4th Circuit Issues Employee Friendly CFAA Opinion

by Fisher Phillips
Contact

[author: Brent A. Cossrow]

As readers of this blog know, we have been following the diverse and seemingly irreconciliable decisions from federal courts regarding the scope of the federal Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030. Last week, in WEC Carolina Energy Solutions LLC (“WEC”) v. Miller, the U.S. Court of Appeals for the Fourth Circuit weighed in on what continues to be one of the hottest debates within the federal judiciary in recent memory: whether the CFAA applies to disloyal employees who access their employer's workplace computers to misappropriate, copy or otherwise transfer corporate data.

The facts in WEC v. Miller were similar to those in other recent CFAA cases. According to the Fourth Circuit’s opinion, a copy of which is available below, WEC provided specialized welding and related services to the power generation sector. As the Fourth Circuit explained, Arc Energy Services, Inc. (“Arc”) was one of WEC’s competitors in South Carolina. WEC provided “Miller with a laptop computer and cell phone, and authorized his access to the company’s intranet and computer servers.” According to WEC’s complaint, "Miller had access to numerous confidential and trade secret documents stored on … computer servers, including pricing terms, pending projects[,] and the technical capabilities of WEC.” WEC implemented employment policies that prohibited the use of such information without authorization or downloading it to a personal computer. But as the appellate court noted, “[t]hese policies did not restrict Miller’s authorization to access the information.”

In its Complaint, WEC alleged that before Miller resigned, he and his assistant at WEC downloaded and emailed WEC’s confidential information to personal email accounts and a personal computer. WEC claimed that this information was used by Miller in a successful pitch to Arc after Miller’s resignation. Miller moved to dismiss WEC’s CFAA claims, and in opposition WEC argued that Miller violated the CFAA and WEC’s employment policies by downloading WEC’s confidential information to a personal computer. WEC also argued that Miller breached his fiduciary duty to WEC when he downloaded this information to his personal computer, thereby losing the authority to access it. WEC Carolina Energy Solutions, LLC v. Miller, No. 0:10-cv-2775-CMC, 2011 WL 379458, at *5 (D.S.C., Feb. 3, 2011). These arguments were rejected by the district court, which held that “WEC’s company policies regulated use of information not access to that information. Thus, even if Miller and Kelley’s purpose in accessing the information was contrary to company policies regulating use, it would not establish a violation of company policies relevant to access and, consequently, would not support liability under the CFAA.”

This decision was affirmed by the appellate court. Diving headfirst into the debate regarding the scope of the CFAA, the Fourth Circuit observed that in interpreting the CFAA, “two schools of thought exist.” The first comes out of Int’l Airport Ctrs., LLC v. Citrin, 440 F.3d 418, 420-21 (7th Cir. 2006), in which the court held that “when an employee accesses a computer or information on a computer to further interests that are adverse to his employer, he violates his duty of loyalty, thereby terminating his agency relationship and losing any authority he has to access the computer or any information on it.” The second school of thought, “articulated by the Ninth Circuit and followed by the district court here, interprets ‘without authorization’ and ‘exceeds authorized access’ literally and narrowly, limiting the terms’ application to situations where an individual accesses a computer or information on a computer without permission.”  

The appellate court rejected WEC’s arguments in favor of following the Citrin line of cases, and adopted what is perceived as the employee-centric view articulated in Brekka and Nosal. As the appellate court held, “we adopt a narrow reading of the terms ‘without authorization’ and ‘exceeds authorized access’ and hold that they apply only when an individual accesses a computer without permission or obtains or alters information on a computer beyond that which he is authorized to access.” In a nod to the potential impact of its opinion, the appellate court noted its “conclusion here likely will disappoint employers hoping for a means to rein in rogue employees.” “But we are unwilling to contravene Congress’s intent by transforming a statute meant to target hackers into a vehicle for imputing liability to workers who access computers or information in bad faith, or who disregard a use policy.”

 

Written by:

Fisher Phillips
Contact
more
less

Fisher Phillips on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.