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.  

 

 

Collateral Estoppel, Law Of the Case and Section 2-1401 Petitions: Illinois Basics

1600 Museum Park, LLC v. Williams, 2012 WL 6955718, chronicles an aborted condominium purchase and its ensuing litigation.  A condo owner and two purchasers signed a contract (Contract) and an approx. $25K promissory note in connection with a condo sale.  But only one of the buyers signed the contract and note.  The deal fell through and the defendants sent a written termination notice to the plaintiff.

Plaintiff sued to confess judgment against both defendants and the trial court entered judgment against both defendants jointly and severally for over $30K.  Defendants appealed. 

The First District affirmed the money judgment against the defendant that signed the contract and note but reversed as to the buyer that didn’t sign either document. 

Collateral Estoppel and Law of the Case Doctrines

The Appellate Court found that the trial court erred in its application of collateral estoppel. 

Collateral estoppel is designed to prevent the relitigation of issues that have already been resolved in earlier actions and specifically contemplates two separate, and consecutive cases.  ¶¶ 13-14. 

Collateral estoppel applies where (1) there is a final, valid judgment on the merits in a prior suit; (2) the issue in the prior suit is identical to the issue in the current case; and (3) the party against whom estoppel is asserted was a party to, or in privity with a party to the prior lawsuit.  ¶ 15. 

The Court held that since there was no prior lawsuit – there is only one case involved – collateral estoppel didn’t apply.  In addition, the Court found that the  ex parte confession of judgment entered against defendants was, by its nature, not a final judgment on the merits.  Id., ¶ 17. 

The First District also rejected plaintiff’s law-of-the-case (“LOC”) argument. 

LOC “bars relitigation of an issue previously decided in the same case.”  The rule applies where an appellate court decides an issue of law and then remands the case to the trial court and is designed to prevent a second appeals court from contradicting the first appellate court on an issue of law. 

The Court found that since this case did not involve a prior appellate ruling and there was no remand to a trial court, the law-of-the-case rule didn’t apply.  

Section 2-1401 Petitions

Code Section 2-1401 petition (735 ILCS 5/2-1401), which governs motions to vacate a judgment older than 30 days.  ¶ 20.

A Section 2-1401 petition establishes (1) a meritorious defense; (2) due diligence in discovering the defense; and (3) due diligence in bringing the petition. (¶¶ 19-20)

Promissory Note Liability and Contract Cancellation

The purchasers argued that since only one of them signed the Note, it wasn’t enforceable on either of them.  The First District disagreed and held the Note’s text didn’t require both purchasers’ signatures for the Note’s enforceability. ¶¶ 23-24. 

The defendants other argument was that since they cancelled the Contract, the Note was also necessarily cancelled.  The Court dismissed this noting that the Contract gave defendants only seven days to terminate the contract.  Since the defendants’ sent their termination letter more than four months after the Contract was signed, the termination was untimely.  As a result, the Contract was never cancelled and the Note was enforceable (but only as to the signing defendant).  (¶¶ 26-27).   

Take-aways:

– Real estate contract termination deadlines will be enforced as written;

– Collateral estoppel and law-of-the-case are construed narrowly and only apply where there are at least two separate, successive cases (for collateral estoppel) or where there is an appeals court decision on a legal issue and subsequent remand to a trial court (for law-of-the-case);

– A promissory note will be enforced to the letter and the court will not engraft conditions onto a clearly drafted note.  

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

LinkedInEagle 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