Copying Customer List Does Not Necessarily Imply "Damages" Under Computer Fraud and Abuse Act

Author: José Mauro Decoussau Machado

Sam's Wines & Liquors, Inc. (Sam’s Wines) sued Sean Hartig (Hartig), a former employee, and Plinio Group, LLC (Plinio), Hartig’s new employer, claiming that Hartig stole Sam’s Wines’ confidential customer list from its computers prior to Hartig’s resignation. The list was password-protected and Hartig had signed an acknowledgement declaring that the information would not be disclosed. Hartig took the confidential customer list to Plinio and used it to solicit customers.

In the complaint Sam's Wines claimed misappropriation of trade secrets, conversion, unjust enrichment, breach of fiduciary duty, and violation of the Computer Fraud and Abuse Act ("CFAA"). Sam’s Wines claimed the Defendants violated the CFAA because it prohibits anyone from accessing a computer without authorization with intent to defraud and obtain anything of value. Hartig and Plinio, on the other hand, moved to dismiss the CFAA claim for failure to state a claim.

Hartig and Plinio presented three arguments to support their contention that the CFAA claim should be dismissed: (i) Sam's Wines could not allege that Hartig accessed a protected computer without authorization, as Hartig would be authorized to access the customer list as its employee; (ii) Sam's Wines could not allege that it suffered "damage" under the CFAA from Hartig's conduct; and (iii) Sam's Wines could not allege that it suffered "loss" under the CFAA from Hartig's conduct. Damage and loss are required elements of a CFAA claim.

The Court found that "loss" was clearly raised in the complaint as "Hartig has caused Sam's Wines to incur the loss in terms of responding to his conduct and conducting damage assessments of at least, in the aggregate, five thousand dollars (US $5,000.00) during a one-year period." However, "damages" was not pleaded, meaning "damages" under CFAA, "…any impairment to the integrity or availability of data, a program, a system, or information." In this regard, the court decided that the misappropriation of a trade secret does not automatically mean that the integrity or availability of the information was harmed.

To support their allegation that "damages" were not properly pled, Hartig and Plinio relied on cases such as Garelli Wong & Assoc., Inc. v. Nichols, 551 F.Supp.2d 704 (N.D.Ill.2008)."Where a trade secret has been misappropriated through the use of a computer, we do not believe that such conduct alone can show 'impairment to the integrity or availability of data, a program, a system, or information.'" Id. at 710.

Based on such decisions, Court found that Sam’s Wines has indeed failed to state a claim under the CFAA due to the lack of "damages" and the motion to dismiss was granted as to the CFAA claim.

Sam’s Wines & Liquors, Inc. v. Hartig, 2008 WL 4394962 (N.D.Ill. September 24, 2008)