed the substantive issue of whether his client was in compliance with the preliminary injunction and whether there was cause to find Palliparamban or Khan in contempt. See, e.g., ECF No. 37 ¶ 14 (“Adequate cause existed for the passwords and mobile not being sent within the timeline in the order.”). *5 Due to the Court's procedural error, the Court modifies the sanction issued at the June 25, 2024 hearing upon the finding that Palliparamban and Khan were in contempt. The Court withdraws its order stating Palliparamban must pay a fine of $10,000 for being in contempt as of June 25, 2024. Cf. ECF No. 46. But because the Court's procedural error was harmless, the Court affirms and reasserts the remaining aspects of the sanctions ordered at the June 25, 2024 hearing. Cf. id. Namely, to ensure compliance with the preliminary injunction issued on May 24, 2024, and to compensate The Wittern Group for the losses sustained in seeking compliance with the preliminary injunction, the Court grants The Wittern Group's request for an award of attorneys fees and costs related to its motion and further imposes a coercive contempt fine of $500 for every day on which Palliparamban continues to fail to satisfy his obligations under the preliminary injunction, starting on June 26, 2024. Cf. Chi. Truck Drivers, 207 F.3d at 505; ECF No. 34. Because Palliparamban continues to be in violation of the injunction as of the date of filing, June 28, 2024, he currently owes a coercive fine of $1,500––and counting––in addition to The Wittern Group's attorneys fees and costs related to their pursuit of his compliance with the injunction. Accordingly, IT IS ORDERED that Plaintiff The Wittern Group, Inc.'s Motion for Order to Show Cause, ECF No. 34, is GRANTED. IT IS FURTHER ORDERED that Defendant Noufal Babu Palliparamban and his lead counsel Zubair Khan are jointly and severally liable for a fine of $500 per day for every day on which Palliparamban has not fully complied with the preliminary injunction—starting June 26, 2024. Once Palliparamban is in full compliance, he and Plaintiff The Wittern Group, Inc. must jointly file a statement asserting that Palliparamban's duties of production under the injunction, ECF No. 29, have been satisfied. IT IS FURTHER ORDERED that Plaintiff The Wittern Group, Inc. shall file an accounting of all attorneys fees and costs associated with its pursuit of Palliparamban's compliance with the preliminary injunction. ECF No. 29. Such an accounting must be filed by no later than 5:00 p.m. on July 2, 2024. IT IS SO ORDERED Dated this 28th day of June, 2024. Footnotes [1] As further discussed below, a document with this information was not filed until June 26, 2024, a day after the June 25, 2024 hearing. See Def.'s Suppl., ECF No. 49.