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Sageworks, Inc. v. Creatore

United States District Court, E.D. North Carolina, Western Division

February 15, 2017

SAGEWORKS, INC., Plaintiff,
v.
RONALD M. CREATORE, Defendant.

          ORDER

          TERRENCE W. BOYLE UNITED STATES DISTRICT JUDGE

         This cause comes before the Court on defendant's motions to dismiss plaintiffs claims and plaintiffs motion to dismiss defendant's counterclaims. The appropriate responses and replies have been filed and the motions are ripe for ruling. For the reasons discussed below, defendant's motions are denied and plaintiffs motion is granted in part.

         BACKGROUND

         Plaintiff filed this action against defendant, a former employee, in Wake County Superior Court alleging claims for violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, the Electronic Communications Privacy Act, 18 U.S.C. § 2511, and the Computer Related Crimes Act, N.C. Gen. Stat. § 14-458(a), as well as for breach of contract, misappropriation of trade secrets, unfair and deceptive trade practices, and breach of fiduciary duty. Defendant, proceeding pro se, removed plaintiffs complaint to this Court on the basis of its federal question jurisdiction. 28 U.S.C. §§ 1331; 1441.

         Plaintiff alleges that defendant was hired by plaintiff in May 2014 as Vice President of Operations & Finance and that defendant's employment was terminated in November 2014 for poor performance. Plaintiff alleges that upon his hiring as an employee defendant executed a business protection agreement in which defendant agreed to keep plaintiffs proprietary information confidential during the term of his employment and for five years following termination of his employment for any reason. Plaintiff alleges that defendant copied thousands of its proprietary documents and saved them to a personal Dropbox account and that defendant also set up a fraudulent scheme to divert executive level email communications to a personal email account.

         Plaintiff filed a motion for preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure seeking the return or restraint of defendant's use or dissemination of plaintiffs confidential information and documents containing personal information about plaintiffs employees. A hearing was held on the motion before the undersigned and the request for a preliminary injunction was granted. [DE 52; 54]. Plaintiff noticed an interlocutory appeal of the preliminary injunction but subsequently voluntarily dismissed his appeal. See Sageworks v. Creatore, No. 16-2118, (4th Cir. Oct. 25, 2016).

         Defendant now proceeds in this Court though duly admitted counsel. [DE 70 & 71]. Still pending for the Court's consideration are two motions to dismiss filed by defendant while proceeding pro se. In his first motion, defendant seeks dismissal of plaintiff s first claim for relief for failure to state a claim upon which relief could be granted. Fed R. Civ. P. 12(b)(6); [DE 6]. Defendant's second motion to dismiss seeks to dismiss plaintiffs fifth and sixth claims for relief as failing to state a claim. [DE 23]. Also pending is plaintiffs motion to dismiss counterclaims asserted in defendant's answer for failure to state a claim. [DE 91].

         DISCUSSION

         Rule 8 of the Federal Rules of Civil Procedure "requires only a short and plain statement of the claim showing that the pleader is entitled to relief and which provides "the defendant fair notice of what the claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal quotations, alterations, and citations omitted). A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Papasan v. Allain, 478 U.S. 265, 283 (1986). When acting on a motion to dismiss under Rule 12(b)(6), "the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). A complaint must allege enough facts to state a claim for relief that is facially plausible. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Facial plausibility means that the facts pled "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, " and mere recitals of the elements of a cause of action supported by conclusory statements do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint must be dismissed if the factual allegations do not nudge the plaintiffs claims "across the line from conceivable to plausible." Twombly, 550 U.S. at 570.

         I. Defendant's motions to dismiss

         In his first-filed motion defendant seeks to dismiss plaintiffs claim under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030. The CFAA is primarily a criminal statute, but it also provides for a private right of action for compensatory damages and equitable relief by someone who suffers damage or loss as a result of a violation of the statute. WEC Carolina Energy Sols. LLC v. Miller, 687 F.3d 199, 201 (4th Cir. 2012). "The CFAA is concerned with the unauthorized access of protected computers, " id. at 204, and prohibits intentional access of a computer without authorization or intentional access of a computer which exceeds authorization. 18 U.S.C. § 1030(a). In Miller, the Fourth Circuit held that an employee

accesses a computer "without authorization" when he gains admission to a computer without approval. Similarly, we conclude that an employee "exceeds authorized access" when he has approval to access a computer, but uses his access to obtain or alter information that falls outside the bounds of his approved access.

Miller, 687 F.3d at 204 (internal citation omitted). Here, plaintiff has alleged that defendant both accessed information without authorization and that he exceeded his authorized access to obtain information. [DE 1-1], Compl. ¶¶ 48; 88.

         Defendant contends that plaintiff has failed to state a plausible CFAA claim because plaintiff has only alleged that defendant violated the company policy or breached his contract, and, under Miller, such facts are insufficient to bring a claim under CFAA. The claim in Miller is distinguishable, however, as the facts alleged in that case supported only unauthorized use of company information, not unauthorized access. See Miller, 687 F.3d at 203 (noting that the "district court held that Appellees' alleged conduct-the violation of policies regarding the use and downloading of confidential information-did not contravene any of these provisions [of CFAA]" and holding that "WEC fails to allege that [defendants] accessed a computer or information on a computer without authorization."). Unlike in Miller, plaintiff has specifically alleged that defendant exceeded his access authorization or accessed information without authorization. For example, plaintiff alleges that defendant engaged in a scheme to fraudulently intercept emails from plaintiffs executive management. Compl. ...


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