Porters Bldg. Ctrs., Inc. v. Lumber

• Decision Date: 02 October 2017
• Docket Number: Case No. 16-06055-CV-SJ-ODS
• Parties: PORTERS BUILDING CENTERS, INC., Plaintiff, v. SPRINT LUMBER, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

PORTERS BUILDING CENTERS, INC., Plaintiff, v. SPRINT LUMBER, et al., Defendants.

Case No. 16-06055-CV-SJ-ODS

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI ST. JOSEPH DIVISION

October 2, 2017

ORDER AND OPINION (1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; AND (2) GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

Pending are Plaintiff's Motion for Summary Judgment (Doc. #263), and Defendants' Motion for Summary Judgment (Doc. #265). For the following reasons, both motions are granted in part and denied in part.

I. BACKGROUND¹

Plaintiff is a family owned business providing building supplies and lumber to commercial contractors and homebuilders. Its stores are located in Kearney, Cameron, and Laurie, Missouri; and Elwood, Kansas. In 2003, Defendants Jerry Downey and Ray Meng began working for Plaintiff. Defendants Jess Reynolds and Sheila Higdon began working for Plaintiff in 2007 and 2010, respectively. These individuals worked at Plaintiff's Elwood store, and were at-will employees.

In late April 2016, Downey, Higdon, Reynolds, and Meng ("former employees") resigned from their employment with Porters. On May 2, 2016, they began working for Defendant Sprint Lumber, Inc. Sprint Lumber sells lumber and building materials to commercial builders from its locations in St. Joseph and Platte City, Missouri. Defendant Scott Laderoute is president and owner of Sprint Lumber.

Beginning in December 2015, there were several communications between Downey and Laderoute about Downey leaving Plaintiff to work for Sprint Lumber. Lateron, those discussions included Reynolds, Higdon, and others employed by Plaintiff. Prior to resigning from Plaintiff, the former employees communicated with several customers they serviced at Plaintiff regarding their impending move to Sprint Lumber. They also provided Sprint Lumber credit applications to many of those customers.

In May 2016, Plaintiff filed this lawsuit and sought a temporary restraining order, which was denied. Docs. #1-2, 8. In October 2016, Plaintiff filed a motion for preliminary injunction. Doc. #116. After a hearing, the Court denied Plaintiff's motion for preliminary injunction. Doc. #194.

During the pendency of this lawsuit, Plaintiff amended its complaint twice. In its Second Amended Complaint, Plaintiff alleges the following claims: (1) violation of the Computer Fraud and Abuse Act, (2) violation of the Sherman Antitrust Act,² (3) computer tampering, (4) violation of the Missouri Uniform Trade Secrets Act, (5) breach of duty of loyalty, (6) tortious interference with business expectancy, (7) trespass, and (8) civil conspiracy. Doc. #109. Downey asserts four counterclaims: (1) violation of 18 U.S.C. § 2701, (2) violation of 18 U.S.C. § 2511, (3) invasion of privacy, and (4) trespass to chattels. Doc. #122. Plaintiff now moves for summary judgment on the counterclaims alleged by Downey, and Defendants move for summary judgment on all of Plaintiff's remaining claims.

II. STANDARD

A moving party is entitled to summary judgment on a claim only if there is a showing that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Williams v. City of St. Louis, 783 F.2d 114, 115 (8th Cir. 1986). "[W]hile the materiality determination rests on the substantive law, it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Wierman v. Casey's Gen. Stores, 638 F.3d 984, 993 (8th Cir. 2011) (quotation omitted). The Court must view the evidence in the light most favorable to the non-moving party, giving thatparty the benefit of all inferences that may be reasonably drawn from the evidence. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588-89 (1986); Tyler v. Harper, 744 F.2d 653, 655 (8th Cir. 1984). A party opposing a motion for summary judgment "may not rest upon the mere allegations or denials of the...pleadings, but...by affidavits or as otherwise provided in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e).

III. DISCUSSION

A. Defendants' Motion for Summary Judgment(1) Computer Fraud and Abuse Act (Count I)

For its Computer Fraud and Abuse Act ("CFAA") claims, Plaintiff alleges Downey, without authorization, deleted emails from his work email account, which contained confidential information, trade secrets, and customer contact information. Doc. #109, at 15-16. Plaintiff alleges Higdon, without authorization, deleted confidential information, trade secrets, and customer contact information on the cell phone provided to her by Plaintiff. Id. Plaintiff contends Sprint Lumber and Laderoute "affirmatively participated in and conspired" with Downey and Higdon. Id. Defendants argue they are entitled to summary judgment because Downey and Higdon did not act without authorization and/or did not act in excess of their authorization, and Plaintiff has not established loss.

The CFAA allows a private party to bring a civil action for damages caused by computer fraud. 18 U.S.C. § 1030(g). To assert a civil action under the CFAA, a plaintiff must establish the defendant (1) accessed a protected computer, (2) without authorization or exceeding authorized access, and (3) caused loss in excess of $5,000. 18 U.S.C. §§ 1030(a)(4), 1030(c)(4)(A)(i)(I). The parties' discussions address only the second and third elements, conceding Plaintiff met the first element.

The CFAA does not define the term "without authorization" or "authorization," but defines "exceeds authorized access" as "access to a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled to obtain or alter." 18 U.S.C. § 1030(e)(6). The parties concede courts are split in interpreting both phrases, particularly when applying the CFAA to an employee who accesses an employer's computer with permission prior to termination, and uses thatinformation to benefit a competitor. Doc. #265, at 65-69; Doc. #291, at 103-08; see also InfoDeli, LLC v. W. Robidoux, Inc., No. 15-364-BCW, 2016 WL 6921623, at *6 (W.D. Mo. Mar. 7, 2016) (noting courts are split on the CFAA definitions but declining to adopt a definition when considering a motion to dismiss).

Some courts hold an individual acts without authorization whenever he, without his employer's knowledge, "acquires adverse interest or if he is otherwise guilty of a serious breach of loyalty." Int'l Airport Ctrs., LLC v. Citrin, 440 F.3d 418, 421 (7th Cir. 2006) (citation omitted); see also United States v. Rodriguez, 628 F.3d 1258, 1263-64 (11th Cir. 2010); P.C. Yonkers, Inc. v. Celebrations the Party & Seasonal Superstore LLC, 428 F.3d 504, 510-11 (3d Cir. 2005); Shurgard Storage Ctrs., Inc. v. Safeguard Self Storage, Inc., 119 F. Supp. 2d 1121, 1124-25 (W.D. Wash. 2000). Other courts apply a more narrow view, finding "without authorization" applies to outsiders' or hackers' conduct, and does not apply to individuals, such as employees, who have permission to access the computer. See WEC Carolina Energy Sols. LLC v. Miller, 687 F.3d 199, 203-07 (4th Cir. 2012); LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1132-35 (9th Cir. 2009); US Bioservices Corp. v. Lugo, 595 F. Supp. 2d 1189, 1192-95 (D. Kan. 2009); Shamrock Foods Co. v. Gast, 535 F. Supp. 2d 962, 964-65 (D. Ariz. 2008).

The Eighth Circuit has not decided whether the CFAA imposes civil liability on employees who access information with permission but with improper purpose. Several district courts in the Eighth Circuit have decided this particular issue. The Eastern District of Missouri, Southern District of Iowa, District of Nebraska, and Western District of Arkansas adopted the broader interpretation to cover actions by an employee who, although given access to an employer's computers, utilizes information from the computers for personal use, in contravention of the employee's duty of loyalty, or to aid unlawful competition. Lasco Foods, Inc. v. Hall & Shaw Sales, Mktg., & Consulting, LLC, No. 08CV1683, 2009 WL 3523986, at *4 (E.D. Mo. Oct. 26, 2009) (stating a CFAA claim was sufficiently pled when the former employees were alleged to have "acted without authorization" by obtaining the plaintiff's information for "personal use and in contravention of their fiduciary duty"); NCMIC Fin. Corp. v. Artino, 638 F. Supp. 2d 1042, 1060-61 (S.D. Iowa 2009) (finding the defendant's "actions in accessing NCMIC's computer system to send e-mails aiding his unlawful competition... and to obtainNCMIC's customer spreadsheet" was "without authorization"); Ervin & Smith Advert. & Pub. Relations, Inc. v. Ervin, No. 8:08CV459, 2009 WL 249998, at *7-8 (D. Neb. Feb. 3, 2009) (finding the defendants' authorization terminated once they destroyed the agency relationship by appropriating protected information); Nilfis-Advance, Inc. v. Mitchell, No. 05-5179, 2006 WL 827073, at *2 (W.D. Ark. Mar. 28, 2006) (finding the plaintiff sufficiently pled a CFAA violation by alleging the defendant emailed company files to a personal computer for the purpose of misappropriation).³

This Court is persuaded by the Seventh Circuit's reasoning in Citrin, and the decisions issued by the majority of district courts in the Eighth Circuit. In Citrin, Judge Posner found an employee's authorization to access a computer "terminated when...he resolved to destroy files that incriminated himself and other files that were the property of his employer, in violation of the duty of loyalty that agency law imposes on an employee." 440 F.3d at 420 (citations omitted). Although noting the difference between "without authorization" and ...