Search
RSS
Subscribe

Enter your email address to receive new posts in your inbox:

Delivered by FeedBurner

Share

Like what you see? Share!

Twitter
Verrill Dana, LLP

Verrill Dana, LLP is one of New England's preeminent regional law firms. With offices in Portland and Augusta, ME; Boston, MA; Westport, CT; Providence, RI; and Washington D.C. Verrill Dana provides sophisticated legal representation to businesses and individuals in the traditional areas of litigation, real estate, business law, labor and employment law, employee benefits, environmental law, intellectual property and estate planning.  The Firm also has industry-focused specialties including higher education, health care and health technology, energy, and timberlands. 

Disclaimer:  The content presented in this blog is for general information only, is not intended to constitute legal advice and cannot be relied upon by any person as legal advice. While we welcome you to contact our blog authors at hrlawupdate@verrilldana.com, the submission of a comment or question does not create an attorney-client relationship between the Firm and you. 

Wednesday
Oct232013

Strong Computer Usage Policy Strengthen Claims Against Former Employees 

Earlier this month the United States District Court for the Southern District of Texas denied a motion to dismiss for lack of subject matter jurisdiction finding the Plaintiff had properly pled a plausible claim of violation of the Computer Fraud and Abuse Act (“CFAA”) as it related to a former employee’s use of proprietary data in violation of the Plaintiff’s Computer-Use Policy. See Beta Tech., Inc. v. Meyers, NO. H-13-1282 (S.D. Tex. Oct. 10, 2013).

Defendants Leigh Meyers (former director, shareholder, and President) and Sonja Garcia (former Account Manager) resigned from Plaintiff, Beta Tech’s employment in 2012. Garcia, a former Account Manager, had entered into an employment agreement that indicated she would not compete against Plaintiff or solicit its clients in six Texas counties for a two-year period following her separation from the company and would not disclose any confidential or proprietary information.

Meyers, pursuant to his job responsibilities, had been provided with a company computer and before his resignation, allegedly downloaded Plaintiff’s confidential and proprietary information and then deleted all stored information from the computer. Plaintiff alleges that both before and after Meyer’s resignation he used this confidential and proprietary information to compete against Plaintiff and solicit Plaintiff’s customers and employees.

After resigning, Meyers formed competing companies Encore Industrial Supply, LLC and Encore Industrial Products, LLC, and began working in the same territory he had previously worked and began soliciting Plaintiff’s customers. He further solicited Garcia to come and work with him.

Plaintiff’s Internet, Intranet, Electronic Mail and Computer Use Policy (the Computer-Use Policy”), provided that it would constitute inappropriate conduct to use Plaintiff’s computer systems to engage in private or personal business activities, to make unauthorized copies of data, or to delete data. Plaintiff brought numerous claims against Meyers and Garcia alleging in part: breach of fiduciary duty and misappropriation of confidential information and trade secrets, tortious interference with business relationships, defamation, and violation of the Computer Fraud and Abuse Act (“CFAA”).

    Focusing on the CFAA as it related to subject matter jurisdiction, the Court stated:

    The CFAA is principally a criminal statute that proscribes various fraudulent and related activities committed in connection with the use of computers. See 18 U.S.C. § 1030. Subsection 1030(g), however, also provides a civil remedy for the recovery of damages and injunctive relief against one who violates § 1030 and whose conduct involves any factor set forth in subsection 1030(c)(4)(A)(i)(I-V). Plaintiff alleges that Meyers violated substantive provisions of subsection 1030(c)(4)(A)(i)(I).
The court found that the company had adequately pled that Meyers had exceeded his authorized access when he misused confidential information. Relying on the Fifth Circuit’s 2010 decision in United States v. John, 597 F.3d 263 (5th Cir. 2010), the court found that access “to a computer and data that can be obtained from that access may be exceeded if the purposes for which access has been given are exceeded.” The court found Meyer’s authorization to use the company’s computer system and the data contained in the system was circumscribed by company policy and that the actions taken by Meyers violated the company policy by making “unauthorized copies of Plaintiff’s confidential information and then deleting stored information from the computer.” Such conduct was outside of his “authorized use” and thus a claim was properly stated. The court further found that a claim was established under § 1030(a)(5), which forbids damaging computers without authorization by deleting stored information, and under § 1030(c)(4)(A)(i)(I) because he caused loss of more than $5,000 in a one-year period based on the significant expenses in assessing and recovering the data deleted from the computer.

Accordingly, while we often stress the importance of having a strong electronic-use policy in handbooks, it is important to keep in mind that this language can be used to further protect your company, and confidential information, after the employment relationship ends. Give a member of the Verrill Dana Labor & Employment group a call to perform a quick audit of your handbook to determine whether your computer-usage policy provides your company with appropriate protection against improper use of confidential data by former employees. 

PrintView Printer Friendly Version

EmailEmail Article to Friend

« A Message to the Equal Employment Opportunity Commission: Don’t Mess with Texas! | Main | Supreme Court Drops Review of Age Bias Case »