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Departing Employee Taking Data from “Restricted” but Unsecured Folder Doesn’t Violate CFAA

TAKEAWAYS: If your company intends to limit its employees access to certain information on the company network, (1) make sure appropriate technological restrictions are in place and are working; and (2) make sure there are appropriate policies or other documentation in place to show the employees subjectively knew it was off limits.

When an employer intends to keep a network folder restricted from employees, but fails to (1) objectively communicate this intention or (2) secure the folder from general access, an employee who accesses the folder and takes data from it does not violate the Computer Fraud and Abuse Act (CFAA), even if he does so for an improper purpose.

Why policies are critical–explained HERE Continue reading “Departing Employee Taking Data from “Restricted” but Unsecured Folder Doesn’t Violate CFAA”

Court Order Provides CFAA Authorization to Access Computer, Even if Later Overturned

A party who accesses a computer pursuant to a court order authorizing him to seize and access the computer will not be found in violation of the Computer Fraud and Abuse Act if such order is later overturned.

“An essential element of a CFAA claim under 10 U.S.C. § 1030 is that the [defendant] accesses a computer ‘without authorization or exceeds authorized access.’ Hunn v. Dan Wilson Homes, Inc., 789 F.3d 573, 583-84 (5th Cir. 2015) (holding that ‘because [the defendant] did not exceed authorized access, he did not violate the Computer Fraud and Abuse Act’). Here, the state-court turnover orders authorized Shor to access the computers. Even though those orders were ultimately overturned, because Shor had authorization at the time pursuant to a court order to access the computers, Black does not state a claim under the CFAA. See id. (discussing CFAA claim, reasoning that the defendant accessed the computer while still employed at the plaintiff’s company). Land and Bay Gauging, L.L.C. v. Shor, 2015 WL 4978993 (5th Cir. Aug. 21, 2015).

See earlier post.

Fifth Circuit: Accessing Computer Per Later-Overturned Order Does Not Violate CFAA

In Land and Bay Gauging L.L.C. v. Shor, –Fed.Appx — (5th Cir. Aug. 21, 2015), the Fifth Circuit recently held that accessing a computer under the authority of a court order that authorizes the access is sufficient to render the access as being authorized, even if the order is later overturned. An essential element under a Computer Fraud and Abuse Act (CFAA) claim is that the defendant accessed the computer “without authorization” or “exceeds authorized access.” When there is such an access that is authorized by a court order–at the time of the access–the later overturning of that order will not then render the access as having been unauthorized and there will be no violation of the CFAA. 

Additionally, the Rooker-Feldman Doctrine does not bar a Federal court from ruling on CFAA claims that stem from parties’ actions taken pursuant to a state court order where such claims do not attack the validity of the order itself, but instead, focus on the parties alleged violations of independent legal duties under the CFAA.

Does the CFAA Apply to Lenovo’s SuperFish Malware Lawsuits?

For me personally, the timeline of events surrounding the discovery of Lenovo’s SuperFish malware is ironic. Just a couple of days before it was discovered, I had a telephone call with a friend named Jon Stanley. Jon is someone I consider to be an elder statesman of the CFAA as he has been digging deep into the law for a long time — much longer than I have — and our call was basically to chat about all things CFAA-related. (to get a glimpse of what it’s like to talk to Jon, check this out)

One of the things we talked about was our favorite CFAA opinions and Jon told me his was Shaw v. Toshiba, 91 F.Supp.2d 926 (E.D. Tx. 1999). I had skimmed the high points a few years back but never really taken the time to go through it slowly and enjoy it like a snifter of brandy, so after we hung up, I pulled it up and began reading.

I immediately turned to the point that Jon and I discussed which is where the court focused on the silliness of folks trying to argue the Computer Fraud and Abuse Act is a “hacking” law – ha, the court knocked it out of the park! “[T]his Court does not see a blanket exemption for manufacturers in Title 18 U.S.C. § 1030; nor does it see the term ‘hacking’ anywhere in this statute.” Id. at 936. I love that statement — I have never seen the term “hacking” in there either and, to hear people continue referring to it that way makes me wonder if they also refer to the mail and wire fraud statute as intending to keep the crooked city slickers from taking advantage of honest country folk. (seriously, see page 1)

How does this apply to the Lenovo SuperFish Malware?

So now you’re probably wondering where I’m going with this, right? And, what it has to do with the Lenovo SuperFish malware?

Ok, did you catch the first part of that quote? The part about a “blanket exemption for manufacturers”?

The issue in Shaw was whether a computer manufacturer’s sale of laptop computers containing devices with defective microcode that erroneously caused the corruption or destruction of data without notice was a violation of the CFAA, because the instructions given by the defective microcode were an unauthorized transmission. Toshiba argued several things but, most applicable here, that “Congress never intended for the CFAA to reach manufacturers; rather, the CFAA is geared toward criminalizing computer ‘hacking.'” In other words, Toshiba argued that, because it was a manufacturer that did all of its “stuff” before the computer was shipped and sold to Shaw, its activities were not prohibited by the CFAA. The Court disagreed with Toshiba’s narrow interpretation:

Perhaps. But it seems more plausible that Congress, grappling with technology that literally changes every day, drafted a statute capable of encompassing a wide range of computer activity designed to damage computer systems–from computer hacking to time bombs to defective microcode.

Brilliant. Ultimately, the Court denied Toshiba’s Motion for Summary Judgment and allowed the case to proceed. 

 The lawsuits against Lenovo have already started to drop and will surely continue coming. While I have not read the individual complaints, I’d say it’s a safe bet there are some CFAA claims in there — and if not, maybe they should give Shaw v. Toshiba a read (and not just for pleasure).

So, here’s a little test for you: if they do bring a CFAA claim, do they have to plead the $5,000 loss? 

Hey Jon, by the way, thank you!



Shawn Tuma (@shawnetuma) is a cybersecurity lawyer business leaders trust to help solve problems with cutting-edge issues involving cyber risk and compliance, computer fraud, data breach and privacy, and intellectual property law. He is a partner at Scheef & Stone, LLP, a full-service commercial law firm in Texas that represents businesses of all sizes across the United States and, through the Mackrell International Law Network, around the world.

Dang! “Loss” of Opportunity to Decide Interesting CFAA Issue, But “Loss” Anayisis is Good Too

Plaintiff had interesting claim under the CFAA but couldn’t get there due to that pesky “loss” requirement

Does an employer violate the Computer Fraud and Abuse Act by remotely wiping an employee’s personal mobile device that was connected to the employer’s server and contained its data?

The United States District Court for the Southern District of Texas was poised to answer this question but did not reach the issue. The court found, as in most of these cases, the plaintiff did not satisfy the jurisdictional threshold $5,000 loss requirement.

What we did get, however, is a strong analysis of how the federal courts in Texas interpret the loss requirement of the CFAA. 

Something to think about — would this have violated the CFAA?

The plaintiff in Rajaee v. Design Tech Homes, Ltd. claimed that his job required him to have constant access to email to do his job. His employer did not provide him with a mobile device so he used his own personal iPhone 4 to conduct his work for Defendants. Plaintiff’s iPhone was connected to his employer’s network server to allow him to remotely access the email, contact manager, and calendar provided by the employer. The parties disagreed over who connected the device or whether it was authorized.

Plaintiff resigned his employment with Defendants and, a few days later, Defendants’ network administrator remotely wiped Plaintiff’s iPhone, restoring it to factory settings and deleting all the data–both personal and work-related–on the iPhone.

Plaintiff sued Defendants alleging that their actions caused him to lose more than 600 business contacts collected during his career, family contacts, family photos, business records, irreplaceable business and personal photos , and videos, and numerous passwords.

Plaintiff sued for violations of the Computer Fraud and Abuse Act, Electronic Communications Privacy Act, and various state law claims.

Violation of the Electronic Communications Privacy Act

The Court found the Defendants’ actions did not violate the Stored Communication Act prong of the ECPA: “the Fifth Circuit has held that ‘information that an individual stores to his hard drive or cell phone is not in electronic storage under the statute.’” The information Plaintiff claimed was deleted was stored on his cell phone and not covered by the SCA.

Unauthorized Access Under the Computer Fraud and Abuse Act

The Court does not reach the issue of whether Defendants’ actions were an unauthorized access under the CFAA but that doesn’t mean we can’t think about it ourselves. In fact, over a year ago my friend Jim Brashear (@JFBrashear) and I talked about this and he suggested I write something about it. I didn’t. I should have.

What we do know from the court’s opinion are the following things:

  • Plaintiff owned the iPhone
  • The iPhone contained Plaintiff’s personal data
  • The iPhone was connected to Defendants’ server
  • The iPhone contained Defendants’ data
  • Defendants’ network administrator somehow remotely wiped all of the data — Plaintiff’s and Defendants’ — from the iPhone

We also know that a cell phone is considered a “protected computer” under the CFAA (post). So, we have a protected computer that — somehow — has its data wiped by someone other than its owner.  What we do not know from the opinion, but need to know, are:

  • What authorization did Plaintiff have to retain Defendants’ data on his device after his employment terminated?
  • What authorization did Plaintiff give Defendants to access his device when (whomever) connected it to Defendants’ server (beyond the fact that by connecting to the server Plaintiff was necessarily giving Defendants authorization for their server to communicate with his device)?
  • Assuming Plaintiff gave any authorization to Defendants, did that authorization continue for as long as Plaintiff maintained the connection to Defendants’ server?
  • What means did Defendant’s network administrator use to remotely wipe the device and what steps were taken beforehand to give Defendants the ability to do that?

I believe the answers to these questions are important in this analysis. If I were the judge, these are things I would want to know.

A hack back?

Thinking in the big picture, this scenario reminds me of the ongoing debate over whether it is acceptable for a company to “hack back” — that is, after a hacker has stolen data from a company, whether the company can in turn hack the attacking hacker (“you drew first blood” – Rambo) to either retrieve or destroy its (or its customers) data that is now residing on the hacker’s system likely in some far off land.

The arguments on both sides of the hack back issue are vigorous and I am not foolish enough to think I could resolve the issue here. I just want to point out that, in the big picture, the rationale seems somewhat similar: someone else has your data, they are not entitled to keep it, you do not want them to keep it, so go zap it!

Loss Under the Computer Fraud and Abuse Act

The real value in the Rajaee Opinion comes from the court’s analysis of the loss issue. As I discussed the CFAA’s loss requirement in another post, “I find it to be one of the more challenging aspects of any civil CFAA claim as well as an important feature of the CFAA to keep it from being used in civil cases that do not justify ‘having a federal case made out of it.’”

Meeting the loss requirement is a jurisdictional threshold that must be met before a plaintiff can bring a civil claim under the CFAA. “Although the CFAA is a criminal statute, Section 1030(g) provides a private right of action ‘for [a]ny person who suffers damage or loss by reason of a violation of this section.’”

The terms “damage” and “loss” are statutorily defined terms that each have a unique meaning under the CFAA, which meanings also differ from the meaning of “damages.” This is important to remember.

The term “damage” means any impairment to the integrity or availability of data, a program, a system, or information and the term “loss” means 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. Capitol Audio Access, Inc. v. Umemoto (for CFAA, disclosure of info not “damage” and evading license not “loss”)

Courts still routinely get this wrong despite the fact that “loss” is defined in subsection (e)(11): “the term ‘loss’ means 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.

While the Rajaee Opinion does not rise to the level of analysis of the Nosal Court’s Opinion which throughly discusses the various views of the CFAA loss jurisprudence, it is one of the more thorough ones I have seen from a federal court in Texas.

Because this case involves a ruling on a motion for summary judgment, the Plaintiff has the burden of providing evidence to support its allegations. The Rajaee Court required Plaintiff to point to evidence that, if believed by the trier of fact, would be sufficient to show that his loss did in fact exceed $5,000. Plaintiff referred the court to a declaration in which he described the losses he suffered as a result of Defendants’ deletion of his personal data as being:

  1. pictures of his personal home rehabilitation project, which decreased the value of the remodel by at least $50,000;
  2. pictures and video of family, friends, and his dogs, which he values at $3,500;
  3. all cell phone contacts after 2009, which he values at over $50,000 based on his diminished employability;
  4. all of Plaintiff’s text messages, which he values at $1,000; and
  5. all of his notes and email accounts, which he values at $600.

The court was correct in agreeing with the Defendants who argued that none of these items qualified as loss. “Plaintiff [did] not produce[] evidence of any costs he incurred to investigate or respond to the deletion of his data, nor do the losses and damages for which he does produce evidence arise from an ‘interruption of service.’”

Because of this, the court dismissed the CFAA claim. 

Important CFAA Loss Principles Applied in this Case

In reaching its decision, the court referenced and stated the following propositions of law that will be helpful for any party to understand in a civil case in the federal courts in Texas, especially the Southern District:

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