Ninth Circuit holds that Computer Fraud and Abuse Act does not require $5000 floor on damages to be met by a single unauthorized

The Ninth Circuit considered whether the Computer Fraud and Abuse Act (18 U.S.C. Sec. 1030) requires plaintiffs to prove at least $5000 of damages or loss resulting from a single unauthorized computer access by defendants in order to establish a cause of action under the statute. The statutory definition of damage had been amended between the time of offense and the time of trial. The court also considered the meaning of the statute’s limitation for awarding only “economic damages.”The issue arose in a suit between two rival web sites used by the trucking industry to locate hauling jobs. Getloaded.com repeatedly (1) improperly accessed restricted portions of Creative's site, (2) improperly accessed and examined Creative's source code, and (3) accessed Creative's confidential customer information through improperly obtained computer files. Getloaded.com argued that Creative could not bring suit under the Computer Fraud and Abuse Act because no single unauthorized access led to damages of over $5,000.

The court strongly rejected the Getloaded.com argument. The statute is unambiguous and merely sets a $5,000 floor for damage or loss to the victim over a one-year period. Both versions of the statute allow damages to be aggregated across multiple intrusions. The Court emphasized that “multiple intrusions can cause a single impairment, and multiple corruptions of data can be described as a single impairment.” To hold otherwise would render the law meaningless, since a skilled attacker could then set up thousands of intrusions calculated to cause a loss of $4,999 each and never be held liable under the Act.

Getloaded also challenged the definition of “economic damages,” which limits a plaintiff’s recovery under the statute. It objected to paying loss of business and goodwill damages. The Ninth Circuit, however, held that the statute only “precludes damages for death, personal injury, mental distress, and the like.” Anything that impairs the value of money or property, including money that must be spent to restore a business affected by a violation properly falls within the “economic damages” provision of the law. The Court relied on the definition of “consequential economic losses” in Black's Law Dictionary to come to this conclusion. As such, the Ninth Circuit affirmed the trial court's decision to impose business and goodwill damages, along with the rest of the judgment.