Shurgard Storage Centers v. Safeguard Self Storage

• Decision Date: 30 October 2000
• Docket Number: No. C00-1071Z.,C00-1071Z.
• Citation: 119 F.Supp.2d 1121
• Parties: SHURGARD STORAGE CENTERS, INC., a Washington corporation, Plaintiff, v. SAFEGUARD SELF STORAGE, INC., a Louisiana corporation, Defendant.
• Court: U.S. District Court — Western District of Washington

119 F.Supp.2d 1121

SHURGARD STORAGE CENTERS, INC., a Washington corporation, Plaintiff, v. SAFEGUARD SELF STORAGE, INC., a Louisiana corporation, Defendant.

No. C00-1071Z.

United States District Court, W.D. Washington, at Seattle.

October 30, 2000.

Warren Joseph Rheaume, Roxanne L Spiegel, Foster Pepper & Shefelman, Seattle, WA, for Shurgard Storage Centers Inc, a Washington corporation, plaintiff.

Kevin Michael Paulich, Wolfstone, Panchot & Block, Seattle, WA, for Safeguard Self Storage Inc, a Louisiana corporation, defendant.

ORDER

ZILLY, District Judge.

INTRODUCTION

Shurgard Storage Centers, Inc. (plaintiff) and Safeguard Self Storage, Inc. (defendant) are competitors in the self-storage business. The plaintiff alleges that the defendant embarked on a systematic scheme to hire away key employees from the plaintiff for the purpose of obtaining the plaintiff's trade secrets. The plaintiff also alleges that some of these employees, while still working for the plaintiff, used the plaintiff's computers to send trade secrets to the defendant via e-mail. The plaintiff's complaint alleges misappropriation of trade secrets, conversion, unfair competition, violations of the Computer Fraud and Abuse Act (CFAA), tortious interference with a business expectancy, and seeks injunctive relief and damages. The defendant has moved to dismiss the CFAA claim pursuant to Fed.R.Civ.P. 12(b)(6), docket no. 7.¹ The Court now DENIES the defendant's motion to dismiss the CFAA claim for the reasons set forth in this order.

MOTION TO DISMISS STANDARD

When considering a motion to dismiss under 12(b)(6), a court must accept all allegations in the complaint as true and make all reasonable inferences in favor of the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A motion to dismiss may be granted when "it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). "Nonetheless, conclusory allegations without more are insufficient to defeat a motion to dismiss for failure to state a claim." Pillsbury, Madison & Sutro v. Lerner, 31 F.3d 924, 928 (9th Cir.1994) (citations omitted).

FACTS

The plaintiff alleges the following facts which the Court accepts as true for the purposes of this motion. The plaintiff is the industry leader in full and self-service storage facilities in both the United States and Europe. The plaintiff's growth in the last 25 years is primarily due to the development and construction of top-quality storage centers in "high barrier to entry" markets. Pursuant to this strategy, the plaintiff has developed a sophisticated system of creating market plans, identifying appropriate development sites, and evaluating whether a site will provide a high return on an investment. The plaintiff invests significant resources in creating a marketing team to carry out these tasks for each potential market. These teams become familiar with the market, identify potential acquisition sites, and develop relationships with brokers and sellers in the market so that the plaintiff has the best opportunity to acquire a preferred site.

The defendant began self-storage operations in 1997. The defendant is a direct competitor of the plaintiff and develops self-storage facilities in the United States and abroad.

In late 1999, the defendant approached Eric Leland, a Regional Development Manager for the plaintiff, and offered him employment with the defendant. Because of his position with the plaintiff, Mr. Leland had full access to the plaintiff's confidential business plans, expansion plans, and other trade secrets. While still employed by the plaintiff, but acting as an agent for the defendant, Mr. Leland sent e-mails to the defendant containing various trade secrets and proprietary information belonging to the plaintiff. Mr. Leland did this without the plaintiff's knowledge or approval. Mr. Leland was later hired by the defendant in October 1999, and he has continued to give the defendant proprietary information belonging to the plaintiff. The defendant has hired away other employees of the plaintiff who have intimate knowledge of the plaintiff's business models and practices, and the defendant continues to recruit employees of the plaintiff.

DISCUSSION

The motion to dismiss raises challenging issues regarding the scope of a civil claim under a criminal statute, the Computer Fraud and Abuse Act, 18 U.S.C. § 1030.² In its complaint, the plaintiff asserts that it is entitled to relief under the CFAA. In its opposition to the motion to dismiss, the plaintiff specifies that its claim is sufficient under 18 U.S.C. §§ 1030(a)(2)(C), 1030(a)(4), and 1030(a)(5)(C).

A. Statutory Interpretation

As a preliminary matter, the Court must determine the appropriate method by which to interpret the statute. The defendant, citing United States v. Flores-Garcia, 198 F.3d 1119, 1121 (9th Cir.2000), asserts that a court should ascertain a statute's plain meaning by examining the statute's language as well as its object and policy. The plaintiff, however, proposes a different standard: "In interpreting a statute we must examine its language. If the statute is clear and unambiguous, that is the end of the matter. There is no need to look beyond the plain meaning in order to derive the `purpose' of the statute." Burton v. Stevedoring Servs. of America, 196 F.3d 1070, 1072 (9th Cir.1999) (quotation marks omitted).

The standard articulated in Flores-Garcia, the case cited by the defendant, only applies when the statute is ambiguous. In Flores-Garcia, the court construed the meaning of a statute; in that case whether "knowingly" in the phrase "knowingly aided and assisted any alien" applied to the term "alien." See Flores-Garcia, 198 F.3d at 1121. The court attempted to find the meaning because the statute was unclear. See id. The Burton standard is the correct standard for statutory interpretation, and the unambiguous meaning of a statute should be the first and final inquiry unless it would lead to an absurd result. See Burton, 196 F.3d at 1072.

B. Does the plaintiff state a claim under 18 U.S.C. § 1030(a)(2)(C)?

Under § 1030(a)(2)(C), "[w]hoever ... intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains ... information from any protected computer if the conduct involved an interstate or foreign communication ... shall be punished" as provided in section (c) of the statute. 18 U.S.C. § 1030(a)(2)(C). Additionally, § 1030(g) provides that "[a]ny person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief." 18 U.S.C. § 1030(g).³ A "protected computer" means a computer "which is used in interstate or foreign commerce or communication." 18 U.S.C. § 1030(e)(2)(B). "The term `exceeds authorized access' means to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter." 18 U.S.C. § 1030(e)(6).

The defendant contends the plaintiff's complaint does not state a claim for relief under 18 U.S.C. § 1030(a)(2)(C) for two reasons. First, the defendant asserts that the plaintiff has not alleged that the employees in question accessed the trade secrets without authorization. Second, the defendant argues that the plaintiff has not alleged facts showing that the alleged behavior by the defendant impacts the national economy.

i. Did Plaintiff allege that its former employees were without authorization or that they exceeded authorized access?

The defendant's first ground for challenging the plaintiff's claim under § 1030(a)(2)(C) is that the plaintiff has not alleged that its former employees did not have authorized access to the information in question. The defendant notes that the plaintiff alleged that Mr. Leland had full access to all the information allegedly transferred to the defendant. Accordingly, the defendant argues that the plaintiff cannot maintain an action under § 1030(a)(2)(C) because it has not alleged that anyone accessed its computers without authorization or exceeded authorized access to those computers.

The plaintiff responds by arguing that the authorization for its former employees ended when the employees began acting as agents for the defendant. The plaintiff cites to the Restatement (Second) of Agency § 112 (1958) and argues that when Mr. Leland or other former employees used the plaintiff's computers and information on those computers in an improper way they were "without authorization."

In United States v. Galindo, 871 F.2d 99 (9th Cir.1989), an employee of a jewelry store was authorized to pick up mail for the store. See Galindo, 871 F.2d at 100. The employee was convicted of stealing the mail. See id. In a possible attempt to conceal her actual receipt of the mail, the employee forged a signature when she received the mail. See id. at 101. The court held that the employee was not an agent of the jewelry store when the employee used fraud to obtain the mail. See id. Relying on Galindo, the plaintiff argues that its former employees were not its agents when they accessed the computers to send trade secrets to the defendant.

Under the Restatement (Second) of Agency, relied upon by the Galindo court:

Unless otherwise agreed, the authority of an agent terminates if, without knowledge of the principal, he acquires adverse interests or if he is otherwise guilty of a serious breach of loyalty to the principal.

Restatement (Second) of Agency § 112 (1958). Under this rule, the authority of the plaintiff's former employees ended when they allegedly became agents of the defendant. Therefore, for the purposes of this 12(b)(6) motion, they lost their authorization and were ...