Court Opinion

ID: 2998919
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:48:42.696573+00
Date Added: 2024-06-11T11:25:02.448850
License: Public Domain

In the
 United States Court of Appeals
                For the Seventh Circuit
                           ____________

No. 05-1522
INTERNATIONAL AIRPORT CENTERS, L.L.C., et al.,
                                                 Plaintiffs-Appellants,
                                   v.

JACOB CITRIN,
                                                   Defendant-Appellee.
                           ____________
              Appeal from the United States District Court
         for the Northern District of Illinois, Eastern Division.
              No. 03 C 8104—Wayne R. Andersen, Judge.
                           ____________
     ARGUED OCTOBER 24, 2005—DECIDED MARCH 8, 2006
                           ____________

  Before POSNER, WILLIAMS, and SYKES, Circuit Judges.
  POSNER, Circuit Judge. This appeal from the dismissal of
the plaintiffs’ suit for failure to state a claim mainly requires
us to interpret the word “transmission” in a key provision
of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030. The
complaint alleges the following facts, which for purposes of
deciding the appeal we must take as true. The defendant,
Citrin, was employed by the plaintiffs—affiliated companies
engaged in the real estate business that we’ll treat as one to
simplify the opinion, and call “IAC”—to identify properties
that IAC might want to acquire, and to assist in any ensuing
2                                                 No. 05-1522

acquisition. IAC lent Citrin a laptop to use to record data
that he collected in the course of his work in identifying
potential acquisition targets.
  Citrin decided to quit IAC and go into business for
himself, in breach of his employment contract. Before
returning the laptop to IAC, he deleted all the data in
it—not only the data that he had collected but also data that
would have revealed to IAC improper conduct in which he
had engaged before he decided to quit. Ordinarily, pressing
the “delete” key on a computer (or using a mouse click to
delete) does not affect the data sought to be deleted; it
merely removes the index entry and pointers to the data file
so that the file appears no longer to be there, and the space
allocated to that file is made available for future write
commands. Such “deleted” files are easily recoverable. But
Citrin loaded into the laptop a secure-erasure program,
designed, by writing over the deleted files, to prevent their
recovery. Thomas J. Fitzgerald, “Deleted But Not Gone:
Programs Help Protect Confidential Data by Making Disks
and Drives Unreadable,” New York Times (national ed.),
Nov. 3, 2005, p. C9. IAC had no copies of the files that Citrin
erased.
   The provision of the Computer Fraud and Abuse Act on
which IAC relies provides that whoever “knowingly
causes the transmission of a program, information, code,
or command, and as a result of such conduct, intentionally
causes damage without authorization, to a protected
computer [a defined term that includes the laptop that
Citrin used],” violates the Act. 18 U.S.C. § 1030(a)(5)(A)(i).
Citrin argues that merely erasing a file from a computer
is not a “transmission.” Pressing a delete or erase key in fact
transmits a command, but it might be stretching the statute
too far (especially since it provides criminal as well as civil
No. 05-1522                                                3

sanctions for its violation) to consider any typing on a
computer keyboard to be a form of “transmission” just
because it transmits a command to the computer.
   There is more here, however: the transmission of the
secure-erasure program to the computer. We do not
know whether the program was downloaded from the
Internet or copied from a floppy disk (or the equivalent of
a floppy disk, such as a CD) inserted into a disk drive that
was either inside the computer or attached to it by a wire.
Oddly, the complaint doesn’t say; maybe IAC doesn’t
know—maybe all it knows is that when it got the computer
back, the files in it had been erased. But we don’t see what
difference the precise mode of transmission can make. In
either the Internet download or the disk insertion, a pro-
gram intended to cause damage (not to the physical com-
puter, of course, but to its files—but “damage” includes
“any impairment to the integrity or availability of data, a
program, a system, or information,” 18 U.S.C. § 1030(e)(8))
is transmitted to the computer electronically. The only
difference, so far as the mechanics of transmission are
concerned, is that the disk is inserted manually before the
program on it is transmitted electronically to the computer.
The difference vanishes if the disk drive into which the disk
is inserted is an external drive, connected to the computer
by a wire, just as the computer is connected to the Internet
by a telephone cable or a broadband cable or wirelessly.
  There is the following contextual difference between the
two modes of transmission, however: transmission via
disk requires that the malefactor have physical access to the
computer. By using the Internet, Citrin might have erased
the laptop’s files from afar by transmitting a virus. Such
long-distance attacks can be more difficult to detect and
thus to deter or punish than ones that can have been made
4                                                 No. 05-1522

only by someone with physical access, usually an employee.
The inside attack, however, while easier to detect may also
be easier to accomplish. Congress was concerned with both
types of attack: attacks by virus and worm writers, on the
one hand, which come mainly from the outside, and attacks
by disgruntled programmers who decide to trash the
employer’s data system on the way out (or threaten to do so
in order to extort payments), on the other. If the statute is to
reach the disgruntled programmer, which Congress in-
tended by providing that whoever “intentionally accesses a
protected computer without authorization, and as a result
of such conduct, recklessly causes damage” violates the Act,
18 U.S.C. § 1030(a)(5)(A)(ii) (emphasis added), it can’t make
any difference that the destructive program comes on a
physical medium, such as a floppy disk or CD.
  Citrin violated that subsection too. For his authoriza-
tion to access the laptop terminated when, having already
engaged in misconduct and decided to quit IAC in violation
of his employment contract, he resolved to destroy files that
incriminated himself and other files that were also the
property of his employer, in violation of the duty of loyalty
that agency law imposes on an employee. United States v.
Galindo, 871 F.2d 99, 101 (9th Cir. 1989); Shurgard Storage
Centers, Inc. v. Safeguard Self Storage, Inc., 119 F. Supp. 2d
1121, 1124-25 (W.D. Wash. 2000); see Restatement (Second) of
Agency §§ 112, 387 (1958).
  Muddying the picture some, the Computer Fraud and
Abuse Act distinguishes between “without authorization”
and “exceeding authorized access,” 18 U.S.C. §§ 1030(a)(1),
(2), (4), and, while making both punishable, defines the
latter as “access[ing] a computer with authorization
and . . . us[ing] such access to obtain or alter information in
the computer that the accesser is not entitled so to obtain
No. 05-1522                                                   5

or alter.” § 1030(e)(6). That might seem the more apt
description of what Citrin did.
  The difference between “without authorization” and
“exceeding authorized access” is paper thin, see Pacific
Aerospace & Electronics, Inc. v. Taylor, 295 F. Supp. 2d 1188,
1196-97 (E.D. Wash. 2003), but not quite invisible. In EF
Cultural Travel BV v. Explorica, Inc., 274 F.3d 577, 583-84 (1st
Cir. 2001), for example, the former employee of a travel
agent, in violation of his confidentiality agreement with
his former employer, used confidential information that
he had obtained as an employee to create a program that
enabled his new travel company to obtain information from
his former employer’s website that he could not
have obtained as efficiently without the use of that con-
fidential information. The website was open to the public,
so he was authorized to use it, but he exceeded his au-
thorization by using confidential information to obtain
better access than other members of the public.
  Our case is different. Citrin’s breach of his duty of loyalty
terminated his agency relationship (more precisely, termi-
nated any rights he might have claimed as IAC’s agent—he
could not by unilaterally terminating any duties he owed
his principal gain an advantage!) and with it his authority
to access the laptop, because the only basis of his authority
had been that relationship. “Violating the duty of loyalty, or
failing to disclose adverse interests, voids the agency
relationship.” State v. DiGiulio, 835 P.2d 488, 492 (Ariz. App.
1992). “Unless otherwise agreed, the authority of the agent
terminates if, without knowledge of the principal, he
acquires adverse interests or if he is otherwise guilty of a
serious breach of loyalty to the principal.” Id.; Restatement,
supra, § 112; see also Shurgard Storage Centers, Inc. v. Safe-
guard Self Storage, Inc., supra, 119 F. Supp. 2d at 1123, 1125;
6                                                No. 05-1522

cf. Phansalkar v. Andersen Weinroth & Co., 344 F.3d 184, 201-
02 (2d Cir. 2003) (per curiam); Restatement, supra, § 409(1)
and comment b and illustration 2.
  Citrin points out that his employment contract authorized
him to “return or destroy” data in the laptop when he ceased
being employed by IAC (emphasis added). But it is unlikely,
to say the least, that the provision was intended to authorize
him to destroy data that he knew the company had no
duplicates of and would have wanted to have—if only to
nail Citrin for misconduct. The purpose of the provision
may have been to avoid overloading the company with
returned data of no further value, which the employee
should simply have deleted. More likely the purpose was
simply to remind Citrin that he was not to disseminate
confidential data after he left the company’s employ—the
provision authorizing him to return or destroy data in the
laptop was limited to “Confidential” information. There
may be a dispute over whether the incriminating files that
Citrin destroyed contained “confidential” data, but that
issue cannot be resolved on this appeal.
  The judgment is reversed with directions to reinstate
the suit, including the supplemental claims that the
judge dismissed because he was dismissing IAC’s fed-
eral claim.
                                 REVERSED AND REMANDED.
No. 05-1522                                             7

A true Copy:
       Teste:

                      _____________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit

                USCA-02-C-0072—3-8-06