Facebook hacking victim’s CFAA and SCA claims not barred by statutes of limitation

Knowledge that email account had been hacked did not start the statutes of limitation clock ticking for Computer Fraud and Abuse Act and Stored Communications Act claims based on alleged related hacking of Facebook account occurring several months later.

Plaintiff sued her ex-boyfriend in federal court for allegedly accessing her Facebook and Aol email accounts. She brought claims under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (“CFAA”), and the Stored Communications Act, 18 U.S.C. § 2701, et seq. (“SCA”).

Both the CFAA and the SCA have two-year statutes of limitation. Defendant moved to dismiss, arguing that the limitation periods had expired.

The district court granted the motion to dismiss, but plaintiff sought review with the Second Circuit Court of Appeals. On appeal, the court affirmed the dismissal as to the email account, but reversed and remanded as to the Facebook account.

In August 2011, plaintiff discovered that someone had altered her Aol email account password. Later that month someone used her email account to send lewd and derogatory sexually-themed messages about her to people in her contact list. A few months later, similar things happened with her Facebook account — she discovered she could not log in in February 2012, and in March 2012 someone publicly posted sexually-themed messages using her account. She figured out it was her (now married) ex-boyfriend and filed suit.

The district court dismissed the claims because it found plaintiff first discovered facts giving rise to the claims in August 2011, but did not file suit until more than two years later, in January 2014. The Court of Appeals agreed with the district court as to the email account. She had enough facts in 2011 to know her Aol account had been compromised, and waited too long to file suit over that. But that was not the case with the Facebook account. The district court had concluded plaintiff knew in 2011 that her “computer” had been compromised. The Court of Appeals observed that the lower court failed to properly recognize the nuance concerning which computer systems were being accessed without authorization. Unauthorized access to the Facebook server gave rise to the claims relating to the Facebook account. The 2011 knowledge about her email being hacked did not bear on whether she knew her Facebook account would be compromised. The court observed:

We take judicial notice of the fact that it is not uncommon for one person to hold several or many Internet accounts, possibly with several or many different usernames and passwords, less than all of which may be compromised at any one time. At least on the facts as alleged by the plaintiff, it does not follow from the fact that the plaintiff discovered that one such account — AOL e-mail — had been compromised that she thereby had a reasonable opportunity to discover, or should be expected to have discovered, that another of her accounts — Facebook — might similarly have become compromised.

The decision gives us an opportunity to think about how users’ interests in having their data kept secure from third party access attaches to devices and systems that may be quite remote from where the user is located. The typical victim of a hack or data breach these days is not going to be the owner of the server that is compromised. Instead, the incident will typically involve the compromising of a system somewhere else that is hosting the user’s information or communications. This decision from the Second Circuit recognizes that reality, and contributes to the reasonable opportunity for redress in those situations.

Sewell v. Bernardin, — F.3d —, 2015 WL 4619519 (2nd Cir. August 4, 2015)

Evan Brown is an attorney in Chicago helping clients manage issues involving technology and new media.

Company facing liability for accessing employee’s Twitter and Facebook accounts

While plaintiff was away from the office for a serious brain injury she suffered in a work-related auto accident, some of her co-workers accessed and posted, allegedly without authorization, from her Twitter and Facebook accounts. (There was some dispute as to whether those accounts were personal to plaintiff or whether they were intended to promote the company.) Plaintiff sued, alleging several theories, including violations of the Lanham Act and the Stored Communications Act. Defendants moved for summary judgment. The court dismissed the Lanham Act claim but did not dismiss the Stored Communications Act claim.

Plaintiff had asserted a Lanham Act “false endorsement” claim, which occurs when a person’s identity is connected with a product or service in such a way that consumers are likely to be misled about that person’s sponsorship or approval of the product or service. The court found that although plaintiff had a protectable interest in her “personal brand,” she had not properly put evidence before the court that she suffered the economic harm necessary for a Lanham Act violation. The record showed that plaintiff’s alleged damages related to her mental suffering, something not recoverable under the Lanham Act.

As for the Stored Communications Act claim, the court found that the question of whether defendants were authorized to access and post using plaintiff’s social media accounts should be left up to the jury (and not determined on summary judgment). Defendants had also argued that plaintiff’s Stored Communications Act claim should be thrown out because she had not shown any actual damages. But the court held plaintiff could be entitled to the $1,000 minimum statutory damages under the act even without a showing of actual harm.

Maremont v. Susan Fredman Design Group, Ltd., 2014 WL 812401 (N.D.Ill. March 3, 2014)

Can an LLC member violate the Stored Communications Act by accessing other members’ email?

Yes.

Two members of an LLC sued another member and the company’s manager of information services alleging violation of the Stored Communications Act, 28 U.S.C. 2701 et seq. Defendants moved to dismiss for failure to state a claim. The court denied the motion.

Plaintiffs alleged that the LLC’s operating agreement required “Company decisions” to be made based on four of the five members voting in favor. The company had no policy in place authorizing the search and review of employees’ email messages, nor did it inform employees that their email may be accessed. Plaintiffs did not consent to their emails being searched and reviewed.

In connection with a dispute among the LLC members, one of them allegedly (in cooperation with the manager of information services) accessed the company’s email server using administrative credentials. She allegedly performed over 2,000 searches, retrieving other members’ communications of a personal nature, as well as communications with those members’ legal counsel.

Defendants moved to dismiss under 12(b)(6), arguing that plaintiffs could not show the access was unauthorized. Defendants argued that there was no electronic trespass, as the access was accomplished simply by company procedure.

The court rejected defendants’ arguments, finding that plaintiffs had sufficiently alleged an SCA violation, since plaintiffs had not consented to the access, and because no policy existed permitting an individual to search and review emails of members or employees absent the four-fifths approval required by the operating agreement.

Joseph v. Carnes, 2013 WL 2112217 (N.D.Ill. May 14, 2013)

Class action against Path faces uphill climb

Hernandez v. Path, Inc., 2012 WL 5194120 (N.D.Cal. October 19, 2012)

uphill path

Earlier this year plaintiff filed a class action lawsuit against photo app provider Path, alleging ten claims relating to Path’s alleged surreptitious collecting of mobile device address books and installation of tracking software. Path moved to dismiss the lawsuit for lack of standing and for failure to state a claim. The court held that plaintiff had standing to pursue the case, but dismissed some of the claims.

Standing

The court found that alleged depletion of “two to three seconds of battery capacity” was de minimus and thus not sufficient to support the injury-in-fact plaintiff was required to show. Citing to the fairly recent case of Krottner v. Starbucks, the court found that the hypothetical threat of future harm due to a security risk to plaintiff’s personal information was insufficient to confer standing. The only basis on which the court found there to be a sufficient claim of injury to support standing was the (hard to believe) claim by plaintiff that he would have to spend $12,500 to pay a professional to remove the Path app and related data from his phone.

The Dismissed Claims

The court dismissed for failure to state a claim (with leave to amend) plaintiff’s claims under the Electronic Communications Privacy Act (ECPA), Stored Communications Act (SCA), California wiretapping statute, state common law privacy, conversion and trespass.

ECPA and California Wiretapping Statute Claim. The court dismissed the ECPA and California Wiretapping Statute claims, finding that the complaint did not allege that Path intercepted any communication contemporaneous with its transmission. At best (from plaintiff’s perspective), it appears that Path gathered information on social networking sites after it was transmitted. And the uploading of the address books does not appear to have qualified as a communication under these statutes.

SCA Claim. The SCA claim failed “on multiple fronts.” Plaintiff was not a provider of electronic communication services and his iPhone was not a facility through which such service was provided. So Path’s alleged access did not come within the prohibition of the SCA. Moreover, the address books were not communications to which the SCA applied, because they were not in “electronic storage” as defined by the SCA, namely, being in temporary, intermediate storage incidental to their electronic transmission. (We see a similar issue in the recent Jennings case from South Carolina.)

State Common Law Privacy. This claim would have required plaintiff to show (1) public disclosure (2) of private facts (3) which would be offensive and objectionable to the reasonable person and (4) which is not of legitimate public concern. The court found there was no public disclosure, only Path’s storage of data on its servers.

Conversion. Under California law, to be successful on a claim of conversion, plaintiff would have had to plead and prove “ownership or right to possession of property, wrongful disposition of the property right and damages.” The court dismissed this claim because plaintiff pled only that Path copied the data, not dispossessing him of it. (As an aside, it’s this very point that underscores my common admonition to copyright maximalists that infringement is not “theft,” because theft involves dispossession. End of digression.)

Trespass. The California common law action of trespass in the computer context requires a plaintiff to show that (1) defendant intentionally and without authorization interfered with plaintiff’s possessory interest in a computer system; and (2) defendant’s unauthorized use proximately resulted in damage to plaintiff. The tort “does not encompass … an electronic communication that neither damages the recipient computer system nor impairs its functioning.” Intel v. Hamidi, 30 Cal.4th 1342 (Cal. 2003). In this case, plaintiff did not allege that the functioning of his mobile device was significantly impaired to the degree that would enable him to plead the elements of a trespass. The court found that any depletion of his mobile device’s finite resources was a de minimis injury. (See the standing analysis above.)

The Remaining Claims

The claims for violations of the California Computer Crime Law, Californa’s Unfair Competition Law (Section 17200), negligence and unjust enrichment remain in the case.

California Computer Crime Law. Based on the limited briefing, the court could not conclude as a matter of law whether Path’s alleged conduct fell outside this statute. The question remains whether providing the app which plaintiff voluntarily downloaded and installed on his iPhone provided undisclosed software code that surreptitiously transferred plaintiff’s data.

Californa’s Unfair Competition Law. This statute prohibits “any unlawful, unfair or fraudulent business act or practice.” The court found that the conduct alleged in the complaint, if true, constituted an unlawful or unfair act or practice within the meaning of the statute. It found that plaintiff had failed to allege any fraudulent practice, but since plaintiff met the first two prongs (unlawfulness and unfairness), the claim survived.

Negligence. Plaintiff alleged that Path owed a duty to plaintiff to protect his personal information and data property and take reasonable steps to protect him from the wrongful taking of such information and the wrongful invasion of privacy. Path allegedly breached this duty by, among other things, accessing and uploading data from plaintiff’s phone, storing that data in an unsecure manner, and transmitting the data to third parties. Path relied on In re iPhone Application Litigation to argue it had no duty to plaintiff. In that decision, Judge Koh held that plaintiffs had not yet adequately pled or identified a legal duty on the part of Apple to protect users’ personal information from third-party app developers. This case was different because Path was a third party developer. Despite the existence of a duty, plaintiff’s claims of damages (here’s the $12,500 repair bill issue again) will likely face substantial challenges as the case progresses.

Unjust Enrichment. Path argued that unjust enrichment was not a cause of action under California law. The court cited to cases suggesting that California law does indeed recognize such a claim and kept in in this case.

Photo credit Flickr user stormwarning under this Creative Commons license.

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