Paul Porvaznik – Business Litigator – Page 107 – Case Notes and Summaries of Recent Cases (State and Federal Courts

Seventh Circuit Summary Judgment Practice: the ‘Production’ and ‘Persuasion’ Burdens

The Seventh Circuit remarked that parties who respond to a summary judgment motion “often misconceive what is required of them” in Modrowski v. Pigatto, 2013 WL 1395696 (7th Cir. 2013). The case amply illustrates that summary judgment misconceptions can have unfortunate consequences.

In Modrowski, a former employee sued two property management firms under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030, after he was fired and locked out of his personal Yahoo email account.

The defendants moved for summary judgment, arguing that plaintiff produced no evidence that he sustained at least $5,000 in monetary loss as required by the CFAA. 18 U.S.C. § 1030(c)(4)A)(i)(I); (g). The District court agreed and granted defendants’ summary judgment motion.

The Seventh Circuit rejected plaintiff’s argument that the defendants failed to meet their summary judgment burden of production. The Court noted that Federal Rule of Civil Procedure 56 imposes an initial burden of production on the summary judgment movant (here, defendants) to show the court why a trial isn’t necessary.

The (summary judgment) moving party can meet the initial burden by either (1) producing affirmative evidence that negates an essential element of the plaintiff’s claim; or (2) asserting that the plaintiff failed to produce sufficient evidence to establish an essential element of his claim.

The defendants opted for the latter, “trickier” path – pointing out a lack of evidence in support of plaintiff’s CFAA minimum monetary loss ($5,000) element. Once the defendants made this initial showing, the burden shifted back to the plaintiff to point to admissible record evidence that established the $5,000 loss threshold.

Question: How does a summary judgment respondent do this?

Answer: The nonmovant doesn’t have to depose her own witnesses or produce evidence in a form that would be admissible at trial, but she must at least produce affidavits, deposition excerpts, interrogatory answers, or record admissions to demonstrate that there is evidence upon which a jury could potentially find in the nonmovant’s favor on the challenged element.

The plaintiff in Modrowski miscalculated his summary judgment burden. Instead of citing evidence to support his claim that he suffered at least $5,000 in monetary loss, plaintiff opted to attack perceived flaws in defendants’ summary judgment motion. Plaintiff argued that defendants failed to file a Local Rule 56.1 Statement, failed to cite to the evidentiary record in support of their factual statements and didn’t support their arguments with supporting case law. (p. 4).

Plaintiff claimed that these motion defects were so major, his burden to produce evidence on his CFAA loss element didn’t trigger.

The Seventh Circuit disagreed. On the defendants’ failure to file a Local Rule 56.1 Statement, the Court said that while a failure to provide the Statement can result in the denial of a summary judgment motion, the district court has wide discretion whether to require strict compliance with local court rules and can freely overlook a rules violation.

Substantively, the Court emphasized that the plaintiff bore the burden of persuasion on the $5,000 damages element of a colorable CFAA claim. Because of this, the plaintiff had to produce admissible evidence in support of this element to survive summary judgment.

The court even gave examples of the type of evidence plaintiff could have offered such as (1) affidavits from prospective business partners who were unable to contact plaintiff after defendants hijacked his Yahoo account, (2) receipts and expense documents relating to amounts paid by plaintiff to replicate the lost emails and billing records, or an (3) affidavit signed by plaintiff attesting to the number of hours he spent trying to recover his erased emails.

On this last point, the Court noted that self-serving affidavits in response to summary judgment are proper if they are fact-specific and based on personal knowledge.

Take-aways: Summary judgment is the “put up or shut up” moment of the lawsuit and the time in which the respondent must marshal admissible evidence to prove his case.

Modrowski‘s clear lessons are that if you have the burden of proof on an issue at trial and you’re served a summary judgment motion, you must do more than point out facial defects in your opponent’s motion (like a failure to file a LR 56.1(a) statement). You must also do more than simply rely on your pleadings. Instead, you should comb the record for evidence in support of each element of your cause of action.

Employer Commandeers Ex-Employee’s LinkedIn Account: ‘Can They Do That?!’ (Eagle v. Morgan I)

Eagle v. Morgan, 2012 WL 4739436 (E.D.Penn. 2012) is a case whose impact is likely to reverberate through the social media legal landscape for some time. It addresses interesting questions like who owns an employee’s social media account, what happens to the account when an employee is fired, and whether the account has monetary value to the employee. In Eagle, a former banking consultant sued her employer under various state and Federal laws when her employer fired her and promptly took over her LinkedIn account – preventing plaintiff (or anyone else) from accessing her account or retrieving messages from it for several weeks. One of plaintiff’s Federal claims was based on the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq. (CFAA), a criminal statute that also provides a private civil cause of action.

The plaintiff’s CFAA claim alleged that her employer first fired her and then commandeered her LinkedIn account (plaintiff had previously given her LinkedIn password to a co-worker); replacing plaintiff’s profile with her replacement’s. Ouch! The record evidence showed that for a period of at least 16 days, plaintiff was locked out of her Linkedin account. In addition, plaintiff claimed that she was unable to receive Linkedin messages from outside parties for nearly four months – resulting in her missing untold business opportunities. According to the plaintiff, because she was unable to access her account and receive messages, she suffered lost business opportunity damages as prospective clients or business contacts were rerouted to her replacement’s Linkedin profile.

The Court granted summary judgment for the defendant employer on the CFAA counts. In doing so, the Court briefly discussed the contours of the CFAA, which provides a private cause of action for a plaintiff who sustains damage or loss of at least $5,000 against a defendant who intentionally, and without authorization, accesses a “protected computer”. 18 U.S.C. 1030(a)(1)-(7).

The CFAA defines “damage” as any impairment to the integrity or availability of data, a program, a system, or information. 18 U.S.C. s. 1030(e)(8). CFAA “loss” denotes the reasonable cost to any computer fraud 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. 18 U.S.C. s. 1030(e)(11). “Loss” also encompasses lost revenue and consequential damages incurred because of interruption of service. Id. Aside from certain exceptions not relevant here, Section 1030(g) of the CFAA requires a plaintiff to show damage or loss of at least $5,000 in any one-year period. 18 U.S.C. § 1030(e)(8)(A); 1030(c)(4)(A)(i)(I).

The court entered summary judgment for the employer on the basis that the plaintiff failed to show damages or loss of at least $5,000. The court held that plaintiff’s damages evidence was too speculative to survive summary judgment. As to plaintiff’s “loss” claim, the Eagle court gave a restrictive reading to the CFAA and ruled that lost business opportunities did not satisfy the CFAA’s loss threshold where there is no underlying impairment to a computer or computer system.

Conclusion: As a later post will discuss, there is a definite split in authority as to whether underlying physical damage to a computer system or computer data is a necessary condition for a showing of “loss”. Some cases require physical damage; while others only require the plaintiff to show that it spent more than $5,000 investigating and ameliorating a breach of its computer system – regardless of whether there was any physical computer or data damage. In Eagle, the Court apparently believed that lost business opportunities resulting from third-parties’ inability to access a social media page were too far removed from Congressional intent when it codified the CFAA’s damage and loss requirements.

Links (courtesy of www.tradesecretslaw.com):

http://www.tradesecretslaw.com/files/2012/10/Eagle-v.-Morgan.pdf

Can Hijacking a LinkedIn Account Subject You to Invasion of Privacy and Missapropriation Claims?

In Eagle v. Morgan, 11-4303 (E.D. Pa. Mar. 12, 2013), an employee sued her employer for seizing the employee’s LinkedIn account and blocked her from it for several weeks.

After trial, the court ruled in Plaintiff’s favor on the following three state law claims:

(1) Claim: Statutory unauthorized use of name

Ruling and Reason: Plaintiff’s claim sustained. Plaintiff’s name has commercial value based on her investment of time and effort developing her reputation in the banking industry. Defendant (Edcomm) used plaintiff’s name without her consent for commercial purposes in that someone looking on-line for plaintiff, would instead be redirected to an Edcomm agent. *6.

2) Claim: Invasion of privacy

Ruling and reason: Judgment for plaintiff. Plaintiff has privacy interest in her name, picture and resume and plaintiff’s name in banking industry has “prestige and commercial value”. Edcomm appropriated plaintiff’s reputation, prestige and commercial standing for its own use by allowing plaintiff’s name to remain on LinkedIn URL. *7-8.

3) Claim: Misappropriation of Publicity

Ruling and reason: Judgment for plaintiff. Plaintiff has exclusive property right in her identity and sole right to control the commercial value of her name and the companion right to prevent others from exploiting it without her permission. Edcomm exploited plaintiff’s name and commercial value associated with her name by locking plaintiff out of her LinkedIn account and replacing plaintiff’s credentials with those of her successor. *8.

Damages

Plaintiff offered no specific, tangible damages evidence. Her lost profits and lost business opportunities claims were purely speculative and she failed to point to a single contract, client, prospect or transaction that didn’t materialize as a result of Edcomm’s conduct. *13-16.

Defendant’s Counterclaims

(1) Misappropriation – Edcomm claimed plaintiff misappropriated Edcomm’s LinkedIn account as her own when plaintiff retook control of her LinkedIn account after about 17 days post-firing. Edcomm claimed that it had the initial idea to use LinkedIn as a business marketing tool and that it retained the rights to the account after plaintiff was fired.

The Court disagreed and said that the LinkedIn user agreement was clearly between the individual user (plaintiff) and LinkedIn. The Court also noted that Edcomm didn’t have a written LinkedIn policy in which it dictated its employee’s LinkedIn use. *16.

(2) Unfair Competition – Edcomm asserted that plaintiff improperly recaptured her LinkedIn account to compete unfairly with Edcomm for business and clients. The court summarily rejected this by saying that Edcomm failed to show that plaintiff misappropriated her LinkedIn account and therefore could not show “passing off” or “likelihood of confusion” – the twin hallmarks of a common law unfair competition claim. *16.

Take-aways:

– Where a plaintiff can show she has invested time and energy into furthering her reputation in an industry, the plaintiff’s identity or “brand” will have commercial value and that value will be protectable;

– So who owns a LinkedIn account? If the employer sponsors the account and has a clearly defined policy concerning ownership and use of the account, an argument can be made that once an employee is terminated, that account devolves to the employer.

– Where a plaintiff can’t pinpoint any specific lost business opportunities, damages will be too speculative and she will get nothing.

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