Black & Decker (Us), Inc. v. Smith

• Decision Date: 11 July 2008
• Docket Number: No. 07-1201.,07-1201.
• Citation: 568 F.Supp.2d 929
• Court: U.S. District Court — Western District of Tennessee
• Parties: BLACK & DECKER (US), INC., Plaintiff, v. Timothy C. SMITH, Defendant.

568 F.Supp.2d 929

BLACK & DECKER (US), INC., Plaintiff, v. Timothy C. SMITH, Defendant.

No. 07-1201.

United States District Court, W.D. Tennessee, Eastern Division.

July 11, 2008.

N. Victoria Holladay, Delaine R. Smith, Emily Christin Pera, Ford & Harrison, LLP, Memphis, TN, for Plaintiff.

John Morris Russell, Malcolm Brown Futhey, III, Lawrence & Russell, LLP, Memphis, TN, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART THE DEFEDANT'S MOTION TO DISMISS

J. DANIEL BREEN, District Judge.

On November 15, 2007, the Plaintiff, Black & Decker, Inc., ("B & D") filed the instant action against the Defendant, Timothy Smith, alleging that Smith shared certain confidential data with one of the Plaintiffs competitors in violation of the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030 et seq., the Tennessee Uniform Trade Secrets Act, Tenn.Code Ann. § 47-25-1701, and the Tennessee Personal and Commercial Computer Act of 2003, Tenn. Code Ann. § 39-14-602. B & D also includes claims of breach of contract, breach of duty of loyalty and/or fiduciary duty, misappropriation of confidential and proprietary information, and unfair competition and unfair trade practices against Smith. Before the Court is the Defendant's motion to dismiss two of these claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Plaintiff has responded and this motion is now ripe for disposition.

BACKGROUND

The Complaint alleges that the Defendant was hired by B & D in June 2004. (Docket Entry ("D.E.") No. 1, Compl. ¶ 6.) He began working for Michael Wilson, the Director of Engineering for the Pressure Washer Design Group at B & D, as a project engineer in June 2006.(Id.) In July or August of 2007, B & D was informed by one of its customers that its contract to supply pressure washers would not be renewed for the year 2008. (Id. ¶ 7.) Instead, the contract was awarded to a competitor of B & D's, Techtronic Industries Co. ("TTI"). (Id.) According to the Plaintiff, TTI had not previously been engaged in large scale manufacturing of pressure washers in the United States. (Id.)

Shortly after B & D lost the contract, a recruiter began calling Wilson and many of the engineers who worked for him to ask them to interview at TTI. (Id. ¶ 8.) The Defendant was one of those contacted by the recruiter. (Id.) On October 8, 2007, Smith took a day off from work and interviewed with TTI in South Carolina. (Id.) He accepted a position with that company approximately four days later. (Id.) Wilson confronted the Defendant on October 15, 2007, about whether he intended to go work for TTI and Smith admitted that he had accepted a position there, to begin on October 22. (Id. ¶ 9.) Although the Defendant intended to leave on October 17, Wilson asked for his immediate resignation. (Id.)

B & D contends that Smith was asked to return all of its property and sign a termination agreement, in conformance with its regular practice. (Id.) In the termination agreement, the Defendant confirmed that he did not possess any confidential information or property of the Plaintiffs and that he would not disclose any trade secrets, confidential information, or proprietary data to any third party. (Id.) Smith had previously also signed a confidentiality agreement while he was working at a "related corporate entity to B & D," which encompassed both that company and its "`parents, subsidiaries, successors and assignees,' i.e. B & D." (Id. ¶ 11 (quoting the confidentiality agreement).) This agreement required him to hold his work product in confidence and return any physical copies of such work to the company upon his termination. (See id.)

After Smith left his employment with B & D, Wilson became concerned that the Defendant might have taken confidential documents. (Id. ¶ 14.) With the assistance of an Information Technology Site Support Manager and a computer consultant, Wilson launched an investigation which revealed that on September 27, 2007, shortly after being contacted by the recruiter about TTI, the Defendant copied a large volume of confidential documents from B & D's secure servers into a file Smith had created under his own name on the company's H drive. (Id. ¶¶ 14-15.) The Plaintiff alleges that the documents Smith copied included confidential and proprietary information about B & D pressure washers and other B & D products in various stages of pre-market development. (Id. ¶ 15.) The investigation also revealed that the Defendant had again accessed certain confidential information on October 14, 2007, including material relating to pump strategies on B & D pressure washers, crankshaft issues, and the Plaintiffs Chinese engine supplier. (Id. ¶ 16.) He also accessed drawings and specifications relating to two confidential projects he was working on, as well as a suite of photographs of B & D prototypes, panel charts showing milestones and market research, test results on products, photographs of products in developments, copies of prototypes for new businesses, and pictures and files on new products. (Id.)

That same day, Smith attached a large external storage device to his B & D office desktop computer and saved many of these documents onto that device. (Id. ¶¶ 17, 20.) He also sent documents from his work email address to his personal Yahoo account, including an email he had received from a B & D co-worker that related to a B & D product. (Id. ¶ 18.) The Complaint contends that these actions violated the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030 et seq. and the Tennessee Personal and Commercial Computer Act of 2003, Tenn.Code Ann. § 39-14-602. (Id. ¶¶ 26-32, 40-43.) In his motion to dismiss, the Defendant argues that these counts should be dismissed because the allegations in the Complaint cannot support a finding that he violated these statutes.

STANDARD OF REVIEW

Rule 12(b)(6) permits dismissal of a lawsuit for failure to state a claim upon which relief could be granted. See Fed.R.Civ.P. 12(b)(6). The Rule requires the Court to "construe the complaint in the light most favorable to the plaintiff, accept all of the complaint's factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of the claims that would entitle relief." Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir.1998). "The Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). However, "[t]o avoid dismissal under Rule 12(b)(6), a complaint must contain either direct or inferential allegations with respect to all the material elements of the claim." Wittstock v. Mark A. Van Sile, Inc., 330 F.3d 899, 902 (6th Cir.2003).

ANALYSIS

I. The Computer Fraud and Abuse Act

The Computer Fraud and Abuse Act (CFAA) prohibits certain conduct involving unauthorized access to computers. See 18 U.S.C. § 1030(a)(1)-(a)(7). While primarily a criminal statute, it permits "[a]ny person who suffers damage or loss by reason of a violation of this section [to] maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief." Id. § 1030(g). The Complaint charges that the Defendant violated subsection (a)(2)(C) of 18 U.S.C. § 1030, which prohibits "intentionally access[ing] a computer without authorization or exceed[ing] authorized access, and thereby obtain[ing] . . . information from any protected computer if the conduct involved an interstate or foreign communication." Smith is also alleged to have violated § 1030(a)(4), which forbids "knowingly and with intent to defraud, access[ing] a protected computer without authorization, or exceed[ing] authorized access, and by means of such conduct furthering] the intended fraud and obtain[ing] anything of value. . . ." Last, he is charged with a violation of § 1030(a)(5)(A), which provides that whoever

(i) knowingly causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer;

(ii) intentionally accesses a protected computer without authorization, and as a result of such conduct, recklessly causes damage; or

(iii) intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage;

and, pursuant to § 1030(a)(5)(B), by such conduct caused or, in the case of an attempted offense, would have caused

(i) loss to 1 or more persons during any 1-year period (and, for purposes of an investigation, prosecution, or other proceeding brought by the United States only, loss resulting from a related course of conduct affecting 1 or more other protected computers) aggregating at least $ 5,000 in value;

(ii) the modification or impairment, or potential modification or impairment, of the medical examination, diagnosis, treatment, or care of 1 or more individuals;

(iii) physical injury to any person;

(iv) a threat to public health or safety; or

(v) damage affecting a computer system used by or for a government entity in furtherance of the administration of justice, national defense, or national security;

is guilty of an offense punishable under § 1030(c).¹

Thus, to state a claim under subsections (a)(2) and(a)(4), the Plaintiff must allege conduct that shows that Smith accessed a protected computer either "without authorization," or that he "exceeded authorized access," while to state a claim under subsections (a)(5)(A)(ii) or (iii), the access must be "without authorization." The statute defines the term "exceeds authorized access" as "access[ing] a computer with authorization and [using] such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter." § 1030(e)(6). There is no definition of access "without authorization" in the statute. The term "damage" means "any impairment to the integrity or...