Joseph et al v. Carnes et al
Filing
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MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 5/14/2013.(jp, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ANDREW JOSEPH,
ISAMU FAIRBANKS,
IAN DOUGHTY, and MARTIN CRAIG,
Plaintiffs,
v.
LISA CARNES,
GREGORY PEASE,
RICK JACOBS, and
CHRIS HAMILTON,
Defendants.
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Case No. 13-cv-2279
Judge John W. Darrah
MEMORANDUM OPINION AND ORDER
Plaintiffs, Andrew Joseph, Isamu Fairbanks, Ian Doughty, and Martin Craig, filed suited
against Defendants, Lisa Carnes, Gregory Pease, Rick Jacobs, and Chris Hamilton, on March 26,
2013, alleging two counts: a civil cause of action under the Stored Wire and Electronic
Communications Privacy Act (“SCA”), 18 U.S.C. § 2701; and civil conspiracy. Defendants
move to dismiss Plaintiffs’ Complaint pursuant to Fed. R. Civ. P. 12(b)(6), for failure to state a
claim upon which relief may be granted. The motion has been fully briefed. For the reasons
provided below, Defendants’ Motion is denied.
BACKGROUND
The following facts are based on the Complaint and attached exhibits and are accepted as
true for purposes of the Motion to Dismiss. See Reger Dev., LLC v. Nat'l City Bank, 592 F.3d
759, 763 (7th Cir. 2010). “Documents attached to a motion to dismiss are considered part of the
pleadings if they are referred to in the plaintiff's complaint and are central to his claim.”
Menominee Indian Tribe v. Thompson, 161 F.3d 449, 456 (7th Cir. 1998). Jurisdiction arises
under 28 U.S.C. § 1331, as Count I of the Complaint alleges violations of the SCA, 18 U.S.C. §
2701, and supplemental jurisdiction exists over Count II of the Complaint, pursuant to 28 U.S.C.
§ 1367(a). (Compl. ¶¶ 13-14.) Fairbanks, LLC (“FLLC”) was formed in 2004 as an Illinois
limited liability company with its principal place of business in Chicago. (Id. ¶ 18.) FLLC has
five members, who each own a 20 percent membership interest in FLLC: Plaintiffs Joseph and
Fairbanks and Defendants Carnes, Pease, and Jacobs. (Id. ¶ 19.) Plaintiff Doughty is a Senior
Manager with FLLC, and Plaintiff Craig is a business advisor to Joseph and Fairbanks. (Id. ¶¶ 78.) Defendant Hamilton is the Manager of Information Services. (Id. ¶ 12.)
The five members of FLLC executed the FLLC Operating Agreement, dated February 3,
2009. (Id. ¶ 20.) The Operating Agreement provides that “[t]he management of the Company
shall be exclusively by Members. All Company decisions shall be decided by Members holding
a Majority Interest . . . .” (Id. ¶¶ 21-22.) A majority interest is defined as the number of
membership interests, which, taken together, exceeds 67 percent of the aggregate of all interests
outstanding. (Id. ¶ 23.) With each member holding a 20 percent interest in FLLC, this requires
company decisions to be approved by 4 out of the 5 members. (Id. ¶ 24.)
FLLC does not have any policies in place, written or otherwise, authorizing the search
and review of the emails of its members or employees, absent approval by four of the five
members of FLLC. (Id. ¶ 25.) FLLC does not inform its employees that its emails may be
accessed or reviewed without their knowledge or authorization. (Id. ¶ 26.) Plaintiffs did not
authorize or consent to the search, access, or review of their emails. (Id. ¶ 28.)
FLLC’s email system is hosted by 123together.com (“123”), which has a data center and
servers in Waltham, Massachusetts. (Id. ¶¶ 29-30.) FLLC’s emails are archived and stored on
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123’s servers, and in order to access these stored emails, an FLLC email administrator is
required to log into 123’s website. (Id. ¶¶ 31-32.) Once logged on, the administrator must
access the “Archiving Settings” and change the setting to “Search Admin PLUS.” (Id. ¶ 33.)
After this change is made, the administrator receives a separate Uniform Resource Locator
(“URL”) and password, which allows her to access, search, and review archived emails from all
FLLC accounts. (Id. ¶ 34.) FLLC members and employees did not have access to FLLC emails
without completing this process. (Id. ¶ 35.)
In 2010, the relationship between the FLLC members began to deteriorate, in part
because of the members’ disagreement over the handling of an unprofitable contract (the “Texas
Contract”). (Id. ¶ 37.) The members discussed a possible solution to this problem: an
assignment of the Texas Contract to a third party. (Id. ¶ 38.) The members met and proposed
the Texas Contract would be assigned to a new entity created by the members on October 17,
2012. (Id. ¶ 39.) Plaintiffs claim Defendant members feigned an interest in the assignment of
the Texas Contract, and Plaintiffs believed the Defendant members were working in good faith
to resolve the issue of the assignment. (Id. ¶¶ 41-42.)
Defendants engaged in a conspiratorial scheme to search, access, monitor, and review
Plaintiffs’ emails without their knowledge, authorization, or consent for use in the state court
lawsuit. (Id. ¶ 44.) On November 5, 2012, Carnes and Hamilton logged on and searched
Plaintiffs’ archived emails. (Id. ¶ 45.) Carnes began a systematic, exhaustive search of
Plaintiffs’ email communications; and, from November 5, 2012, through December 5, 2012,
Carnes performed 966 searches of Plaintiffs’ emails. (Id. ¶ 49.) From November 5, 2012, to
February 5, 2013, when the searches came to light, Carnes had performed a total of 2,488
searches of Plaintiffs’ emails and converted many of the emails she found into .pdf documents
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for further review. (Id. ¶¶ 49-51.) Thereafter, Carnes deleted her previous searches and actively
concealed her future searches. (Id. ¶ 56.) Hamilton, on at least one occasion, also searched
Plaintiffs’ emails. (Id. ¶ 48.)
Carnes specifically searched for Plaintiffs’ email communications and performed
searches of a personal nature. (Id. ¶¶ 52-53.) Carnes intentionally and surreptitiously accessed
and viewed attorney-client privileged emails between Plaintiffs Joseph and Fairbanks and their
personal attorneys. (Id. ¶ 55.) After Fairbanks discovered these email searches, Defendants
Carnes, Pease, and Jacobs filed suit against Plaintiffs in state court. (Id. ¶ 61.) The state court
suit involves business proposals Defendants received from Plaintiffs Joseph and Fairbanks and
information and emails acquired by Defendants through their search of Plaintiffs’ emails. (Id. ¶
62.)
Fairbanks contacted 123 to inform it of the unauthorized searches and to request more
information about these unauthorized searches; 123 forwarded Fairbanks’ request to Pease, who
instructed 123 not to provide the information to Fairbanks, claiming Fairbanks lacked the
authority to acquire that information. (Id. ¶¶ 63-64.)
Relying on these facts, Plaintiffs allege Defendants Carnes and Hamilton violated the
SCA by intentionally accessing the 123 email servers for Plaintiffs’ emails, without authorization
or consent. (Id. ¶¶ 72-73.) Plaintiffs further allege all Defendants committed civil conspiracy by
conspiring to cause the access and review of Plaintiffs’ emails without Plaintiffs’ knowledge,
authorization, or consent. (Id. ¶ 79.)
Defendants move to dismiss the Complaint, pursuant to Fed. R. Civ. P. 12(b)(6), for
failure to state a claim upon which relief may be granted.
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LEGAL STANDARD
To properly assert a claim in a complaint, the plaintiff must present “a short and plain
statement of the claim showing that the pleader is entitled to relief and a demand for the relief
sought.” Fed. R. Civ. P. 8. Rule 8 “does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (Iqbal) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007) (Twombly)). While a court is to accept all allegations contained in a complaint
as true, this principle does not extend to legal conclusions. Iqbal, 129 S. Ct. at 1949.
A defendant may file a motion to dismiss a claim under Federal Rule 12(b)(6) for failure
to state a claim upon which relief may be granted. To defeat a motion to dismiss under Rule
12(b)(6), a plaintiff must plead sufficient factual matter to state a claim for relief that is
“plausible on its face.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570). A claim is
facially plausible “when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at
1949.
However, “[w]here the well-settled pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’ –
‘that the pleader is entitled to relief.’” Iqbal, 129 S. Ct. at 1950. For a claim to be plausible, the
plaintiff must put forth enough “facts to raise a reasonable expectation that discovery will reveal
evidence” supporting the plaintiff’s allegations. Brooks v. Ross, 578 F.3d 574, 581 (7th Cir.
2009) (quoting Twombly, 550 U.S. at 556). At issue in a 12(b)(6) motion is “not whether a
plaintiff will ultimately prevail” but whether the plaintiff is entitled to present evidence to
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support the claims alleged. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011)
(internal quotation and citation omitted).
ANALYSIS
SCA Claim
The SCA provides a civil cause of action when an individual or entity “intentionally
accesses without authorization a facility through which an electronic communication service is
provided” or “intentionally exceeds an authorization to access that facility” and “thereby obtains
. . . a wire or electronic communication while it is in storage in such system . . . .” 18 U.S.C. §
2701(a).
Defendants move to dismiss the SCA claim alleged against Carnes and Hamilton, arguing
Plaintiffs are unable to state a claim that the accessing of Plaintiffs’ emails was unauthorized.
Rather, Defendants contend, Carnes and Hamilton simply accessed the emails by the procedure
prescribed by FLLC, by logging on the 123 website as an FLLC email administrator.
Congress enacted the SCA “to protect privacy interests in personal and proprietary
information from the mounting threat of computer hackers ‘deliberately gaining access to, and
sometimes tampering with, electronic or wire communications’ by means of electronic trespass.”
Devine v. Kapasi, 729 F. Supp. 2d 1024, 1026 (N.D. Ill. 2010) (citing S.Rep. No. 99-541, at 3
(1986)). Here, Defendants posit, there was no trespass, as Carnes and Hamilton simply went
through the steps required to access the emails archived with 123.
Defendants rely in part on the opinion of another district court, the Eastern District of
Missouri. In Lasco Foods, Inc. v. Hall and Shaw Sales, Marketing, & Consulting, LLC, the court
dismissed a claim under the SCA, finding that an employee’s alleged misappropriation of
information was not considered “unauthorized” under the SCA. Lasco Foods, Inc. v. Hall and
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Shaw Sales, Marketing, & Consulting, LLC, 600 F. Supp. 2d 1045, 1049-1050 (E.D. Mo. 2009).
In dismissing the SCA count of the complaint, the court there found the plaintiff “broadly, and
without any factual support, allege[d] ‘Defendants . . . fraudulently or intentionally exceeded
their authorization to access [Plaintiff]’s protected computers.’” Id. at 1050.
The Lasco case, however, is readily distinguishable from the facts of this case. Here,
Plaintiffs specifically allege that no policy exists permitting an individual to search and review
emails of the FLLC’s members or employees, “absent approval by four of five members of
FLLC as required by Article 14.1 of the Operating Agreement.” (Compl. ¶ 25.) Section 14.1 of
the Operating Agreement provides that “[a]ll Company decisions shall be decided by Members
holding a Majority Interest . . . .” (Compl. Ex. A ¶ 14.1.) Company decision is not a defined
term in the Operating Agreement. This case is distinguishable from the Lasco case because
Plaintiffs specifically allege Hamilton and Carnes accessed emails without authorization and
further support their claim by explaining how decisions are made under the FLLC’s Operating
Agreement.
At this stage in the proceedings, all inferences are drawn in Plaintiffs’ favor, and it is
plausible that the decision to search member and employee emails is a Company decision and
that, therefore, the searches by Hamilton and Carnes were unauthorized under the Operating
Agreement.1 Plaintiffs have sufficiently pleaded enough facts to state a claim for relief under the
SCA. Iqbal, 129 S. Ct. at 1949.
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Defendants further assert the SCA claim should be dismissed under a theory of unclean
hands. However, the defense of unclean hands is an affirmative defense, and “[a]ffirmative
defenses do not justify dismissal under Rule 12(b)(6) . . . .” Doe v. GTE Corp., 347 F.3d 655,
657 (7th Cir. 2003). Accordingly, this argument is also rejected.
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Civil Conspiracy Claim
Defendants argue the civil conspiracy claim should be dismissed because the SCA claim
must fail and that, therefore, the conspiracy claim should be dismissed as no independent cause
of action remains underlying the conspiracy claim. (Defs.’ Mot. at 13-14.) However, for the
reasons provided above, Plaintiffs’ SCA claim survives; and, therefore, Defendants cannot defeat
the civil conspiracy claim on that basis.
CONCLUSION
For the reasons set forth above, Defendants’ Motion to Dismiss is denied.
Date:
May 14, 2013
______________________________
JOHN W. DARRAH
United States District Court Judge
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