The Solutions Team, Inc. v. Oak Street Health, MSO, LLC. et al
Filing
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MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr. on 2/6/2019. Before the Court are the motion to dismiss 24 filed by Defendant Oak Street Health, MSO, LLC ("Oak Street"), and the motion to dismiss 28 filed by Defendants Focus Solutions LLC and its owner Bruce Schaumberg. For the reasons set forth below, the motions [24; 28] are granted. Further status hearing set for February 21, 2019 at 9:00 a.m. Mailed notice(cdh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
THE SOLUTIONS TEAM, INC.,
Plaintiff,
v.
OAK STREET HEALTH, MSO, LLC, et al.,
Defendants.
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Case No. 17-cv-1879
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Before the Court are the motion to dismiss [24] filed by Defendant Oak Street Health,
MSO, LLC (“Oak Street”), and the motion to dismiss [28] filed by Defendants Focus Solutions
LLC and its owner Bruce Schaumberg. For the reasons set forth below, the motions [24; 28] are
granted. Further status hearing set for February 21, 2019 at 9:00 a.m.
I.
Background1
Plaintiff The Solutions Team, Inc. (“TST” or “Plaintiff”) initially filed this lawsuit on
March 10, 2017, bringing claims for breach of contract, violations of the Computer Fraud and
Abuse Act, and fraud in the inducement against Defendant Oak Street Health, MSO, LLC (“Oak
Street”), and bringing claims for tortious interference with a contract, violations of the Computer
Fraud and Abuse Act, fraud in the inducement, and breach of fiduciary duty against Defendants
Focus Solutions, LLC (“Focus”) and Bruce Schaumberg (“Schaumberg”). [See 1.] The Court
granted Defendants’ motion to dismiss all but one of Plaintiff’s claims—the breach of contract
1
For purposes of this motion to dismiss, the Court accepts as true all of Plaintiff’’ well-pleaded factual
allegations and draws all reasonable inferences in Plaintiff’s favor. Killingsworth v. HSBC Bank Nev., N.A.,
507 F.3d 614, 618 (7th Cir. 2007).
claim against Oak Street. Plaintiff filed an amended complaint seeking to cure the deficiencies
identified by the Court.
Plaintiff alleges that in or around March 2015, Defendants Schaumberg and Focus arranged
a meeting and relationship between Defendant Oak Street and Plaintiff. [Id. at ¶ 20.] For his role
in the arrangement of a business relationship between Oak Street and Plaintiff, Schaumberg and/or
Focus demanded and received a commission of $6,750 from Plaintiff. [Id. at ¶ 21.] On March 27,
2015, Oak Street entered into a contract with Plaintiff to provide equipment and services to Oak
Street. [Id. at ¶¶ 23-24.] Generally, under the contract and subsequent proposals, Plaintiff was to
store, safeguard, manage and maintain data for Oak Street and provide a viable path for saving and
retrieving that data. [Id. at ¶ 25.] The initial term of the contract was to run for twenty-four months
or until March 27, 2017. [Id. at ¶ 27.] The contract also provided for an automatic renewal of the
initial term or any subsequent term for a period of forty-eight months if neither party gave notice
within thirty days of the end of the existing term. [Id. at ¶ 28.] Section 6(a) of the Contract also
provided that the term of the contract would automatically renew for forty-eight months upon the
execution of any subsequent proposal. [Id. at ¶ 30.]
On April 1, 2016, Schaumberg and other representatives of Oak Street participated in a
telephone conference hosted by Century Link—one of Plaintiff’s competitors—during which the
parties discussed replacing Plaintiff and discontinuing use of its services under the relevant
contracts between Plaintiff and Oak Street. [Id. at ¶ 34.] Yet on April 5, 2016 and May 5, 2016,
Oak Street executed proposals for additional equipment and/or services from Plaintiff. [Id. at ¶¶
35-36.]
At some point, Oak Street decided that it wished to terminate its relationship with Plaintiff.
However, Oak Street needed the data on Plaintiff’s computers to do so. According to Plaintiff,
2
Defendants conspired to gain the access to Plaintiff’s computers and informational systems under
false pretenses. Specifically, Plaintiffs allege that Defendants made the following representations
regarding their need to access the data:
During Fall 2016, Oak Street Health, through Keith Forshaw, VP, Information
Technology Operations & Enterprise Security, began efforts to get The Solutions
Team to permit Focus Solutions and Schaumberg access to the Data stored at The
Solutions Team by telling Todd Gooden that access to servers and data would be
for the limited purpose of running reports and establishing better connections. [20,
at ¶ 43.]
On and around December 2016, Oak Street Health represented to The Solutions
Team that it needed access to the Data for the limited purpose of Focus Solutions
designing and running select reports of the Data for Oak Street Health. [Id. at
¶ 116.]
In and around December 2016, Focus Solutions represented that it needed access
to the Data for the limited purpose of transitioning some of the Data for use in
designing and running reports for Oak Street Health. [Id. at ¶ 142.]
On January 12, 2017, Bruce Schaumberg told The Solutions Team that the
Solutions Team needed to improve the time it takes to replicate data between
servers within The Solutions Team. He further stated that “at this time, we are only
trying to replace the current VPN between TST and CLC to utilize the MPLS.
Everything with the clinics will stay the same.” At that same time, Schaumberg
asked The Solutions Team to grant him access. On January 12, 2017, Keith
Forshaw echoed Bruce Schaumberg’s email and stated that the priority for access
was replacing the “VPN with MPLS between TST and CLC”. That same day,
Forshaw encouraged Todd Gooden to “just work with Bruce” to satisfy his requests.
[Id. at ¶¶ 55-57.]
On September 2, 2016, [ ] Schaumberg individually and with Focus, on behalf of
Oak Street Health told The Solutions Team that his access to the data needed to
improve including increased speed of data sharing and transfer without any mention
that said access was being sought to permit him to remove all data for Oak Street
Health. [Id. at ¶ 44.]
On September 6, 2016, Schaumberg through email correspondence to Gooden
asked The Solutions Team for assistance in accessing data to permit movement of
data from one server to another without any mention that said access was being
sought to permit him to remove all data for Oak Street Health. [Id. at ¶ 45.]
On December 27, 2016, Schaumberg contacted Todd Gooden at The Solutions
Team about working on the MPLS connection without any mention of taking all
3
data from The Solutions Team servers. He stated that they “finished development
on some additional ETL’s that will be moving all of the BIN data from Prod to
EDW and Edmund is concerned about moving this data over the connection we
have.” There is no reference of doing any transfer or moving of data from the other
three servers maintained by The Solutions Team. [Id. at ¶ 49.]
On January 4, 2017, Bruce Schaumberg, individually and on behalf of Oak Street
Health contacted The Solutions Team and requested work to be performed on the
MPLS connection between CLS and The Solutions Team. This communication
omitted reference to the purpose of this request being to take all Oak Street data
from The Solutions Team and sever the connection between the two. [Id. at ¶ 50.]
On January 6, 2017, Bruce Schaumberg, on behalf of Oak Street, contacted The
Solutions Team requesting connectivity work on the MPLS server, the same server
with related monthly costs of $658.75. In a January 6, 2017, handwritten note,
Forshaw repeated the request to allow Focus Solutions to gain access for “MPLS
Connection” with no mention of Focus taking all data and disconnecting the
electronic connection between Oak Street and The Solutions Team. [Id. at ¶¶ 5152.]
On January 9, 2017, Schaumberg again requested access to the server from The
Solutions Team while omitting reference to the intent to take all data and sever the
connection between The Solutions Team and Oak Street. [Id. at ¶ 53.]
On January 15, 2017, Schaumberg, individually and for Focus Solutions and on
behalf of Oak Street Health who was on the correspondence with copies to
Forshaw, James Chow and Jason Vandeneeden, emailed The Solutions Team’s
Fowler and Gooden that he needed access just for the purpose of doing a data load
from the SQL server without any mention that said access was being requested to
permit a removal of all data from The Solutions Team servers. On that same day,
Schaumberg and by inclusion on the correspondence, Oak Street, represented that
unfettered access was needed by saying, “I do have some work I need to do” without
mentioning that the “work” was taking the data from The Solutions Team servers.
[Id. at ¶¶ 62-63.]
Plaintiff alleges that Defendants knew these statements were false at the time they were
made and that Defendants made these statements to induce Plaintiff to give Focus and Schaumberg
access to the data on its computers. Without knowledge of Defendants’ real purpose for obtaining
unrestricted access for Focus and Schaumberg, on or about February 5, 2017, Plaintiff granted
Focus and Schaumberg access to its computers. [Id. at ¶ 64.] Defendants took the data from
Plaintiff and transferred it to Century Link, rendered the remaining files held by Plaintiff
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functionally inaccessible to it. [Id. at ¶ 65.] This had the practical effect of severing the electronic
link between Oak Street and Plaintiff. [Id.] On February 8, 2017, after facilitating the taking of
the data, Oak Street’s Chief Technology Officer Jason Van Den Eeden called Plaintiff and stated
that Oak Street had acquired the necessary data and was terminating its contract with Plaintiff. [Id.
at ¶ 67.] Before the Court are Defendants’ motions to dismiss the amended complaint.
II.
Legal Standard
To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief
can be granted, the complaint first must comply with Rule 8(a) by providing “a short and plain
statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), such
that the defendant is given “fair notice of what the * * * claim is and the grounds upon which it
rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S.
41, 47 (1957)) (alteration in original). Second, the factual allegations in the complaint must be
sufficient to raise the possibility of relief above the “speculative level.” E.E.O.C. v. Concentra
Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555, 127
S.Ct. 1955). “A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the
elements of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 555). Dismissal for failure to state a claim under Rule 12(b)(6) is proper
“when the allegations in a complaint, however true, could not raise a claim of entitlement to relief.”
Twombly, 550 U.S. at 558. In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court
accepts as true all of Plaintiff’s well-pleaded factual allegations and draws all reasonable
inferences in Plaintiff’s favor. Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618 (7th
Cir. 2007).
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III.
Analysis
A.
Computer Fraud and Abuse Act (“CFAA”)
The Court previously dismissed Plaintiff’s CFAA claims because Plaintiff failed to allege
“loss to 1 or more persons during any 1-year period * * * aggregating at least $5,000 in value,” as
required by 18 U.S.C. § 1030(c)(4)(A)(i)(I). [18, at 23-24.] The Court explained that “Plaintiff
fails to allege any ‘loss’ as defined by the CFAA, much less losses of at least $5,000 in value.”
[Id. at 24.]. Plaintiff again fails to allege sufficient losses to bring claims under
Section 1030(c)(4)(A)(i)(I) of the CFAA. The CFAA defines “loss” to mean “any reasonable cost
to any victim, including the cost of responding to an offense, conducting a damage assessment,
and restoring the data, program, system, or information to its condition prior to the offense, and
any revenue lost, cost incurred, or other consequential damages incurred because of interruption
of service.” 18 U.S.C. § 1030(e)(11). “Purely economic harm unrelated to the computer systems
is not covered by” the CFAA’s definition of loss. SKF USA, Inc. v. Bjerkness, 636 F. Supp. 2d
696, 721 (N.D. Ill. 2009).
Plaintiff argues that is has alleged loss in the form of “consequential damages incurred
because of interruption of service.” [29, at 3.] Specifically, Plaintiff claims to have suffered
damage in the form of (1) $34,140.76 in lost value (i.e., depreciation) of equipment which Plaintiff
purchased solely to service Oak Street’s needs under the contract and subsequent proposals, and
(2) $7,905.00 in lost use of a router that remained dormant after the alleged unauthorized access.2
However, neither of these claimed “losses” resulted from the interruption of service. Rather, as
2
If Plaintiff alleged that a router remained dormant while it investigated unauthorized access of its
computers, such an allegation might establish losses under the CFAA. However, Plaintiff alleges that it
purchased the router at issue “due to [the] requirements and demands of Oak Street[.]” [20 (Am. Compl.),
at ¶¶ 41-42.] Thus, Plaintiff’s allegations indicate that it really is seeking to recover costs that it had
incurred to provide the services under the contracts with Oak Street.
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noted by Defendants, those harms stemmed from the alleged breach of contract. Thus, those harms
are “[p]urely economic harm unrelated to the computer systems is not covered by” the CFAA’s
definition of loss. SKF USA, Inc. v. Bjerkness, 636 F. Supp. 2d 696, 721 (N.D. Ill. 2009); see also
CustomGuide v. CareerBuilder, LLC, 813 F. Supp. 2d 990, 998 (N.D. Ill. 2011) (granting motion
to dismiss CFAA claim where Plaintiff failed to allege facts “connecting its purported ‘loss’ to an
interruption of service of its computer systems”).
Plaintiff also argues that it has alleged loss in the form of stolen proprietary information as
well as Plaintiff’s data backup technology, which carry a combined value in excess of $5,000. [29,
at 4-5.] However, as noted by Defendants, courts consistently have found that such losses do not
fit within the CFAA’s statutory definition of loss. See, e.g., SKF USA, Inc. v. Bjerkness, 636 F.
Supp. 2d 696, 721 (N.D. Ill. 2009) (holding that allegations of “losses” caused by the transfer of
data to a competitor did not fit within the CFAA’s definition of loss and concluding that such
economic losses are better addressed under state contract and trade secrets law); Synthes, Inc. v.
Emerge Med., Inc., 2014 WL 2616824, at *26 (E.D. Pa. June 11, 2014) (“Notably, a claim for
future lost revenue due to the dissemination of trade secrets does not qualify as a ‘loss’ under the
CFAA.”).
These cases are consistent with the language and structure of the CFAA. As the court
explained in Resdev, LLC v. Lot Builders Association, Inc.:
The CFAA defines “loss” in terms of “any reasonable cost.” [18 U.S.C.
§ 1030(e)(11).] “Cost” ordinarily means an “amount paid or charged for
something; price or expenditure.” Black’s Law Dictionary 371 (8th Ed. 2004). The
CFAA’s “loss” definition goes on to list costs that are similar in that they are all
directly associated with, or with addressing, an unauthorized-computer-access
event. Among those costs are: “any revenue lost, cost incurred, or other
consequential damages incurred because of interruption of service.” 18 U.S.C. §
1030(e)(11) (emphasis added). By use of the term “cost” and its listing potential
injuries directly associated with, or with addressing, an unauthorized-computeraccess event, the CFAA plainly enumerates a narrow grouping of “loss” distinct
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from—and thus excluding—the far greater range of losses that could flow from a
violation of the CFAA. [Plaintiff’s] position, that “loss” can cover a trade secret’s
exclusivity value, disregards the ordinary meaning of statutory terms, fails to
account for surrounding context, and runs counter to the “expressio[ ] unius * * * ”
canon of construction, which translates as “the expression of one implies the
exclusion of others.” See Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003)
(indicating that expressio unius cannon has force “when the items expressed are
members of an ‘associated group or series,’ justifying the inference that items not
mentioned were excluded by deliberate choice, not inadvertence.”).
2005 WL 1924743, at *4 (M.D. Fla. Aug. 10, 2005). Plaintiff fails to address the reasoning of the
court in Resdev or in any of the numerous other cases cited by Defendants for the proposition that
the CFAA’s definition of “loss” does not encompass economic losses stemming from stolen
proprietary information. The Court finds those cases persuasive, especially in the absence of any
authority to the contrary. Accordingly, Plaintiff’s claimed harm stemming from the loss of
proprietary information does not constitute a loss as the term is defined by the CFAA.
Finally, Plaintiff argues that it has alleged loss in the form of expenses paid “responding to
an offense [and] conducting a damage assessment.” Specifically, Plaintiff alleges that it spent at
least $1,500.00 in time and labor analyzing its systems and systems contacts. [20 (Am. Compl.),
at ¶¶ 111, 136, 162.] While those expenses may constitute “losses” under the CFAA, Plaintiff
nonetheless fails to allege losses of at least $5,000 in value. Because the amended complaint also
fails sufficiently to allege the requisite amount of losses to state a claim under the CFAA, the Court
grants Defendants’ motions to dismiss Plaintiff’s CFAA claims.3
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In its amended complaint, Plaintiff also alleges that Defendants violated 18 U.S.C. § 1030(a)(5)(C). With
respect to Plaintiff’s original complaint, the Court found that Plaintiff abandoned that argument by failing
to address Defendants’ arguments for dismissal of Plaintiff’s CFAA claim based on that provision. [18, at
16 n.5.] In their motions to dismiss Plaintiff’s amended complaint, Defendants argue that the Court should
strike Plaintiff’s allegations with respect to that issue. Because Plaintiff did not raise any argument in
opposition to that point, the Court assumes that Plaintiff accepts the dismissal of any claim under 18 U.S.C.
§ 1030(a)(5)(C).
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B.
Promissory Fraud
The Court previously dismissed Plaintiff’s promissory fraud claims,4 concluding that
Plaintiff failed to satisfy Rule 9(b)’s heightened pleading standard, failed to allege a pattern or
scheme to defraud, and failed to allege any injury (among other deficiencies). Defendants again
move to dismiss Plaintiff’s promissory fraud claims for failure to allege a pattern or scheme to
defraud and for failure to allege an injury.
i.
Scheme to Defraud
“[P]romissory fraud, i.e., a false statement of intent regarding future conduct rather than
present or past facts, ‘is generally not actionable under Illinois law unless the plaintiff also proves
that the act was a part of a scheme to defraud.’” Trade Fin. Partners, LLC v. AAR Corp., 573 F.3d
401, 413 (7th Cir. 2009) (quoting Ass’n Benefit Servs., Inc. v. Caremark Rx, Inc., 493 F.3d 841,
853 (7th Cir. 2007)). Thus, under Illinois law, “promissory fraud is actionable only if it either is
particularly egregious or, what may amount to the same thing, it is embedded in a larger pattern of
deceptions or enticements that reasonably induces reliance and against which the law ought to
provide a remedy.” Desnick v. Am. Broad. Companies, Inc., 44 F.3d 1345, 1354 (7th Cir. 1995).
Defendants Focus and Schaumberg argue that Plaintiff’s promissory fraud claims should be
dismissed because Plaintiff again fails to allege a scheme to defraud. Defendants Focus and
Schaumberg also argue that Plaintiffs fail to allege any false statements made by Schaumberg.
In response to Defendants’ argument that Plaintiff fails to allege a scheme to defraud,
Plaintiff identifies allegations indicating that Defendants represented that their access to Plaintiff’s
4
Plaintiff’s original complaint brought claims for fraud in the inducement. Because Plaintiff’s fraud claims
were based on Defendants’ alleged representations regarding how they intended to use the information to
which Plaintiff provided them access (i.e., statements of intent regarding future conduct), the Court
reviewed Plaintiff’s fraud in the inducement claims as promissory fraud claims. [18, at 6-7.] The Court
does the same again here.
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data and/or servers was for the limited purpose of running reports and establishing better
connections. [20 (Am. Compl.), at ¶¶ 43, 55-57.] Plaintiff also alleges that Defendants made other
representations regarding their need to access Plaintiff’s data and/or servers, without any mention
that said access was being sought to permit the removal of data from Plaintiff’s computers. [Id. at
¶¶ 44-45, 49-53, 62-63.]
Focus and Schaumberg argue that the latter category of purported misrepresentations are
really omissions. Under Illinois law, “the omission or concealment of a material fact when * * *
the person has the opportunity and duty to speak also amounts to fraudulent misrepresentation.”
Havoco of Am., Ltd. v. Sumitomo Corp. of Am., 971 F.2d 1332, 1341 (7th Cir. 1992). Focus and
Schaumberg argue that because they had no duty to speak, the alleged omissions do not amount to
fraudulent misrepresentations. Because Plaintiff fails to identify any duty to speak on the part of
Defendants, the Court agrees that the alleged omissions do not amount to actionable
misrepresentations.
That leaves Plaintiff’s allegations that Defendants represented that their access to
Plaintiff’s data and/or servers was for the limited purpose of running reports and establishing better
connections. [20, at ¶¶ 43, 55-57.] “As few as ‘two broken promises’ can amount to a scheme to
defraud.” Lane v. Le Brocq, 2016 WL 5955536, at *6 (N.D. Ill. Oct. 12, 2016) (quoting Wigod v.
Wells Fargo Bank, N.A., 673 F.3d 547, 570 (7th Cir. 2012)). Here, however, Plaintiff alleges that
Defendants made the same representation numerous times. Plaintiffs cannot establish a scheme to
defraud merely by alleging that defendants made the same representation multiple times. Nat’l
Painting, Inc. v. PPG Architectural Finishes, Inc., 2015 WL 1593008, at *4 (N.D. Ill. Apr. 1,
2015) (“While plaintiff alleges that defendants made the allegedly fraudulent representations
multiple times, such an allegation, without more, does not raise plaintiff’s claim to an actionable
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promissory fraud case.” (citing LeDonne v. Axa Equitable Life Ins. Co., 411 F. Supp. 2d 957, 962
(N.D. Ill. 2006))). Plaintiff therefore fails to allege a scheme to defraud.
Even though Oak Street did not raise this argument, the argument applies to Plaintiff’s
fraud claims against all Defendants. Where one defendant successfully challenges a claim on a
ground common to several defendants, the Court has inherent authority to dispose of the claims
with respect to other defendants if the plaintiff had an adequate opportunity to respond. Acequia,
Inc. v. Prudential Ins. Co. of Am., 226 F.3d 798, 807 (7th Cir. 2000) (“[W]e have stated that where
one defendant succeeds in winning summary judgment on a ground common to several defendants,
the district court may also grant judgment to the nonmoving defendants, if the plaintiff had an
adequate opportunity to argue in opposition.” (citing Malak v. Associated Physicians, Inc., 784
F.2d 277, 280 (7th Cir. 1986))). The Court exercises that authority here and dismisses Plaintiff’s
fraud claims (Counts III, VI, X) against all Defendants.
ii.
Injury
Defendants argue that Plaintiff also fails sufficiently to allege any injury caused by the
alleged fraud. Although the Court is dismissing Plaintiff’s promissory fraud claims for failure to
allege a scheme to defraud, for the sake of completeness, the Court also will address Defendants’
argument regarding Plaintiff’s failure to allege injury. Under Illinois law, “injury from fraud must
be more than just damages arising from a breach of contract.” Bucciarelli-Tieger v. Victory
Records, Inc., 488 F. Supp. 2d 702, 711 (N.D. Ill. 2007) (citations omitted). Defendants argue that
Plaintiff’s fraud claims should be dismissed because Plaintiff fails to allege damages beyond its
breach of contract damages. The Court agrees that some of Plaintiff’s claimed damages are just
damages arising from the alleged breach of contract. For example, the alleged depreciation in the
value of equipment that was to be used servicing the contract is really another way to recover
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income lost as a result of the alleged breach of contract. The same is true of Plaintiff’s alleged
losses relating to a dormant router. However, Plaintiff alleges that it spent at least $1,500.00 in
time and labor analyzing its systems and systems contacts as a result of Defendants’ alleged
misconduct.5 Plaintiff further alleges loss in the form of stolen proprietary information and data
backup technology, which carry a combined value in excess of $5,000. The Court therefore denies
Defendants’ motion to dismiss Plaintiff’s promissory fraud claims for failure to allege an injury
resulting from the alleged fraud.
Still, the Court dismisses Plaintiff’s promissory fraud claims for failure to allege a scheme
to defraud. Although the Court will consider any motion for leave to amend Plaintiff may wish to
file, the Court questions the basis for Plaintiff’s fraud claims in other respects. For example, it is
not clear to the Court which of the alleged omissions and/or misrepresentations Plaintiff relied
upon in granting Defendants access. Plaintiffs identify numerous reasons Defendants proffered
for needing to access Plaintiff’s data and/or computers over an extended period of time. Given
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In their reply, Defendants argued for the first time that Plaintiff failed sufficiently to allege facts
establishing that it incurred losses analyzing its systems as a result of Defendants’ alleged misconduct. [30,
at 8.] Defendants represent that their delay in raising the argument is justified because it has identified a
new authority in support of that argument that was decided after Defendants filed their motions. However,
Sargeant v. Maroil Trading Inc., 2018 WL 3031841, at *11-12 (S.D. Fla. May 30, 2018), the case cited by
Defendants, does not represent a change in the law. To the contrary, that non-binding case involves a
straightforward application of general pleading standards. Defendants’ failure to raise the argument in its
opening brief therefore results in waiver of the argument. James v. Sheahan, 137 F.3d 1003, 1008 (7th Cir.
1998) (“Arguments raised for the first time in a reply brief are waived.” (citations omitted)). Regardless,
Sargeant is distinguishable. In that case, the Court concluded that the plaintiff failed to allege reasonable
costs incurred investigating and otherwise responding to alleged CFAA violations (including the hiring of
a forensic computer analyst to conduct investigation and analysis) where the plaintiff did not even allege
that he had access to the server at issue and the complaint indicated that a third-party controlled the server.
Sargeant v. Maroil Trading Inc., 2018 WL 3031841, at *12 (S.D. Fla. May 30, 2018). Because plaintiff
did not allege that he had access to the server at issue, the court questioned why the plaintiff needed to
obtain a forensic analyst. Id. Here, however, Plaintiff alleges that it expended $1,500 analyzing its systems
and system contacts as a result of the unauthorized access and activity. [20 (Am. Compl.), at ¶¶ 111, 136,
162.] The Court sees no reason to find that Plaintiff’s expenditure of such modest costs investigating
suspected misconduct on its own computers was unreasonable.
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that some of the alleged reasons were to the exclusion of others,6 it is unclear to the Court how
Plaintiffs could have relied (much less reasonably relied) on all of the identified representations.
Still, if Plaintiff believes it can overcome that hurdle and can allege a scheme to defraud, Plaintiff
may move for appropriate relief.
IV.
Conclusion
For the reasons set forth above, the motions to dismiss [24; 28] are granted. Further status
hearing set for February 21, 2019 at 9:00 a.m.
Date: February 6, 2019
____________________________________
Robert M. Dow, Jr.
United States District Judge
6
For example, Plaintiff alleges that “Focus Solutions represented that it needed access to the Data for the
limited purpose of transitioning some of the Data for use in designing and running reports for Oak Street
Health.” [20, at ¶ 142 (emphasis added).] Yet Plaintiff also alleges that “Schaumberg, individually and for
Focus Solutions” stated “that he needed access just for the purpose of doing a data load from the SQL server
without any mention that said access was being requested to permit a removal of all data from The Solutions
Team servers.” [Id. at ¶ 62.]
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