Employment Agreement Restrictions Determined Whether Employees Exceeded Authorized Access Under Computer Fraud and Abuse Act

A recent district court opinion relied on employment agreement restrictions to determine whether the employees exceeded their authorized access to the employer’s computers. In doing so, the court used the Intended-Use Theory of access to determine whether there may have been a violation of the Computer Fraud and Abuse Act (CFAA), highlighting the need for companies to have well-written agreements that objectively establish such intended use.

Specifically, the court looked to two restrictions in the employment agreements that happen to be the same restrictions I make sure my clients have in their employment agreements:

  1. the employee’s use of the computer and data was restricted to the period of employment (limited duration); and
  2. the employee’s use of the computer and data was restricted to being only for the benefit of employer (intended use). 

Notice the italicized text “and data” — that is another restriction that I include in these agreements. Why? Because, most of the agreements that are litigated under the CFAA involve restrictions on the access to and use of the computers but most of the underlying factual scenarios for those same cases involve the usage of the data obtained by the access — not just the access to the computer. The case discussed here is Custom Hardware Engineering & Consulting, Inc. v. Dowell, 2013 WL 252945 (E.D. Mo. Jan. 23, 2013), and it exemplifies this point quite well.

While it is always important to have well written employment agreements and/or acceptable computer use policies, it is even more important to have these in jurisdictions that follow the Intended-Use Theory of access because under this theory the courts look to the restrictions placed upon and known by the employee to determine whether authorized access is exceeded. In United States v. John, 597 F.3d 263, 271 (5th Cir. 2010), the court explained its “intended-use analysis” as follows: access to a computer and data that can be obtained from that access may be exceeded if the purposes for which access has been given is exceeded and the employee is actually aware of those limitations on purpose through policies or contractual agreements.

Trilogy of Access Theories

There are three theories of access under the Computer Fraud and Abuse Act: Intended-Use Theory, Strict Access Theory, and Agency Theory. I explain this trilogy of access theories with more detail in this post: New “Employment” Computer Fraud and Abuse Act case … but with a twist! though the cases under the Strict Access Theory have changed since that time.

The Intended-Use Theory is followed by the following jurisdictions (as of this writing): Fifth Circuit (United States v. John and United States v. Phillips), Eleventh Circuit (United States v. Rodriguez), Eighth Circuit, which includes Missouri (United States v. Teague), Third Circuit (United States v. Tolliver) and possibly the First Circuit (United States v. MorrisUnited States v. Czubinski) as the rationale for the Intended-Use Theory is derived from the second factor in Morris. 

The Strict Access Theory is followed by the Ninth Circuit (United States v. Nosal a/k/a Nosal II) and Fourth Circuit (WEC Carolina Energy Solutions LLC v. Miller).

The Agency Theory is followed by the Seventh Circuit (International Airport Centers, LLC v. Citrin).

TAKEAWAYS: The important takeaways from the Custom Hardware Engineering & Consulting, Inc. v. Dowell case are that your business really needs to have solid employment agreements or acceptable use policies that restrict (1) the duration for which access is authorized, (2) the intended-use for which access is authorized, and (3) that these restrictions apply to not only the computers but also the data that is accessible from those computers.

If you would like to talk with me about legal issues concerning computer fraud, data security or privacy, please feel free to give me a call (469.635.1335) or email me (stuma@brittontuma.com).

Bye Bye Brekka–Hello Nosal! Ninth Circuit Warms-up to Intended-Use Theory of “Access” Under the Computer Fraud and Abuse Act

This past Monday I blogged of what I called the “Trilogy of Access Theories” to refer to the 3 lines of circuit court cases that have different theories for interpreting “access” under the Computer Fraud and Abuse Act (“CFAA”).

That was a FAIL!

United States v. Nosal

As of today the trilogy has become a duo with the Ninth Circuit‘s opinion in United States v. Nosal. Honestly, however, I can’t say that it is that much of a surprise that the Ninth Circuit backed off of the hard line it took in LVRC Holdings LLC v. Brekka in which it established the rigid “access means access” theory. The facts of Brekka were quite distinguishable from the facts of United States v. Rodriguez, United States v. John, United States v. Phillips, and International Airport Centers, LLC v. Citrin–the cases in which the Eleventh, Fifth, and Seventh Circuits, respectively, ruled differently on the access issue. Moreover, the Brekka Court left a few clues in its opinion though I am saving those for a different day … but here’s a hint: study those Bluebook signals! 

Case Background

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New “Employment” Computer Fraud and Abuse Act case … but with a twist!

It’s always the same: Employee decides to go work for a competitor. Employee takes confidential information. Employee uses it in new job with competitor. Employer sues.

We see it all the time and, in fact, it is probably the most common scenario of cases asserting claims under the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, et seq. This case, however, handed down on April 20, 2011, has an interesting twist.

In Meats by Linz, Inc. v. Dear, 2011 WL 1515028 (N.D. Tex. Apr. 20, 2011), the court handed down a decision denying the Defendant’s Motion to Dismiss the CFAA claim on two distinct grounds: “access” and “loss”.

The Facts, Just the Facts

Steve Dear was employed by Meats by Linz, Inc. (“MBL”) as the general manager of its Dallas sales facility. He had an employment agreement that included a confidentiality / non-disclosure agreement. Dear decided to go work for one of MBL’s competitors but, before announcing he would be leaving, accessed MBL’s password-protected confidential and proprietary information to which only he, and others on a “need to know” basis, had access. In fact, he accessed it at 9:15 p.m. on a Sunday night, downloaded it, and sent an email resignation about two hours later. In the words of Gomer Pyle, “Surprise! Surprise!” … not long afterwards, he was working for a competitor and soliciting MBL’s customers by, according to MBL, using its confidential and proprietary information that he had taken.

Employer Sued

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