Court Opinion

ID: 2681675
Source: CourtListenerOpinion
Date Created: 2014-07-02 16:00:51.188842+00
Date Added: 2024-06-11T10:36:15.860769
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

INTELSAT USA SALES LLC,                           :
                                                  :
       Plaintiff and Counter-Defendant,           :       Civil Action No.:      10-2095 (RC)
                                                  :
       v.                                         :       Re Document No.:       44
                                                  :
JUCH-TECH, INC.,                                  :
                                                  :
       Defendant and Counter-Claimant.            :

                                  MEMORANDUM OPINION

            DEFERRING A DECISION ON INTELSAT’S MOTION FOR RULE 11 SANCTIONS

                                      I. INTRODUCTION

       Plaintiff and Counter-Defendant Intelsat USA Sales LLC (“Intelsat”), formerly known as

Intelsat USA Sales Corporation, brought suit against Defendant and Counter-Claimant Juch-

Tech, Inc. (“Juch-Tech”) alleging breach of contract and unjust enrichment on the theory that

Juch-Tech refused to pay for services rendered after Intelsat performed all of its contractual

obligations. Juch-Tech filed original and amended counterclaims that included several counts,

many of which either were dismissed by stipulation or limited through this Court’s prior rulings.

Now before the Court is Intelsat’s motion seeking Rule 11 sanctions against Juch-Tech based on

certain allegations in those counterclaims. For the reasons discussed below, the Court will defer

ruling on Intelsat’s motion because Juch-Tech has failed to provide sufficient information from

which the Court can ascertain whether Rule 11 was violated. The Court therefore will order

Juch-Tech to submit an affidavit setting forth details regarding its pre-filing inquiry and

explaining the factual and evidentiary bases for the counterclaims and allegations that Intelsat

argues are in violation of Rule 11.
                                       II. BACKGROUND

                                     A. Factual Allegations 1

        Intelsat and Juch-Tech are companies that operate in the satellite communications

industry. In 2005, the parties entered into a contractual agreement titled the Non-Exclusive

Service Agreement (“NESA”), see 1st Am. Compl. Ex. 1, ECF No. 3, under which Juch-Tech

leased satellite capacity from Intelsat on two satellites so that Juch-Tech could provide its

customers with communications services. See Am. Answer 1st Am. Compl. & Am. Countercls.

¶ 26, ECF No. 30. In early 2009, the parties entered into an additional agreement, the

“Transition Agreement,” see Am. Countercls. Ex. A, ECF No. 30-1, and a companion

agreement, “Service Order No. 22165,” under which Juch-Tech agreed to lease additional

satellite capacity from Intelsat in exchange for, among other things, Intelsat’s sale of a Linkstar

Hub and assignment of Intelsat’s contracts with certain customers who were using that satellite

capacity at the time. See Am. Answer 1st Am. Compl. & Am. Countercls. ¶¶ 27-28. Juch-Tech

was to lease capacity on Intelsat’s “IS-1R” satellite, which was already in orbit at the time, and

then transition to the “IS-14,” a satellite that would become operational several months later. See

id. ¶ 27.

        Juch-Tech claims that it did not need the additional capacity for itself, but instead was

induced to enter the Transition Agreement and Service Order No. 22165 as a result of certain

representations about the value of the contracts Intelsat would assign. See id. ¶ 28. Juch-Tech

asserts that Intelsat, through its agents, represented that once customers on IS-1R were migrated

        1
               Intelsat previously filed two motions to dismiss, both of which the Court granted
in part and denied in part. The memorandum opinions accompanying the orders provide a more
detailed overview of the facts, which the Court incorporates by reference in this opinion. See
Intelsat USA Sales Corp. v. Juch-Tech, Inc., 935 F. Supp. 2d 101 (D.D.C. 2013) (ECF No. 22);
Intelsat USA Sales Corp. v. Juch-Tech, Inc., No. CV 10-2095 (RC), 2014 WL 905323 (D.D.C.
Mar. 10, 2014) (ECF No. 82).

                                                  2
to IS-14, there would be little capacity left on the IS-14 satellite. See id. ¶ 54. Juch-Tech also

alleges that Intelsat provided Juch-Tech with a financial analysis of the contracts to be assigned

under the Transition Agreement, showing that the revenues from the contracts would exceed the

cost of Juch-Tech’s lease, resulting in a profit for Juch-Tech. See id. ¶ 56.

       But Juch-Tech maintains that not everything was as it seemed. According to the

allegations in Juch-Tech’s amended counterclaim, Intelsat knew, but failed to disclose, that

certain customers were not paying their bills and would not renew their contracts, that other

customers had been complaining about poor service on the Linkstar Hub and IS-1R for some

time, and that still others were threatening to terminate their contracts altogether. See id. ¶ 59.

Juch-Tech, moreover, alleges that after the Transition Agreement was executed, Intelsat failed to

conduct the transition from IS-1R to IS-14 in a manner that minimized the disruption of service

and failed to correct other technical problems that made it difficult for Juch-Tech to serve

existing clients and obtain new customers. See id. ¶¶ 33, 42.

       Juch-Tech then fell behind on its payments to Intelsat. See id. ¶ 34. The companies

entered a period of renegotiation between July and September of 2010, but Juch-Tech alleges

that during this period, Intelsat approached current and potential Juch-Tech customers in order to

convince them to abandon Juch-Tech and sign with Intelsat or another provider. See id. ¶¶ 35-

36. Juch-Tech alleges that some of the statements Intelsat made to these clients about Juch-Tech

were false and defamatory. See id. ¶ 47. The parties agree that their contractual relationship was

terminated in October 2010. See 1st Am. Compl. ¶ 8; Am. Answer 1st Am. Compl. & Am.

Countercls. ¶ 8.

                                                  3
                        B. Claims, Counterclaims, And Motions To Dismiss

          Intelsat initiated litigation against Juch-Tech by filing a complaint for breach of contract

and unjust enrichment on the theory that Intelsat performed all of its contractual obligations but

Juch-Tech refused to pay for the services rendered. See generally 1st Am. Compl. Juch-Tech

filed its original counterclaim alleging eleven causes of action, ranging from breach of contract

under New York law to various torts under D.C. law to unfair competition under Canadian

trademark law. See generally Answer 1st Am. Compl. & Countercls., ECF No. 10. After the

Court granted in part and denied in part Intelsat’s motion to dismiss Juch-Tech’s original

counterclaim, see generally Intelsat USA Sales Corp. v. Juch-Tech, Inc., 935 F. Supp. 2d 101

(D.D.C. 2013) (ECF No. 22), Juch-Tech, through new counsel, filed an amended counterclaim

that included seven counts, many of which were identical or nearly identical to those in the

original counterclaim: (1) breach of contract under New York law; (2) breach of the implied

covenant of good faith and fair dealing under New York law; (3) fraud in the inducement under

D.C. law; (4) tortious interference with contractual relations under D.C. law; (5) tortious

interference with business relations under D.C. law; (6) defamation under D.C. law; and

(7) unfair competition under the Canadian Trademark Act. See generally Am. Answer 1st Am.

Compl. & Am. Countercls. By consent of the parties, Counts IV through VII have been

dismissed. See Stip., ECF No. 42 (Counts VI and VII); Min. Order, Dec. 13, 2013 (Counts IV

and V).

          Intelsat filed a renewed motion to dismiss the remaining counts in the amended

counterclaim, which the Court granted in part and denied in part. See generally Intelsat USA

Sales Corp. v. Juch-Tech, Inc., No. CV 10-2095 (RC), 2014 WL 905323 (D.D.C. Mar. 10, 2014)

(ECF No. 82). Specifically, the Court dismissed Juch-Tech’s breach of contract claim as to its

                                                    4
“assignment of customers” theory and Juch-Tech’s claim for breach of the implied covenant of

good faith and fair dealing as it related to Intelsat’s alleged misrepresentations about the

condition of the assigned contracts. The Court denied the remainder of Intelsat’s motion.

                          C. Intelsat’s Motion For Rule 11 Sanctions

       Now before the Court is Intelsat’s motion for Rule 11 sanctions against Juch-Tech, its

counsel, and its counsel’s law firm. See generally Pl.’s Mot. Sanctions, ECF No. 44. Intelsat

asserts that Juch-Tech’s original counterclaim included several tort counts and related allegations

that were blatantly false and devoid of factual support. 2 See Pl.’s Mem. Supp. Mot. Sanctions 2-

3, ECF No. 45. In May 2013, substitute counsel appeared on behalf of Juch-Tech and requested

an extension of time to file an amended counterclaim. See id. at 4. Counsel for Intelsat

responded with a letter to Juch-Tech’s new counsel, Mark Shaffer, suggesting a longer extension

of time so that he could fully investigate Juch-Tech’s counterclaim allegations before refiling;

Intelsat’s counsel also warned attorney Shaffer that many of Juch-Tech’s allegations, including

the original fraud, tortious interference, and defamation claims, were frivolous, not supported by

facts, and should be withdrawn. See id. at 4; id. Ex E (May 16, 2013 Letter from Bledsoe to

Shaffer).

       On May 28, 2013, Juch-Tech filed an amended counterclaim that left intact most of the

original counterclaim’s allegations that Intelsat made misrepresentations about the profitability

of the customer contracts it was assigning to Juch-Tech, tortiously interfered with Juch-Tech’s

customers, and made defamatory statements about Juch-Tech. See generally Am. Answer 1st

Am. Compl. & Am. Countercls. Intelsat now argues through its Rule 11 motion that a

       2
                Because Juch-Tech’s first counsel is unavailable to comment on his investigation
before filing the original counterclaim, the Court finds that there is insufficient information
available for evaluating whether Rule 11 was violated. The Court therefore will focus on
Intelsat’s arguments regarding the amended counterclaim.

                                                  5
reasonable pre-filing inquiry would have revealed that Juch-Tech lacked the facts necessary for

establishing the essential elements of these claims. See Pl.’s Mem. Supp. Mot. Sanctions 18.

Intelsat’s specific arguments for sanctions are discussed below.

                                         III. ANALYSIS

                           A. Legal Standard For Rule 11 Sanctions

       Under Federal Rule of Civil Procedure 11(b), the Court may impose sanctions if “a

pleading, written motion, or other paper … [is] presented for any improper purpose[;]… the

claims, defenses, and other legal contentions therein are [un]warranted by existing law[;]… the

allegations and other factual contentions have [no] evidentiary support[; or] the denials of factual

contentions are [un]warranted on the evidence[.]” See Fed. R. Civ. P. 11(b). The Court applies

“an objective standard of reasonable inquiry on represented parties who sign papers or

pleadings.” Bus. Guides, Inc. v. Chromatic Commc’ns Enters., 498 U.S. 533, 554 (1991). Rule

11 is designed to insure that allegations made in a filing “are supported by a sufficient factual

predicate at the time that the claims are asserted.” City of Yonkers v. Otis Elevator Co., 106
F.R.D. 524, 525 (S.D.N.Y. 1985). As such, it is “no answer to a motion seeking Rule 11

sanctions … to suggest that plaintiffs needed discovery to ascertain whether the claim asserted

was well founded.” Id.

       The Court has “discretion to determine both whether a Rule 11 violation has occurred and

what sanctions should be imposed if there has been a violation.” Cobell v. Norton, 211 F.R.D. 7,

10 (D.D.C. 2002) (internal quotations omitted). Rule 11(c)(1) provides that if the Court

determines Rule 11(b) was violated, it may impose sanctions on “any attorney, law firm, or party

that violated the rule or is responsible for the violation.” Fed. R. Civ. P. 11(c)(1). “The sanction

should be imposed on the persons — whether attorneys … or parties — who have violated the

                                                 6
rule or may be determined to be responsible for the violation.” Id. Advisory Committee Note

(1993) (subdivisions (b) and (c)); see also Reynolds v. U.S. Capitol Police Board, 357 F. Supp.
2d 19, 23-24 (D.D.C. 2004) (“Parties and their counsel may be sanctioned by the Court for

violations of Rule 11.”). Finally, the imposition of Rule 11 sanctions is not something courts

take lightly; instead, Rule 11 sanctions are an extreme punishment for filing pleadings that

frustrate judicial proceedings. See Henok v. Chase Home Fin., LLC, 926 F. Supp. 2d 100, 104

(D.D.C. 2013).

                            B. Intelsat’s Arguments For Sanctions

       The critical question under Rule 11 is whether Juch-Tech undertook a reasonable

investigation into the factual bases for its amended counterclaim before submitting the filing to

the Court. See Bus. Guides, 498 U.S. at 554. In support of its motion, Intelsat sets forth several

arguments about when and how Juch-Tech violated Rule 11 through its counterclaim theories

and factual allegations that were not, and could not have been, based on a reasonable pre-filing

inquiry.

       First, Intelsat cites Juch-Tech’s failure to provide written answers or documents to

interrogatory requests for evidence supporting the counterclaims. Intelsat argues that these

incomplete answers demonstrate that Juch-Tech never had a factual basis for making the

allegations, yet it did so anyway. For example, in Interrogatory No. 7, Intelsat asked:

       Identify each actual or potential customer of Juch-Tech with whose contracts or
       business relations Intelsat interfered as alleged in the Counterclaims, and describe
       the specific acts, including the dates and participants in such acts, that constitute
       the wrongful interference.

Pl.’s Mem. Supp. Mot. Sanctions 6. Juch-Tech responded by referring Intelsat to its own

communications with customers and stating that it could not provide more information at the

time but would supplement the response later:

                                                 7
       Juch-Tech preliminarily refers Intelsat to all of its communications with [various
       customers]. As it has advised counsel for Intelsat, Juch-Tech cannot give a more
       complete, accurate, and professional answer to this Interrogatory until it
       completes its ongoing document review. Thereafter, Juch-Tech intends to utilize
       its option under Federal Rules of Civil Procedure Rule 33(d) to answer this
       Interrogatory.

Id. Juch-Tech provided a similar answer to several interrogatories targeting the evidentiary bases

for its counterclaim allegations. Intelsat argues that although discovery remains ongoing, Juch-

Tech’s responses came two years into the litigation, which is highly suggestive that no such

grounds ever existed to support Juch-Tech’s allegations.

       Second, Intelsat argues that Juch-Tech asserts a fraud claim that misrepresents

indisputable facts to the Court. These misrepresentations come from Juch-Tech’s claims

premised on an email from Intelsat’s Alicia Schwarcz to Juch-Tech on March 12, 2009, which

included various attachments and information about customer contracts and billing. In the

amended counterclaim, Juch-Tech alleges that Intelsat fraudulently represented that “leasing

costs would be fully paid by Intelsat’s … assignment to Juch-Tech of certain customer contracts,

including the right of contract extensions and new contract negotiations” and “affirmatively

represented that the customer contracts that it would assign to Juch-Tech generated a revenue

stream … well in excess of the leasing fees for all the additional bandwidth and leave Juch-Tech

with substantial bandwidth to lease to third parties at a profit.” Am. Answer 1st Am. Compl.

& Am. Countercls. ¶ 28; Pl.’s Mem. Supp. Mot. Sanctions, Ex. B.

       In its motion for sanctions, Intelsat argues that Juch-Tech did not attach the Schwarcz

email to the amended counterclaim because the email clearly demonstrates that Juch-Tech’s

fraud allegations are false. According to Intelsat, it made no guarantee, in this email or

elsewhere, about future revenue or that the transaction would even be profitable for Juch-Tech.

Rather, as Intelsat explains, the Schwarcz email “carefully and truthfully stated the termination

                                                 8
dates of the various contracts, five of which were month to month and could be terminated at any

time.” Pl.’s Mem. Supp. Mot. Sanctions 16. In addition, Intelsat points out that the Schwarcz

email indicated to Juch-Tech that several of the assigned contracts were due to expire within six

months, and thus any revenue flowing from those contracts would shortly cease if not extended

or renewed. See id. Indeed, according to Intelsat, the chart attached to the Schwarcz email

showed that one of the most profitable contracts was not being assigned to Juch-Tech, and as

such, even if every contract Intelsat assigned to Juch-Tech was renewed or extended at the end of

its term, Juch-Tech still would lose more than $35,000 per month by December 2009 unless

Juch-Tech found additional customers on its own. See id. at 17. The Schwarcz email therefore

did not make a promise about profitability to Juch-Tech; rather, Juch-Tech was provided with

accurate information about the contracts and warned that it needed to investigate them for itself

to determine their future status. See id. Despite these obvious facts, Intelsat argues, Juch-Tech

maintained fraud allegations in its amended counterclaim.

       Third, Intelsat argues in its motion for sanctions that Juch-Tech’s tortious interference

allegations violated Rule 11. See id. at 20. In the amended counterclaim, Juch-Tech asserts

through multiple paragraphs that Intelsat intentionally made false or misleading statements to

customers in order to harm Juch-Tech. For example, Juch-Tech alleges:

       Upon information and belief, Intelsat intentionally interfered with Juch-Tech’s
       contracts with its customers by (a) inducing Juch-Tech’s customers to breach their
       contracts by failing to pay Juch-Tech under their enforceable agreement; (b)
       entering into agreements with Intelsat for bandwidth Juch-Tech was providing on
       IS-1R; or (c) materially impairing or making impossible Juch- Tech’s ability to
       serve its existing clients under their contracts by disparaging Juch-Tech’s business
       capabilities and degrading the service Intelsat provided to Juch-Tech, which
       caused Juch-Tech’s customers to decline to continue or renew their existing
       contracts.

       …

                                                 9
       Intelsat made false and misleading statements regarding Juch-Tech’s financial
       status and Juch-Tech’s relationship with Intelsat and degraded Intelsat service to
       Juch-Tech which in turn degraded the service Juch-Tech was able to provide its
       customers IS-1R and IS-14. By doing so, Intelsat caused existing Juch-Tech
       customers to decline to extend existing contracts and/or ratify terms for new
       contracts. Intelsat further prevented Juch-Tech from marketing its services to
       and/or beginning business relationships with new customers.

Am. Answer 1st Am. Compl. & Am. Countercls. ¶¶ 69, 72. Juch-Tech further alleges that

“Intelsat’s motive for interfering with Juch-Tech’s business relationships was solely malicious,”

id. ¶ 74, and “Juch-Tech would have been able to renew its existing customer relationships and

acquire additional customers but for Intelsat’s wrongful conduct,” id. ¶ 73.

       During discovery, Intelsat asked Juch-Tech through multiple interrogatories to (1)

identify actual or potential customers with whom Intelsat interfered; (2) identify facts or

documents supporting allegations that Intelsat induced customers to breach contracts or not

extend contracts with Juch-Tech; (3) describe the actions Intelsat allegedly took to commit the

interference; and (4) identify facts or documents showing that Intelsat acted with a malicious

motive. See Pl.’s Mem. Supp. Mot. Sanctions 22. Juch-Tech, however, was unable to provide

any documents supporting these critical aspects of its tortious interference theory, which

suggests that it lacked a pre-filing basis for the claim.

       Similarly, Intelsat argues that Juch-Tech’s defamation theory underlying the tortious

interference counterclaim is without evidentiary support. Again, Juch-Tech failed to identify in

response to discovery requests potential witnesses or documents showing the alleged defamatory

or disparaging statements by Intelsat that could support Juch-Tech’s allegations. See id. at 23.

As Intelsat argues in its motion for Rule 11 sanctions, “Juch-Tech admits, under oath, it cannot

identify a single defamatory or disparaging statement that Intelsat made; that despite its

allegations of tortious interference, it cannot identify a single customer with whom Intelsat

                                                  10
tortiously interfered, or a single act of tortious interference that Intelsat committed.” Id. at 14

(emphasis in original).

                      C. Juch-Tech’s Response To Intelsat’s Arguments

       Juch-Tech’s substitute counsel defends against Intelsat’s arguments by asserting that he

undertook a reasonable pre-filing inquiry before submitting the amended counterclaim. In

particular, attorney Shaffer suggests that when preparing the new counterclaim, he relied on

information from Juch-Tech’s management and staff, as well as interviews of third parties,

identifiable emails and documents within Juch-Tech’s possession, and an ancillary lawsuit

involving the performance of Intelsat’s Linkstar Hub. See Def.’s Mem. Opp’n Mot. Sanctions 7,

10, ECF No. 50. He further argues that this inquiry revealed “supporting documents and

sources” for the allegations in the amended counterclaim. See id. at 4. Juch-Tech’s counsel,

however, fails to provide any details about his pre-filing inquiry from which the Court might

evaluate whether Rule 11 was violated. For instance, he states that he relied on Juch-Tech

employees for information and reviewed documents, but he does not provide an affidavit with

specific information about what these employees said and how those statements supported the

various counterclaim allegations. See id. at 7-8.

       In particular, Juch-Tech asserts that its pre-filing inquiry revealed actual and potential

customers with whom Intelsat tortiously interfered. See id. at 19. But Juch-Tech does not

provide information about who these customers are and what Intelsat said to them that might

constitute tortious interference. Instead, Juch-Tech defends its counterclaim allegations by

arguing that it is not asserting a defamation claim, but rather just that Intelsat made disparaging

comments to customers about Juch-Tech. See id. at 20-21. This response is insufficient and

misses the point.

                                                  11
       Intelsat’s argument about how Juch-Tech violated Rule 11 has nothing to do with

whether Juch-Tech alleges defamation in the technical sense of the tort versus mere disparaging

statements. Rather, regardless of the description, the essence of Juch-Tech’s counterclaim theory

was that Intelsat made false and intentionally misleading statements to influence certain

customers, yet Juch-Tech continuously fails to provide evidence regarding the substance of those

alleged statements and to whom they were made. Juch-Tech could not provide these specifics in

response to multiple interrogatories, and it likewise failed to demonstrate through its

memorandum in opposition to Intelsat’s Rule 11 motion what, if anything, its pre-filing inquiry

revealed about Intelsat’s alleged statements to customers and the contracts with which Intelsat

allegedly interfered. The Court is left to surmise that either Juch-Tech is playing “hide the ball”

by failing to disclose information through discovery, or the factual support never existed and the

allegations were made in violation of Rule 11.

         In response to Intelsat’s argument that Juch-Tech’s fraud claims were filed without

supporting evidence, Juch-Tech’s counsel states that the allegations were warranted due to pre-

filing interviews with Juch-Tech employees and his review of the Schwarcz emails on March 12

and 19, 2009. See id. at 14. Juch-Tech devotes much time in its opposition memorandum

restating information contained in these emails, see id. at 16, but it does not explain what

material facts were withheld by Intelsat or how those facts conflicted with the information set

forth in the emails and attachments such that they constitute false representations or material

omissions. And most importantly, Juch-Tech fails to address Intelsat’s argument that the March

19 Schwarcz email shows that Juch-Tech would actually lose money in the near future unless it

acquired new contracts because a large sum included in the billing chart was for an Intelsat

customer not being assigned to Juch-Tech under the Transition Agreement and whose payments

                                                 12
would end within nine months at the latest. In fact, this document seems to make clear that most

of the contracts actually being assigned were expiring soon or were month-to-month contracts

such that the customer could cancel at any time, which strongly contradicts Juch-Tech’s fraud

theory about guaranteed future revenue streams. Yet Juch-Tech does not respond to this critical

issue in its opposition memorandum.

                              D. Further Information Is Required

       The Court is troubled by Juch-Tech’s failure to respond in detail to many of Intelsat’s

Rule 11 arguments such that the Court might assess whether a reasonable pre-filing inquiry was

conducted before the amended counterclaim was filed. General assertions, unsupported by

affidavits or other documentation, that Juch-Tech employees were interviewed and some

documents were reviewed do not clarify the scope of the pre-filing inquiry, whether that inquiry

actually revealed a sufficient evidentiary basis to support certain counterclaims and allegations,

or whether Rule 11 was violated by Juch-Tech and its counsel. See, e.g., Kingvision Pay-Per-

View Ltd. v. Ramierez, No. 05 CIV.2778, 2005 WL 178511, at *3 (S.D.N.Y. July 28, 2005)

(“[T]he failure to submit such an affidavit strongly suggests that no pre-filing inquiry was made

and consequently that no evidentiary support exists.” (citation, quotation, and internal alteration

omitted)). The fact that Juch-Tech’s discovery responses fail to reveal any evidence to support

its claims only aids Intelsat’s argument for sanctions. Indeed, counsel for Intelsat warned Juch-

Tech’s new counsel about the inaccuracies of the original counterclaim, but, based on the facts

available to the Court, it appears that counsel failed to heed this warning before hastily refiling

the counterclaim.

       Nonetheless, the Court recognizes that it has discretion to determine if Rule 11 was

violated and, if so, what sanctions are appropriate. See Cobell v. Norton, 211 F.R.D. 7, 10

                                                 13
(D.D.C. 2002). The Court therefore will give Juch-Tech another opportunity to defend against

Rule 11 sanctions by submitting a detailed affidavit explaining with specificity its pre-filing

inquiry, including who was interviewed and what information they provided in support of the

counterclaim issues raised in Intelsat’s motion for sanctions. 3 For example, the Court expects

specific information regarding the disparaging statements Intelsat allegedly made to customers

and how those statements constitute tortious interference. The Court also expects an explanation

about the pre-filing factual support for the fraud and misrepresentation allegations based on the

promised revenue stream theory given that: most of the contracts were set to expire soon or were

month-to-month; Juch-Tech appears to mistakenly rely on the chart in the Schwarcz email which

includes a valuable contract not actually being assigned by Intelsat; and Schwarcz warned Juch-

Tech that it should investigate for itself the status of the contracts to clarify any discrepancies,

which suggests Juch-Tech may not have been reasonable to rely on this email in the first place.

                                        IV. CONCLUSION

       For the foregoing reasons, the Court defers ruling on Intelsat’s motion for Rule 11

sanctions until it receives Juch-Tech’s supplemental response, which shall be due within thirty

days of issuance of this decision. An order consistent with this Memorandum Opinion is

separately and contemporaneously issued.

Dated: July 2, 2014                                                  RUDOLPH CONTRERAS
                                                                     United States District Judge

       3
               In a footnote to its opposition memorandum, Juch-Tech’s counsel offers to
provide further information about its investigation through a sealed affidavit for in-camera
inspection only. See Def.’s Mem. Opp’n Mot. Sanctions 10 n.9. The Court recognizes Juch-
Tech’s concern about waiving the attorney-client and work-product privileges, so it will agree to
an in-camera inspection of a sealed affidavit insofar as any statements contained therein are
privileged and not subject to disclosure to Intelsat.

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