1. by Robert B. Fitzpatrick, Esq. Robert B. Fitzpatrick, PLLC Universal Building South 1825 Connecticut Avenue, N.W. Suite 640 Washington, D.C. 20009-5728 (202) 588-5300 (202) 588-5023 (fax) fitzpatrick.law@verizon.net (e-mail) http://www.robertbfitzpatrick.com (website) Employee Misconduct: Employer Claims and Counterclaims

2. DISCLAIMER OF ALL LIABILITY AND RESPONSIBILITY THE INFORMATION CONTAINED HEREIN IS BASED UPON SOURCES BELIEVED TO BE ACCURATE AND RELIABLE – INCLUDING SECONDARY SOURCES. DILIGENT EFFORT WAS MADE TO ENSURE THE ACCURACY OF THESE MATERIALS, BUT THE AUTHOR ASSUMES NO RESPONSIBILITY FOR ANY READER’S RELIANCE ON THEM AND ENCOURAGES READERS TO VERIFY ALL ITEMS BY REVIEWING PRIMARY SOURCES WHERE APPROPRIATE AND BY USING TRADITIONAL LEGAL RESEARCH TECHNIQUES TO ENSURE THAT THE INFORMATION HAS NOT BEEN AFFECTED OR CHANGED BY RECENT DEVELOPMENTS. THIS PAPER IS PRESENTED AS AN INFORMATIONAL SOURCE ONLY. IT IS INTENDED TO ASSIST READERS AS A LEARNING AID; IT DOES NOT CONSTITUTE LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE. IT IS NOT WRITTEN (NOR IS IT INTENDED TO BE USED) FOR PURPOSES OF ASSISTING CLIENTS, NOR TO PROMOTE, MARKET, OR RECOMMEND ANY TRANSACTION OR MATTER ADDRESSED; AND, GIVEN THE PURPOSE OF THE PAPER, IT MAY OMIT DISCUSSION OF EXCEPTIONS, QUALIFICATIONS, OR OTHER RELEVANT INFORMATION THAT MAY AFFECT ITS UTILITY IN ANY LEGAL SITUATION. THIS PAPER DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN THE AUTHOR AND ANY READER. DUE TO THE RAPIDLY CHANGING NATURE OF THE LAW, INFORMATION CONTAINED IN THIS PAPER MAY BECOME OUTDATED. IN NO EVENT WILL THE AUTHOR BE LIABLE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, OR OTHER DAMAGES RESULTING FROM AND/OR RELATED TO THE USE OF THIS MATERIAL.

3. Computer Fraud and Abuse Act 18 U.S.C. § 1030 Computer Fraud and Abuse Act 18 U.S.C. § 1030 Overview Establishes civil liability for anyone who “[k]nowingly and with the intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud or obtains anything of value.” 18 U.S.C. § 1030(a)(4). Establishes civil liability for anyone who “[k]nowingly and with the intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud or obtains anything of value.” 18 U.S.C. § 1030(a)(4). While the Act’s original purpose was to punish computer hackers, particularly those who attack computers used for compelling federal interests (e.g., computers used by the federal government, large financial institutions, etc.), employers in recent years have increasingly been using the Act to sue employees and former employees who make wrongful use of the employer’s computer system. While the Act’s original purpose was to punish computer hackers, particularly those who attack computers used for compelling federal interests (e.g., computers used by the federal government, large financial institutions, etc.), employers in recent years have increasingly been using the Act to sue employees and former employees who make wrongful use of the employer’s computer system. Employers have been able to successfully hold employees and former employees liable under the Act for actions such as retaining or wrongfully accessing the employer’s computer systems or electronic documents without proper authorization. Employers have been able to successfully hold employees and former employees liable under the Act for actions such as retaining or wrongfully accessing the employer’s computer systems or electronic documents without proper authorization.

4. Computer Fraud and Abuse Act 18 U.S.C. § 1030 Computer Fraud and Abuse Act 18 U.S.C. § 1030 Scope of Employees’ “Authorization” to Access Employer’s Electronic Files under the Act A current CFAA hot topic is a recently developed circuit split as to whether the Act should be interpreted broadly or narrowly when an employer claims an ex-employee has acted “without authorization” or has “exceeded authorization” in accessing computer-stored information prior to termination of employment. A current CFAA hot topic is a recently developed circuit split as to whether the Act should be interpreted broadly or narrowly when an employer claims an ex-employee has acted “without authorization” or has “exceeded authorization” in accessing computer-stored information prior to termination of employment. – The narrower view, which has garnered significant support, can be illustrated by the 9 th Circuit’s holding in LVRC Holdings LLC v. Brekka, 581, F.3d 1127 (9 th Cir. 2009), where the Court rejected the employer’s argument that an employee accesses electronic documents without “authorization” when the employee acts contrary to the employer’s interest or in breach of the employee’s fiduciary obligation of loyalty to the employer. Rather, where the employee’s actions are consistent with the access previously granted to him as an employee, the Court held that the employee acts with proper “authorization” within the meaning of the Act. – The broader view, which has proven thus far to be the minority view, can be illustrated by the 7th Circuit’s decision in International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7 th Cir. 2006), where the Court held that an employee can be found to have accessed a computer “without authorization,” whenever he does so in breach of his duty of loyalty to the company.

5. Computer Fraud and Abuse Act 18 U.S.C. § 1030 Computer Fraud and Abuse Act 18 U.S.C. § 1030 Articles and Other Sources David Johnson, “Update on CFAA Circuit Split: District Courts in 8 th Circuit Adopt Minority View, Permitting Claims Where Defendant Exceeds His Authority to Access Computer”, November 16, 2009, available at http://www.digitalmedialawyerblog.com/2009/11/update_on_cfaa_circuit_split_d.html David Johnson, “Update on CFAA Circuit Split: District Courts in 8 th Circuit Adopt Minority View, Permitting Claims Where Defendant Exceeds His Authority to Access Computer”, November 16, 2009, available at http://www.digitalmedialawyerblog.com/2009/11/update_on_cfaa_circuit_split_d.html http://www.digitalmedialawyerblog.com/2009/11/update_on_cfaa_circuit_split_d.html David Conforto, “Employees Beware: Computer Fraud & Abuse May Restrict Ability to Retain Documents”, November 5, 2009, available at http://www.bostonemploymentlawyerblog.com/2009/11/computer_fraud_and_abuse_act_b.html.David Conforto, “Employees Beware: Computer Fraud & Abuse May Restrict Ability to Retain Documents”, November 5, 2009, available at http://www.bostonemploymentlawyerblog.com/2009/11/computer_fraud_and_abuse_act_b.html. http://www.bostonemploymentlawyerblog.com/2009/11/computer_fraud_and_abuse_act_b.html Amy E. Bivins, “Attorneys Advise Employers to Revisit Data Misuse Policies After Brekka Ruling”, November 4, 2009, available at http://www.tradesecretslaw.com/uploads/file/110409%20DailyLaborReport.pdf Amy E. Bivins, “Attorneys Advise Employers to Revisit Data Misuse Policies After Brekka Ruling”, November 4, 2009, available at http://www.tradesecretslaw.com/uploads/file/110409%20DailyLaborReport.pdf http://www.tradesecretslaw.com/uploads/file/110409%20DailyLaborReport.pdf Kenneth J. Vanko, “Two Views of the Computer Fraud and Abuse Act (Brekka and Pullen), October 30, 2009, available at http://www.non-competes.com/2009/10/two-views-of-computer- fraud-and-abuse.html Kenneth J. Vanko, “Two Views of the Computer Fraud and Abuse Act (Brekka and Pullen), October 30, 2009, available at http://www.non-competes.com/2009/10/two-views-of-computer- fraud-and-abuse.htmlhttp://www.non-competes.com/2009/10/two-views-of-computer- fraud-and-abuse.htmlhttp://www.non-competes.com/2009/10/two-views-of-computer- fraud-and-abuse.html Robert B. Milligan and Carolyn E. Sieve, “Establishing CFAA Violations by Former Employees”, October 27, 2009, available at http://www.tradesecretslaw.com/uploads/file/Establishing%20CFAA%20Violations%20- %20Law%20360.pdf Robert B. Milligan and Carolyn E. Sieve, “Establishing CFAA Violations by Former Employees”, October 27, 2009, available at http://www.tradesecretslaw.com/uploads/file/Establishing%20CFAA%20Violations%20- %20Law%20360.pdf http://www.tradesecretslaw.com/uploads/file/Establishing%20CFAA%20Violations%20- %20Law%20360.pdf http://www.tradesecretslaw.com/uploads/file/Establishing%20CFAA%20Violations%20- %20Law%20360.pdf

6. Computer Fraud and Abuse Act 18 U.S.C. § 1030 Computer Fraud and Abuse Act 18 U.S.C. § 1030 Articles and Other Sources (cont’d) David Johnson, “LVRC v. Brekka: 9 th Circuit Decision Creates Circuit Split on Whether CFAA Applies to an Employee Who Misuses His Authority to Access His Employer’s Computer Files”, October 1, 2009, available at http://www.digitalmedialawyerblog.com/2009/10/lvrc_v_brekka_9th_circuit_deci.html David Johnson, “LVRC v. Brekka: 9 th Circuit Decision Creates Circuit Split on Whether CFAA Applies to an Employee Who Misuses His Authority to Access His Employer’s Computer Files”, October 1, 2009, available at http://www.digitalmedialawyerblog.com/2009/10/lvrc_v_brekka_9th_circuit_deci.html http://www.digitalmedialawyerblog.com/2009/10/lvrc_v_brekka_9th_circuit_deci.html Lori Bauman, “Ninth Circuit Narrowly Interprets Computer Fraud and Abuse Act”, September 24, 2009, available at http://www.aterwynneblog.com/oregon_business_litigatio/2009/09/ninth-circuit- narrowly-interprets-computer-fraud-and-abuse-act.html Lori Bauman, “Ninth Circuit Narrowly Interprets Computer Fraud and Abuse Act”, September 24, 2009, available at http://www.aterwynneblog.com/oregon_business_litigatio/2009/09/ninth-circuit- narrowly-interprets-computer-fraud-and-abuse-act.htmlhttp://www.aterwynneblog.com/oregon_business_litigatio/2009/09/ninth-circuit- narrowly-interprets-computer-fraud-and-abuse-act.htmlhttp://www.aterwynneblog.com/oregon_business_litigatio/2009/09/ninth-circuit- narrowly-interprets-computer-fraud-and-abuse-act.html David Johnson, “ES&H v. Allied Safety: Court Sidesteps Split in Authority over Whether CFAA Applies to an Employee Who Misuses His Authority to Access His Employer’s Computer Files”, September 24, 2009, available at http://www.digitalmedialawyerblog.com/2009/09/esh_v_allied_safety_court_side_1.htmlDavid Johnson, “ES&H v. Allied Safety: Court Sidesteps Split in Authority over Whether CFAA Applies to an Employee Who Misuses His Authority to Access His Employer’s Computer Files”, September 24, 2009, available at http://www.digitalmedialawyerblog.com/2009/09/esh_v_allied_safety_court_side_1.html http://www.digitalmedialawyerblog.com/2009/09/esh_v_allied_safety_court_side_1.html Amy E. Bivens, “Brekka Case Shows Need for Comprehensive Strategy to Shield Data from Insider Misuse”, September 20, 2009, available at http://www.tradesecretslaw.com/uploads/file/Sieve.pdf Amy E. Bivens, “Brekka Case Shows Need for Comprehensive Strategy to Shield Data from Insider Misuse”, September 20, 2009, available at http://www.tradesecretslaw.com/uploads/file/Sieve.pdf http://www.tradesecretslaw.com/uploads/file/Sieve.pdf Roy Ginsburg, “When Workers Steal Data to Use at New Jobs”, August 5, 2009, available at http://www.quirkyemploymentquestions.com/qq/blog.aspx?entry=310 Roy Ginsburg, “When Workers Steal Data to Use at New Jobs”, August 5, 2009, available at http://www.quirkyemploymentquestions.com/qq/blog.aspx?entry=310 http://www.quirkyemploymentquestions.com/qq/blog.aspx?entry=310

7. Faithless Servant Doctrine Faithless Servant Doctrine Overview A New York State common law doctrine under which employers may refuse to pay employees for the time the employees were unfaithful to their duties. A New York State common law doctrine under which employers may refuse to pay employees for the time the employees were unfaithful to their duties. Courts have gone so far as to rule that employees must forfeit all compensation received after their first disloyal act. See, e.g., Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184 (2d Cir. 2003) (applying New York law). Courts have gone so far as to rule that employees must forfeit all compensation received after their first disloyal act. See, e.g., Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184 (2d Cir. 2003) (applying New York law). Of particular note to attorneys practicing outside of New York – while the doctrine originated in and is primarily applied in the New York State court system, other courts (whether applying New York law or the law of another jurisdiction) have occasionally applied the doctrine, at least to some extent. Of particular note to attorneys practicing outside of New York – while the doctrine originated in and is primarily applied in the New York State court system, other courts (whether applying New York law or the law of another jurisdiction) have occasionally applied the doctrine, at least to some extent.

8. Faithless Servant Doctrine Faithless Servant Doctrine Representative New York Cases Original New York Case Establishing the Doctrine: Original New York Case Establishing the Doctrine: – Murray v. Beard, 102 N.Y. 505 (1886) A Sampling of Recent Cases Applying the Doctrine under New York law: A Sampling of Recent Cases Applying the Doctrine under New York law: – William Floyd Union Free Sch. Dist. v. Wright, 61A.D.3d 856 (N.Y. 2009) – Design Strategy, Inc. v. Davis, 469 F.3d 284 (2d Cir. 2006) (applying New York law) – Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184 (2d Cir. 2003) (applying New York law) – South Pierre Assocs. v. Meyers, 12 Misc.3d 955 (Civ. Nt. N.Y. Cty. 2006)

9. Faithless Servant Doctrine Faithless Servant Doctrine Acceptance of the Doctrine in Other Jurisdictions States Following Some Form of the Doctrine: States Following Some Form of the Doctrine: – California – D.C. States Taking an Intermediate Approach: States Taking an Intermediate Approach: – Massachusetts – Delaware – Pennsylvania – New Jersey – Texas States Largely Rejecting the Doctrine’s Approach: States Largely Rejecting the Doctrine’s Approach: – Connecticut – Florida – Alaska – Hawaii – Rhode Island For a detailed explanation of these various state rules, and for citations to supporting case law, see Mark A. Jacoby, “Disloyalty Doesn’t Pay: New York’s ‘Faithless Servant’ Doctrine”, March 2004, available at http://www.weil.com/news/pubdetail.aspx?pub=8640 For a detailed explanation of these various state rules, and for citations to supporting case law, see Mark A. Jacoby, “Disloyalty Doesn’t Pay: New York’s ‘Faithless Servant’ Doctrine”, March 2004, available at http://www.weil.com/news/pubdetail.aspx?pub=8640 http://www.weil.com/news/pubdetail.aspx?pub=8640

10. Faithless Servant Doctrine Faithless Servant Doctrine Articles and Other Sources Harvey Randall, “Applying the Faithless Servant Doctrine, Employer Does Not Have to Pay Benefits to Former Employees Found Guilty of Embezzling”, February 3, 2010, available at http://publicpersonnellaw.blogspot.com/2010/02/applying-faithless-servant- doctrine.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot% 2FIlee+(New+York+Public+Personnel+Law) Harvey Randall, “Applying the Faithless Servant Doctrine, Employer Does Not Have to Pay Benefits to Former Employees Found Guilty of Embezzling”, February 3, 2010, available at http://publicpersonnellaw.blogspot.com/2010/02/applying-faithless-servant- doctrine.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot% 2FIlee+(New+York+Public+Personnel+Law) http://publicpersonnellaw.blogspot.com/2010/02/applying-faithless-servant- doctrine.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot% 2FIlee+(New+York+Public+Personnel+Law) http://publicpersonnellaw.blogspot.com/2010/02/applying-faithless-servant- doctrine.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot% 2FIlee+(New+York+Public+Personnel+Law) Workplace Prof Blog, “More on Faithless Servants”, January 29, 2010, available at http://lawprofessors.typepad.com/laborprof_blog/2010/01/more-on-faithless-servants.html Workplace Prof Blog, “More on Faithless Servants”, January 29, 2010, available at http://lawprofessors.typepad.com/laborprof_blog/2010/01/more-on-faithless-servants.html http://lawprofessors.typepad.com/laborprof_blog/2010/01/more-on-faithless-servants.html Workplace Prof Blog, “Of Faithless Servants and Efficient Breaches”, January 28, 2010, available at http://lawprofessors.typepad.com/laborprof_blog/2010/01/of-faithless-servants-and-efficient- breaches.html Workplace Prof Blog, “Of Faithless Servants and Efficient Breaches”, January 28, 2010, available at http://lawprofessors.typepad.com/laborprof_blog/2010/01/of-faithless-servants-and-efficient- breaches.htmlhttp://lawprofessors.typepad.com/laborprof_blog/2010/01/of-faithless-servants-and-efficient- breaches.htmlhttp://lawprofessors.typepad.com/laborprof_blog/2010/01/of-faithless-servants-and-efficient- breaches.html Andre G. Castaybert, “NY Faithless Servant Doctrine”, November 11, 2009, available at http://blog.golawintl.com/2009/11/11/ny-faithless-servant-doctrine/ Andre G. Castaybert, “NY Faithless Servant Doctrine”, November 11, 2009, available at http://blog.golawintl.com/2009/11/11/ny-faithless-servant-doctrine/ http://blog.golawintl.com/2009/11/11/ny-faithless-servant-doctrine/ Chaya F. Weinberg-Brodt, “The Faithless Servant Doctrine in New York State”, March 24, 2009, available at http://www.withersworldwide.com/news-publications/504/the-faithless-servant- doctrine-new-york-state.aspx Chaya F. Weinberg-Brodt, “The Faithless Servant Doctrine in New York State”, March 24, 2009, available at http://www.withersworldwide.com/news-publications/504/the-faithless-servant- doctrine-new-york-state.aspxhttp://www.withersworldwide.com/news-publications/504/the-faithless-servant- doctrine-new-york-state.aspxhttp://www.withersworldwide.com/news-publications/504/the-faithless-servant- doctrine-new-york-state.aspx Tal Marnin, “United States Court of Appeals Clarifies the Forfeiture Remedies Available Under the “Faithless Servant” Doctrine in New York”, July 2007, available at http://www.whitecase.com/ecbelfocus_0707_3/ Tal Marnin, “United States Court of Appeals Clarifies the Forfeiture Remedies Available Under the “Faithless Servant” Doctrine in New York”, July 2007, available at http://www.whitecase.com/ecbelfocus_0707_3/ http://www.whitecase.com/ecbelfocus_0707_3/

11. Faithless Servant Doctrine Faithless Servant Doctrine Articles and Other Sources (cont’d) Ronald Minkoff, “Suing Disloyal Employees & Agents: Court Gives Employers a Powerful New Weapon”, April 2004, available at http://www.fkkslaw.com/newsletter.asp?pageID=2&newsletterID=3 Ronald Minkoff, “Suing Disloyal Employees & Agents: Court Gives Employers a Powerful New Weapon”, April 2004, available at http://www.fkkslaw.com/newsletter.asp?pageID=2&newsletterID=3 http://www.fkkslaw.com/newsletter.asp?pageID=2&newsletterID=3 Mark A. Jacoby, “Disloyalty Doesn’t Pay: New York’s ‘Faithless Servant’ Doctrine”, March 2004, available at http://www.weil.com/news/pubdetail.aspx?pub=8640 Mark A. Jacoby, “Disloyalty Doesn’t Pay: New York’s ‘Faithless Servant’ Doctrine”, March 2004, available at http://www.weil.com/news/pubdetail.aspx?pub=8640http://www.weil.com/news/pubdetail.aspx?pub=8640 Stephen M. Bainbridge, “The Faithless Servant Doctrine and Partner (or Agent) Compensation”, November 9, 2003, available at http://www.professorbainbridge.com/professorbainbridgecom/2003/11/the-faithless-servant- doctrine-and-partner-or-agent-compensation.html Stephen M. Bainbridge, “The Faithless Servant Doctrine and Partner (or Agent) Compensation”, November 9, 2003, available at http://www.professorbainbridge.com/professorbainbridgecom/2003/11/the-faithless-servant- doctrine-and-partner-or-agent-compensation.html http://www.professorbainbridge.com/professorbainbridgecom/2003/11/the-faithless-servant- doctrine-and-partner-or-agent-compensation.html http://www.professorbainbridge.com/professorbainbridgecom/2003/11/the-faithless-servant- doctrine-and-partner-or-agent-compensation.html Gary J. Mennitt, “The Faithless Servant Doctrine – Developments in the Law”, March 2, 2001, available at http://www.mondaq.com/unitedstates/article.asp?articleid=10298 Gary J. Mennitt, “The Faithless Servant Doctrine – Developments in the Law”, March 2, 2001, available at http://www.mondaq.com/unitedstates/article.asp?articleid=10298http://www.mondaq.com/unitedstates/article.asp?articleid=10298

12. Other Issues Other Issues Misappropriation of Trade Secrets / Trade Secrets Act Misappropriation of Trade Secrets / Trade Secrets Act Contribution Contribution Breach of Fiduciary Duty Breach of Fiduciary Duty Breach of Contractual Confidentiality Agreement Breach of Contractual Confidentiality Agreement Enforcement of Contractual Clawbacks Enforcement of Contractual Clawbacks Conversion Conversion Trover and Replevin Trover and Replevin

13. Other Issues Other Issues Defamation Defamation Cyberlibel Cyberlibel Trade Libel Trade Libel Computer Trespass Computer Trespass Surreptitious Recording / Violation of Wiretap Statutes Surreptitious Recording / Violation of Wiretap Statutes Indemnification for Claims Arising Out of Employee Conduct Indemnification for Claims Arising Out of Employee Conduct