Snyder et al v. Fantasy Interactive Inc. et al

Filing 27

MEMORANDUM & ORDER granting in part and denying in part 17 Motion to Dismiss. For the foregoing reasons, Defendants' motion to dismiss is granted in part and denied in part. Defendants' motion is granted with respect to Plaintiffs' Electronic Communications Privacy Act claims and New York Penal Law claims, and those claims are dismissed with prejudice. Defendants' motion to dismiss is also granted with respect to Gould's Fair Labor Standards Act claim and New York Labor Law claims, but those claims are dismissed without prejudice. Gould must submit her amended complaint by February 29, 2012. Defendants' motion to dismiss is denied with respect to Plaintiffs' Stored Communications Act claim, and Gould's breach of contract and Hawaii privacy law claims. The Clerk of the Court is directed to terminate the motion pending at ECF. No. 17. (Signed by Judge William H. Pauley, III on 2/9/2012) Copies Mailed By Chambers. (lmb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

------------------------------- -- X
JULIE SNYDER & KAREN GOULD,
11 Civ. 3593 (WHP)

Plaintiffs,

MEMORANDUM & ORDER

-against­
FANTASY INTERACTIVE, INC., et aI.

Defendants.
------------------------------- --X

I, L!SDC SDNY

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WILLIAM H. PAULEY III, District Judge:
Plaintiffs Julie Snyder ("Snyder") and Karen Gould ("Gould") bring this action
against their former employer, Fantasy Interactive, Inc. ("Fantasy") and several individuals.
Both Plaintiffs allege violations of federal and New York privacy laws. Additionally, Gould
alleges violations of federal and state wage laws, breach of contract, and violations of Hawaii
privacy laws. Defendants move to dismiss all of Plaintiffs' claims pursuant to Federal Rule of
Civil Procedure 12(b)(6). For the following reasons, Defendants' motion is granted in part and
denied in part.

BACKGROUND
Fantasy is a web design agency with offices in New York. (Complaint, dated
May 25, 2011 ("CompL") ~ 12.) Defendant David Martin is Fantasy's Chief Executive Officer,
and Defendant Camilla Martin is Fantasy's Chief Operating Officer, (collectively, "the
Martins"). (Compl.

~~

9-10.) Defendant Ben Knight ("Knight") is an information technology

employee at Fantasy. (Compl.

~

11.)

Gould joined the firm as a senior producer in August 2008. (Compl.

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14.) On

October 19,2010, Gould executed an employment agreement ("the Employment Agreement")
with Fantasy that provided that "[i]f either party decides to terminate this agreement, a two
weeks [sic] written notice is required." (Compl. ~ 15.) In November 2010, Gould moved to
Hawaii and worked for Fantasy remotely. (Compl. ~ 14.)
Snyder began working at Fantasy as an administrative assistant in February 2009.
(Compl. ~ 13.) She worked in the New York office at all relevant times.
During their employment, Plaintiffs maintained accounts with Skype, a computer
program that allows users to send instant messages to each other. (Compl.

~

18.) Instant

messages sent via Skype are encrypted and can only be viewed by logging into a user's account
with a password. (Compl.
(Comp1.

~

~

20.) Skype stores instant message conversations for up to one year.

21.) Plaintiffs engaged in instant message conversations with each other on Fantasy's

computers and on their personal computers. (Comp1. ~ 24.)
Plaintiffs claim that on November 17, 2010, the Martins and Knight accessed their
Skype accounts and read their instant message conversations. (Compl.

~

26.) Snyder discovered

this when she logged into her Skype account and noticed that Knight was listed as one of her
contacts even though she had never added him to her list. (Compl. ~ 27.) On November 18,
2010, Fantasy prohibited Gould from logging onto her work computer. (Compl.

~

28.) That

same day, the Martins informed Snyder that they had read Snyder'S instant message
conversations for three hours and that they knew "all about [her] and [her] boyfriends." (Compl.
~

30.) Fantasy terminated Snyder and Gould later that day. (Compl. ~ 31.) Plaintiffs allege that

in December 2010, Knight told several Fantasy employees that he "hacked" into Snyder's Skype
account at the direction of the Martins. (Compl. ~ 33.)

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DISCUSSION

1. Conversion to Summary Judgment
Defendants ask the Court to treat the instant motion to dismiss as a motion for
summary judgment. On a motion to dismiss, a court may only consider "facts stated on the face
of the complaint, in the documents appended to the complaint or incorporated in the complaint
by reference, and to matters of which judicial notice may be taken." Allen v. WestPoint­
Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). However, a court may consider matters outside
of the pleadings and treat a motion to dismiss as a motion for summary judgment if all parties
have had a "reasonable opportunity to present all the material that is pertinent to the motion."
Fed. R. Civ. P. 12(d). The Court declines to convert this motion to dismiss into one for summary
judgment because Plaintiffs have not had the opportunity to conduct discovery. See Fed. R. Civ.
P. 12(d); see also Brodeur v. City of New York, No. 99 Civ. 651 (WHP), 2002 WL 424688, at *2
(S.D.N.Y. 2002) (declining to convert motion to dismiss into motion for summary judgment
where discovery not was complete).
II. Legal Standard
On a motion to dismiss, a court must accept the material facts alleged in the
complaint as true and construe all reasonable inferences in plaintiffs favor. See Grandon v.
Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998). Nonetheless, "factual allegations must
be enough to raise a right of relief above the speculative level, on the assumption that all of the
allegations in the complaint are true." Bell Atl. Corp. v. Twombly, 540 U.S. 544, 556 (2007).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937,
1949 (2009) (quoting Twombly, 555 U.S. at 570). "The plausibility standard is not akin to a

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'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted
unlawfully." Igbal, 129 S.Ct at 1949 (citation omitted). "A pleading that offers 'labels and
conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor
does a complaint suffice if it tenders 'naked assertion[ s]' devoid of 'further factual
enhancement.'" Igbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 555).
III. Federal and State Privacy Claims
A. Electronic Communications Privacy Act
The Electronic Communications Privacy Act ("ECPA"), 18 U.S.C. § 2510 et seq.,
provides a civil cause of action against persons who intentionally "intercept" electronic
communications. Courts addressing the meaning of "intercept" narrowly define it to include
only "acquisitions of communication contemporaneous with transmission, not storage." Conte v.
Newsday, Inc., 703 F. Supp. 2d 126, 139 n.l1 (E.D.N.Y. 2010); see e.g., Fraser v. Nationwide
Mut. Ins. Co., 352 F.3d 107, 113-14 (3rd Cir. 2003) (following Fifth, Ninth, and Eleventh
Circuits and adopting the narrow definition); United States v. Meriweather, 917 F.2d 955,960
(6th Cir. 1990). Courts employed this narrow definition when interpreting ECPA's predecessor,
the Omnibus Crime Control and Safe Streets Act of 1968. See Steve Jackson Games, Inc. v.
U.S. Secret Serv., 36 F.3d 457, 460-62 (5th Cir. 1994); see also Konop v. Hawaiian Airlines,
Inc., 302 F.3d 868, 876 (9th Cir. 2002). And after reviewing the legislative history, the Fifth
Circuit concluded that Congress intended to retain this definition under ECP A. See Steve
Jackson Games, Inc., 36 F.3d at 462. While the Second Circuit has not addressed this issue,
Conte, 703 F. Supp. 2d at 139 n.11, the Fifth Circuit's reason for maintaining the narrow
definition is sound, and this Court adopts it. Because Plaintiffs plead no facts suggesting that

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Defendants accessed their communications during transmission, their ECPA claims are
dismissed with prejudice.
B. Stored Communications Act

The Stored Communications Act ("SCA"), 18 U.S.C. § 2701 et seq., provides:
"whoever (1) intentionally accesses without authorization a facility through which an electronic
communication service is provided; or (2) intentionally exceeds an authorization to access that
facility; and thereby obtains, alters, or prevents authorized access to a wire or electronic
communication while it is in electronic storage in such system shall be punished ...." 18 U.S.C.

§ 2701(a).
Defendants contend that Plaintiffs fail to state a claim because Fantasy's Human
Resources Manual ("the Manual") authorizes Fantasy to monitor its employees'
communications. However, on a motion to dismiss, a Court may only consider those documents
attached to the Complaint or incorporated by reference. See Chambers v. Time Warner. Inc.,
282 F.3d 147, 153 (2d Cir. 2002). "Even where a document is not incorporated by reference, the
court may nevertheless consider it where the complaint relies heavily upon its terms and effect,
which renders the document integral to the complaint." Chambers, 282 F.3d at 153 (internal
quotation marks omitted). Defendants argue that the Court should consider the Manual because
the Complaint relies on the Employment Agreement, which in tum references the Manual. But
the Employment Agreement does not reference the Manual. Moreover, Defendants cannot show
that the Complaint relies on the Manual's terms and effect. See Chambers, 282 F.3d at 154
(declining to consider document where complaint did not refer to it, parties did not rely on it in
drafting their complaint, and where document was unsigned).
Even assuming the Court could consider the Manual, it only governs the parties'

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employment relationship. And Plaintiffs allege that Defendants accessed communications
occurring outside of the workplace on Plaintiffs' personal computers. See Penrose Computer
Marketgroup, Inc. v. Camin, 682 F. Supp. 2d 202, 210-211 (N.D.N.Y. 2010) (where employer
was authorized to access plaintiffs computer for limited purpose, allegation that he exceeded
authorized scope and accessed plaintiff's e-mail was sufficient to survive a motion to dismiss).
Accordingly, Plaintiffs state a claim under the SCA.
C. Hawaii Privacy Claims
Gould alone alleges that the Defendants violated Hawaii law when they
"intentionally intercept[ed)" her "wire, oral, or electronic communication." See HI Rev. Stat. §
803-42; see also HI Rev. Stat. § 803-48 (providing private cause of action). Gould also asserts
claims for invasion of privacy under Hawaii common law. Defendants rely on essentially the
same argument for dismissing these claims as they do for dismissing Plaintiffs' SCA claims.
The Court rejects these arguments for the reasons previously stated and denies Defendants'
motion to dismiss the Hawaii privacy claims.
D. New York Privacy Claims
Plaintiffs assert claims of unauthorized use of a computer and computer trespass,
arising under New York Penal Law §§ 156.05 and 156.10, respectively. There is conflicting
authority regarding whether these statutory provisions provide a private right of action. Compare
Casey Sys., Inc. v. Firecom, Inc., 94 Civ. 9327 (KTD), 1995 WL 704964, at *3-4 (S.D.N.Y.
Nov. 29, 1995) (finding no private right of action); with Blissworld, LLC v. Kovak, Index No.

125431/00,2001 WL 940210, at *5 (N.Y. Sup. Ct. July 9, 2001) (recognizing private right).
"Rarely is there a private right of action under a criminal statute." Firecom, 1995 WL 704964, at
*3. In determining whether a criminal statute gives rise to a private right of action, courts look to

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"(1) whether the plaintiff is a member of a class for whose special benefit the statute was
enacted, (2) whether there is any indication of legislative intent to create or deny a private right,
(3) whether it would be consistent with the purposes of the underlying statutory scheme to create
a private right, and (4) whether the cause of action is one traditionally relegated to state law."
Firecom, 1995 WL 704964, at *3 (citing Cort v. Ash, 422 U.S. 66, 79 (1975)). Since Cort, the
Supreme Court has clarified that while the Cort factors are relevant, the "central inquiry"
remains whether the legislature "intended to create, either expressly or by implication, a private
cause of action." Touche Ross & Co. v. Redington, 442 U.S. 560, 575 (1979); see also Gonzaga
Univ. v. Doe, 536 U.S. 273, 286 (2002) ("where the text and structure of a statute provide no
indication that Congress intends to create new individual rights, there is no basis for a private
suit ...."). The court in Blissworld did not address whether the legislature intended to create a
private right of action, as required by the Supreme Court. Because there is no indication that the
legislature intended to create a private right of action, this Court declines to adopt the reasoning
in Blissworld and dismisses these claims. See Firecom, 1995 WL 704964, at *3.
IV. Gould's Additional Claims

A. Wage Claims
Gould alleges that Fantasy and the Martins violated the Fair Labor Standards Act
and New York Labor Law when they failed to pay her overtime after she worked in excess of
forty hours per week. See 29 U.S.C. § 207; N.Y. Lab. Law § 652. Fantasy's policy of requiring
its employees to obtain approval prior to working overtime does not absolve Fantasy of liability.
See Chao v. Gotham Registry, 514 FJd 280, 288-89 (2d Cir. 2008). But Gould fails to plead a
viable FLSA claim because she does not allege the number of overtime hours that she worked.
See Eng v. Argsoft Consultants, Inc., 11 Civ. 2180 (LBS), 2011 WL 4936951, at *2 (S.D.N.Y.

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Oct. 17,2011); see also Nichols v. Mahoney, 608 F. Supp. 2d 526,547 (S.D.N.Y. 2009). Gould
also fails to state a claim under New York Labor Law because "[t]he relevant portions of the
Labor Law do not diverge from the FLSA" with respect to overtime. See Nichols, 608 F. Supp.
2d at 548; see also Hinterberger v. Catholic Health, 08 Civ. 380S, 2008 WL 5114258, at *2 n.2
(W.D.N.Y. Nov. 25, 2008) (requirements for stating FLSA overtime claim are the same as those
under New York Labor Law). These claims are dismissed without prejudice, and Gould is
granted leave to amend the Complaint to allege the number of overtime hours that she worked.
B. Breach of Contract
Gould asserts a breach of contract claim against Fantasy. To establish a breach of
contract under New York Law, Gould must demonstrate (1) the existence of an agreement, (2)
performance by the plaintiff, (3) breach by the defendant, and (4) damages. See Hajny v. Best
Roofing ofNJ, Inc., No. 11 Civ. 00173 (LLS), 2011 WL 2493737, at *5 (S.D.N.Y. June 22,
2011).
Gould asserts that Fantasy failed to provide her with two weeks notice before
terminating her, as required by the Employment Agreement. Fantasy offers affidavits to support
its argument that Gould resigned without notice, and that she, and not Fantasy, breached the
contract. But because those affidavits were not attached to the Complaint or incorporated by
reference, the Court may not consider them on this motion. See Chambers, 282 F.3d at 153 (2d
Cir.2002). Accepting all of Gould's factual allegations as true, she has adequately pled this
claim, and Fantasy's motion is denied.

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CONCLUSION
For the foregoing reasons, Defendants' motion to dismiss is granted in part and
denied in part. Defendants' motion is granted with respect to Plaintiffs' Electronic
Communications Privacy Act claims and New York Penal Law claims, and those claims are
dismissed with prejudice. Defendants' motion to dismiss is also granted with respect to Gould's
Fair Labor Standards Act claim and New York Labor Law claims, but those claims are dismissed
without prejudice. Gould must submit her amended complaint by February 29,2012.
Defendants' motion to dismiss is denied with respect to Plaintiffs' Stored Communications Act
claim, and Gould's breach of contract and Hawaii privacy law claims. The Clerk of the Court is
directed to terminate the motion pending at ECF. No. 17.
Dated:

February 9,2012
New York, New York

SO ORDERED:

WILLiAMH. PAULEYiIIr-­
U.S.DJ.

Copies mailed to:
Joshua Samuel Carlo Parkhurst
Cary Kane LLP
1350 Broadway, Suite 1400
New York, NY 10018
Counsel for Plaintiff
Aimee Alyssa Drouin
Drouin Law Offices
375 South End Avenue
20th floor, Suite C
New York, NY 10280
Counselfor Defendant

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