{"id":675,"date":"2014-04-30T15:00:38","date_gmt":"2014-04-30T15:00:38","guid":{"rendered":"https:\/\/www.bfvlaw.com\/northern-district-weighs-in-on-circuit-split-gives-broad-meaning-to-loss-in-the-computer-fraud-and-abuse-act\/"},"modified":"2014-04-30T15:00:38","modified_gmt":"2014-04-30T15:00:38","slug":"northern-district-weighs-in-on-circuit-split-gives-broad-meaning-to-loss-in-the-computer-fraud-and-abuse-act","status":"publish","type":"post","link":"https:\/\/www.bfvlaw.com\/northern-district-weighs-in-on-circuit-split-gives-broad-meaning-to-loss-in-the-computer-fraud-and-abuse-act\/","title":{"rendered":"Northern District Weighs in on Circuit Split: Gives Broad Meaning to “Loss” in the Computer Fraud and Abuse Act"},"content":{"rendered":"

In Southern Parts & Engineering Co. v. Air Compressor Services<\/em>, two former employees of Southern left their employment and founded Air Compressor Services.\u00a0 No. 1:13-CV-2231-TWT, 2014 WL 667958, at *1 (N.D. Ga. Feb. 20, 2014).\u00a0 Both companies specialize in the sale of air compressor parts and lubricants. \u00a0Id.\u00a0 <\/em>After the employees resigned, Southern hired forensic computer experts to investigate the computer activity of the two employees in the weeks leading up their resignations.\u00a0 Id<\/em>.\u00a0 The investigation revealed that the two employees had (1) accessed Southern\u2019s databases containing customer information, financial information, and business plans; (2) copied confidential information and trade secrets onto USB drives; (3) used Southern\u2019s computers to perform research for Air Compressor and its website; and (4) used Southern\u2019s resources to contact a marketing firm for Air Compressor.\u00a0 Id<\/em>.\u00a0 The investigation also showed that the employees had remotely accessed Southern\u2019s network after they resigned to collect more confidential information. \u00a0Id<\/em>.<\/p>\n

Based on this and other conduct, Southern filed suit against Air Compressor and the employees for misappropriation of trade secrets, intentional interference with contractual and business relations, and violation of the Computer Fraud and Abuse Act (\u201cCFAA\u201d).\u00a0 Id<\/em>.\u00a0 at *2.\u00a0 The defendants moved to dismiss the claims for intentional interference with contractual and business relations and violation of the CFAA. Id.\u00a0<\/em><\/p>\n

With respect to the CFAA claim, the defendants argued that Southern failed to allege a \u201closs\u201d aggregating to at least $5,000 in value, as the CFAA requires.\u00a0 Id. <\/em>at *5.\u00a0 <\/em>Specifically, Southern had alleged that it had to hire computer forensic experts to determine the nature of the employees\u2019 unauthorized access, and that this cost alone was at least $5,000. \u00a0Id. <\/em>\u00a0The defendants argued that because these costs were not a consequence of an \u201cinterruption of service,\u201d they did not constitute a \u201closs\u201d under the CFAA.\u00a0 Id.<\/em><\/p>\n

As the Court explained, the CFAA defines \u201closs\u201d as \u201cany 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<\/em> any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service<\/em>.\u201d\u00a0 Id. <\/em>(emphasis added) (quoting 18 U.S.C. \u00a7 1030(e)(11)).<\/p>\n

The wording of this provision has caused a split amongst district courts.\u00a0 Some courts, and the defendants in this case, interpret the provision so that the \u201cinterruption of service\u201d language applies to all of the listed items and that, therefore, any alleged loss must be a consequence of such interruption of service.\u00a0 Id.\u00a0 <\/em>Other courts, and Southern in this case, read the statute so that the \u201cinterruption of service\u201d language only applies to the second half of the definition, i.e. it only applies to the \u201cany revenue lost, cost incurred, or other consequential damages incurred\u201d portion.\u00a0 Id.\u00a0<\/em><\/p>\n

Relying on the rules of statutory construction, the Court stated that if the \u201cinterruption of service\u201d language applied to all of the listed items, the first half of the definition of \u201closs\u201d definition would be surplusage, as the first half of the definition would be \u201centirely subsumed by the broader wording of the second half.\u201d\u00a0 Id.\u00a0 <\/em>On the other hand, the Court reasoned, applying the \u201cinterruption of service\u201d language only to the second half of the definition \u201cgive[s] effect to both halves.\u00a0 The latter half refers to general costs incurred because of interruptions in service, and the former refers to certain specific costs that are not necessarily based upon interruptions in service.\u201d\u00a0 Id.\u00a0 <\/em>The Court also bolstered this reasoning by drawing upon legislative history.\u00a0 Id. <\/em>at *6.\u00a0 Consequently, the Court found that Southern had adequately alleged a loss amounting to at least $5,000 and denied the defendants\u2019 motion to dismiss the CFAA claim.<\/p>\n

Many defendants try to get CFAA claims dismissed at an early stage on various grounds.\u00a0 This decision suggests judges in the Northern District of Georgia may refuse to dismiss a CFAA claim just because the alleged \u201closs\u201d is not tied directly to an interruption of service.<\/p>\n","protected":false},"excerpt":{"rendered":"

In Southern Parts & Engineering Co. v. Air Compressor Services, two former employees of Southern left their employment and founded Air Compressor Services.\u00a0 No. 1:13-CV-2231-TWT, 2014 WL 667958, at *1 (N.D. Ga. Feb. 20, 2014).\u00a0 Both companies specialize in the sale of air compressor parts and lubricants. \u00a0Id.\u00a0 After the employees resigned, Southern hired forensic […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_mo_disable_npp":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,9],"tags":[27,28,16],"acf":[],"yoast_head":"\nNorthern District Weighs in on Circuit Split: Gives Broad Meaning to "Loss" in the Computer Fraud and Abuse Act - Berman Fink Van Horn P.C.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bfvlaw.com\/northern-district-weighs-in-on-circuit-split-gives-broad-meaning-to-loss-in-the-computer-fraud-and-abuse-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Northern District Weighs in on Circuit Split: Gives Broad Meaning to "Loss" in the Computer Fraud and Abuse Act - Berman Fink Van Horn P.C.\" \/>\n<meta property=\"og:description\" content=\"In Southern Parts & Engineering Co. v. Air Compressor Services, two former employees of Southern left their employment and founded Air Compressor Services.\u00a0 No. 1:13-CV-2231-TWT, 2014 WL 667958, at *1 (N.D. Ga. 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