The Basics: "Hacking," the Computer Fraud and Abuse Act, and You

Today we're going to look at a federal statute that is increasingly becoming central to disputes between outgoing executives and their former employers -- a statute originally designed to prohibit computer "hacking."

Now, if you’re anything like me, when you hear the word “hacking,” you probably envision Matthew Broderick using a dial-up modem to break into his high school’s computer and change his grades.  (In fact, Broderick pulled this same trick twice in the 1980s; first in WarGames and then again in Ferris Bueller’s Day Off.)  Indeed, if you asked the average person to define “hacking,” they would probably come up with something like WarGames; that is, they would consider hacking to be breaking into a computer or network to which you were not given permission to access, in order to do something nefarious, like changing your grades or starting World War III.

It probably comes as no surprise that after those blockbuster movies (and some real-life events, too), Congress enacted a statute to prohibit “hacking” back in the heyday of the 1980s.  That statute – the Computer Fraud and Abuse Act (“CFAA”) – is still the law today, and is codified at 18 U.S.C. §§ 1030.

But what you might not know is that in many areas of the country, there's a court-interpreted disconnect between the CFAA’s definition of hacking and Matthew Broderick.  That disconnect, in turn, has become a very real issue today for departing executives and their employers.  For example, if you’ve been fired and you delete files off of your laptop before returning it, you may be civilly and even criminally liable under the CFAA in some jurisdictions.  (International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006).  (Less relevant – but more salacious – is the Justice Department’s efforts to prosecute a mom under the CFAA for lying about her age on MySpace.)  United States v. Drew, 259 F.R.D. 449 (C.D. Calif. 2009).

It all depends on how the courts in your area interpret the CFAA.  Read on.... Read More ›

Is A Bad Job Interview Evidence Of Discrimination? (Part 2)‎

In Part 1 of this series, we relayed the case of Pamela Hill, an engineer with the Virginia Department of Transportation.  Hill was passed over for promotion.  Another applicant, a man, who has less experience than Hill and doesn’t have a college degree like she has, got the job.  VDOT’s only reason for the decision is that the man did better in the interview. 

Hill sued VDOT, alleging sexual discrimination in violation of Title VII of the Civil Rights Act.  VDOT moved for summary judgment – an early resolution in its favor – and at the end of this post, I’ll tell you if Hill won or not.  Read More ›

Court Order: You Shall Not Start Your New Job at that Oil Company Because We're Worried About Irreparable Harm to the Oil Company You Just Quit

Engineer Milos Milosevic may have thought that he and Schlumberger Technology Corporation were like oil and water when he recently left Schlumberger, which provides services to the oil and gas industry, to work for Halliburton Company, a direct competitor.  On Friday, a Texas state court said not so fast, and issued a temporary restraining order (or TRO) against Dr. Milosevic that prohibits him from starting his new job at Halliburton.  The court also ordered Dr. Milosevic to “restrain from using or disclosing [Schlumberger’s] trade secrets,” and to “immediately return” any of Schlumberger’s documents or other property.  Schlumberger requested the TRO at the outset of a lawsuit that it filed against Dr. Milosevic for breach of a non-compete contract and misappropriation of trade secrets.  Read More ›

State vs. State Smackdown: How Other Courts Are Responding To California’s Unique Law ‎Prohibiting Covenants Not To Compete

In last week’s Inbox, we briefly discussed the dispute between rival insurers Aon and Alliant Insurance Services, Inc.; that lawsuit centers around Aon’s allegations that Alliant raided Aon’s top executives in violation of those employees' covenants not to compete contained within their employment agreements with Aon.  That dispute is currently being fought via two parallel lawsuits brought in two different states, New York and California.

Ordinarily, the plaintiff is “master of his or her complaint,” meaning that even if a lawsuit could be brought in multiple jurisdictions, courts will typically defer to the forum chosen by the plaintiff.  When parties have claims against each other but prefer different states, this doctrine often results in a so-called “race to the courthouse” in which the first party to file “wins” his or her chosen forum.  The “first filed” complaint – the “winner,” if you will, then typically moves to either stay or dismiss the second-filed parallel jurisdiction in the “loser’s” state, and the “loser’s” court almost always complies.  This may not be high-minded justice, but it is routine.

Or so we thought. Read More ›

Marketing With Social Media: Is It Time to Retire the Concept of the "Workplace?"

For two centuries, intellectual property disputes between employees and employers were guided by a relatively simple principle:  if you did something “in the workplace” – and you didn’t specifically bargain with your employer to keep it – then what you did was “on the clock” and that work product belongs to your employer.

If you’re a business professional or a lawyer reading this blog, chances are that notion seems awfully quaint right about now.  You know that smartphones are ubiquitous in our respective professions, and business gets done 24 hours a day, seven days a week.  That important client email gets answered at midnight on a Saturday from your basement – not at 9 am the next Monday from your office.

Whether our brave new wireless world is a mixed blessing is probably beyond the scope of this blog.  But one of the things we have noted is that the increasing commingling of the “workplace” with “personal” space is blazing new trails in previously settled areas of the law.  We look at another recent development in this area in context after the jump. Read More ›

Does a Company Have to Pay for the Defense of a Former Officer Who Was Criminally Charged (Twice) with Stealing the Company's Trade Secrets?

That’s the question presented by a recent lawsuit filed by Sergei Aleynikov, a computer programmer who was a Vice President at Goldman Sachs responsible for code relating to Goldman’s high frequency trading business (more on “HFT” here) before he left to work for a hedge fund – allegedly bringing Goldman’s “secret sauce” code with him.  We’ve observed before that contractual rights to indemnification can sometimes lead to head-scratching results, but, depending on the outcome, this case may take the cake.  Plus, it nicely illustrates key concepts about indemnification (our focus today) and advancement (our focus later this week). Read More ›

The Inbox

News in suits by suits for you to ponder once you’ve tired of reading about replacement refs and bacon:

• Every law librarian I know is a kind, mild-mannered person who would never dream of threatening to bash you with a crowbar.  But Donald Raymond, formerly of Southern Illinois University, was accused of making such a threat, and was fired shortly after the allegation.  Karen Sloan at the National Law Journal writes that Raymond sued his employer after his termination, and that his case has now survived a motion to dismiss. 

Chemistry Dispute Blows Up In Scientific Society’s Face

We’ve previously written about the disputes that can arise when an employee leaves a job to start a competing company, such as claims that the employee has misappropriated trade secrets or breached confidentiality provisions.  Sometimes the employers win these cases.  And sometimes, they lose in a big way – as the American Chemical Society (ACS) found out in a case that went all the way to the Ohio Supreme Court.  Am. Chem. Soc’y v. Leadscope, Inc., Slip Opinion No. 2012-Ohio-4193. That court's recent decision serves as a caution to employers: if you don’t have reliable evidence that anything’s been stolen, but you sue your employees’ new business anyway, you can end up on the wrong end of a large verdict.  Read More ›

A Big Bill for Biller: Whistleblowers and Confidentiality Agreements

Many of the cases we talk about here on Suits by Suits are breach of contract cases brought by executives against their former employers.  Sometimes, however, the employer turns the tables, bringing an action against a former executive for breaching its confidences.  When that happens, the executive can find himself owing the company a lot of money, rather than the other way around.

Such was the fate of a former lawyer for Toyota named Dimitrios Biller, the subject of the Ninth Circuit’s recent opinion in Biller v. Toyota Motor Corp., 668 F.3d 655 (9th Cir. 2012).   Read More ›

Lighting the Dollar Tree

Today’s decision of interest, U.S. Electrical Services, Inc. v. Schmidt (D. Mass. June 19, 2012), involves everyone’s favorite strip-mall stop: the Dollar Tree. James Schmidt and Peter Colon wanted to sell lighting and fixtures to the Dollar Tree (presumably for more than $1.00). Their former employer, U.S. Electrical Services (USESI), wanted to stop them, because it wanted to bid on the same Dollar Tree lighting account and it didn’t want Schmidt and Colon using its confidential pricing information to make their bid. 

At the time USESI sued, the account was up for bid in only a few days. So USESI didn’t just file a complaint and seek damages. Instead, it asked for a preliminary injunction barring Schmidt, Colon, and their new employer, Munro, from competing for the business. Read More ›