An employer had no cause of action under the Computer Fraud and Abuse Act (“CFAA”) against an employee who accessed its computer systems to misappropriate confidential and proprietary business information to start a competing business, the U.S. District Court for the Southern District of Ohio has held. Cranel Inc. v. Pro Image Consultants Group, LLC, 2014 U.S. Dist. LEXIS 137347 (S. D. Ohio Sept. 29, 2014).

The employer alleged that the employee emailed himself certain Microsoft Excel, Microsoft Word and PDF files containing the employer’s confidential, proprietary, or trade secret information and convinced a co-worker to send him a proprietary pricing tool that he could not access. The employer claimed that this employee and his competing business violated, among other things, subsection (a)(2)(C) of the CFAA, which prohibits “intentionally access[ing] a computer without authorization or exceed[ing] authorized access, and thereby obtain[ing]… information from any protected computer.”

Judge James Graham recognized that courts across the country have struggled with whether a valid CFAA claim exists where an employee accesses his employer’s computer to misappropriate confidential information. Judge Graham noted a split in opinion on the issue, with some courts construing “without authorization” and “exceeding authorized access” broadly and others interpreting these words narrowly, holding that once an employee is granted access to the employer’s computer system, he does not violate the CFAA regardless of how he subsequently uses the information. The court determined the narrow interpretation was more appropriate in light of the CFAA’s definition of “exceeds authorized access.”

The CFAA defines “exceeds authorized access” as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. §1030(e)(6). The court cited LVRC Holding L.L.C. v. Brekka, 581 F.3d 1127 (9th Cir. 2009), with approval and found that an employee authorized to access the employer’s computer systems does not exceed such authorization, as defined under the CFAA, unless he accesses information on the computer to which he is not permitted.

Based on its narrow interpretation of the statute, the court found the employer failed to state a claim under the CFAA because the employee had authorization to access the confidential and proprietary documents that he later emailed to himself, even if he used the documents for an improper purpose. Additionally, because the employee did not access the proprietary pricing tool himself (he persuaded his colleague who has access to the tool to send it to him), he did not “exceed his authorization.”

The lesson for employers is to restrict access to confidential and proprietary information on their systems to employees with a business need for the information. Employers also should make sure that appropriate security measures are in place to prevent employees from sharing this confidential and proprietary information with co-workers without prior approval.

 

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.