Court Holds That Bartered Services May Qualify as "Loss" Under the Computer Fraud & Abuse Act


An increasing number of courts have weighed in recently on whether the Computer Fraud & Abuse Act (“CFAA”) applies in the context of a faithless employee. Despite this onslaught of decisions, there are still relatively few cases that delve into the details of what qualifies as a “loss” under the statute. The definition matters because without a “loss” of $5,000 or more, employers (or anyone else) cannot bring a civil claim under the CFAA.

In Animators At Law, Inc. v. Capital Legal Solutions, LLC, the U.S. District Court for the Eastern District of Virginia recently took on this issue and offered its view on whether an actual payment of money is required to establish a “loss.” The Court also addressed whether bartered services, lost employee time, and attorneys’ fees may qualify. The result is a decision that will make it easier to assert such claims if it is followed by other courts. (A copy of the court’s decision is available in pdf format below.)

In Animators

Animators sued the former employees and their new employer in federal court asserting a claim under the CFAA. Animators sought to satisfy the $5,000 jurisdictional threshold in three ways. First, it noted that the services performed by its computer forensic firm were valued at nearly $20,000. Second, it argued that its president normally charges $300 per hour for his time as a consultant, and he spent in excess of 72 hours overseeing the investigation. Third, Animators stated that its lawyer chimed in with an , an employer sued two former employees who allegedly took a laptop computer with them when they resigned. The former employer, Animators At Law (“Animators”), hired a computer forensic firm to analyze the laptop computer after it was returned. The overall investigation was spearheaded by Animators’ president and its outside counsel.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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