Source: https://www.lawinsport.com/topics/articles/intellectual-property-law/item/cyber-espionage-hits-major-league-baseball-a-review-of-the-cardinals-chris-correa-case?category_id=124
Timestamp: 2019-04-26 00:23:32+00:00

Document:
When one thinks of cyber-espionage, images abound of young people with iridescent faces from the glow of computer screens, listening to metal music, and living in their parents’ basement hacking into banks and public systems for thrill, notoriety, and (sometimes) money. Such images are, of course, clichés.
Take Chris Correa: a well-educated baseball outsider in his thirties, who at one time was a doctoral candidate at the University of Michigan and who swiftly rose within the ranks of the St. Louis Cardinals’ front office to become its Scouting Director in late 2014. In 2016, Correa admitted to engaging in cyber-espionage against the Astros, pleading guilty to five counts of federal unauthorized access of a protected computer in violation of 18 U.S.C. 1030(a)(2)(C) & (c)(2)(B)(iii). Then, in January 2017, after concluding his investigation of Correa’s conduct, Major League Baseball (MLB) Commissioner Robert D. Manfred, Jr. banned Correa from the MLB, stripped the Cardinals of their top two 2017 draft picks (awarding them to the Astros), and ordered the Cardinals to pay the Astros $2 million.
In late 2011, two Cardinals employees left to join the Astros -- Jeff Luhnow and Sig Mejdal. “Mejdal was one of Correa’s rivals” who worked with Correa in the Cardinal’s analytics department and now headed up the same department for the Astros. Luhnow became the Astros’ general manager.
In 2014, the rivalry between Correa and Mejdal intensified after Sports Illustrated praised Mejdal and Luhnow, predicting the Astros would win the 2017 World Series. With the intensified rivalry came continued hacking by Correa.
When the dust settled, the Astros had suffered financial and reputational loss. The Cardinals terminated Correa in July 2015. In December of that year, the Government charged Correa with five counts of Unauthorized Access of a Protected Computer in violation of 18 U.S.C. 1030(a)(2)(C) & (c)(2)(B)(iii). Correa pled guilty and was sentenced to 46 months in federal prison.
The Astros filed a claim with the Office of the Commissioner pursuant to Article VI of the Major League Constitution. The claim sought compensation from the Cardinals for Correa’s conduct.
The MLB Commissioner’s investigation followed.
All disputes between Major League clubs must be arbitrated, subject to a few exceptions. In such situations, the Commissioner shall serve as the arbitrator and his decision is final and non-appealable. In fact, the clubs agree on behalf of themselves and their officers, directors, and employees, “to be finally and unappealably bound by actions of the Commissioner” and waive the right to litigate any dispute in court.
On January 30, 2017, the Commissioner issued his decision on the hacking investigation. The Commissioner’s Order provided only a summary of his findings and decision, given the breadth and complexity of the investigation and to avoid disclosure of the Astros’ confidential and proprietary information.
The Commissioner made three findings.
Mr. Correa will be immediately placed on the “permanently ineligible list."
The Commissioner’s decision did not reveal co-conspirators within the Cardinals club. Thus, under the decision, the entire club was not implicated in a larger conspiracy.
That being said, by ordering the Cardinals to forfeit to the Astros their top two 2017 draft picks and pay the Astros $2 million, the Commissioner made clear that even absent a larger conspiracy, the Cardinals club should be punished for Correa’s wrongful conduct. The Commissioner did so by finding the Cardinals vicariously liable for Correa’s conduct pursuant to MLB policy.
The Commissioner’s punishment of the Cardinals for Correa’s conduct, without citing evidence of a larger conspiracy or evidence that anyone in the Cardinals’ front office knew he had hacked the Astros’ electronic systems, has received mixed reactions. Some commentators characterize the punishment as harsh, while others conclude that the Cardinals “got off easy.” The former recognize that the $2 million sanction is relatively high. The latter, however, recognize that the order that the Cardinals forfeit their top two 2017 draft picks lacks teeth because the Cardinals had already surrendered their first round selection (pick #19) in the 2017 draft by signing free agent Dexter Fowler and were able to maximize their 2016 draft picks (given that the federal criminal case against Correa was still pending).
No matter the opinions on the punishment’s fairness, the fact remains that the Cardinals organization was punished, as a matter of MLB policy, for the wrongful acts of a single employee found to be acting alone.
This article is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting an attorney. Any views expressed herein are those of the author and not necessarily those of the law firm’s clients.
 Press Release, ‘Cardinals Name Chris Correa Director of Scouting,’ 2 Dec. 2014, https://m.mlb.com/news/article/102965844/cardinals-name-chris-correa-director-of-scouting/ (accessed 17 Feb. 2017).
 Correa Plea Agreement, at p. 1, 7 https://www.justice.gov/opa/file/811951/download (accessed 16 Feb. 2017).
 Commissioner’s Jan. 30, 2017 Order, at p. 3 https://courthousenews.com/wp-content/uploads/2017/01/HackingMLB.pdf (accessed 16 Feb. 2017).
 Press Release, ‘Cardinals Name Chris Correa Director of Scouting,’ 2 Dec. 2014, https://m.mlb.com/news/article/102965844/cardinals-name-chris-correa-director-of-scouting/ (accessed 17 Feb. 2017); see also Correa Plea Agreement, at p.7 https://www.justice.gov/opa/file/811951/download (accessed 16 Feb. 2017).
 Jenifer Langosch, ‘Scouting Director Correa Impressing GM, Staff Alike,’ 28 May 2015 https://m.mlb.com/news/article/127187978/cardinals-director-of-scouting-chris-correa-impressing-gm-staff-alike/ (accessed 17 Feb. 2017).
 Correa Plea Agreement, at p.7 https://www.justice.gov/opa/file/811951/download (accessed 16 Feb. 2017); Lindsey Adler, ‘Feds: Cardinals Hacker Probably Leaked to Deadspin As Revenge for Astros’ Sports Illustrated Cover,’ 30 Jan 2017 https://deadspin.com/feds-cardinals-hacker-probably-leaked-to-deadspin-as-r-1791778599 (accessed 17 Feb. 2017); Redacted Government Sentencing Report, Docket No. 45-2 (available through Pacer.gov), United States v. Chris Correa, United States District Court for the Southern District of Texas, Case No. 4:15-cr-00679 (available through Pacer.gov).
 Redacted Government Sentencing Report, Docket No. 45-2, United States v. Chris Correa, United States District Court for the Southern District of Texas, Case No. 4:15-cr-00679 (available through Pacer.gov).
 Correa Plea Agreement, at p.7 https://www.justice.gov/opa/file/811951/download (accessed 16 Feb. 2017).
 Correa Plea Agreement, at p.8 https://www.justice.gov/opa/file/811951/download (accessed 16 Feb. 2017).
 Correa Plea Agreement, at p.10 https://www.justice.gov/opa/file/811951/download (accessed 16 Feb. 2017).
 Redacted Government Sentencing Report, Docket No. 45-2 at p.4, United States v. Chris Correa, United States District Court for the Southern District of Texas, Case No. 4:15-cr-00679 (available through Pacer.gov).
 Redacted Government Sentencing Report, Docket No. 45-2 at pp. 4-6, United States v. Chris Correa, United States District Court for the Southern District of Texas, Case No. 4:15-cr-00679 (available through Pacer.gov).
 Redacted Government Sentencing Report, Docket No. 45-2 at p. 6, United States v. Chris Correa, United States District Court for the Southern District of Texas, Case No. 4:15-cr-00679 (available through Pacer.gov).
 Commissioner’s Jan. 30, 2017 Order, at p. 2 https://courthousenews.com/wp-content/uploads/2017/01/HackingMLB.pdf (accessed 16 Feb. 2017).
 Information, Docket No. 1 at pp. 4-5, United States v. Chris Correa, United States District Court for the Southern District of Texas, Case No. 4:15-cr-00679.
 Commissioner’s Jan. 30, 2017 Order, at p. 1 https://courthousenews.com/wp-content/uploads/2017/01/HackingMLB.pdf (accessed 16 Feb. 2017).
 Major League Constitution at Art. VI, Docket No. 35-2, City of San Jose v. Office of the Commissioner of Baseball, United States District Court for the Northern District of California, Case No. 5:13-cv-02787-RMW (Available through Pacer.gov).
 Major League Constitution at Art. II, Docket No. 35-2, City of San Jose v. Office of the Commissioner of Baseball, United States District Court for the Northern District of California, Case No. 5:13-cv-02787-RMW (Available through Pacer.gov).
 Major League Constitution at Art. II, Sec. 2(b), Docket No. 35-2, City of San Jose v. Office of the Commissioner of Baseball, United States District Court for the Northern District of California, Case No. 5:13-cv-02787-RMW (Available through Pacer.gov).
 Major League Constitution at Art. II, Sec. 2(c), Docket No. 35-2, City of San Jose v. Office of the Commissioner of Baseball, United States District Court for the Northern District of California, Court Case No. 5:13-cv-02787-RMW (Available through Pacer.gov).
 Major League Constitution at Art. II, Sec. 3, Docket No. 35-2, City of San Jose v. Office of the Commissioner of Baseball, United States District Court for the Northern District of California, Case No. 5:13-cv-02787-RMW (Available through Pacer.gov).
 Commissioner’s Jan. 30, 2017 Order, https://courthousenews.com/wp-content/uploads/2017/01/HackingMLB.pdf (accessed 16 Feb. 2017).
 See Mike Axisa, ‘We Now Know Extent of Cardinals Hack and the Unprecedented Penalties from MLB,’ 30 Jan. 2017 https://www.cbssports.com/mlb/news/we-now-know-extent-of-cardinals-hack-and-the-unprecedented-penalties-from-mlb/ (accessed 17 Feb. 2017).
 See Mark Saxon, ‘Cardinal Get Off Light with Hacking Scandal Penalties,’ 30 Jan. 2017 https://www.espn.com/blog/st-louis-cardinals/post/_/id/2828/cardinals-get-off-light-with-hacking-scandal-penalties (accessed 17 Feb. 2017).
 ‘Statement from Chris Correa,’ 31 Jan. 2017, https://www.stltoday.com/sports/baseball/statement-from-chris-correa/article_2e5d592f-ce66-5da9-af74-a85da43dcf6d.html; ‘Chris Correa Still Alleges Astros First Stole Information from Cardinals,’ 31 Jan. 2017 https://www.espn.com/mlb/story/_/id/18592311/chris-correa-maintains-allegations-houston-astros-first-stole-information-st-louis-cardinals (accessed 17 Feb. 2017).
Christina Goodrich is a US partner in K&L Gates’ Global Sports Practice and a litigation partner in the firm’s Los Angeles office.
After law school, Ms. Goodrich was a judicial law clerk for the Honorable R. Gary Klausner in the United States District Court for the Central District of California.
Nolan Thomas is a corporate associate in the firm’s Los Angeles office. His practice focuses on general corporate and securities law, including mergers and acquisitions, corporate governance, project finance, real estate, and other regulatory compliance matters. Mr. Thomas advises renewable energy companies and investors in corporate, project development, and financing matters. He has represented electric automakers, solar power providers, and renewable energy project developers in acquisitions, asset sales, and development agreements. Mr. Thomas also has experience representing creditors in restructuring and insolvency matters.

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