A Novel Claim Against Departed Disloyal Employees

A Novel Claim Against Departed Disloyal Employees

       A recent decision out of Alabama considered and, at least for purposes of a motion to dismiss, allowed to stand allegations brought against disloyal employees based upon federal and state of the computer fraud laws. Sunil Jupta, M.D., LLC v. Franklin, Civ. Act. No. 17-00335-N, 2017 WL 5196392 (S.D. Ala. Nov. 9, 2017).

      Franklin, a former member of the LLC, identified in the opinion by its assumed name RSI (incorrectly identified as being a “Delaware limited liability corporation”), left for employment with another venture. Thereafter, Wilson and Payton applied for employment with that same new company. As set forth in the complaint:

Before resigning from employment with RSI, “… Franklin instructed Wilson and Payton to download confidential RSI patient data from RSI’s practice management system on a portable hard drive provided by Franklin.”

      Again, as alleged in the complaint, Wilson and Payton proceeded to do exactly that. In response, the plaintiff brought an action against the defendants charging them with violation of the Computer Fraud and Abuse Act (18 U.S.C. § 1030) and the Alabama Digital Crime Act (Ala. Code § 13 A-8-112).

      The balance of the decision is focused upon whether there exist a private cause of action under either of these statutes and whether the necessary elements had been satisfied by the conduct of Franklin/Wilson/Payton. Ultimately the court found that they were.

      I review this case only because the use of these computer crime statutes creates an interesting opportunity for plaintiffs who charge that disloyal employees/officers downloaded company information before departing for a new venture. Doing so has always been improper as a breach of the fiduciary duties imposed upon officers and employees. These statutes create an additional path of imposing liability.