SPINELLO COMPANIES v. SILVA et al
Filing
30
OPINION/ORDER denying 12 Motion to Dismiss. Signed by Judge Claire C. Cecchi on 9/30/14. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
SPINELLO COMPANIES,
Civil Action No.: 13-5 146
Plaintiff,
OPINION & ORDER
V.
SAMAN K. SILVA, et al.
Defendants.
CECCHI, District Judge.
Before the Court is Defendants’ motion to dismiss or alternatively transfer venue to the
Central District of California. (ECF No. 12). The Court decides this matter without oral argument
pursuant to Rule 78 of the Federal Rules of Civil Procedure.’ For the reasons set forth below, the
Court will deny the motion.
I.
INTRODUCTION
This case arises out of allegations that Defendant Silva used his position within Plaintiff’s
organization to divert customers to his own business, Defendant Lucas Builders, Inc. (“LB I”).
Once Defendants moved to dismiss on jurisdictional and venue wounds. the Court ordered the
Parties to take jurisdictional discovery, The following facts are taken from that discovery and the
assertions in the Complaint.
The Court considers any new arguments not presented by the parties to be waived. çç
Brenner v. Local 514, United Bhd. of Carpenters & Joiners. 927 F.2d 1283, 1298 (3d Cir. 1991)
(1t is well established that failure to raise an issue in the district court constitutes a waiver of the
argument.”).
Plaintiff is a California corporation with its principal place of business and headquarters in
New Jersey. (Compi.
¶ 4). Defendants are California residents. (Id. at ¶i 5-6). Plaintiff originally
hired Silva in 2001 to work in its New Jersey office. (Id. at ¶ 12). In 2006, Silva transfeffed to
Plaintitis California field office, reporting back to the New Jersey headquarters. (P1.
Opp. at 4).
Silva resigned from Plaintiff in May 2009, but continued to work part-time for Plaintiff in
California, reporting to the New Jersey office. (Id. at 5). In February 2010, Silva rejoined Plaintiff
full-time in Plaintiff’s California field office. (Id.) Silva again resigned from Plaintiff in March,
2013. (Compl. ¶55).
Plaintiff alleges that from 2007 onward Silva: (1) engaged in self-dealing when he awarded
subcontracts to LBI without disclosing his financial interest in the company (Compl. ¶ 60; P1. Opp.
6); (2) diverted Plaintiff’s confidential bid opportunities to LBI (Compi.
¶ 61; P1. Opp. 6); and (3)
diverted Plaintiff’s confidential information to LBI by forwarding the confidential information
from his work email address to his personal email address, and by improperly modifying files on
Plaintiffs servers. (Compl.
¶J 51-54). From this final allegation, Plaintiff contends that Silva and
LBI violated the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C.
§ 1030.
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Defendants move to dismiss on two grounds, venue and failure to state a claim. First,
Defendants argue a lack of venue and, in the alternative, that the more appropriate forum for this
action is the Central District of California under 28 U.S.C.
1404. Second, they argue the
complaint fails to state a CFAA claim, and that the court should decline pendant jurisdiction over
the remaining state law claims. (Def. Br. at 5).
2
Defendants originally included a third ground. lack of personal jurisdiction, which they
waived after jurisdictional discovery, (Def. Rep. at 12 n.3).
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II.
DISCUSSION
A.
Venue
There appears to be no dispute that the only provision that might confer venue on this court
is 28 U.S.C.
§ 1391(b)(2). which provides that venue is proper in any district where “a substantial
part of the events or omissions giving rise to the claim occurred.” (Def Opp. 26). In this circuit,
the test to determine whether an event or omission arose in a particular district focuses on “the
location of those events or omissions giving rise to the claim.” Cottman Transmission Systcrn.
Inc. v. Martino, 36 F.3d 291, 294 (3d Cir. 1994)). In order to determine whether these events or
omissions are substantial “it is necessary to look at the nature of the dispute.” j at 295. In the
Third Circuit, “the defendants bear the burden of showing improper venue.” Bockman v. First Am.
Marketing Corp., 459 F. App’x. 157, 160 (3d Cir. 2012) (quoting Myers v. Am. Dental Ass’n, 695
F.2d 716, 724-25 (3d Cir. 1982)).
Defendants argue that venue is improper because “Plaintiff does not allege that y
actionable conduct occurred in New Jersey.” (Def Br. at 23). However, even if that were so,
Defendants would not have met their burden to show improper venue because “it is not necessary
for the plaintiff to include allegations in his complaint showing that venue is proper.” Great
434 F. App’x 83, 86-87 (3d Cir. 2011) (citing
Mycrs, 695 F.3d
at 724). Because they have not demonstrated that the events underlying the
dispute occurred outside of New Jersey, Defendants l2(b)(3) motion fails, Id. at 87 (venue proper
when defendant had “presented
no evidence” in support of its underlying venue argument).
In any event. Plaintiff has supported its claim that venue is proper in this district. Plaintiff
has introduced evidence that Defendant Silva: (I) was a high-ranking employee who often worked
from the New Jersey office (Silva Tr. 30:8-31:20. 86:14-25; P1.
op.
10-11); (2) reported directly
to the New Jersey office for approval of contracts and bids (Black Cert.
¶‘J 7-8); (3) regularly
traveled to Plaintiff’s New Jersey headquarters on behalf of Plaintiff (Black Cert.
¶f 10-11); and
(4) that LBI and Silva accepted a loan from Plaintiff in New Jersey (Compl. 99-100; Black Cert.
¶ 14). “Courts have upheld venue where an illegal action was repeated in more than one state and
venue was laid in a state that accounted for only a small number of those actions.” Calkins v.
Dollarland, Inc., 117 F.Supp.2d 421, 427 (D.N.J. 2000). Thus, Plaintiffs have shown that
substantial events or omissions underlying the dispute occurred in New Jersey, and venue is proper
here. 28 U.S.C.
B.
§ 1391(b)(2).
28 U.S.C.
28 U.S.C.
§
1404(a)
§ 1404(a) permits transfer to a more convenient forum “[f]or the convenience of
parties and witnesses, in the interest of justice.” To guide the trial court’s inquiry, “the Supreme
Court has prescribed a balancing of private interest factors affecting the convenience of the
litigants and public interest factors affecting the convenience of the forum.” Windt v. Owest
Commc’n Int’l, Inc., 529 F.3d 183, 189 (3d Cir. 2008) (citing Gulf Oil Corp. v. Gilbert, 330 U.S.
501, 508-09 (1947)).
The moving party bears the burden of establishing that the transfer is appropriate and must
demonstrate that the alternate forum is more convenient than the present forum, Jumara v. State
Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.1995). “The Court has broad discretion in making
determinations under Section 1404(a), and convenience and fairness are considered on a case-by
case basis.” $pi v. Nat’l Bus.RecordsM
t. LLC, 722 F.Supp.2d 602, 606 (D.NJ. 2010).
“While there is no definitive formula or list of the factors to consider,” the Third Circuit has
articulated certain “public” and “private” interests implicated by
§ 1404(a). These enumerated
private factors include: plaintiffs forum choice; the defendanfs preference; where the claim arose;
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convenience of parties; convenience of witnesses—”but only to the extent that the witnesses may
actually be unavailable for trial in one of the fora; and the location of books and records (similarly
limited to the extent that the files could not be produced in the alternative forum).” Jumara 55 F.3d
at 879 (citations omitted). The enumerated public factors include enforceability of the Courts
judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the
level of congestion in the respective forums; the local interest in deciding local controversies at
home; the public policies of the forum; and the familiarity of the trial judge with the applicable
state law in diversity cases.
1.
The Private Factors
The private interests of the parties do not favor transfer. For domestic plaintiffs,
“[ilt is
black letter law that a plaintiffs choice of a proper forum is a paramount consideration in any
determination of a transfer request, and that choice should not be lightly disturbed.” Shutte v.
Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970); see also Windt, 529 F.3d at 190 (“a strong
presumption of convenience exists in favor of a domestic plaintiffs chosen forum, and
presumption may be overcome only when the balance of the public and private interests clearly
favors an alternate forum”) (emphasis added). The other factors do not shift the balance against
Plaintiffs choice of forum. Defendant was employed by a corporation with its principle place of
business and headquarters in New Jersey. The underlying facts of this case arose out of Silva’ s
longstanding employment with this New Jersey based entity. Further, Defendants have not
demonstrated that witnesses or evidence will be unavailable to this Court. Yocham v. Novartis
p, 565 RSupp.2d 554, 558 (D.N.J. 2008). In light of this, Defendants’ argument that
they will be inconvenienced by litigating in this Court likewise does not overcome the deference
given to Plaintiffs choice of forum.
2.
The Public Factors
The public factors favor New Jersey. The underlying employment contract contains a New
Jersey choice of law provision (Compi.
¶ 22). Accordingly. this Court is likely to be more familiar
with the law underlying Plaintiff’s New Jersey state law claims, favoring Plaintiff. Furthermore,
New Jersey has a strong interest in this case, considering that the center of avity of the parties’
relationship is New Jersey. Calkins, 117 F.Supp.2d at 429.
Accordingly, because neither the private nor public factors weigh in favor of transfer, the
Court declines to transfer this case to California pursuant to 28 U.S.C.
C.
§ 1404(a).
Defendants’ 12(b)(6) Motion
Defendants ask this court to dismiss Plaintiff’s sole federal claim and to subsequently
decline to exercise supplemental jurisdiction over the remaining state law claims. Defendants
argue that the allegations against Silva do not state a claim under CFAA because they do not
sufficiently allege that Silva “exceed[edj authorized access” on Plaintiff’s computer system or
accessed a computer “without authorization” under 18 U.S.C.
§ 1030(a)(2)(C), (a)(4), and
(a)(5)(C). The CFAA defines “exceeds authorized access” as follows: “to access a computer with
authorization and to use such access to obtain or alter information in the computer that the accessor
is not entitled to so obtain or alter.” 18 U.S.C.
§ l030(e)(6).
As the parties acknowledge. there is a circuit split regarding the proper interpretation of
these terms. The Seventh Circuit held that when an employee accesses files after breaching the
duty of loyalty to his employer, he exceeds his authorized access. Int’l Airport Ctrs.. LLC. v.
Citrin. 440 F.3d 418, 420-21 (7th Cir, 2006). Similarly, the First. Fifth and Eleventh Circuits have
held that the boundaries of “authorized access” “include exceeding the purposes for which access
is ‘authorized.” u.s. v. John, 597 F.3d 263, 272 (5th Cir. 2010); v. Rodri
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ez, 628 F.3d
1258, 1263 (11th Cir. 2010); EF Cultrural Travel BV v. Explorica, Inc., 274 F.3d 577, 581-84 (1st
Cir. 2001). The Ninth Circuit has, on the other hand, held that an employee does not exceed
authorized access when that employee was entitled to obtain the documents at issue. LVRC
Holdings LLC v. Brekka, 581 F.3d 1127, 1135 n.7 (9th Cir, 2009). The Fourth Circuit has held
similarly. WEC Carolina Energy Solutions LLC v. Miller, 687 F.3d 199, 204 (4th Cir. 2012)
(neither term reaches “the improper use of information validly accessed”). The Parties correctly
note that the Third Circuit has not addressed this issue.
Plaintiff alleges that Silva accessed its servers and improperly deleted files. (Compi. ¶J 5354). Drawing all inferences in favor of Plaintiff, this is enough to state a claim that Silva exceeded
his authorized access under any interpretation of the law, since it is alleged that he altered files
without authorization. 18 U.S.C.
§ 1030(e)(6). The Complaint also states a claim that Silva
accessed the computer “without authorization” because, at this stage in the proceedings, any
difference between “without authorization” and “exceeding authorized access” is “paper thin.”
Citrin, 440 F.3d at 420.
Further, because the complaint alleges that Silva was performing these actions on behalf
of LBI, the complaint states a claim against both Defendants. (Compl.
III.
¶J 6, 50-54).
CONCLUSION
For the forgoing reasons it is on this 30th day of September. 2014:
ORDERED that Plaintiffs’ motion (ECF No. 12) is DENIED.
c_
C
CLAIRE C. CECCHI, U.S.D.J.
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