Lewis-burke Assoc.s Llc. v. Widder, Civil Action No. 09-302 (JMF).

• Decision Date: 28 July 2010
• Docket Number: Civil Action No. 09-302 (JMF).
• Parties: LEWIS-BURKE ASSOCIATES LLC, Plaintiff, v. Joel WIDDER, Defendant.
• Court: U.S. District Court — District of Columbia

725 F.Supp.2d 187

LEWIS-BURKE ASSOCIATES LLC, Plaintiff, v. Joel WIDDER, Defendant.

Civil Action No. 09-302 (JMF).

United States District Court,District of Columbia.

July 28, 2010.

COPYRIGHT MATERIAL OMITTED.

Rebecca Woods, Reenah L. Kim, Seyfarth Shaw LLP, Washington, DC, for Plaintiff.

James E. Anderson, Robert J. Weil, Howe Anderson & Steyer PC, Washington, DC, for Defendant.

MEMORANDUM OPINION

JOHN M. FACCIOLA, United States Magistrate Judge.

This case is before me for all purposes, including trial. It was scheduled to go to trial in February of this year; however, on the eve of the pre-trial conference, defendant filed a motion to dismiss based on lack of subject-matter jurisdiction, and the plaintiff filed a motion to amend the complaint. Due to the pending motion and the extreme weather conditions at the time of the scheduled trial, I found that it was both impossible and improvident to proceed to trial as originally scheduled. Memorandum Order [# 44], February 16, 2010. I will now address all remaining motions before the Court, in the hopes of bringing this case to its conclusion.

I. Background

Plaintiff brings this case against Joel Widder, a former employee, alleging that he violated a Non-Competition and Confidentiality Agreement that he had entered into with plaintiff. Complaint (“Compl.”) ¶¶ 9-19. According to plaintiff, Widder took confidential and proprietary information with him when he left the firm and solicited clients for a competing business. Id. at ¶ 34. Plaintiff filed a motion for a temporary restraining order, which I granted in part, enjoining defendant from (1) using for any purpose or sharing with anyone confidential or proprietary information belonging to the plaintiff; and from (2) contacting plaintiff's current and former clients for purposes of soliciting them. Order Granting in Part and Denying in Part Motion for a Temporary Restraining Order [# 4], February 19, 2009. I also ordered the parties to discuss the most appropriate means of preserving relevant electronically stored information (“ESI”) and protecting privileged or confidential information contained therein. Id. The parties submitted their report on the ESI, and I issued an order on the review of electronic devices. Order Regarding Review of Electronic Devices [# 11], March 13, 2009. Discovery closed on October 15, 2009, and on November 13, 2009 plaintiff filed a motion to compel production of documents and a motion to compel compliance with document subpoenas. See Plaintiff's Motion to Compel Production of Documents [# 26]; and Plaintiff's Motion to Compel Compliance with Document Subpoenas [# 27]. Defendant did not submit any opposition to the motions, and I granted the motions on December 8, 2009. On January 8, 2010, plaintiff filed a motion for sanctions, which is currently pending before me, in relation to the two motions to compel. See Plaintiff's Motion for Sanctions [# 29] (“Pl. Mot. for Sanctions”). On January 28, 2010, plaintiff filed a motion in limine that sought to exclude certain testimony and to preclude defendant from introducing into evidence a change in Lewis-Burke Associates LLC's (“Lewis-Burke”) commission policy. Plaintiff's Motion In Limine [# 32] (“Pl. Mot. In Limine ”). On February 8, 2010, defendant filed a motion to dismiss for lack of subject-matter jurisdiction. Motion to Dismiss [# 38] (“Mot. to Dismiss”). The parties then filed their pre-trial statement on February 11, 2010, and plaintiff filed a motion to amend the same day. Plaintiff's Motion to Amend Complaint [# 42] (“Mot. to Amend”). The Court was closed, due to inclement weather, from noon on February 5, 2010 until 10:00 am on February 12, 2010, the day of the pre-trial conference. Thus, because the Court was closed for this long period of time, the motion to dismiss, motion to amend, and pre-trial statements were not accessible to the Court until February 12, 2010, the day of the pre-trial conference.

In light of the pending motions, I continued the trial until the pending motions were resolved. At the pre-trial conference, I determined that I would hold an evidentiary hearing regarding the motion for sanctions. That hearing was to be set after the scheduled jury selection; however, in light of the continuance of the trial, the hearing was not held. I will reset the evidentiary hearing on the motion for sanctions in a separate order. I will address the remaining motions in turn.

II. Motion to Dismiss

Defendant moves to dismiss the case for lack of subject-matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Mot. to Dismiss 1. Defendant argues that the federal court's jurisdiction over the matter is predicated on plaintiff's claim under the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, et seq., ¹ and that plaintiff failed to meet the jurisdictional threshold for the claim. Mot. to Dismiss 1. Rule 12(b)(1) concerns the power of the Court to hear plaintiff's case; as such, a party may raise the objection that a federal court lacks subject-matter jurisdiction at any stage of the litigation. Fed.R.Civ.P. 12(b)(1); Ghawanmeh v. Islamic Saudi Academy, 672 F.Supp.2d 3, 7 (D.D.C.2009) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 506, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006); and Casanova v. Marathon Corp., 256 F.R.D. 11, 12 (D.D.C.2009)). Thus, “ ‘a Rule 12(b)(1) motion imposes on the court an affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority.’ ” Ghawanmeh, 672 F.Supp.2d at 7 (quoting Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C.2001)).

Defendant also invokes Rule 12(b)(6) of the Federal Rules of Civil Procedure as grounds for dismissal for plaintiff's failure to state a CFAA claim. Mot. to Dismiss 1. The Federal Rules of Civil Procedure require a pleading to contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The pleading should, thus, “ ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). More than a mere “formulaic recitation of the elements of a cause of action” must be alleged to survive a motion to dismiss. Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) (on a motion to dismiss, courts “are not bound to accept as true a legal conclusion couched as a factual allegation”)). Thus, for a complaint to survive a motion to dismiss, “[it] must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ”

Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955).

The CFAA is a criminal statute; however, subsection (g) of the statute provides a civil cause of action to “any person who suffers damage or loss by reason of a violation” of the CFAA. 18 U.S.C. § 1030(g). Under the statute, such a person may obtain compensatory damages and injunctive relief or other equitable relief, but only if the conduct leading to the violation of the CFAA involves one of the factors “set forth in subclauses (I), (II), (III), (IV), or (V) of subsection (c)(4)(A)(i).” Id. The conduct relevant in this case is set forth in 18 U.S.C. § 1030(c)(4)(A)(i)(I), which states that the CFAA is violated when there is a “loss to 1 or more persons during any 1-year period ... aggregating at least $5,000 in value.” 18 U.S.C. § 1030(c)(4)(A)(i)(I). Under the statute, loss is defined as “any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service.” 18 U.S.C. § 1030(e)(11). Thus, a “private plaintiff must prove that the defendant violated one of the provisions of § 1030(a)(1)-(7), and that the violation involved one of the factors listed in § 1030(a)(5)(B).” LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1131 (9th Cir.2009).

Plaintiff alleges that defendant violated subsection (a)(2) of the CFAA, which prohibits “intentionally access[ing] a computer without authorization or exceed[ing] authorized access, and thereby obtain[ing] ... information from any protected computer.” 18 U.S.C. § 1030(a)(2). Under the statute, “exceeds authorized access” is defined as “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). Further, a “protected computer” means “a computer ... which is used in or affecting interstate or foreign commerce or communication ...” Id. at (e)(2)(B).

Therefore, to bring an action successfully under 18 U.S.C. § 1030(g) based on a violation of 18 U.S.C. § 1030(a)(2), plaintiff must show that defendant:

(1) intentionally accessed a computer, (2) without authorization or exceeding authorized access, and that he (3) thereby obtained information (4) from any protected computer (if the conduct involved an interstate or foreign communication), and that (5) there was loss to one or more persons during any one-year period aggregating at least $5,000 in value.

Brekka, 581 F.3d at 1132.

Plaintiff alleges that defendant “was not authorized by Lewis-Burke to access, via its protected computer systems, the Confidential and Proprietary Information for his personal gain or that of a competitor.” Compl. ¶ 39. Further, it is through these actions that defendant “has intentionally accessed a computer system without authorization and has exceeded his authority to...