Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-5_05-cv-05179/USCOURTS-arwd-5_05-cv-05179-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Fraud

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IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

NILFISK-ADVANCE, INC. PLAINTIFF

v. Civil No. 05-5179

KEVIN MITCHELL DEFENDANT

O R D E R

Now on this 28th day of March, 2006, comes on for

consideration defendant’s Motion To Dismiss (document #6), and

from said motion, and the response thereto, the Court finds and

orders as follows:

1. Plaintiff Nilfisk-Advance, Inc. (“Nilfisk”) brings this

suit under the Computer Fraud and Abuse Act, 18 U.S.C. §1030 (the

“CFAA” or the “Act”). The gravamen of the Complaint is that

defendant Kevin Mitchell (“Mitchell”), an engineer developing

certain new products for Nilfisk, transmitted confidential

information and trade secrets from his work computer to his home

computer, with the intent of conveying that information to

Nilfisk’s competitors. State law claims for violation of the

Arkansas Trade Secrets Act and breach of contract are appended to

the federal claim.

2. Mitchell moves the Court to dismiss the federal claim

for failure to state a claim, pursuant to F.R.C.P. 12(b)(6), and

to dismiss the state law claims over which it has supplemental

jurisdiction pursuant to 28 U.S.C. §1367. Nilfisk objects to such

dismissal.

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3. It is well settled that a complaint should not be

dismissed under Rule 12(b)(6) unless - viewing the complaint in

the light most favorable to the plaintiff - it appears beyond

doubt that he can prove no set of facts in support of his claim

that would entitle him to relief. Krentz v. Robertson Fire

Protection District, 228 F.3d 897 (8th Cir. 2000).

Mitchell contends that he meets this high standard, in that

the factual allegations of the Complaint would not, even if

proven, establish a violation of the CFAA.

4. The Complaint specifically alleges that Mitchell

violated 18 U.S.C. §1030(a)(5)(B)(i), but in its briefing, Nilfisk

asserts that the factual allegations are sufficient to also put

Mitchell on notice of a claim under 18 U.S.C. §1030(a)(4). The

Court agrees with this proposition, and has so addressed the

issues.

5. While the CFAA is basically a criminal statute, it

provides a civil remedy, in the form of a suit for recovery of

economic damages and injunctive relief, against a person who

causes certain kinds of loss. 18 U.S.C. §1030(g).

The prohibited conduct alleged by Nilfisk falls into the

following categories established by the Act:

* that Mitchell knowingly, and with intent to defraud,

accessed a protected computer either without

authorization, or in excess of authorization, and

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thereby obtained something of value other than the use

of the computer itself (the §1030(a)(4) claim);

* that Mitchell knowingly caused the transmission of a

program, information, code, or command, and as a result,

intentionally caused damage, without authorization, to

a protected computer;

* that Mitchell intentionally accessed a protected

computer without authorization, and as a result of such

conduct, recklessly caused damage; or

* that Mitchell intentionally accessed a protected

computer without authorization, and as a result caused

damage.

The Act defines “protected computer” to include a computer

which is used in interstate or foreign commerce or communication.

18 U.S.C. §1030(e)(2). It defines the term “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). 

6. The factual allegations of the Complaint, as they go to

Nilfisk’s claim under the CFAA, may be briefly summarized as

follows:

* Mitchell worked for Nilfisk as a Project Engineer, in

which position he had access to proprietary and

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confidential technical data, design drawings, pictures,

and other information regarding an orbital scrubber

under development at Nilfisk. He was under a duty not

to disclose such information to anyone outside Nilfisk’s

organization without Nilfisk’s express authorization.

* On or about May 9, 2005, Mitchell submitted a letter to

Nilfisk’s Human Resources Manager, indicating

dissatisfaction with a performance review and an intent

to leave his employment as soon as he found other work.

* On his work computer’s hard drive, Mitchell had a number

of zip files pertaining to the orbital scrubber and to

another research project then under development, known

as the Encore 17 project. Zip files are files in a

compressed format primarily used to facilitate the

transmission of large quantities of data by e-mail or by

downloading to a portable storage device. The data in

zip files is not directly accessible.

* On May 10, 2005, Mitchell e-mailed to his personal email address numerous electronic documents and files

containing confidential information and trade secrets

relating to the orbital scrubber.

* On May 16, 2005, Mitchell was terminated.

* Following his termination, Mitchell was unwilling to

allow Nilfisk to conduct an unlimited inspection of his

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personal computer to ascertain whether it contained any

of Nilfisk’s confidential information.

* Nilfisk’s computers are used to communicate with

plaintiff’s offices, customers, and suppliers in other

states and countries, thus meeting the definition in the

CFAA for “protected computers.”

7. Mitchell contends that these allegations, even if

proven, would not constitute a violation of the CFAA because, at

all times when he accessed Nilfisk’s protected computers, he was

employed by Nilfisk and had authorization for such access. 

Nilfisk does not, however, allege that Mitchell had no

authority to access his computer at work, or that the data he

obtained went beyond what he was authorized to obtain. Instead,

it takes the position that Mitchell exceeded any authorization he

had when he e-mailed the files to his personal computer with the

alleged purpose of misappropriating the information contained in

them. Nilfisk points to its allegation that the zip files were

not in a form used by Mitchell at work, and that the transmission

occurred after Mitchell had decided to resign, as allegations that

Mitchell’s access exceeded such authorization as he had for use of

the data.

8. Taking the allegations of the Complaint as true, and

giving them the inferences favorable to Nilfisk, the Court

believes Nilfisk has stated a claim under the CFAA. In Shurgard

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Storage Centers, Inc. v. Safeguard Self Storage, Inc., 119

F.Supp.2d 1121 (W.D. Wash. 2000), the plaintiff was held to have

stated a CFAA claim on the allegation that an employee with

authorization to access files exceeded his authority when he

accessed the files for the purpose of sending information to his

employer’s competitor. In Personalized Brokerage Services, LLC,

v. Lucius, 2006 WL 208781 (D.Minn. 2006), the plaintiff was held

to have stated a CFAA claim on the allegation that an employee

used his company computer to set up competing companies, e-mail

competitors, distribute employer’s proprietary information to

software developers, and negotiate contracts to sell products to

employer’s competitors. The allegations here are of the same

nature.

IT IS THEREFORE ORDERED that defendant’s Motion To Dismiss

(document #6) is denied.

IT IS SO ORDERED.

 /s/ Jimm Larry Hendren 

JIMM LARRY HENDREN

UNITED STATES DISTRICT JUDGE

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