A district court in Tennessee recently concluded in Wachter Inc. v. Cabling Innovations LLC that two former employees who allegedly shared confidential company information found on the company’s computer system with a competitor did not violate the Computer Fraud and Abuse Act (CFAA). The CFAA expressly prohibits “intentionally accessing a computer without authorization or exceeding authorized access, and thereby obtaining… information from any protected computer”.

The two former employees in question worked for Wachter Inc., a Kansas-based communications equipment provider, during which time they allegedly sent confidential company information to their personal email accounts and to email accounts of Wachter’s competitor, Cabling Innovations. In addition the former employees allegedly used Wachter’s resources and confidential information to obtain and perform work for Cabling Innovation.

In its reasoning, the Court emphasized that the CFAA does not define the term “without authorization” and some courts have found that “an employee may access an employer’s computer ‘without authorization’ where it utilizes the computer to access confidential or proprietary information that he has permission to access, but then uses that information in a manner that is inconsistent with the employer’s interest”. Moreover, the Court highlighted that “the CFAA was not meant to cover the disloyal employee who walks off with confidential information. Rather, the statutory purpose is to punish trespassers and hackers”.

The Court went on to state that the CFAA is primarily a criminal statute, and although it also permits “any person who suffers damage or loss by reason of a violation … [to] maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief,” the rule of “lenity” directs the Court to construe the CFAA coverage narrowly. The Court reasoned, “the rule of lenity limits the conduct that falls within the criminal prohibitions, it likewise limits the conduct that will support a civil claim”.

The CFAA has generated much debate among the courts regarding the scope of its application. Some forms of “unauthorized access” are obvious – e.g. a hacker breaking into a protected computer system resulting in data theft is clearly a CFAA violation and is the type of event the CFAA was originally designed to protect against. However, other circumstances, particularly in the employment context, can blur the lines of what is considered “unauthorized access” under the CFAA.

The court in Wachter is under the jurisdiction of the Sixth Circuit, which has not addressed the issue of a potential CFAA violation where an employee who has permission to access company information then misuses or misappropriates that information. That said, most districts courts in the Sixth Circuit have concluded that there cannot be a CFAA violation where an employee had permissible access to the computer system. Similarly, the Fourth Circuit held in WEC Carolina Energy Solutions LLC v. Miller that an employee who allegedly downloaded proprietary information from an employer’s computer system for the benefit of his subsequent employer did not violate the CFAA.

Other circuits, however, have taken a much more expansive approach to what employee activity is considered “without authorization” under the CFAA. For example, in U.S. v. John, the Fifth Circuit held that an employee violated the CFAA when she retrieved confidential customer account information she was authorized to access and transferred it to her half-brother for the purpose of committing a fraud. The First, Seventh and Eleventh Circuits have all taken a similarly expansive view that an employee violates the CFAA when he/she accesses the computer system in violation of the employer’s data use policies.

The U.S. Supreme Court has avoided addressing issues of CFAA vagueness. Most recently, the Supreme Court denied certiorari in Nosal v. United States, 16-1344, declining to weigh in on the scope of unauthorized access under the CFAA. The Ninth Circuit held in Nosal that David Nosal violated the CFAA by using his past assistant’s password to access his former employer’s computer system after his access credentials were expressly revoked.

Given the conflicting jurisdictional interpretations of the CFAA, companies should review their policies and procedures to ensure access rights and limitations to their information and information systems are clearly defined and effectively communicated to their employees. Taking these steps will help protect company data and may be useful in preserving a potential CFAA claim.

 

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Photo of Jason C. Gavejian Jason C. Gavejian

Jason C. Gavejian is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. and a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

As a Certified Information Privacy Professional (CIPP/US), Mr. Gavejian focuses on the matrix of laws governing privacy, security, and management of data. Mr. Gavejian is Co-Editor of, and a regular contributor to, the firm’s Workplace Privacy, Data Management & Security Report blog.

Mr. Gavejian’s work in the area of privacy and data security includes counseling international, national, and regional companies on the vast array of privacy and security mandates, preventive measures, policies, procedures, and best practices. This includes, but is not limited to, the privacy and security requirements under state, federal, and international law (e.g., HIPAA/HITECH, GDPR, California Consumer Privacy Act (CCPA), FTC Act, ECPA, SCA, GLBA etc.). Mr. Gavejian helps companies in all industries to assess information risk and security as part of the development and implementation of comprehensive data security safeguards including written information security programs (WISP). Additionally, Mr. Gavejian assists companies in analyzing issues related to: electronic communications, social media, electronic signatures (ESIGN/UETA), monitoring and recording (GPS, video, audio, etc.), biometrics, and bring your own device (BYOD) and company owned personally enabled device (COPE) programs, including policies and procedures to address same. He regularly advises clients on compliance issues under the Telephone Consumer Protection Act (TCPA) and has represented clients in suits, including class actions, brought in various jurisdictions throughout the country under the TCPA.

Mr. Gavejian represents companies with respect to inquiries from the HHS/OCR, state attorneys general, and other agencies alleging wrongful disclosure of personal/protected information. Mr. Gavejian negotiates vendor agreements and other data privacy and security agreements, including business associate agreements. His work in the area of privacy and data security includes counseling and coaching clients through the process of investigating and responding to breaches of the personally identifiable information (PII) or protected health information (PHI) they maintain about consumers, customers, employees, patients, and others, while also assisting clients in implementing policies, practices, and procedures to prevent future data incidents.

Mr. Gavejian represents management exclusively in all aspects of employment litigation, including restrictive covenants, class-actions, harassment, retaliation, discrimination, and wage and hour claims in both federal and state courts. Mr. Gavejian regularly appears before administrative agencies, including the Equal Employment Opportunity Commission (EEOC), the Office for Civil Rights (OCR), the New Jersey Division of Civil Rights, and the New Jersey Department of Labor. Mr. Gavejian’s practice also focuses on advising/counseling employers regarding daily workplace issues.

Mr. Gavejian’s litigation experience, coupled with his privacy practice, provides him with a unique view of many workplace issues and the impact privacy, data security, and social media may play in actual or threatened lawsuits.

Mr. Gavejian regularly provides training to both executives and employees and regularly speaks on current privacy, data security, monitoring, recording, BYOD/COPE, biometrics (BIPA), social media, TCPA, and information management issues. His views on these topics have been discussed in multiple publications, including the Washington Post, Chicago Tribune, San Francisco Chronicle (SFGATE), National Law Review, Bloomberg BNA, Inc.com, @Law Magazine, Risk and Insurance Magazine, LXBN TV, Business Insurance Magazine, and HR.BLR.com.

Mr. Gavejian is the Co-Chair of Jackson Lewis’ Hispanic Attorney Resource Group, a group committed to increasing the firm’s visibility among Hispanic-American and other minority attorneys, as well as mentoring the firm’s attorneys to assist in their training and development. Mr. Gavejian also previously served on the National Leadership Committee of the Hispanic National Bar Association (HNBA) and regularly volunteers his time for pro bono matters.

Prior to joining Jackson Lewis, Mr. Gavejian served as a judicial law clerk for the Honorable Richard J. Donohue on the Superior Court of New Jersey, Bergen County.