Computer Fraud and Abuse Act Claim Supportable Without Cash Loss

What kind of expense amounts to a “loss” under the Computer Fraud and Abuse Act (CFAA), and did a Virginia litigation-support company incur the required minimum of $5,000 in losses when it investigated an alleged breach of its computer systems, retaining the services of both an attorney and a computer forensics company to aid with the investigation? That was the issue recently before Judge T.S. Ellis III of the Eastern District of Virginia, who held that the investigative activities could support a CFAA claim, even if the expenses were not paid in cash.

The issue was particularly important to the plaintiff, Animators at Law, a graphics and technology litigation support company, because of the 13 claims it brought against two former employees and a competitor, all but the CFAA claim were based on state law, meaning that without it, there would be no basis for federal-court jurisdiction.

The CFAA provides for a civil action against anyone who intentionally gains access to a computer without authorization and obtains information from it. The CFAA has a minimum jurisdictional requirement of $5,000 in losses. Animators at Law claimed screen.jpgthat its former employees conspired with a competitor to leave Animators’ employment and join the competitor, taking with them confidential and proprietary information about Animators’ services, projects, and clients.

When Ken Lopez, the president of Animators at Law, suspected that one of his company’s laptops had been accessed without authorization, he brought in an outside company to engage in a forensic analysis of the laptop. Evidence produced during the litigation showed that Animators received services valued at $19,501.41 or more in connection with investigating the unauthorized access. However, Animators did not actually pay the contractor for its services, prompting the defendants to move for summary judgment on the basis that the $5,000 jurisdictional threshold had not been met. Animators countered that it provided services to the contractor in exchange for its forensic services, as a form of barter.

The court found that it “would be passing strange” if the contractor had spent over 60 hours analyzing Animators’ data without any expectation of payment in some form. At a minimum, the court ruled, there was a triable issue of fact as to whether the services were provided on credit or in trade, given that there was an existing business relationship between Animators and the contractor. Because the CFAA does not require losses to be paid for in cash, this was sufficient to survive summary judgment.

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