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Integrated Waste Solutions, Inc. v. Sudhakar Goverdhanam

July 13, 2012


The opinion of the court was delivered by: Jacob P. Hart United States Magistrate Judge


On May 10, 2012, the parties in the above captioned case appeared before the undersigned for a conference and reached an agreement to settle the case. Although the parties have not yet executed a written agreement, on that date, the terms of that agreement were set forth in detail on the record "the Agreement". Tr. 5/10/12. Part of the Agreement required that Defendant transfer certain assets pertaining to the dumpster business to Plaintiff by May 12 at 5:00 pm. An agreement regarding the specific assets to be transferred had been worked out between Mr. Goverdhanam and Mr. Rundatz, an IT professional who works for Plaintiff on nights and weekends helping with specific issues. N.T. 6/12/12 at 33-34. Mr. Rundatz placed the list of 9 items, as they had agreed, on the record and Mr. Goverdhanam then had a chance to respond. Tr. 5/10/12 at 17-18. Presently before the Court is Plaintiff's Motion To Enforce and Impose Damages. The alleged breaches all involve Defendant's alleged failure to produce certain assets set forth on that list by the 5:00 pm deadline on May 12, 2012. Plaintiff alleges that Defendant materially breached the agreement and seeks the award of $150,000 pursuant to the liquidated damages provision of the agreement.

Plaintiff also originally asked that the Court direct Plaintiff to transfer certain items, which at the time of the hearing had already been transferred, making their request moot. In light of the alleged breaches, Plaintiff also asked that the Court accelerate Defendant's transfer of, as opposed to the scheduled transfer on July 9, 2012. Given that July 9, 2012 has passed, this request is also moot. Although Plaintiff raised other issues, Mr. Thall made it clear at the hearing that he was limiting his arguments to Defendant's failure to turn over, failure to turn over, failure to turn over LinkedIn social media account, failure to turn over usable customer, vendor or order data, failure to turn over the source codes and finally the fact that access to accounts was restricted. N.T. 6/13/12 at 15-16; Exhibit P-1.

After conducting a hearing over the course of two days, during which argument and testimony was presented by both sides, the Court makes the following findings:

Failure to Turn Over E-mail Accounts and to Remove Restrictions:

The fifth item listed on page 17 of the transcript provides that the Defendant provide "the login and password for all email addresses associated with the sites." Tr. 5/10/12 at 17. Plaintiff alleges that Defendant failed to transfer the email account and refused to acknowledge its existence until May 17, 2012, five days after the transfer date set forth in the Agreement. Plaintiff also claims that Defendant failed to transfer the email account According to Plaintiff, it was only after they confronted Defendant that the account was transferred on May 18, 2012, six days after the deadline and by that time AdWord campaigns had been removed and were not transferred.

According to the testimony, these two email accounts were created for the purpose of managing Google accounts. As per Plaintiff's P-1, Plaintiff agrees that was used to control the domain and websites and was used to market the websites via Google adwords. While a gmail account is a form of an "email" account, we find credible Defendant's testimony that in this case the accounts were created simply because a Google email account or gmail account was required by Google to run and manage their adwords and Google analytics.

The entrance to the Adwords account was by a gmail account. It was not an e-mail account for customers or vendors. According to Defendant, because the account was used for overall business including porta-potties and fences and was not a dumpster account, Plaintiff was not entitled to the username and passwords. Defendant testified that the account was used to manage his Google accounts for all of his businesses including dumpsters, porta-potties and fences, but they were not used in the dumpster business to send or receive emails to or from customers or vendors. N.T. 6/13/12 at 26-29. Given that we accept this testimony, we find that the transfer of the two accounts were not included under the fifth item in the transcript. Therefore, Plaintiff was not required to give Defendant the accounts. Rather, under item #9, they were entitled to a data dump from the account, as was provided. Tr. 5/10/12 at 18; N.T. 6/13 at 24.

The accounts were simply keys to access the Google Adwords accounts, but did not receive or send e-mails for the dumpster business. Id. at 28. However, by May 18, 2012, although we find they were not required to do so, Defendant transferred both accounts. Therefore, we do not find a breach of the agreement, material or otherwise, related to the Defendant's failure to turn over the two gmail accounts by the deadline. See Pure Earth, Inc. v. Call, Civ. A. No. 09-4174, 2012 WL 947027 at *49 (E.D. Pa. March 21, 2012) citing Oak Ridge Constr. Co. V. Tolley, 504 A.2d 1343, 1348 (Pa. Super. 1985) (listing factors to consider in determining if breach is material); see also Restatement 2d of Contracts § 241.

Pursuant to seventh and eighth items listed in the Agreement, Defendant was to produce the login and password to the Google webmaster tools and the login and password to Google Analytics. Tr. at 17. Plaintiff argues that although Defendant had turned over the logins and passwords to the restricted account, he did not turn off security measures so Plaintiff was still unable to log in to the account. N.T. 6/12/12 at 49. Plaintiff acknowledges that Defendant gave them the accounts by the deadline set forth in the Agreement, but claim that they were given only restricted access to sites. N.T. 6/12/12 at 46. Plaintiff alleges that defendants retained ownership of the domain names and they were not able to make any changes to the accounts. Once they were given the gmail accounts, the account access was still restricted because of security questions. They assert that IWS could not claim ownership of the accounts that were transferred because the accounts were set up with security restrictions that were not eliminated. However, Plaintiff admits that they were able to gain access to the accounts by guessing the answers to security questions. They "guessed" the answers to the questions instead of contacting the Defendant for the information and ultimately gained access. The security question required that an Indian cell phone number be entered and the cell phone number had not been disclosed to plaintiffs. Id. at 50. Rather than contacting Defendant, Mr. Rundatz was able to get into the account by changing the security question and entering information that he remembered discussing with Mr. Goverdhanam. Id. Once again, there was no material breach. Furthermore, as to Plaintiff's claim that the access was still as co-owners, although they may not have been required to, Defendants have now fully relinquished control of these accounts.

Failure to Turn Over LinkedIn Social Media Account:

Next, Plaintiffs allege that Defendant materially breached the agreement by failing to turn over all social media accounts related to the dumpster business by the deadline, as was required by the sixth item set forth on the record. Tr. 5/10/12 at 17. There is no dispute that by the deadline defendants turned over to the plaintiffs their Facebook and Twitter accounts and did not turn over a LinkedIn account until six days later on May 18, 2012, after being contacted by Plaintiff.

According to Mr. Goverdhanam, they did not know that they had a LinkedIn account until they were notified by Plaintiff on May 17th or 18th. He went to his marketing manager when he was informed of the account and they discovered that the account had been created by a former employee, who had been in the marketing department. They located the former employee in India, figured out the username and password, and gave the information to Plaintiff the same day. N.T. 6/13/12 at p. 38. We find Mr. Goverdhanam's testimony stating that the failure to initially disclose the LinkedIn account was not intentional or malicious to be entirely credible. Since the failure ...

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