United States: U.S. Supreme Court Takes Pass On CFAA Lawsuit; Uncertainty Remains

Last Updated: March 4 2013
Article by Brian P. Bialas

The U.S. Supreme Court's denial of certiorari in a Computer Fraud and Abuse Act case leaves employment lawyers in the 1st Circuit and beyond with continuing uncertainty.

Employers frequently add a CFAA claim to suits against former employees that take confidential information from company computer systems.

But federal courts across the country have split on just how broadly the act should be interpreted.

The CFAA provides for criminal and civil penalties against an employee who "knowingly and with the intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value."

The 1st U.S. Circuit Court of Appeals has granted employers the right to sue under the act when employees have authorized access but use it for non-job-related purposes, while others, such as the 9th Circuit, have narrowly interpreted the law to require an actual hacking of the computer system.

Raising the hopes of employment lawyers nationwide, a 4th Circuit case sought certiorari before the Supreme Court, hoping to end the circuit split.

But in January, the justices denied review, leaving employment lawyers with continuing uncertainty.

Until the Supreme Court agrees to decide the issue, Bialas added, "the ball is definitely in the employer's court in the 1st Circuit."

Circuit split widens

For multiple reasons, the CFAA is a valuable tool for attorneys representing employers. In addition to establishing federal jurisdiction, the CFAA lets victorious plaintiffs recover damages such as the cost of hiring a computer forensic firm to investigate the employee's activities, Bialas said.

And the act provides for injunctive relief, which can allow employers to stop a former worker from taking information to a new employer or using it for his own benefit.

The law comes into play when an employee leaves a job or is terminated and attempts to take information with him.

While an employee typically is authorized to access company documents on an internal document management system, "if she does so not in the course of her employment but rather for the purpose of viewing information that might be helpful for her next employer or some other improper purpose, then [the CFAA] can be triggered," said John R. Bauer, a partner at Robinson & Cole in Boston.

For example, Bauer said, an employer would consider financial information, a formula or a client list confidential.

"Even though the person has literal authorized access to the documents, the access is used not for the purpose of fulfilling job responsibilities," he said, adding that an alleged breach of the company's computer use policy can — in some jurisdictions — provide the basis for a CFAA claim.

In the 1st Circuit, an employer has been allowed to bring suit against a former employee for accessing data in violation of a confidentiality agreement. The decision in EF Cultural Travel BV v. Explorica stands with similar decisions from the 5th, 8th and 11th circuits, where courts have also allowed employers to allege violations of the CFAA when the employee breached a confidentiality or computer use agreement.

A case from the 9th Circuit stands in stark contrast.

In an en banc decision issued last year, a criminal action against an employee who had authorization to access his employer's database but used his log-in credentials to download source lists, names and contact information to start his own business was dismissed.

Even though the employee in U.S. v. Nosal violated a company policy that prohibited the disclosure of confidential information, the panel held that the statute did not apply. The CFAA requires unauthorized access to computer data or computer hacking, the 9th Circuit said.

Last July, the 4th Circuit agreed, holding in WEC Carolina Energy Solutions LLC v. Miller that the CFAA does not impose liability on authorized workers who breach computer user policies.

Noting the widening circuit split, the company petitioned the high court for review, which was declined by the justices in January.

Employers: Establish a policy

The Supreme Court's denial of cert leaves attorneys representing employers in Massachusetts standing on solid ground.

To protect a company, make sure to have a data or computer use policy in place, Bialas advised, and "include a provision about confidentiality to use as a basis for a CFAA claim."

However, the jurisdictional split "creates a problem for employers who have employees in multiple states," Bauer said.

The employer "might be able to bring an action against an employee in one state but can't take action against an employee in another state for doing the exact same thing," he said.

For now, employees — and their new employers — face potential lawsuits with the existing 1st Circuit CFAA caselaw.

But attorneys agreed that the circuit split will be resolved, whether by the Supreme Court or via an update to the legislation.

The CFAA has received the attention of federal lawmakers recently after the suicide of Aaron Swartz, a computer prodigy who had been criminally charged under the law. With the statute under consideration, a tweak to clarify the breadth of its application in civil employment suits is possible, Bialas noted.

If not, "the Supreme Court would certainly be the easiest way for a lot of people to get some clarity," he added hopefully.

Previously published by Massachusetts Lawyers Weekly.

To view Foley Hoag's Massachusetts Noncompete Law Blog please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions