March 2016: Sweeping Sanctions Victory in Central District of California

The firm recently obtained a sweeping sanctions victory in the Central District of California for client American Rena International Corporation in a case involving trademark, copyright, RICO, and related claims.

In 2012, the firm was retained to represent American Rena—distributor of  products under the RENA and RENA BIOTECHNOLOGY trademarks—against a former senior sales distributor who left the company to sell competing products under the “aRena” brand. In late 2012, the firm obtained a far-reaching  preliminary injunction enjoining defendants from marketing or selling their competing products and requiring defendants to turn over all products under their control bearing the infringing marks. 

In response, defendants claimed it was American Rena, not them, that was infringing because defendants had, in fact, used their marks years before American Rena. When asked to support their claim, defendants provided three declarations purportedly from individuals who all claimed to have purchased defendants’ products before American Rena began using its marks.

Quinn Emanuel’s extensive discovery efforts revealed troubling facts about these declarations. The first came from an individual who did not appear to exist. The second came from an individual who testified that her identity had been stolen, that the declaration was a forgery, and that she had never even heard of, let alone purchased, the items at issue. After the firm obtained an order in the Northern District of California holding the third individual in contempt for ignoring orders that she appear for deposition, that individual confirmed that she had not purchased any of the products when the declaration claimed. She also claimed that she did not know what the declaration said and was deceived into signing it, also that she had repeatedly been instructed by defendants to refuse to appear and to obstruct the firm’s efforts to depose her, efforts which included the filing of false accusations  with the Court. Though defendants’ principal initially denied any knowledge of this misconduct in deposition, she broke when confronted with the evidence, eventually admitting defendants’ central role in orchestrating and perpetrating this litigation misconduct.

Armed with this information, the firm promptly moved for terminating sanctions, asking that defendants’ counterclaims be dismissed and that default be entered against defendants on all of American Rena’s claims. On December 14, 2015, the district court ruled and, in a strongly-worded 84-page opinion, granted American Rena’s motion in full, dismissing defendants’ counterclaims, entering default judgment against defendants on all of American Rena’s affirmative claims, and awarding American Rena $1.2 million in attorneys’ fees. Among other things, the Court found that, “Plaintiffs have demonstrated by clear and convincing evidence that defendants fabricated a declaration for a phantom witness, forged a declaration, falsified and fraudulently procured a declaration, filed these false declarations with different federal courts, obstructed the discovery process,  … lied under oath, and violated the court’s preliminary injunction.” The victory marks an extremely unusual use of the inherent powers of federal courts to grant sanctions of this magnitude.