Question: Garelli Wong Associates Inc GW a provider of accounting

Garelli Wong & Associates, Inc. (GW), a provider of accounting and financial personnel services, created a database containing confidential client tracking information. The firm took steps to maintain the confidentiality of the information and thereby obtain the competitive advantage that the information provided. GW and a corporation that had later acquired the firm sued William Nichols, a former employee of GW and the successor corporation. The plaintiffs alleged that Nichols used some of the confidential information in the above-referred-to database after he had taken a job with a competing firm. Nichols' supposed use of the information allegedly breached a contract he had entered into with GW when he was employed there. In their complaint filed in federal court, GW and the successor corporation contended that Nichols' actions violated the federal Consumer Fraud and Abuse Act (CFAA) and constituted breach of contract in violation of state common law. The CFAA section on which the plaintiffs relied, § 1030 (a)(5), states, in pertinent part: Whoever (5)(A)(i) knowingly causes the transmission of . . . information . . . and as a result of such conduct, intentionally causes damage without authorization, to a protected computer; (ii) intentionally accesses a protected computer without authorization, and as a result of such conduct, recklessly causes damage; or (iii) intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage . . .; and (5)(B)(i) by conduct described in clause (i), (ii), or (iii) of subparagraph (A), caused . . . loss to 1 or more persons during any 1-year period . . . aggregating at least $ 5,000 in value. A definition section of the CFAA defines damage as "impairment to the integrity or availability of data, a program, a system, or information." Nichols moved to dismiss the plaintiffs' CFAA § 1030 (a)(5) claim because of a supposed failure to state a claim upon which relief could be granted. He argued that even if he used information in the database, he did not impair the integrity or availability of the information or the database. How did the court rule on Nichols' motion regarding the § 1030 (a)(5) claim? Did that section of the CFAA apply to this alleged instance of trade secret misappropriation?

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  • CreatedJuly 16, 2014
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