Malcolm Gladwell in his essay “How David Beats Goliath” extolled the use of the full-court press in basketball: “In the world of basketball, there is one story after another … about legendary games where David used the full-court press to beat Goliath.”
Is there an equivalent in litigation with ex-employees?
Under the Computer Fraud and Abuse Act (“CFAA”), there is one possible equivalent. Broadly, the CFAA allows employers (as owners of computers and computer systems) to bring a civil claim against anyone who accesses its computers without authorization and, as a result, causes the owner loss of $5,000 or more.
First, there must be at least $5,000 in loss. But, look closely: CFAA defines loss as any “reasonable cost to any 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, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service.” 18 U.S.C. § 1030. This, in short, can include the cost of determining that there has been a misuse. Brown Jordan International, Inc. v. Carmicle, 846 F.3d 1167 (11th Cir. 2017) (holding that this dollar threshold is satisfied by the cost of retaining forensic specialists to determine the extent of the damage caused the company’s systems and to sweep the workplace for surveillance devices).
Second, the loss must result from the bad actor’s use “without authorization” or by “exceeding [his/her] authorized use.” 18 U.S.C. § 1030. Brown Jordan held that “without authorization” means that there was an absence of authority or permission conferred by the employer to the employee for the “use” in question, a construction shared by the 9th Circuit in U.S. v. Nosal, 828 F.3d 865 (9th Cir. 2016). Other courts have taken a broader approach. For example, the 7th Circuit has held that when an employee breaches his common law duty of loyalty to his employer, he is acting “without authorization.” Int’l Airport Centers v. Citrin, 440 F.3d. 418, 420 (7th Cir. 2006). The 5th Circuit has defined “without authorization” by virtue of the employer’s policies—such as those set forth in an employee handbook. See United States v. John, 597 F.3d 263, 272 (5th Cir. 2010).
Gladwell points out that a full court press hinges “on a willingness to try harder than anyone else.” CFAA claims are likewise not effortless. Such claims require proof not only of the dollar threshold but also of the fact of the misuse being unauthorized. A press is indeed hard work.
Under the Defense of Trade Secrets Act (“DTSA”), there is another potential equivalent.
The DTSA permits — in addition to actual damages — awarding the amount of any unjust enrichment the misappropriator experienced if such an amount is not covered by the actual damages. Plus, in the case of a willful or malicious breach , courts may award either double the actual loss and/or reasonable attorneys’ fees. This arsenal of remedies creates the equivalent impact of the full court press: “the ‘rush state’ in their opponents—that moment when the player with the ball is shaken out of his tempo.”
The $5,000,000 jury verdict in Dalmatia Import Group, Inc. v. FoodMatch Inc. et al, Case No. 16-cv-0276 (E.D. Pa 2017) illustrates this perfectly. There, Dalmatia brought claims for stealing the secret recipe for a proprietary fig spread. Though this dispute was among business partners, it is no different legally from situations in which the defendant is an ex-employee. The only difference, perhaps, would be that the in terrorem impact of a full court press of DTSA remedies may be higher there.
There is, however, a counterpoint. No strategy is automatic. Gladwell ends his essay on a sad note: the National Journal Basketball girls’ team from Redwood City that illustrated his essay lost in the third round after committing too many fouls–a classic hazard of an aggressive press. Is there an equivalent caveat for employers?
Sure. Employers are often tempted to raise CFAA or DTSA issues as counterclaims against ex-employees who have sued. Before doing so, there is an additional step of analysis to undertake: is this retaliatory? Even if an employer’s affirmative claim and/or counterclaim is colorable, it still may be retaliatory. See Spencer v. International Shoppes Inc., 902 F. Supp. 2d 287 (E.D.N.Y. 2012) (denying defendant’s motion for summary judgment as to plaintiff’s retaliation claim and finding that there was a material issue of fact as to whether claims brought against a former employee was motivated by retaliatory animus notwithstanding the validity of the suit).
Veteran basketball fans and coaches appreciate the fundamental rule of pressure defense: it can make diamonds but can also burst pipes. Choose carefully when, where, and how to apply pressure.