Mifflinburg Telegraph, Inc. v. Criswell et al
Filing
148
MEMORANDUM OPINION (Order to follow as separate docket entry). Signed by Honorable Matthew W. Brann on 9/28/17. (lg)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
MIFFLINBURG TELEGRAPH, INC.,
Plaintiff,
v.
HEIDI CRISWELL,
DALE E. CRISWELL,
WILDCAT PUBLICATIONS, LLC,
Defendants.
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No. 4:14-CV-0612
(Judge Brann)
MEMORANDUM OPINION
SEPTEMBER 28, 2017
“In all literature, there is perhaps no more vivid example of a man wrestling
with the knowledge of his own guilt than that of Raskolnikov in [Fyodor]
Dostoyevsky’s Crime and Punishment.”1 “Throughout Crime and Punishment,
Dostoyevsky provides examples of physical actions and reactions that demonstrate
Raskolnikov’s consciousness of his guilt…such as Raskolnikov’s psychosomatic
illness and his internal monologue.”2 After murdering a pawnbroker for her
money, Raskolnikov convinces himself that he could perform good deeds to offset
the crime. When questioned by the police about an unrelated matter,
1
Dan E. Stigall, PROSECUTING RASKOLNIKOV: A LITERARY AND LEGAL LOOK
"CONSCIOUSNESS OF GUILT" EVIDENCE, Army Law., December 2005, at 54, 54
2
Id. at 56.
AT
Rasknolnikov finds himself forced to fabricate an alibi, “attempting to convince
law enforcement that he was somewhere else, doing something other than
murdering and stealing.”3
Here, there is no murder. But there was stealing. Although the matter turns
on the undisputed facts of this case, Defendant Heidi Criswell’s pro se
representations, written in the third person as if to distance herself from her own
actions,4 are an admixture of consciousness of guilt and an attempt to convince the
Court of her unbelievable naivety, leading me to the ineluctable conclusion based
on the record of this matter that, despite her vociferous protestations to the
contrary, there is a distinct absence of mistake here.
I.
BACKGROUND
The procedural history and a brief background of this action are as follows.
Plaintiff Mifflinburg Telegraph, Inc. filed a complaint on March 31, 2014, against
Defendants Heidi Criswell, Dale E. Criswell, and Wildcat Publications, LLC.5
Hereinafter “Mifflinburg Telegraph,” “Heidi Criswell,” “Dale Criswell,” and
“Wildcat” respectively. The complaint began as a fifty-four page, two-hundred
twenty paragraph, eighteen count complaint against six defendants. Jurisdiction is
based on two federal causes of action: alleged violations of the Computer Fraud
3
Id.
4
Def. Opp. Br., September 16, 2016, ECF No. 138.
5
And others, who have since been dismissed from the action.
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and Abuse Act, 18 U.S.C. § 1030, and the Lanham Act 15 U.S.C. § 1125. The
Court is exercising supplemental jurisdiction over the pendant state claims.
Mifflinburg Telegraph is a small business located in Mifflinburg, Union
County, Pennsylvania, that operated, previously, as both a print shop and a
newspaper publisher, and as of 2014, only a print shop. Heidi and Dale Criswell
are spouses who had been two of only five employees of Mifflinburg Telegraph
until their February 3, 2014 resignation from the business.
Heidi Criswell had been a long time employee of Mifflinburg Telegraph
when its owner, John Stamm, died in 2013. Hereinafter “Stamm.” Heidi
Criswell’s title was ‘primary designer and printer,’ but it is widely acknowledged
that in the years preceding Stamm’s death, while he was ill, she ran the business in
his stead. Dale Criswell worked for Mifflinburg Telegraph intermittently as a
“delivery guy.”
After Stamm’s death, Heidi Criswell entered into negotiations with the
Stamm Estate to purchase the business for $225,000. Negotiations ultimately
failed, and in the autumn of 2013, unbeknownst to the estate or Mifflinburg
Telegraph, Heidi Criswell started a competing business, Wildcat Publications,
LLC.
Prior to her February 2014 departure from Mifflinburg Telegraph, she began
providing customers with re-order forms listing Wildcat’s contact information
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where Mifflinburg Telegraph’s information had previously appeared. She also
misappropriated from Mifflinburg Telegraph’s customer lists and data files, and
then subsequently and secretly deleted her computer identity from Mifflinburg
Telegraph’s computers. This deletion included any order history, so that if a
customer returned to Mifflinburg Telegraph with a repeat order, the company
could not simply reprint a prior order, but would have to start from scratch and
recreate the customer’s logo and any other information. Additionally, Heidi
Criswell misappropriated a Ricoh commercial printer from Mifflinburg Telegraph
for Wildcat’s use.
The day after filing the complaint, Plaintiff filed for injunctive relief, and on
April 17, 2014, I entered an order enjoining Defendants
1.
From directly or indirectly processing reorders procured
from placing re-order forms in Mifflinburg Telegraph’s
customers’ orders;
2.
From directly or indirectly processing orders placed with
the Mifflinburg Telegraph;
3.
From directly or indirectly processing orders with
confidential and proprietary information taken, procured, or
received from the Mifflinburg Telegraph;
4.
From directly or indirectly processing orders with
information, files, or images taken, procured or received from
the Mifflinburg Telegraph, a Mifflinburg Telegraph computer
or email, or received from clients while employed at the
Mifflinburg Telegraph;
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5.
From directly or indirectly using Mifflinburg Telegraph
templates, distribution lists, confidential or proprietary
information or machinery in order to publish the Mifflinburg
Free Press;
6.
From directly or indirectly accessing or attempting to
access Mifflinburg Telegraph computers or email;
7.
From directly or indirectly using the RICOH C720S
printer, serial number C40026787; and
8.
From purposefully misleading customers and vendors
into believing the Mifflinburg Telegraph is now Wildcat
Publications, LLC, Heritage Printers or any other division or
fictitious name of Wildcat Publications, LLC. 6
On September 7, 2017, default judgment was entered as to Wildcat.7
Heidi and Dale Criswell initially were represented by counsel, including at
the time of their depositions. Counsel filed an answer to the complaint on behalf of
these Defendants.8 After a fashion, however, there was a breakdown in the
relationship between counsel and Defendants. I eventually granted counsels’
motion to withdraw.9 In so Ordering, I provided these Defendants with two
months, until July 28, 2015, to find replacement counsel. When no counsel entered
an appearance, I entered a second Order extending the time one additional month.
However, I warned in that Order that:
6
ECF No. 26.
7
ECF Nos. 146 and 147. The parties also refer to Wildcat as Heritage Printers, the fictitious
name of the business, and use the two names interchangeably. ECF No. 124-2 at 7.
8
June 11, 2014, ECF No. 35.
9
May 29, 2015, ECF Nos. 78 and 79.
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if the Wildcat defendants do not find counsel by August 28, 2015,
approximately ninety days after their original counsel withdrew, no
further continuances will be granted to find new counsel. The
individual Wildcat defendants, Dale E. Criswell, Heidi Criswell, and
Darlene Sharp may proceed pro se, that is to say they will represent
themselves. If Wildcat Publications, LLC. does not find counsel by
August 28, 2015, entry of default will be made against it. See, e.g.,
Galtieri-Carlson v.Victoria M. Morton Enterprises, Inc., No. 2:08CV-01777, 2010 WL 3386473, at
*1 (E.D. Cal. Aug. 26, 2010).10
Nearly two years later, these defendants still have not retained counsel and
are currently proceeding pro se.
Presently pending before the Court are Motions for Partial Summary
Judgment against Heidi Criswell11 and against Dale E. Criswell.12 The motion for
summary judgment as to Dale Criswell will be denied, but final judgment is
deferred for thirty days for additional response if the parties choose to file a
response, but only as to those counts directed in this memorandum opinion. The
motion for summary judgment as to Heidi Criswell is granted in part, denied in
part, and final judgment deferred for thirty days if the parties choose to file an
additional response, but only as to those counts directed in this opinion. I will enter
final judgment in accordance with this opinion by October 31, 2017, barring any
further responsive filings.
10
July 28, 2015, ECF No. 80.
11
August 15, 2016, ECF No. 122.
12
August 15, 2016, ECF No. 123.
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II.
DISCUSSION
A.
Motion for Summary Judgment Standard
“One of the principal purposes of the summary judgment rule is to isolate
and dispose of factually unsupported claims or defenses, and we think it should be
interpreted in a way that allows it to accomplish this purpose.”13 Summary
judgment is appropriate where “the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.”
14
“Facts that could alter the outcome are ‘material facts,’ and disputes are
‘genuine’ if evidence exists from which a rational person could conclude that the
position of the person with the burden of proof on the disputed issue is correct.”15
“A defendant meets this standard when there is an absence of evidence that
rationally supports the plaintiff’s case.”16 “A plaintiff, on the other hand, must
point to admissible evidence that would be sufficient to show all elements of a
prima facie case under applicable substantive law.”17
“[T]he inquiry involved in a ruling on a motion for summary judgment or for
a directed verdict necessarily implicates the substantive evidentiary standard of
13
Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).
14
Fed. R. Civ. P. 56(a).
15
Clark v. Modern Grp. Ltd., 9 F.3d 321, 326 (3d Cir. 1993) (Hutchinson, J.) (citing Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) and Celotex, 477 U.S. at 322).
16
Clark, 9 F.3d at 326.
17
Id.
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proof that would apply at the trial on the merits.”18 Thus, “[i]f the defendant in a
run-of-the-mill civil case moves for summary judgment or for a directed verdict
based on the lack of proof of a material fact, the judge must ask himself not
whether he thinks the evidence unmistakably favors one side or the other but
whether a fair-minded jury could return a verdict for the plaintiff on the evidence
presented.”19 “The mere existence of a scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on which the jury
could reasonably find for the plaintiff.”20 “The judge’s inquiry, therefore,
unavoidably asks . . . ‘whether there is [evidence] upon which a jury can properly
proceed to find a verdict for the party producing it, upon whom the onus of proof is
imposed.’”21 Summary judgment therefore is “where the rubber meets the road”
for a plaintiff, as the evidentiary record at trial, by rule, will typically never surpass
that which was compiled during the course of discovery. “In this respect, summary
judgment is essentially ‘put up or shut up’ time for the non-moving party.”22
“[A] party seeking summary judgment always bears the initial responsibility
of informing the district court of the basis for its motion, and identifying those
portions of the pleadings, depositions, answers to interrogatories, and admissions
18
Liberty Lobby, Inc., 477 U.S. at 252.
19
Id.
20
Id.
21
Id. (quoting Schuylkill & Dauphin Imp. Co. v. Munson, 81 U.S. 442, 447 (1871)).
22
Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006) (Fisher, J.).
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on file, together with the affidavits, if any, which it believes demonstrate the
absence of a genuine issue of material fact.”23 “[R]egardless of whether the
moving party accompanies its summary judgment motion with affidavits, the
motion may, and should, be granted so long as whatever is before the district court
demonstrates that the standard for the entry of summary judgment, as set forth in
Rule 56(c), is satisfied.”24
Where the movant properly supports his motion, the nonmoving party, to
avoid summary judgment, must answer by setting forth “genuine factual issues that
properly can be resolved only by a finder of fact because they may reasonably be
resolved in favor of either party.”25 For movants and nonmovants alike, the
assertion “that a fact cannot be or is genuinely disputed” must be supported by:
(i) “citing to particular parts of materials in the record” that go beyond “mere
allegations”; (ii) “showing that the materials cited do not establish the absence or
presence of a genuine dispute”; or (iii) “showing . . . that an adverse party cannot
produce admissible evidence to support the fact.”26
“When opposing summary judgment, the non-movant may not rest upon
mere allegations, but rather must ‘identify those facts of record which would
23
Celotex, 477 U.S. at 323 (internal quotations omitted).
24
Id.
25
Liberty Lobby, 477 U.S. at 250.
26
Fed. R. Civ. P. 56(c)(1).
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contradict the facts identified by the movant.’”27 Moreover, “[i]f a party fails to
properly support an assertion of fact or fails to properly address another party’s
assertion of fact as required by Rule 56(c), the court may . . . consider the fact
undisputed for purposes of the motion.”28 On motion for summary judgment,
“[t]he court need consider only the cited materials, but it may consider other
materials in the record.”29
“[A]t the summary judgment stage the judge’s function is not himself to
weigh the evidence and determine the truth of the matter but to determine whether
there is a genuine issue for trial.”30 “[T]here is no issue for trial unless there is
sufficient evidence favoring the nonmoving party for a jury to return a verdict for
that party.”31 “If the evidence is merely colorable . . . or is not significantly
probative, summary judgment may be granted.”32
B.
Undisputed Facts
The Court is reminded of the old adage, if you tell the truth, you never have
anything to remember. Discussed above, as an introductory matter, was a brief
distillation of the procedural history of this matter. I have attempted to discern the
27
Port Auth. of N.Y. and N.J. v. Affiliated FM Ins. Co., 311 F.3d 226, 233 (3d Cir. 2003) (Weis,
J.).
28
Fed. R. Civ. P. 56(e)(2).
29
Fed. R. Civ. P. 56(c)(3).
30
Liberty Lobby, 477 U.S. at 249.
31
Id.
32
Id. at 249–50 (internal citations omitted).
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undisputed facts, as I must do on a Federal Rule of Civil Procedure 56 motion, to
the best of my ability. However, the Criswells’ pro se responses are, as evidenced
below, full of rambling explanations that, while detailed, do not dispute the actual
facts at issue. When they have attempted to create a dispute, for the most part it
has not been supported by the record.
The ‘sham affidavit’ doctrine has a long history in this Circuit. “The trial
judge’s role in [summary judgment is] sorting the genuine from the fallacious.”33
“It is this determination that permits trial judges to disregard contradictory
affidavits.”34 “A sham affidavit is a contradictory affidavit that indicates only that
the affiant cannot maintain a consistent story or is willing to offer a statement
solely for the purpose of defeating summary judgment.”35 “A sham affidavit
cannot raise a genuine issue of fact because it is merely a variance from earlier
deposition testimony, and therefore no reasonable jury could rely on it to find for
the nonmovant.”36 “Therefore, if it is clear that an affidavit is offered solely for the
purpose of defeating summary judgment, it is proper for the trial judge to conclude
33
Jiminez v. All Am. Rathskeller, Inc., 503 F.3d 247, 253 (3d Cir. 2007), see Anderson v.
Liberty Lobby 477 U.S. 242 (1986).
34
Jiminez, at 253.
35
Id.
36
Id.
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that no reasonable jury could accord that affidavit evidentiary weight and that
summary judgment is appropriate.”37
Additionally, as I will explain later in this opinion, Rule 56(h) states, “(h)
Affidavit or Declaration Submitted in Bad Faith. If satisfied that an affidavit or
declaration under this rule is submitted in bad faith or solely for delay, the court-after notice and a reasonable time to respond--may order the submitting party to
pay the other party the reasonable expenses, including attorney’s fees, it incurred
as a result. An offending party or attorney may also be held in contempt or
subjected to other appropriate sanctions.”38
Heidi Criswell’s statement of facts is not in accordance with her own written
letter of resignation, her deposition testimony, and other evidence of record.
Middle District Local Rule 56.1 requires parties to cite to the record, and, “all
material facts set forth in the statement required to be served by the moving part
will be deemed to be admitted unless controverted by the statement required to be
served by the opposing party.” Therefore, as to paragraphs where she has
attempted to create a dispute, I have not relied on her unsupported and uncited,
assertions, but instead on the record, as required by Federal Rule of Civil
Procedure 56, which states “a party asserting that a fact…is genuinely disputed
37
Id.
38
I intended to address this further in the “Attorney’s Fees” section below.
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must support the assertion by citing to particular parts of materials in the record,
including depositions, documents, electronically store information, affidavits or
declarations, stipulations, admissions, interrogatory answers, or other materials.”39
The undisputed facts are as follows, with attempts at dispute by the Criswells
noted.40
As noted, Mifflinburg Telegraph is an incorporated print shop located in
Mifflinburg, Union County, Pennsylvania.41 It operates as a print shop printing
brochures, booklets, letterhead, business cards, invitations and announcements.42
Mifflinburg Telegraph has been in business since 1992, when its sole shareholder,
John R. Stamm, began the business.43 Stamm died on January 9, 2013.44 When
Stamm died, the shares of Mifflinburg Telegraph passed to his estate.45 The
executor of the still open Stamm estate is Angelo Mark Papalia.46 Hereinafter
“Papalia.”
39
Fed. R. Civ. P. 56(c)(1)(A).
40
Pl. Statement of Undisputed Facts, August 15, 2016, ECF No. 124. Def. Resp. to Undisputed
Facts, September 16, 2016, ECF No. 138. Hereinafter, the facts will be cited to collectively
only by paragraph number.
41
¶ 1.
42
¶ 2.
43
¶ 5.
44
¶ 5.
45
¶ 6.
46
¶ 6.
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Heidi Criswell and Dale E. Criswell are former employees of Mifflinburg
Telegraph.47 Heidi Criswell had been a twelve-year employee of Mifflinburg
Telegraph and was its primary designer.48 During her tenure with Mifflinburg
Telegraph, Heidi Criswell earned between $10.75 and $11.75 per hour.49 She was
never an officer of Mifflinburg Telegraph.50 She was not on the Board of Directors
of Mifflinburg Telegraph.51 According to his wife’s affidavit, Dale Criswell was
employed by Mifflinburg Telegraph doing “odd jobs such as making deliveries and
taking out the trash, for $9/hour.”52
Soon after Stamm’s death, his estate, through Papalia, entered into
negotiations with Heidi Criswell for the purchase and sale of Mifflinburg
Telegraph.53 The negotiations resulted in an initial agreement, one that was
ultimately never consummated, for Heidi Criswell to purchase the Mifflinburg
Telegraph for a total of $225,000.54 The offer was comprised of $80,000 for
accounts receivable, $61,000 for assets (excluding real property), and $84,000 for
the goodwill of the business, including the business name, “Mifflinburg
47
¶ 3.
48
¶ 15 and ECF no. 124-2 at 12.
49
ECF No. 124-2 at 12.
50
ECF No. 124-2 at 15.
51
ECF No. 124-2 at 16.
52
ECF No. 124-2 at 214.
53
¶ 7.
54
¶ 8 and ECF No. 124-2 at 55 and ECF No. 124-2 at 273-.
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Telegraph.”55 At the time of Stamm’s January 2013 death she did not know that
the business had a $46,000 loss in tax year 2012.56 However, by December 9,
2013, she was aware of the this loss.57
By October 2013, negotiations between the parties broke down and no
agreement reached.58 On October 7, 2013, the attorney for Heidi Criswell notified
her that their written offer was not accepted59 as Papalia made a counteroffer. On
October 25, 2013, unbeknownst to Papalia or the Stamm estate, Heidi Criswell
formed a competing business, Wildcat Publications, LLC.60 She was free to do so,
as she was not subject to non-competition, non-solicitation, or non-disparagement
agreements.61
Her husband, Dale Criswell, testified at his deposition that he was not
involved in the negotiations to purchase Mifflinburg Telegraph nor in the decision
to start Wildcat.62 However, he did testify that the purchase agreement ultimately
55
¶ 8.
56
ECF No. 124-2 AT 32.
57
ECF No. 124-2 at 359.
58
¶ 9. There is a typo in the Plaintiff’s statement of undisputed facts. It lists the date as
October 2014, I believe all parties would agree that was a typo and the year was actually
2013.
59
ECF No. 124-2 at 60.
60
¶ 4 and ECF No. 124-2 at 62-63, and 96.
61
ECF No. 124-2 at 15.
62
ECF No. 124-2 at 18-21.
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“wasn’t signed because my wife and I didn’t agree with it.”63 ‘It’ being the
counteroffer from Papalia.64
Dale Criswell continued, “It was all - - it all boiled own to the stock sale.
We didn’t want the stock. I mean, that was a sticking point in the sale.”65 He
further testified that the Criswell’s decision not to purchase Mifflinburg Telegraph
was made “before Halloween.”66
As late as November 6, 2013, Heidi Criswell sent an email to Papalia
temporizing the situation. The email lead him to believe that she was still planning
to proceed with the purchase and was merely awaiting financing, as she wrote in
the email, “Holding on to bank information until after veteran’s day, banks are
closed Monday and won’t hear until Tuesday.”67 Yet, that very same date,
November 6, 2013, is the date of her Wildcat Publications Business Plan,68 copied
in full herein:
63
ECF No. 124-2 at 24.
64
ECF No. 124-3 at 25.
65
ECF No. 124-3 at 25.
66
ECF No. 124-3 at 26.
67
ECF No. 124-2 at 301.
68
ECF No. 124-2 at 303.
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The November 6, 2013, Wildcat business plan lists as employees all the
employees of Mifflinburg Telegraph at the time: Heidi Criswell, Dale Criswell,
Darlene Sharp, hereinafter “Sharp,” and Jane Boop.69 Thus, it is clear that the very
same day Heidi Criswell emailed Papalia leading him to believe that she is still
attempting to obtain financing to purchase Mifflinburg Telegraph, she was doing
no such thing; she had instead already formed a competing business using all
Mifflinburg Telegraph employees and a large part of its customer base.
On January 13, 2014, Papalia appointed a new president of Mifflinburg
Telegraph, John Helwig.70 Three weeks later, during the weekend of January 31,
2014 through February 2, 2014, all employees ceased employment with
Mifflinburg Telegraph, Heidi Criswell through a written letter of resignation, Dale
E. Criswell, without notice.71 Helwig was surprised with the en masse resignation
of all employees, but him.72
Heidi Criswell is currently the president of Wildcat, a competing print shop
and newspaper she formed as a limited liability company and also based in
Mifflinburg, Pennsylvania.73 She is the only member of the LLC.74 Heidi Criswell
69
ECF No. 124-2 at 303.
70
¶ 10.
71
¶ 11.
72
¶ 14.
73
ECF No. 124-2 at 8-9.
74
ECF No. 124-2 at 9.
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earned her Bachelor of Arts degree with a concentration in graphic design from the
Pennsylvania State University in 1990.75
Dale Criswell is currently the publisher of Wildcat.76 He testified at his
deposition:
Really I’m the guy that delivers stuff and takes the garbage out, just
like I was at the Telegraph you know. Pretty much my duties as
publisher just include writing a letter to the public, you know. I don’t
-- I give full creative control to my people, because that’s why they’re
there. I don’t -- I honestly -- it’s just the name I drew out of the hat,
you know. I never really picked it; it picked me. As far as -- Like I
said, it was a job somebody needed to fill.77
Dale Criswell appears to have only an opaque understanding about
Wildcat’s ownership. When asked at his deposition, “Do you own Wildcat
publications,” he responded equivocally, “I guess I do. Do I? Yeah, with my
wife.”78 He continued,
I’m not sure how -- honestly, I was just -- I mean, as far as all that
goes, I don’t know a lot of the innerworking of how things are set up.
I don’t. I just - - I was just the guy who said, Here, you know, I’ll
give you my credit. 79
75
ECF No. 124-2 at 8.
76
ECF No. 124-3 at 9.
77
ECF No. 124-3 at 9.
78
ECF No. 124-3 at 9-10.
79
ECF No. 124-3 at 10.
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Dale Criswell is also unsure about Wildcat’s financing. When questioned
during his deposition about whether or not Wildcat had a business loan he
responded:
A: Yeah, I did [sign the loan]; but I’m not sure if it’s an actual
business loan, you know, come to think of it.
Q: Okay. So then please explain to me. What do you recall signing,
what type of loan?
A: It was a remortgage on my wife’s grandmother’s house.
Q: Okay. And you cosigned that or signed it?
A: Yes. Yes.
Q: Do you remember what you used as collateral?
A: The house itself.
*****
A: Yeah, we borrowed on the house to start the business.
Q: Okay.
A: I mean, whatever that is, that’s what we did.
Q: Okay. Do you own the building where Wildcat Publications is
located?
A: Personally, no. Or wait. I’m not sure. I’m honestly not sure who
owns the building. 80
80
ECF No. 124-3 at 10-12
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Darlene Sharp, was deposed as well. She had been the office manager of
Mifflinburg Telegraph for thirty-four years before she left with the Criswells to
take a position with Wildcat.81 As office manager for Mifflinburg Telegraph she
“paid the bills; [] took care of cash receipts and all receipts; took care of the
subscriptions; waited on customers; answered the phone” and prepared invoices.82
Heidi Criswell’s resignation letter
Because her resignation letter is instructive as to the issues at hand, I copy
Heidi Criswell’s resignation letter in its entirety.
February 1, 2014
Dear John83 [Helwig]:
Thirteen months ago my life was forever changed when John
[Stamm] called me here at the shop on a Monday morning and told
me that he had decided to sell the Telegraph. He had talked to Dennis
at Printed Page but he wasn’t interested in spending that much money
on another business at the time. He told me that he did not want Jake
[Stamm’s son] to have it and that Jake’s time as a pressman was over,
it wasn’t his calling whether he realized it yet or not. He then asked
me to please consider buying it from him. John told me that he was
worried about the future of the business- he told me that no one but
me would give a shit about the newspaper and that I was the only
logical candidate to buy it.
John knew I wasn’t loaded, he knew what I made (or didn’t
make), but he knew he could trust me. He told me that day that if I
81
ECF No. 124-7 at 8.
82
ECF no. 124-7 at 9.
83
The irony has not been lost on me that Heidi Criswell wrote what is literally, and
figuratively, a “Dear John” letter prior to ending her professional relationship with
Mifflinburg Telegraph and starting a competing business.
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wanted it, it was mine. That he would sit down with me later that
week and show me the books, and we’d work out a number suitable
and that I could pay him (or the estate after he passed) for as long as I
wanted to. He told me that he’d make sure that Wanda would also
hold on to it, until we could make arrangements.
That Thursday meeting never happened, he died two days later.
And a few days after that, we found out that Wanda didn’t even own
it, that it was in another’s hands.
We also didn’t know until a few weeks later, just how much
financial trouble the Telegraph was in.
Mark [Papalia] came in and told us to run business as usual,
that he needed to sell it and that he would like to honor John’s request
but he immediately started talking ridiculous numbers that made no
sense when you looked at the books and the building. I did what
everyone told me to do- I sought council [sic] and tried to do
everything by the book. I researched machinery, combed the books,
talked to my accountant and we valued the business at barely
$150,000 but I was still willing to go much higher because I knew
Mark would never agree. Well - he did agree that there was about
$150,000 in the business but then started tossing out ridiculous
principles like EBIDTA and again valued the business at some
ridiculous amount.
I offered a fair and reasonable price, I was told it was
summarily accepted. We drafted agreements based on what was
affordable based on what this business brought in a month. I was
laughed at, I was made a fool of, I was told that I’d run the place into
the ground. I was told I’d have to pay much more a month, I’d have to
secure ridiculous amounts of collateral (which should tell you that
even Mark knew this business wasn’t worth squat), I was told they’d
prefer to sell me worthless stock than assets, I was told if I got those
assets- they were also tied as collateral. I’d have no cash flow, no
way of making building improvements, no way of promote the
business. I should have known the real game was to prevent me from
even attempting to buy it anymore.
- 22 -
I went back to my attorney and to my accountant and to my
bank and the solution was clear- start over. Start new- turn my
collateral into something that worked for me, not Mark Papalia. So we
did- the bank happily financed us and off we went on our new
adventure.
Now, that day has come- we are ready for business and myself
and Darlene, Dale and Jane are leaving the Telegraph with heavy
hearts but also with great excitement for the future. OUR future ...
We bear no ill will against you John, -you’ve made the past few
weeks really hard because we all really like you but we simply can’t
stay. Mark will never sell this to me, he never intended to. He
couldn’t even thank me for what I’ve done, he had to toss it in my
face that he needed to make sure we didn’t go under. Well, if he was
so damn worried about that, where was he the past 13 months. He
never stopped by, never called, never asked how it was going, if we
needed anything, if the building was falling down, if it was bee
infested, etc .... His sudden concern is a bit odd, don’t you think?
I didn’t lie to you about the equipment- it’s all good. The Ricoh
is the best machine out there for the money. The presses all function
in some capacity but haven’t been used since Jake left. You honestly,
have all the tools to continue to operate- you’ll just need to find new
people to helm the ship. And you’ll have us to contend with, because
we will be out there securing our customers and getting those jobs that
I was told that I didn’t know how to get or how to properly market.
Remember this too, the Telegraph has no contracts with clientsthere is not one client under any kind of obligation for any extended
period of time to print with the company.
This isn’t easy for me -losing the newspaper is killing me. It
means so much to me and I hope one day to buy it back from the
estate. Hopefully, someone will come to their senses and allow me to
buy it for a reasonable price- if not, we will be publishing our own
newspaper soon enough.
I have given 300% to this business the past year- I have worked
60 hours weeks, I have been out there talking to people and securing
- 23 -
our old clients and not one word of thank you from anyone in the
family or the estate. That’s fine- I’m finally getting my reward something that can’t be taken away from me.
Again, I wish you well and will not bad mouth you to anyone you are a good man. can see that. Under different circumstances, we
could have been a good team.
Darlene has left passwords and the safe combination. I have
done the same.
Things to know:
1.
2.
3.
4.
5.
6.
7.
8.
Call Peggy Shields about online newspaper updating
information.
Paper ordered through Lindenmyer-Monroe- Jason Butler
contact.
Daily Item prints Telegraph- Bob Kutz is your contact.
I switched you as the official contact with RicohMargaret Wolfe is your contact, whom you’ve already
met. She can set up training for you. They
are changing the online supply order as well - once they
get it updated and contact you, password is-[redacted].
My computer is set to log in as Mifflinburg Telegraph log in is-[redacted].
Time capsule has my current backups and the CO’s to the
right are older files.
Xante envelope printer is not under Ricoh. The files
should have contact information if you have problems.
D&L is our contact for the big machinery.
I think that’s it.
Heidi Criswell84
Tellingly, the copy of the resignation letter that the Criswells attached as an
exhibit to their opposing brief is slightly different than the copy Mifflinburg
84
ECF No. 124-1 at 14-16.
- 24 -
Telegraph attached.85 The phrase “Remember this too” has been cut from the
eleventh paragraph.86 The first six line items under “things to know” are identical,
but then they continue:
7. Risograph contact is Pat from GE Richards
8. Xante envelope printer is not under Ricoh. The files should have
contact information if you have problems. Also - we ordered needed
supplies last week, the ordering information for that is also in file.
9. D&L is our contact for the big machinery - I think service number
is in rolodex - Bonnie is secretary, Terry is the service man you [sic]
usually comes up here.
The most damnning difference, one of several indicators of ‘consciousness
of guilt,’ is that the letter the Criswells’ attached as an exhibit contain a different
sign off. As opposed to “I think that’s it. Heidi.” in the copy Mifflinburg
Telegraph attached, the Criswell’s purported letter includes an additional, phrase:
87
85
ECF No. 138-1 at 13-14.
86
ECF No. 138-1 at 13.
87
ECF No. 138-1 at 14.
- 25 -
Misleading Mifflinburg Telegraph’s clients
Reorder forms
Prior to resigning, Heidi Criswell provided reorder forms to Mifflinburg
Telegraph clients. She testified the reorder forms contained the phone number, fax
number, email address, and mailing address, not of Mifflinburg Telegraph, but of
her new business,Wildcat.88 The front and back of a reorder form given to a client
on January 30, 2014, immediately prior to her resignation, is copied herein:89
88
ECF No. 124-2 at 105-106 and ECF No. 124-2 at 308-309.
89
ECF No. 124-2 at 308-309.
- 26 -
- 27 -
In her counseled deposition testimony, when asked when this reorder form
was used, she responsively testified that
We had two schools of thought here: One, what was happening to the
Mifflinburg Telegraph before January 9th when Mark walked in the
business, and one that happened after that. We seriously, stupidly,
thought that the customers were our responsibility, that if we walked
out the door and the shop closed down on February 3rd or whatever
day we were thinking we were going to be able to get out of there, that
the customers were going to be left hanging.
It was a stupid attempt to try to reach out to them to find us, to find
anybody to print. When -- I think I printed maybe 20 of these, I don’t
know, just a couple of sheets. And I was under the impression that-the day that John walked into the building or Mark Papalia walked
into the building and said that things -- he was going to -- there was
no danger of the Telegraph closing, I was under the impression that all
these cards were pitched.
I honestly do not know how this card got out on January 30th.It was,
honestly, the last job that was done before we walked out of the
building for the last time as printers -- the last time that she walked
out of the building, on January 30th. She, meaning Jane [Boop
another employee], who would have filled this out.90
Mifflinburg Telegraph’s counsel continued the line of questioning asking
Q: “And who instructed Jane to fill this out?”91
A: “I did.”92
Q: “When did you instruct Jane to first start putting them in the
jobs?”93
90
ECF No. 124-2 at 110-111.
91
ECF No. 124-2 at 111.
92
ECF No. 124-2 at 111.
93
ECF No. 124-2 at 112.
- 28 -
A: “Oh, gosh, probably the very end of December. I’m not honestly
sure. It would have been somewhere around Christmas, somewhere in
that period of time. As I said, I don’t think I printed more than 20 of
them, 20 or 25 of them; and I did think they were gone.”94
Q: “So you printed them, the 20, 25 of them, for the specific pursue of
taking care of Mifflinburg Telegraph customers?”95
A: “Yes.”96
Darlene Sharp testified at her deposition that she had seen the reorder card
prior to the litigation “back in the finishing department of Mifflinburg Telegraph.97
She affirmed that Wildcat Publications’ reorder cards were put in Mifflinburg
Telegraph jobs when completed.98 She was aware of this practice since sometime
in early January 2014, but never told John Helwig.99
Helwig discovered the reorder form shortly after the collective resignation.
He attested in an affidavit: “On February 6, 2014, I noticed a customer order that
was ready for pick up by the customer. When I opened the order to make sure it
was correct, I found a reorder form for Wildcat Publications, LLC.”100
94
ECF No. 124-2 at 112.
95
ECF No. 124-2 at 112.
96
ECF No. 124-2 at 112.
97
ECF No. 124-7 at 21.
98
ECF No. 124-7 at 21.
99
ECF No. 124-7 at 21.
100
ECF No. 124-4 at 2.
- 29 -
Accessing Mifflinburg Telegraph Emails after resigning and responding
with a sign off containing the Mifflinburg Telegraph name
In addition to providing customers misleading reorder forms directing them
to Wildcat, Heidi Criswell also accessed, after she resigned and without authority,
her former Mifflinburg Telegraph email account from her personal iPad.101 She
did not delete her Mifflinburg Telegraph email account until the weekend of
February 6 and 7, 2014, a week after her voluntary resignation.102 She continued to
send emails from that account during the week after she handed in her formal
resignation letter, leading customers to believe that she was both still with the
Mifflinburg Telegraph and now running it. On February 4th and 5th 2014, Heidi
Criswell engaged in an email exchange with Christina Lee regarding a print job for
Mifflinburg Midget football and cheerleading. She did so from her Mifflinburg
Telegraph email address, Heidi@mifflinburgtelegraph.com with the following
picture attached to the bottom of her email:103
101
¶ 30.
102
¶ 31.
103
ECF No. 124-2 at 319.
- 30 -
The picture was also attached to her January 31, 2014-February 3, 2014
email exchange with Andrew Klose from her Mifflinburg Telegraph email address,
Heidi@mifflinburgtelegraph.com.104
When questioned at her counseled deposition, Heidi Criswell testified that
“new management” referred to “Darlene and I started managing the place with
Mark’s blessing.”105 She continued by saying “Competitive pricing meant exactly
what it says. It was very important. There was a lot of concern after John passed
away that the place was closing, and we got phone calls every day; so we wanted
to make it very clear that the place was not closing.”106
104
ECF No. 124-2 at 316-318.
105
ECF No. 124-2 at 84.
106
ECF No. 124-2 at 85.
- 31 -
Fulfilling Mifflinburg Telegraph orders though Wildcat
In addition to sending these emails after she had resigned, Heidi Criswell
conceded at her deposition that she had fulfilled a Mifflinburg Telegraph order
through Wildcat.107 The weekend she resigned, she took Andrew Klose’s business
card order from Mifflinburg Telegraph. She testified that,
A: So on Sunday when I went in and had my last walk through the
building, I grabbed them [the business cards] quick and took them
with me. And I contacted him immediately to tell him, as that e-mail
says, that I had his cards and where they were located, and I knew he
was in a hurry for them, so to come get them.108
Q: When did he pick them up?
A: First thing Monday morning.
Q: So he could have picked them up from the Telegraph?
A: Yes, he could have. We never did any - I mean, I never heard from
him again, you know. There was a mention of receipt books here.
We never printed them or did anything for him after that, so --109
The email exchange between Andrew Klose and Heidi Criswell confirms
that she took the business cards from Mifflinburg Telegraph and told Klose to pick
107
108
109
ECF No. 124-2 at 130.
ECF No. 124-2 at 126.
ECF No. 124-2 at 127.
- 32 -
them up from her at Wildcat.110 The salient portion of this email exchange is
copied herein:
For his part, Dale Criswell testified that although he did recall taking a
package to UPS on January 23, 2014, he did not recall the intended recipient.111
Additionally, John Helwig professed that at least one “Mifflinburg Telegraph
customer entered the Mifflinburg Telegraph to pick up his order. He then
indicated that he had ordered it from Heidi Criswell and was at the wrong
place.”112
110
ECF no. 124-2 at 316.
111
ECF No. 124-3 at 46.
112
ECF No. 124-4 at 4.
- 33 -
However, one Mifflinburg Telegraph customer was not misled -- Conagra.
Credit for honesty should be given to Darlene Sharp, however, not Heidi Criswell.
This email is copied herein:113
Absconding with Mifflinburg Telegraph’s customer list
Prior to their official departure from Mifflinburg Telegraph, Sharp sent an
email to Heidi Criswell’s personal email address, bluebari89@mac.com, attached
was an excel spreadsheet, containing the Mifflinburg Telegraph “mailing list.”114
113
114
ECF No. 138-1 at 5.
ECF no. 124-4 at 236.
- 34 -
Sharp testified at her deposition that she maintained an electronic mailing list on
her computer listing subscribers.115 She further testified that her January 24, 2014
email reflected sending the Mifflinburg Telegraph customer list/mailing list to
Heidi Criswell. She stated as a deponent:
Q: I’m going to hand you what we’re marking as Sharp 7. Do you
recognize this e-mail?
A: I have seen it before, yes.
Q: And where have you seen it before?
A: On documents.
Q: Okay. Did you send an e-mail from your computer to
bluebari89@mac.com?
A: I tried to, yes.
Q: Okay. And what were you sending?
A: A mailing list.
Q: And whose mailing list was it?
A: From the Telegraph.
Q: And where did you get this mailing list?
A: From my computer.
Q: Is a copy of this mailing list still on your computer?
A: Yes.
115
ECF No. 124-7 at 25.
- 35 -
Q: Okay. And what would it be called?
A: I don’t remember. Customer list.
Q: You said you tried to send this mailing list.
bluebari89@mac.com?
And who is
A: That is Heidi’s address.
Q: Okay. Did you delete this e-mail after you tried to send it?
A: I probably did, yes.
Q: And why were you sending this to Heidi?
A: Because she asked me to.
Q: And what did you think it was going to be used for?
A: A postcard mailing.
Q: For?
A: Wildcat Publications.
Q: Okay. And where did you get the mailing list?
A: Off my computer.
Q: So it was a Mifflinburg Telegraph mailing list?
A: Yes.116
There are two separate lists attached as sealed exhibits. Approximately 300
customers are noted on the mailing list.117 There are approximately 200 customers
named on the November 26, 2013 ‘customer and job list.’118
116
ECF No. 124-7 at 28.
- 36 -
In preparing her business plan for the new Wildcat business, Heidi Criswell
included a “laundry list” of confirmed clients.119 Heidi Criswell had spoked to “all
but two or three” of those listed prior to writing her business plan. 120 Heidi
Criswell testified that “a lot of them were friends that had been with me since
January and saw me struggling to buy the business and saw my choices and felt
that -- and wanted to assure me that if I would decide to branch out on my own that
they would definitely consider -- strongly consider or definitely stay with me.”121
She had been speaking to these clients “for a long time.”122
Heidi Criswell further testified that she “went around with the business
agreement as to the people that said they would definitely continue to use my
services. I did not contact people that I did not know, didn’t have personal
encounters with, which was probably 95 percent of customers.”123 She continued,
“Darlene talked to ConAgra sometime in November…I know the only one we
117
ECF No. 128 at 2-11.
118
ECF No. 128 at 15-49
119
ECF No. 124-2 at 82.
120
ECF no. 124-2 at 82.
121
ECF No. 124-2 at 83.
122
ECF No. 124-2 at 83.
123
ECF No. 124-2 at 90.
- 37 -
made a formal -- any kind of formal letter to was ConAgra.”124 “Lewisburg
School District, we did not call until February 3rd.”125
Although Heidi Criswell only admitted to two clients, her business plan,
dated November 6, 2013, lists the following clients. “Confirmed Clients: Heritage
Printers confirmed clients Include: Country Farm & Home, Mifflinburg Heritage &
Revitalization Association, Artist Valerie Moyer, Martin & Lobes Attorneys,
Tournament of Bands/National Judges Association, BandVideos.com, Milton Band
Boosters & Theatre Department, Hoffman Advertising, Mifflinburg Christkindl
lnc., Max Media, Mifflinburg Theatre & Arts Department, Raspberry Creative
Design, Hoffman Advertising, Hometown Eatery.”126 “Clients in negotiation
include: Con-Agra, Boy Scouts, Country Cupboard, Central Susquehanna Builders
Association, Landmark Tours, Mifflinburg School District, Lewisburg School
District to name a few.”127
An email chain between Heidi Criswell and Stacey Reich at ConAgra Foods
dated January 10, 2014 through January 13, 2014 confirmed Con-Agra as a client
of Wildcat. 128 This particular email was not misleading. Heidi Criswell made it
clear that “The new name is Wildcat Publications LLC” and that “all of the
124
ECF No. 124-2 at 90-91.
125
ECF No. 124-2 at 91.
126
ECF No. 124-2 at 303.
127
ECF No. 124-2 at 303.
128
ECF no. 124-2 at 304-5s.
- 38 -
employees are moving.”129 Of the above listed clients Heidi Criswell included in
her business plan, one-third were existing Mifflinburg Telegraph customers.130
In deleting files, it appears that Heidi Criswell may have also deleted the
customer list from the Mifflinburg Telegraph computers. John Helwig attested that
“I am unable to locate the Mifflinburg Telegraph newspaper distribution list which
indicates the subscription end dates.”131
Closing Mifflinburg Telegrpah’s account with its paper supplier
On December 20, 2013, Heidi Criswell and Sharp received an email from
Lindenmeyr Munroe, Mifflinburg Telegraph’s paper supplier, that indicated that
based on a verbal representation from Heidi Criwell, Lindenmeyr Munroe would
close the Mifflinburg Telegraph account at the end of January 2014. This email
exhibit appears to be an exhibit that, tellingly, Mifflinburg Telegraph apparently
wasn’t aware of, because Mifflinburg Telegraph didn’t attach the exhibit to its
papers; the Criswells, however, did. The Criswells attached this email despite it
clearly inculpating Heidi Criswell as the individual who closed Mifflinburg
Telegraph’s account with its paper supplier. That email is copied herein,132
129
ECF No. 124-2 at 305.
130
ECF No. 128 at 15-49.
131
ECF No. 124-4 at 4.
132
ECF No. 138-1 at 16.
- 39 -
Heidi Criswell could have advised Mark Papalia in the interim that
Mifflinburg Telegraph’s account with its paper supplier would be closed. Instead,
on January 3, 2014, Heidi Criswell sent a responsive letter to Lindenmeyer Munroe
stating, in relevant part,
You have requested some information from me about the current
situation at the Mifflinburg Telegraph…and how it pertains to my new
business - Wildcat Publications, LLC.
*****
- 40 -
We already have verbal confirmations from about 85% of our major
clients that they have no intention of leaving us regardless of where
we are located or what we call ourselves.133
Lindenmeyer Munroe then closed Mifflinburg Telegraph’s account “as a result of
being told that the Mifflinbug Telegraph would be out of business at the end of
January.”134 As a result, Helwig had to subsequently reapply for credit with this
vendor.135
Work performed by Mifflinburg Telegraph and invoiced for payment by
Wildcat
Heidi Criswell testified at her deposition that a client, Brett Hosterman,
emailed her on January 21, 2014 to place an order for 150 posters for Mount
Carmel Area High School. 136 She processed the order on January 23, 2014 while
still working at Mifflinburg Telegraph using Mifflinburg Telegraph machines and
supplies, but later billed the order from Wildcat.137 The bill is copied herein:138
133
ECF No. 124-2 at 356.
134
ECF No. 124-4 at ¶ 14.
135
ECF No. 124-4 at ¶ 14.
136
ECF No. 124-2 at 166.
137
ECF No. 124-2 at 167 and 362 and ECF No. 138 at ¶69.
138
ECF no. 124-2 at 365.
- 41 -
She did not forward to her employer the money received by Wildcat from the
Tournament of Bands work performed by Mifflinburg Telegraph.139 At her
deposition, Heidi Criswell conceded that yet another bill for work that was
completed by Mifflinburg Telegraph was ultimately billed from Wildcat.140
139
ECF No. 124-2 at 167.
140
ECF No. 124-2 at 166.
- 42 -
The uninformed or inobservant Dale Criswell testified that he was not aware
of any “Wildcat Publications orders [] processed through the Telegraph.”141
Deleted data files from Mifflinburg Telegraph’s computer
After the clandestine resignation of all employees, Helwig attempted to
access Heidi Criswell’s computer and discovered that in addition to her
resignation, she had also deleted all Mifflinburg Telegraph work product and
customer files from the Mifflinburg Telegraph owned computer.142 Mifflinburg
Telegraph was forced to retain a computer recovery service to attempt to recover
the files.143 The first computer technical support personnel retained was unable to
recover the files.144 Mifflinburg Telegraph later hired a forensic computer expert
who did recover some deleted emails, but most of what was found were ‘corrupt,’
unusable files.145 In total, Mifflinburg Telegraph paid $9,204.57 for the computer
recovery services.146
In her counterstatement of facts, Heidi Criswell asserts “emphatically [that]
all job files were on her computer on February 2, 2014.”147 Yet an email she sent to
141
ECF no. 124-3 at 47 and ECF No. 124-4 at 2.
142
¶ 16-19. She testified that the computer was only “two or three years old maybe.” ECF No.
124-2 at 104.
143
¶ 18, 20-24.
144
¶ 24.
145
¶ 25-27.
146
¶ 28 and ECF No. 124-1 at 9-12..
147
¶ 18.
- 43 -
Cheri Ross of the Main Street program part of the Mifflinburg Heritage &
Revitalization Association (“MHRA”), shows that as early as January 22, 2014,
Heidi Criswell was aware that she had deleted all MHRA files.148 This email is
copied herein.149
148
ECF No. 124-2 at 310.
149
ECF No. 124-2 at 310.
- 44 -
Moreover, in her statement of facts Heidi Criswell admitted that she deleted
her entire computer identity on January 31, 2014.150 She testified at her deposition
that she understood ‘identities’ on Macs.151 She further testified that she removed
her identity from the computer, explaining “I removed myself from the computer:
my name, my personal identity; and that’s what I did. I removed my identity from
the computer.”152
Darlene Sharp testified at her deposition that the job files were all stored on
Heidi Criswell’s computer. If a customer asked for a reorder, no one else could go
on Heidi Criswell’s computer; Heidi “would have to send it directly to the
[printing] press from her computer.”153
Heidi Criswell does not dispute that Mifflinburg Telegraph spent almost tenthousand dollars attempting to recover files.154 What she appears to dispute is the
timeline of events, as she poses the question in her counterstatement of facts
“Criswell asks what date Kinn Computers was called to investigate it?”155 Heidi
Criswell asserts that Mifflinburg Telegraph should have been able to access all
150
¶ 19.
151
ECF No. 124-2 at 117.
152
ECF No. 124-1 at 121.
153
ECF No. 124-7 at 10-12.
154
¶ 28.
155
¶ 18.
- 45 -
files on her computer.156 However, the inability of the forensic computer recovery
service to recover the files belies her contention. Her narration of undisputed facts
is as follows:
¶ 17 Criswell states that Mifflinburg’s customer job files were saved
on her computer. In addition back-ups were on her Apple Time
Capsule and on CD’s as stated in her resignation letter.
¶ 18 Criswell would have no first hand knowledge of this but
assumes it to be true that David Kinn was hired to examine the
computer. Criswell states emphatically all job files were on her
computer on February 2, 2014. Helwig made no inquires directly to
Criswell about the computer when he asked for a voicemail password
- it seems that missing files would have ben the larger priority.
Criswell asks what date Kinn Computers was called to investigate it?
It seems as if it was working immediately after Criswell leaving as at
least two repeat jobs were printed b the Telegraph.
¶ 19 As stated, Criswell admits to removing her identity from her
work computer on Friday, January 31, 2014. As stated in her
directions to Helwig in her resignation letter, the computer was set to
log in as “Mifflinburg Telegraph” not “Mifflinburg” as she provided
the password to access it.
¶ 20 Mr. Kinn is correct, identities allow the use with the access to
the files the administrator allows. However, “Mifflinburg Telegraph”
was also set as the administrator, which allowed it to access and edit
ALL files on the computer.
¶ 21 The sole identity on the computer was not “Telegraph.” It was
“Mifflinburg Telegraph.” It was also the sole administrator. Again,
Criswell asks if the computer was ever attempted to be logged in as
she instructed.
156
¶ 20.
- 46 -
¶ 22 Criswell strong disputes that the files were not accessible. While
Criswell does not dispute what Mr. Kinn found, she disputes how the
computer arrived to him in that condition.
¶ 23 Again, while Criswell’s identity was deleted from her computer,
the “Mifflinburg Telegraph” identity as well as the assignment of
administer allowed access to all files on the computer. Criswell
assigned it as such and disputed Mr. Kinn’s claims.
However, the Criswells’ 2016 recitation of facts is not in entirely in accord
with what the Heidi Criswell’s February 2014 resignation letter actually says.157 In
her letter, her only references to the computers were to say “Darlene has left
passwords and the safe combination;” “I have done the same;” “My computer is set
to log in as Mifflinburg Telegraph - log in is [redacted]; and “Time capsule has my
current backups”158 Her contrary statements in paragraphs nineteen and twenty
noted above are examples of multiple discrepancies in the Criswells written work
that cause me to question their forthrightness. Heidi Criswell admits that she
deleted her files and identity from the computer, but in the same breath attempts to
shift the blame back to Plaintiff for its inability to access those deleted files
through its administrator identity.
The undisputed fact is, that despite Heidi Criswell’s purported hope that the
files would remain after she deleted them, they somehow did not. The owner,
president, lead computer technician, computer consultant, technical advisor, tech
157
ECF No. 124-1 at 14-16.
158
Id.
- 47 -
support, and the on-side field technician of Kinn Computers, David Kinn, was
unable to recover her files.159 Kinn is far from a novice, as he has more than 25
years of experience.160 The computer at issue is a MAC161, an Apple, Inc. brand.
Kinn attested as follows in his declaration:
4.
On or about February 3, 2016, I was contacted by Mark Papalia
to go to the Mifflinburg Telegraph to assist in locating files on a MAC
computer which was formerly used by Heidi Criswell while she was
employed by Mifflinburg Telegraph.
5.
Mifflinburg Telegraph computers were set such that a person
logged into the computer under an identity. The person then had
access to all files created under that identity and no other identity.
Therefore, if one were to log in under the identity of Mifflinburg
Telegraph, they would not have access to the customer files created
under Heidi Criswell’s identity.
6.
The only identity that existed on February 3, 2016 was the
identity of Mifflinburg Telegraph. Logging in as Heidi Criswell as an
identity was not an option.
7.
When we logged in as Mifflinburg Telegraph, none of
Mifflinburg Telegraph’s customer files were accessible.
8.
When an identity is deleted on a computer, this action deletes
all files associated with that identity and login. Therefore, when Heidi
Criswell deleted her identity, she deleted all Mifflinburg Telegraph
files that were created under her identity, in essence all Mifflinburg
Telegraph files.
9.
I was unable to restore Ms. Criswell’s identity and unable to
recover the deleted files.
159
ECF No. 124-5 at 2-5.
160
Id. at ¶ 2.
161
¶ 3.
- 48 -
10. As I was unable to recover the deleted files, I recommended to
Mark Papalia that he hire a forensic computer expert to work with me,
which he did.
11.
The forensic computer expert recovered deleted emails.
12. The forensic computer expert also did recover a minimum
amount of customer files; however, those files were not able to be
used as they were corrupt.
13. At that time it was determined that the customer files were not
able to be recovered in a usable manner, so we stopped attempting to
recover them.162
Continued unauthorized use of Mifflinburg Telegraph’s data files
Lest one believe Heidi Criswell’s vacillating responses are confined solely
to her written statements, I note her deposition was laden with equivocal responses,
as well. When asked “Are you using Mifflinburg Telegraph designs at Wildcat
Publications?”163 She responded “I am doing my best not to, if I feel it’s
something that’s in conflict. At this point, yes -- I mean, no, I am not using
anything.”164 When pressed, she continued, “I mean, I’m not saying I have not
accidentally used one. If it was done, it was not done with intent.”165
She admitted in her statement of facts that she was using designs that were
on the Mifflinburg Telegraph computers, but argues that the customer ‘owns’ the
162
Id. at p. 3-4 (emphasis added).
163
ECF No. 124-2 at p. 185 ¶ 15-16.
164
ECF no. 124-2 at p. 185 ¶ 17-19.
165
ECF No. 124-2 at p. 185 ¶ 7-9.
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design.166 Specifically, she admitted she re-produced the menu for Carriage Corner
restaurant.167 Interestingly, Sharp testified that she believed that if a customer
wanted to purchase something through Wildcat that is duplicative of work from
Mifflinburg Telegraph that “Heidi had to start from scratch and redo it.”168
Use of Mifflinburg Telegraph’s pricing list
Until just before his death, John Stamm was responsible for determining
pricing for the products and services Mifflinburg Telegraph provided.169
Mifflinburg Telegraph asserts that Heidi Criswell used this pricing book to solicit
Mifflinburg Telegraph customers to Wildcat, telling customers that she would
charge less than John Stamm.170 Heidi Criswell disputes this, but again, her
emphatic statement of facts contradicts her own prior testimony. She wrote:
¶ 33 Stamm had a pricing book that he kept with him at all times.
The book was turned over to Sharp and Criswell approximately one
week before his death and was used to price orders. UNDISPUTED.
¶ 34 Criswell used pricing information obtained from Stamm’s book
to solicit Telegraph customers for the Telegraph NOT Wildcat.
UNDISPUTED.
166
ECF no. 138 at ¶ 71.
167
ECF no. 124-2 at 186-187.
168
ECF No. 124-7 at 68.
169
¶ 33.
170
¶ 34-35.
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In her 2014 deposition, however, Heidi Criswell testified that Stamm gave
the pricing book to his wife Wanda, not to her.171 Additionally, prior to leaving
Mifflinburg Telegraph, she attempted to undercut Mifflinburg Telegraph by telling
a client that she would charge them less at Wildcat. She wrote in a January 28,
2014 email to Carol Pierson
Worked on the pricing for the bridal book - With the reduced page
count, I can do you more programs - do you want to do about 300-350
and put the rest toward the nascar book and get more there? I’m not
getting anything near what John was charging you.172
Unauthorized transfer of Mifflinburg Telegraph’s printer to Wildcat
Sometime between October 7, 2013, when she was notified that the
negotiations to purchase Mifflinburg Telegraph had failed, and October 25, 2013,
when she formed the Wildcat business, Heidi Criswell contacted Ricoh, USA, Inc.,
hereinafter “Ricoh,” to ask them “if equipment that I [Heidi Criswell] thought was
mine that I had signed for, could be switched -- the contracts could be switched;
and they said yes.”173 Curiously, on September 22, 2013, without Papalia’s
knowledge, Heidi Criswell signed a lease with Ricoh for a ‘651’ printer for
Mifflinburg Telegraph for a cost of $1,704 per month.174 She signed a revised
lease, dated November 14, 2013, to ‘buy out’ Mifflinburg Telegraphs’ existing
171
ECF No. 124-2 at 24.
172
ECF No. 124-6 at 17.
173
ECF No. 124-2 at 63.
174
ECF No. 124-2 at 132-137 and ECF No. 124-2 at 320-322.
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‘720’ printer to bring the lease up to $1,986 per month.175 The change in lease price
was “what it would cost to add the 720 on to the 651 lease.”176 She never
discussed the lease, nor the subsequent revision, with Papalia prior to signing.177
The lease itself, including the price change from $1,704 to $1,986, is billed to
Mifflinburg Telegraph.178
Although Heidi Criswell asserts in her statement of facts that Wildcat signed
a service contract for the increased payment to be removed from Mifflinburg
Telegraph’s account and placed on Wildcat’s, her only evidentiary support for this
is to cite, ipsie dixit, to her resignation letter.179 The price change and billing
information on the lease have been copied herein:
175
ECF No. 124-2 at 132-137 and ECF No. 124 at ¶ 42..
176
ECF No. 124-2 at 134.
177
ECF No. 124-2 at 132.
178
ECF no. 124-2 at 320-322.
179
ECF No. 138 at ¶ 50 and Exhibit F.
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Heidi Criswell asserts she believed she was personally responsible for the
machines.180 The lease does contain a ‘personal guaranty’ section, but it is
unexecuted by anyone:181
180
ECF No. 124-2 at 135.
181
ECF No. 124-2 at 320.
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In a December 2, 2013 email exchange with Margaret Wolfe, a Senior
Account Executive with Ricoh USA, hereinafter “Wolfe,” Heidi Criswell wrote:
So to re-iterate -please make sure all billing goes to the Miflfinburg
[sic] Telegraph Inc... not me. Something going down (not bad) and
Iwant [sic] to make sure that the present trustee pays for all that the
business is responsible for. So for now, let’s just forget that we talked
about moving them until this is all settled.
In a January 3, 2014 email to Wolfe, Heidi Criswell wrote,
As I said, if there is ANYTHING I can do to help, please let me know.
Things seems to be progressing according to plan but the silence on
the part of the Stamm estate is deafening and I’m worried we may
hear from them soon. I gotta get these machines moved out of here
soon.182
In a January 6, 2014 email exchange between Wolfe and Heidi Criswell,
Criswell wrote:
182
ECF No. 124-2 at 348.
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It is in the mail...
As far as the world is concerned the Telegraph is now Wildcat
Publications, LLC. It is closing Feb. 3, and unless the executor would
like to find a buyer at sometime and try to reopen it - which is 99%
doubtful, it will stay shuttered. He doesn’t know equipment was ever
here, we have contracts, we are continuing to pay our commitment to
Ricoh.
Can we simply tell them that yes, we are the Telegraph and yes, we
are rebrandlng and starting over simply because of the "bad karma"
associated with the Telegraph name. We have to move because the
current location is about to be condemned by the county (this is the
truth).
Are we just trying to be too damn honest about this? Can you just be
"misinformed" or just didn’t quite understand what I wanted done.
We are under the exact same corporate structure.
It is interesting to note that Lindenmyer- Munroe is cancelling the
credit line with the current Telegraph on Jan. 30 because John is dead
and we are gone. If someone else opens this, they must re-apply and
will have to prove credit worthiness even though the business itself
has been here since 1862. They have no problem with allowing us to
take our credit to the new location.
I need a beer!
Heidi Criswell183
Wolfe responded to Heidi Criswell:
I’m down with the beer!
OK…, lets do this…I will process paperwork as Telegraph, moving to
“telegraph” at new location. The invoice will be created as
‘telegraph’. Then once the assumption is done…provided its done,
183
ECF No. 124-2 at 355.
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we can issue a new invoice as wildcat and credit it. Or you can just
pay the ‘telegraph’ invoice. We don’t care where the check comes
from.184
On January 8, 2014, Heidi Criswell wrote in an email to Wolfe: “do
whatever you need to do to get these machines out of here asap!!”185 In a January
9, 2014 email exchange between Wolfe and Heidi Criswell, Wolfe wrote:
Heidi,
Our coordinator got wind of the conversation I had with the big boss
(Ramzi). She was trying to get the Mifflinburg Telegraph lease
straightened out so the you [sic] could start making the payments.
NOW there is a total barrage of questions. They want to know who
the contact will be if not you,
I am afraid they are not going to be OK with this. After all it is rather
apparent that you are more or less sticking the Executor (what’s his
name?) with this lease. If he doesn’t want to pay it, we are going to
have to re-posess [sic] the unit and take a loss.
Now maybe they will let you just assume the lease with the
marketplace funding it.
I’m not sure what to tell them. You’re thoughts?
Margaret Wolfe186
Heidi Criswell replied,
184
ECF no. 124-2 at 354.
185
ECF no. 124-6 at 12.
186
ECF No. 124-2 at 374.
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If the skew can be fixed a little better btw, which I can just say "hey
it’s fixed!" He will keep the machine with no problem. I told him
about the skewing issue and that it still wasn’t great and he asked if
they planned on fixing it - I couldn’t say - yeah, when it moves. So - if
a tech comes in and "fixes" it- or tries to make it better again, I will
say "this is great!!" and he will say yeah!! and pay all the money
Ricoh wants, cause he is all about spending the cash!!187
In a January 9-10 email exchange between Heidi Criswell and Wolfe,
Criswell wrote:
how do we get these out of here post haste?
He wants to bring in a manager to help us make more money and he’s
willing to look at new printers (I told him one of these was on trial
and the other broken) and they were scheduled for removal soon.188
Wolfe replied “I’ve asked to have them scheduled ASAP. I will check with
the warehouse and get back to you.”189 Heidi Criswell replied, “Any idea when the
720 is physically leaving the building.190 In a January 10, 2014 email from Wolfe
to Heidi Criswell, Wolfe wrote:
Heidi,
The payment for the 720 has to be in it. We bought it out with the 651
lease. You are correct that it doesn’t appear on the lease document, so
he won’t know that. All he will know is that the C651 costs $1986 a
month.
187
ECF No. 124-2 at 374.
188
ECF No. 124-6 at 26.
189
ECF No. 124-6 at 26.
190
ECF No. 124-6 at 26.
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We can move it because according to our records it is “owned by the
Telegraph now. And he told you to get it out of there.
Margaret Wolfe.191
In a January 15, 2014 email exchange to Wolfe, Heidi Criswell wrote:
Someone from ricoh is calling HERE to find out about the new
machine - something about delivery Darlene thinks. I have no idea
who it is because I am never here. It’s so important that no one calls
the Telegraph about the new machinery. Have no idea who is using
the number.192
In a January 28, 2014 email exchange with Erika Brent, Lead Specialist,
Customer Billing at Ricoh USA, Inc., Heidi Criswell wrote:
I wasn’t aware that we’d be receiving invoices until the new 651 was
installed -it’s at least two weeks from what Margaret told me. The two
machines are on the same contract?
The Telegraph would be responsible for all invoices dating to January
14. We don’t have supporting electricity to run any printers yet, prob.
not for another two weeks.
Darlene caught up Invoices at the Telegraph relating to the both the 720
and the 651 that is here last week I believe. (I hope)
Thanks ,
Heidi193
Heidi Criswell made the first lease payment with her “own personal
money;”194 she signed an assumption agreement on January 6, 2014.195 The
191
ECF No. 124-2 at 352.
192
ECF No. 124-2 at 350.
193
ECF No. 124-2 at 326.
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assumption agreement stated that the Transferor, Mifflinburg Telegraph, and
Transferee, Wildcat Publication, are jointly and severally liable for all rental and
lease payments.196 There was a $250 fee assessed by Lessor, Ricoh, in connection
with the assumption.197
In a January 30, 2014 email to Donald Reichenbach, another Ricoh
employee, with the subject line, ‘Installation of Machines at Wildcat Publications,’
Heidi Criswell wrote,
Howdy ho Don!!
I am not sure who to contact about this because Margaret is away and
I don’t have the serial numbers of the machines to open an account to
file a service request.
The contractors at our new place of business say that we will have
power up and running for both the 720 that was moved from the
Telegraph and the new 651 that I’m hoping we will see tomorrow. It
was in town yesterday and the lift gate froze, hoped we’d get it today
but never heard anything from the driver.
SO…that being said - we can scheduled [sic] installation of the
machines anytime after Mon., Feb. 3.
Thanks so much!!
Heidi Criswell.198
194
ECF No. 124-2 at 136 and ECF No. 138-1 at 2.
195
ECF No. 124-2 at 137.
196
ECF No. 124-2 at 333.
197
ECF No. 124-2 at 333.
198
ECF NO. 124-6 at 27.
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On February 6, 2014, Heidi Criswell had the printers at Wildcat “up and
running.”199
On March 3, 2014, Ricoh billed Mifflinburg Telegraph $500 for “equipment
relocation.”200
When questioned at his deposition about the printers at Wildcat, Dale
Criswell explained:
A: We have a digital printer, a paper cutter, a folder, an envelope
press, and, of course, the disputed 720.
Q: Okay. So when you mentioned digital printer, you’re not talking
about the 720?
A: No.
Q: That’s the second one. Okay. Do you know where the 720 came
from?
A: It came from the Telegraph.
Q: Okay. Do you know how Wildcat got the 720?
A: To the -- the way it was explained to me was that this was a
machine that was going to be junked because it was broken and the
lease was up on it. And when Mr. Papalia said throw it out, we
thought, well, this is going to end up on the ship somewhere; so my
wife asked Margaret if we could buy it or whatever or we could
assume -- or take over the lease on it or whatever, you know. We
weren’t trying to steal it or anything. We were under the assumption
that this was all set up with Ricoh, and, you know, -- and I asked them
199
ECF No. 124-2 at 180.
200
ECF No. 124-2 at 357.
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for reassurances, you know, over and over against, Is this okay? Not
because we were trying to steal anything. We were just trying to buy
an old broken press.201
John Helwig attested that he was unaware of Heidi Criswell’s plan for the
720 printer.
¶ 8. Prior to [Heidi] Criswell and Sharp quitting, according to the
Mifflinburg Telegraph’s financial records payments were made to
RICOH in the amount of $1,986. I did not sign the check making the
payments.
¶ 9. I was unaware that the lease payment of $1,986 included a
payment for the 720 Printer until I read the emails recovered by the
computer forensic consultant.
¶ 10. On March 20, 2014, a bill from RICOH was dropped off at the
Mifflinburg Telegraph for moving the 720 Printer to Wildcat
Publications, LLC’s address.
¶ 11. I was under the impression that the 720 Printer was returned to
RICOH. 202
Mifflinburg Telegraph asserts that the total payments it made for the 720
printer while in Wildcat’s possession was $5,358.00
Defamation
Heidi Criswell also testified that she “told a few people that I was concerned
something illegal was going on, yes.”203 She also emailed a contact at Costas
Foods:
201
ECF No. 124-3 at 2-3.
202
ECF No. 124-3 at 2-3.
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204
For his part, Dale Criswell testified as follows:
Q: Did you ever tell anyone that Mark Papalia was engaged in illegal
operations?
A: Not -- I -- well, no. I said to people that we might -- we have
apprehension.
*****
Q: Okay. Do you know if anyone else told -- or said that Mifflinburg
Telegraph was engaged in illegal operations or doing something
illegal?
A: No.
*****
Q: Did you ever tell anyone that Mifflinburg Telegraph had financial
troubles and could not pay its bills?
A: No, not that it couldn’t bay [sic] its bills. But it’s no secret that the
Telegraph was floundering for a while.
203
ECF No. 124-2 at 103.
204
ECF No. 124-2 at 373.
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Q: And so who would you have told that -A: Nobody. I don’t -- I wouldn’t tell them. It’s common knowledge.
*****
Q: Did you ever tell anyone that the Mifflinburg Telegraph was
closing?
A: No.
Q: Did you ever tell anyone that the Mifflinburg Telegraph was not
going to be in business after January?
A: No.
205
Additionally, Helwig attested that:
The Mifflinburg Telegraph uses Lindenmeyr Munroe to purchase
paper. Upon attempting to order more paper, I was informed by Andy
Lamden at Lindenmeyr Munroe that our account was blocked as a
result of being told that the Mifflinburg Telegraph would be out of
business at the end of January. Although I have reassured Mr.
Lamden that we were not closed, we still had to reapply for credit.206
Unauthorized Transfer of Trusteeship of Mifflinburg Telegraph’s 401K plan
On August 1, 2013, Heidi Criswell changed the trustee of the Mifflinburg
Telegraph’s 401K plan held by First Savings Bank from Stamm and Papalia to
herself and Darlene Sharp.207 She did so by signing her name as the employer,
knowing that she was not, and also knowing full well that she did not have a
205
ECF No 124-3 at 38, 42, 44-45
206
ECF No. 124-4 ¶ 14.
207
ECF No. 124-2 at 16 and ECF No. 124-2 at 228-272.
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written agreement to purchase the business.208 Heidi Criswell did not notify Paplia
that she had transferred the trusteeship of the 401K plan.209 Subsequently, on
February 2, 2014, immediately after her stealthy resignation from Mifflinburg
Telegraph, she signed documents transferring the 401K plan from Mifflinburg
Telegraph to Wildcat.210
The documents Sharp and Criswell submitted to the plan administrator at
Continental Benefits Group are copied herein:
208
ECF No. 124-2 at 16-18 and ECF No. 124-2 at 229.
209
ECF No. 124-2 at 18.
210
ECF No. 124-2 at 20 and ECF No. 124-2 at 231-272.
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211
211
ECF No. 124-7 at 138.
- 65 -
212
212
ECF No. 124-7 at 140.
- 66 -
213
Darlene Sharp admitted that she was never an officer of the Mifflinburg
Telegraph.214 She also testified that there was no board meeting and that she was
213
ECF No. 124-7 at 136.
214
ECF No. 124-7 at 37.
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not a member of board on August 1, 2013. She further testified that Mifflinburg
Telegraph did not have a board.215
In a feeble attempt to mitigate her liability as to the change of 401K
trusteeship, Heidi Criswell attempts to shift blame to Continental Benefits Group
by asserting that they initiated contact with her. In her statement of facts, she
wrote:
Any movement of the 401 K was initiated by First Savings and their
agent Marianne Mundy (Mundy) of Continental benefits Group. It
was never implied or understood that Criswell was under any
“authority.” The Plaintiff seeks to establish such authority in
hindsight. The 401 K was never an issue until First Savings and
Mundy made it one. Interestingly enough, Mundy would not divulge
to Attorney Jason Benion who directed her to initiate contact with
Sharp and it is also interesting that Helwig was still employed by First
Savings at this time. Mundy was to be depositioned [sic] by Sharp’s
attorneys but that deposition was cancelled when the Telegraph
decided to settle with Sharp and the answer to this question will not be
known until this goes to trial.216
Whether or not Continental Benefits Group reached out to her initially is
really irrelevant. Sharp testified that Mifflinburg Telegraph does not have a board
of directors; Heidi Criswell admitted that she was never an officer of Mifflinburg
Telegraph;217 nor was she on the board of directors of Mifflinburg Telegraph.218 It
is abundantly clear that Heidi Criswell unscrupulously signed a document stating
215
ECF No. 124-7 at 39.
216
ECF No. 128 at ¶ 58.
217
ECF No. 124-2 at 15.
218
ECF No. 124-2 at 16.
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that she was appointed trustee of the 401K plan pursuant to a resolution of the
Mifflinburg Telegraph board of directors. She acknowledged at her deposition that
she signed the documents as the ‘employer’ knowing that she was not the
employer.
With the facts as I understand them stated, I now move to the legal causes of
action against Heidi and Dale Criswell.
C.
The Counts
1.
Count I: Violation of the Computer Fraud and Abuse Act
(“CFAA”)18 U.S.C. § 1030(a)(2)(C) against Heidi Criswell
Count II: Violation of the Computer Fraud and Abuse Act
(“CFAA”)18 U.S.C. § 1030(a)(5) against Heidi Criswell
Count V: Aiding and Abetting Thru Violation of the
computer Fraud and Abuse Act, 18 U.S.C. § 1030, et. seq.,
(“CFAA”) against Heidi Criswell and Dale E. Criswell
The Computer Fraud and Abuse Act “CFAA” is part of the federal crimes
code. “The [CFAA] was an anti-hacking law that has grown well beyond its
original role.”219 “Now, it can serve as the basis of litigation by creative plaintiffs’
class action attorneys, as well as companies attempting to protect their trade
secrets.”220 The United States Court of Appeals for the Third Circuit has observed
that employers “are increasingly taking advantage of the CFAA’s civil remedies to
219
Christine D. Galbraith, ACCESS DENIED: IMPROPER USE OF THE COMPUTER FRAUD AND
ABUSE ACT TO CONTROL INFORMATION ON PUBLICALLY ACCESSIBLE INTERNET WEBSITES, 63
Md. L.Rev. 320, 324 (2004)
220
Id.
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sue former employees and their new companies who seek a competitive edge
through wrongful use of information from the former employer’s computer
system.”221
The CFAA has been amended several times. Although the CFAA is part of
the crimes code, “the 1994 Act added civil remedies.”222 “ One of the 1996
amendments deleted the phrase “through means of a computer used in interstate
commerce or communications” found in the 1994 Act’s version.”223 “Today, a
claimant may establish a civil cause of action under the CFAA by demonstrating
that a person has (i) knowingly and with intent to defraud, (ii) accessed a protected
computer, (iii) without authorization, and as a result (iv) has furthered the intended
fraudulent conduct and obtained anything of value.”224
The Computer Fraud and Abuse Act prohibits seven fraudulent activities
related to computers.225 Count I alleges that Heidi Criswell violated 18 U.S.C. §
1030(a) (2)(C), which states “Whoever-- intentionally accesses a computer
without authorization or exceeds authorized access, and thereby obtains -
221
P.C. Yonkers, Inc. v. Celebrations the Party & Seasonal Superstore, LLC, 428 F.3d 504, 510
(3d Cir.2005).
222
Pac. Aerospace & Elecs., Inc. v. Taylor, 295 F. Supp. 2d 1188, 1195 (E.D. Wash. 2003)
(superseded by statute on other grounds, e.g. the definition of the term “loss.”) see e.g. 18
U.S.C. § 1030(g).
223
Pac. Aerospace & Elecs., Inc. at 1195.
224
Id.
225
See 18 U.S.C. § 1030(a)(1)-(7).
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information from any protected computer.” Count II alleges that Heidi Criswell
violated Section 1030 (a)(5) “Whoever-- (A) knowingly causes the transmission
of a program, information, code, or command, and as a result of such conduct,
intentionally causes damage without authorization, to a protected computer; (B)
intentionally accesses a protected computer without authorization, and as a result
of such conduct, recklessly causes damage; or (C) intentionally accesses a
protected computer without authorization, and as a result of such conduct, causes
damage and loss.” “To state a civil claim for violations of the CFAA, [Plaintiff]
must allege: (1) damage or loss “to 1 or more persons during any 1–year period ...
aggregating at least $5,000 in value”; (2) caused by; (3) violation of one of the
substantive provisions of §§ 1030(a) or (b).”226
“Caselaw supports an employer’s use of the CFAA’s civil remedies to sue
former employees and their new companies who seek a competitive edge through
wrongful use of information from the former employer’s computer system.”227
“Such former employees may attempt to gain an edge for their new venture by
making use of proprietary information, such as customer lists or trade secrets,
obtained with ease of access from their former employer’s computer database or
226
Advanced Fluid Sys., Inc. v. Huber, 28 F. Supp. 3d 306, 326 (M.D. Pa. 2014) (Conner, J.)
citing 18 U.S.C. §§ 1030(c)(4)(A)(i)(I), 1030(g).
227
Id.
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workstations that are linked together in a network.”228 “While passwords and other
electronic means can limit the unauthorized dissemination of some confidential
information, an employee who has not yet announced his departure is still able to
access confidential information and store it on a CD or floppy disk before he or she
leaves.”229 “Computers also make it easy for employees to quickly transmit
information out of the company via e-mail.”230
“Protected computer”
“The definition of ‘protected computer” includes [the computers] at issue
here, because the definition embraces any computing device that may be used in
interstate commerce.231
“Without authorization” 232
228
Id.
229
Id.
230
Id.
231
Penn--Air & Hydraulics Corp. v. Lutz, 2015 WL 4508922, at *3 (M.D. Pa. July 24, 2015)
(Kane, J.) see also 18 U.S.C. § 1030(e).
232
The issue here turns on whether Heidi Criswell was authorized to access Mifflinburg
Telegraph’s computer system after resignation.
The circuits are divided as to this issue.
The United States Court of Appeals for the Ninth Circuit has explained:
A Seventh Circuit decision, International Airport Centers, LLC v. Citrin, 440
F.3d 418 (7th Cir.2006). According to LVRC, Citrin supports its argument
that the CFAA incorporates an additional limitation in the word
“authorization, such that an employee can lose authorization to use a
company computer when the employee resolves to act contrary to the
employer's interest. In Citrin, the court held that an employee's authorization
to access a computer ended for purposes of § 1030(a)(5)6 when the employee
violated his duty of loyalty to his employer. The employee had decided to start
a competing business in violation of his employment contract and erased all
data from his work laptop computer before quitting his job. Id. at 419. The
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erased data included both valuable information belonging to his employer and
evidence that the employee had engaged in misconduct. Id. The Seventh
Circuit held that, under common law agency principles, the employee
breached his duty of loyalty to his employer “when, having already engaged
in misconduct and decided to quit [the company] in violation of his
employment contract, he resolved to destroy files that incriminated himself
and other files that were also the property of his employer, in violation of the
duty of loyalty that agency law imposes on an employee.” Id. at 420. The
court held that this breach of the duty of loyalty to his employer terminated
the employee's agency relationship “and with it his authority to access the
laptop, because the only basis of his authority had been that relationship.” Id.
at 420–21. Accordingly, the Seventh Circuit held that the employee's actions
were “without authorization” for purposes of § 1030(a)(5). Id. at 421.
If we applied the reasoning in Citrin to this case, Brekka would have breached
his duty of loyalty to LVRC when he allegedly resolved to transfer key LVRC
documents and information to his personal computer to further his own
competing business, and at that point his authorization to access the computer
would have ended. Applying this reasoning, Brekka would have acted
“without authorization” for purposes of §§ 1030(a)(2) and (4) once his mental
state changed from loyal employee to disloyal competitor.
We are unpersuaded by this interpretation. First, and most important, § 1030
is primarily a criminal statute, and §§ 1030(a)(2) and (4) create criminal
liability for violators of the statute. Although this case arises in a civil context,
our interpretation of §§ 1030(a)(2) and (4) is equally applicable in the criminal
context. See Leocal v. Ashcroft, 543 U.S. 1, 11 n. 8, 125 S.Ct. 377, 160
L.Ed.2d 271 (2004) (holding that where a statute “has both criminal and
noncriminal applications,” courts should interpret the statute consistently in
both criminal and noncriminal contexts). It is well established that “ambiguity
concerning the ambit of criminal statutes should be resolved in favor of
lenity.” United States v. Carr, 513 F.3d 1164, 1168 (9th Cir.2008) (quoting
Rewis v. United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 28 L.Ed.2d 493
(1971)). The Supreme Court has long warned against interpreting criminal
statutes in surprising and novel ways that impose unexpected burdens on
defendants. See United States v. Santos, 553U.S. 507, 128 S.Ct. 2020, 2025,
170 L.Ed.2d 912 (2008) (J. Scalia) (plurality opinion) (citing United States v.
Bass, 404 U.S. 336, 347–49, 92 S.Ct. 515, 30 L.Ed.2d 488 (1971); McBoyle v.
United States, 283 U.S. 25, 27, 51 S.Ct. 340, 75 L.Ed. 816 (1931); United
States v. Gradwell, 243 U.S. 476, 485, 37 S.Ct. 407, 61 L.Ed. 857 (1917)).
“This venerable rule ... vindicates the fundamental principle that no citizen
should be held accountable for a violation of a statute whose commands are
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Both Sections a(5) and “Section 1030(a)(2)(C), [] requires [Defendant] to
have accessed [Plaintiff’s] computer system ‘without authorization.’”233
“‘Authorization is not defined by the CFAA, and the Third Circuit has not yet
uncertain, or subjected to punishment that is not clearly prescribed.” Id.
Therefore, “[t]he rule of lenity, which is rooted in considerations of notice,
requires courts to limit the reach of criminal statutes to the clear import of
their text and construe any ambiguity against the government.” United States
v. Romm, 455 F.3d 990, 1001 (9th Cir.2006).
In this case, as noted above, “authorization” means “permission or power
granted by an authority.” Random House Unabridged Dictionary, 139. The
definition of the term “exceeds authorized access” from § 1030(e)(6) implies
that an employee can violate employer-placed limits on accessing information
stored on the computer and still have authorization to access that computer.
The plain language of the statute therefore indicates that “authorization”
depends on actions taken by the employer. Nothing in the CFAA suggests that
a defendant's liability for accessing a computer without authorization turns on
whether the defendant breached a state law duty of loyalty to an employer. If
the employer has not rescinded the defendant's right to use the computer, the
defendant would have no reason to know that making personal use of the
company computer in breach of a state law fiduciary duty to an employer
would constitute a criminal violation of the CFAA. It would be improper to
interpret a criminal statute in such an unexpected manner. See Carr, 513 F.3d
at 1168.
Because LVRC's proposed interpretation based on Citrin does not comport
with the plain language of the CFAA, and given the care with which we must
interpret criminal statutes to ensure that defendants are on notice as to which
acts are criminal, we decline to adopt the interpretation of “without
authorization” suggested by Citrin. Rather, we hold that a person uses a
computer “without authorization” under §§ 1030(a)(2) and (4) when the
person has not received permission to use the computer for any purpose (such
as when a hacker accesses someone's computer without any permission), or
when the employer has rescinded permission to access the computer and the
defendant uses the computer anyway.
LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1133–34 (9th Cir. 2009)
233
QVC, Inc. v. Resultly, LLC, 159 F. Supp. 3d 576, 595 (E.D. Pa. 2016) (Beetlestone, J.).
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addressed the meaning of ‘authorization’ in the context of the statute.”234 “[T]hose
who have permission to access a computer for any purpose, such as employees,
cannot act “without authorization” unless and until their authorization to access the
computer is specifically rescinded or revoked.”235 “No language in the CFAA
supports [the] argument that authorization to use a computer ceases when an
employee resolves to use the computer contrary to the employer’s interest.”236
“[A] person who uses a computer ‘without authorization’ has no rights, limited or
otherwise, to access the computer in question.”237 Accordingly, “[w]hile disloyal
employee conduct might have a remedy in state law, the reach of the CFAA does
not extend to instances where the employee was authorized to access the
information he later utilized to the possible detriment of his former employer.”238
Chief Judge Christoper C. Conner of this Court has held that “the CFAA prohibits
unauthorized access to information rather than unauthorized use of such
information.”239 Chief Judge Conner further noted that unauthorized access
234
Id.
235
Id.
236
LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1133 (9th Cir. 2009)
237
Id.
238
Brett Senior & Assoc., P.C. v. Fitzgerald, 2007 WL 2043377, at *3, 2007 U.S. Dist. LEXIS
50833, at *9–10 (E.D.Pa. July 13, 2007)
239
Advanced Fluid Sys., Inc. v. Huber, 28 F. Supp. 3d 306, 329 (M.D. Pa. 2014) (Conner, J.)
(emphasis in original).
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includes an employee continuing to access an employer’s computers after leaving
employment.240
“Damage or Loss”
“Under the Act, the term ‘damage’ means any impairment to the integrity or
availability of data, a program, a system, or information.”241 “Meanwhile, the term
‘loss’ means 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.”242 “A violation of (a)(5)(A) is not determined by unauthorized access,
rather, it is predicated on unauthorized damage.”243 There must be a minimum of
$5,000 in loss for the statute to apply.244
Summary Judgment is denied as to Counts I and II
In the case sub judice, Heidi Criswell admitted that she accessed her
Mifflinburg Telegraph email after she resigned. Because it has not yet been
decided in this Circuit if confiscating information before resigning is a violation, I
240
Id.
241
In re Google Inc. Cookie Placement Consumer Privacy Litig., 806 F.3d 125, 148 (3d Cir.
2015), cert. denied sub nom. Gourley v. Google, Inc., 137 S. Ct. 36, 196 L. Ed. 2d 26 (2016)
(internal citations omitted).
242
Id.
243
Advanced Fluid Sys., Inc, at 330 (M.D. Pa. 2014) (Conner, J.) (internal citation omitted).
244
18 U.S.C. § 1030(a).
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base today’s decision only on the clearly established laws that she did access
Mifflinburg Telegraph computers without authorization, i.e. after she resigned.
However, Mifflinburg Telegraph has not provided evidentiary support that the
damages based on her accessing her Mifflinburg Telegraph emails after she
resigned were more than the statutory threshold $5,000. The approximately $9,000
damages for computer recovery will be recoverable for her torts, but not under the
CFAA because it is undisputed that she deleted the files prior to her official
resignation, when she was still ‘authorized’ to use her computer. Judgment will be
entered in favor of Heidi Criswell as to these counts.
Summary Judgment is also denied as to Count V as it fails as a matter of law
Moreover, the motion for summary judgment is also denied and judgment
will be entered as to both Heidi and Dale Criswell as to Count V as “the CFAA
does not create a cause of action for aiding and abetting.”245
245
Advanced Fluid Sys., Inc, at 327 citing 18 U.S.C. §§ 1030(c)(4)(A)(i)(I), 1030(g).; see also
Flynn v. Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP, 2011 WL
2847712, at *2–4, 2011 U.S. Dist. LEXIS 77217, at *7–9 (D.Nev. July 15, 2011); and see 18
U.S.C. § 1030(b) (Holding that the statute creates a cause of action against “whoever
conspires to commit or attempts to commit” an offense under § 1030(a), but makes no
mention of aiding and abetting liability).
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2.
Count VI: Conversion against Heidi Criswell
Count VIII: Aiding and Abetting Conversion against Heidi
Criswell and Dale E. Criswell
Conversion
There is no genuine dispute as to any material fact as to Count VI,
conversion as to Heidi Criswell. The law relating to conversion is well established
in the Commonwealth of Pennsylvania. “A conversion is the deprivation of
another’s right of property in, or use or possession of, a chattel, or other
interference therewith, without the owner’s consent and without lawful
justification.”246 “Conversion may be committed by [u]nreasonably withholding
possession from one who has the right to it.”247
Heidi Criswell has acknowledged multiple conversions. She took the
Mifflinburg Telegraph 720 printer to Wildcat without Mifflinburg Telegraph’s
consent or knowledge, and without justification. She took the Mifflinburg
Telegraph 401K plan to Wildcat without Mifflinburg Telegraph’s consent or
knowledge, and without justification. She took the Mifflinburg Telegraph customer
business card order to Wildcat without Mifflinburg Telegraph’s consent or
knowledge, and without justification. She took the Mifflinburg Telegraph customer
files and customer lists to Wildcat without Mifflinburg Telegraph’s consent or
246
Stevenson v. Econ. Bank of Ambridge, 413 Pa. 442, 451 (1964).
247
Id. at 451-2.
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knowledge, and without justification. This is a catalog of inappropriate behavior.
The motion for summary judgment will therefore be granted on Heidi Criswell as
to Count VI.
Aiding and Abetting Conversion
“The civil tort of aiding and abetting has the following elements: For harm
resulting to a third person from the tortious conduct of another, one is subject to
liability if he (a) does a tortious act in concert with the other or pursuant to a
common design with him, or (b) knows that the other’s conduct constitutes a
breach of duty and gives substantial assistance or encouragement to the other so to
conduct himself, or (c) gives substantial assistance to the other in accomplishing a
tortious result and his own conduct, separately considered, constitutes a breach of
duty to the third person.”248
That said, ‘aiding and abetting’ a conversion does not appear to be a tort in
Pennsylvania; I was unable to find even a single case with a cause of action of
‘aiding and abetting’ a conversion. Moreover, Mifflinburg Telegraph did not cite
to any cases where ‘aiding and abetting’ a conversion is a cause of action.
Accordingly, because I am unconvinced that this is, in fact, a cause of action, and
because there has been no legal argument advancing the issue, I find that there is
248
Bochetto & Lentz, P.C. v. Datz, 2013 WL 11256829, at *3 (Pa. Super. Ct. 2013) see also
Cummins v. Firestone Tire & Rubber Co., 495 A.2d 963, 969 (Pa. Super. Ct. 1985) (quoting
Restatement (Second) of Torts § 876).
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no ‘aiding and abetting conversion’ tort in Pennsylvania; I have no basis upon
which to create torts in this state. The motion for summary judgment as to Heidi
and Dale Criswell as to aiding and abetting conversion will be denied and
judgment entered in their favor as to Count VII.
3.
Count IX: Breach of Fiduciary Duty against Heidi Criswell
and Dale E. Criswell
Count X: Aiding and Abetting Breach of Fiduciary Duty
against Heidi Criswell and Dale E. Criswell
Inexplicably, Mifflinburg Telegraph did not move for summary judgment on
the breach of fiduciary duty counts. Pursuant to Federal Rule of Civil Procedure
56(f)(3) “after giving notice and a reasonable time to respond, the court may ...
consider summary judgment on its own after identifying for the parties the material
facts that may not be genuinely in dispute.” District Courts “possesses the power
to enter summary judgment sua sponte provided the losing party ‘was on notice
that [it] had to come forward with all of [its] evidence.’”249 “Sua sponte grants of
249
United States v. AseraCare Inc, 153 F. Supp. 3d 1372, 1385–86 (N.D. Ala. 2015) citing
Burton v. City of Belle Glade, 178 F.3d 1175, 1203 (11th Cir.1999) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)); see also Lillo ex rel.
Estate of Lillo v. Bruhn, 413 Fed.Appx. 161 (11th Cir.2011) (affirming order granting
summary judgment after district court sua sponte raised issue); Strange v. Travelers Indem.
Co., 915 F.Supp.2d 1243, 1245 (N.D.Ala.2012) (“Rule 56(f)(3) ... allows the court to act on
its own initiative” in considering whether summary judgment is appropriate.); United States
v. Ala. Power Co., 274 F.R.D. 686, 692 (N.D.Ala.2011) (granting summary judgment under
Rule 56(f)(3) after informing parties that it “could grant summary judgment as to all claims if
there was no admissible evidence” as to a particular part of a claim); Franks v. Indian Rivers
Mental Health Ctr., No.7:08–cv–1035–SLB, 2014 WL 514130, at *7 (N.D.Ala. Feb. 7, 2014)
(“Pursuant to Rule 56(f), the court may grant a sua sponte motion for summary judgment
‘after identifying for the parties material facts that may not be genuinely in dispute,’ and
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summary judgment are only appropriate if the losing party has reasonable notice
that the sufficiency of his or her claim will be in issue.”250 “Reasonable notice
implies adequate time to develop the facts on which the litigant will depend to
oppose summary judgment.”251
The Honorable Jan E. DuBois of the Eastern District of Pennsylvania has
explained that
To allege a breach of fiduciary duty, a plaintiff must establish that a
fiduciary or confidential relationship existed between her and the
defendants. Harold v. McGann, 406 F.Supp.2d 562, 571
(E.D.Pa.2005). “Although no precise formula has been devised to
ascertain the existence of a confidential relationship, it has been said
that such a relationship exists whenever one occupies toward another
such a position of advisor or counselor as reasonably to inspire
confidence that he will act in good faith for the other’s interest.”
Silver v. Silver, 421 Pa. 533, 219 A.2d 659, 662 (1966); see also
Basile v. H & R Block, Inc., 777 A.2d 95, 101–02 (Pa.Super.2001).
In addition to a confidential relationship, a plaintiff must also allege
the elements of a breach of fiduciary duty:
(1) That the defendant negligently or intentionally failed to act in
good faith and solely for the benefit of plaintiff in all matters for
which he or she was employed;
(2) That the plaintiff suffered injury; and
giving the opponent at least ten days notice and time to respond.”); accord Norse v. City of
Santa Cruz, 629 F.3d 966, 971 (9th Cir.2010) (“District courts unquestionably possess the
power to enter summary judgment sua sponte, even on the eve of trial.”).
250
Norse v. City of Santa Cruz, 629 F.3d 966, 971–72 (9th Cir. 2010) citing United States v.
14.02 Acres of Land More or Less in Fresno Cnty., 547 F.3d 943, 955 (9th Cir.2008)
(internal quotation marks omitted).
251
Portsmouth Square, Inc. v. S'holders Protective Comm., 770 F.2d 866, 869 (9th Cir.1985).
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(3) The defendant’s failure to act solely for the plaintiff’s benefit
was a real factor bringing about plaintiff’s injuries. Pa. S.S.J.I. §
4.16; see also McDermott v. Party City Corp., 11 F.Supp.2d 612,
626 n. 18 (E.D.Pa.1998).252
Here, Heidi Criswell owed a fiduciary duty to her employer, and breached it
by both taking and deleting data files and customer lists from Mifflinburg
Telegraph’s computers.253 However, there is no evidence of any actionable breach
by Dale Criswell in this regard.
“Under Pennsylvania law, the elements that must be proven in order
to maintain a claim for aiding and abetting a breach of fiduciary duty are: (1)
a breach of a fiduciary duty owed to another; (2) knowledge of the breach by
the aider and abettor; and (3) substantial assistance or encouragement by the
aider and abettor in effecting that breach.”254 “In other words, “[i]n order to
be found liable for aiding and abetting a breach of a fiduciary duty, one must
demonstrate that the party knew that the other’s conduct constituted a breach
of a fiduciary duty and gave substantial assistance or encouragement to the
other in committing that breach.”255 “A fiduciary duty may arise from “a
252
Baker v. Family Credit Counseling Corp., 440 F. Supp. 2d 392, 414–15 (E.D. Pa. 2006)
(DuBois, J.).
253
See id.
254
Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617, 674-75 (E.D. Pa. 2014) citing Reis v.
Barley, Snyder, Senft & Cohen, 667 F.Supp.2d 471, 492 (E.D.Pa.2009).
255
Id. citing Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296
F.3d 164, 174 (3d Cir.2002) (claim for aiding and abetting breach of fiduciary duties
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confidential relationship between two parties.”256 There is no evidence that
Dale Criswell was in any way involved in the Heidi Criswell breach.
Finding both a breach of fiduciary duty and aiding and abetting of that
duty as to Heidi Criswell would be duplicative. The parties are on notice
pursuant to Fed. R. Civ. P. 56(f)(3) that summary judgment will be entered if
no opposition is filed within thirty (30) days of the date of this Memorandum
Opinion and Order; I intend to enter summary judgment in favor of
Mifflinburg Telegraph as to Count IX as to Heidi Criswell, against
Mifflinburg Telegraph as to Count IX as to Dale Criswell, and against
Mifflinburg Telegraph as to Count X in its entirety.
4.
Count XI: Tortious Interference with Business Relations
against Heidi Criswell and Dale E. Criswell
Again, Plaintiff did not move for summary judgment on this claim.
Interestingly, it is an exhibit that the Criswells attached that leads me to the
ineluctable conclusion that summary judgment should be entered on Plaintiff’s
behalf as to Heidi Criswell.
It is clear from the evidence that Heidi Criswell
interfered with Mifflinburg Telegraph’s contract with, at a minimum, its paper
under ERISA); see also RESTATEMENT (SECOND) TORTS § 876, cmt. to subsection (b)
(1979) (“If the encouragement or assistance is a substantial factor in causing the
resulting tort, the one giving it is himself a tortfeasor and is responsible for the
consequences of the other’s act.”).
256
PTSI, Inc. v. Haley, 71 A.3d 304, 311 (Pa. Super. Ct. 2013) (internal citation omitted).
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supplier. However, there is no evidence to support an entry of summary judgment
on this count as to Dale Criswell.
The elements of a cause of action for intentional interference with a
contractual relation, whether existing or prospective, are as follows:
(1) the existence of a contractual, or prospective contractual relation
between the complainant and a third party;
(2) purposeful action on the part of the defendant, specifically
intended to harm the existing relation, or to prevent a prospective
relation from occurring;
(3) the absence of privilege or justification on the part of the
defendant; and
(4) the occasioning of actual legal damage as the result of the
defendant’s conduct.257
As to the first element,
A “prospective contractual relationship” is something less than a
contractual right, something more than a mere hope. Under
Pennsylvania law, [Plaintiffs] must present adequate proof of an
objectively reasonable probability that a contract will come into
existence. [Plaintiffs] need only demonstrate that it is reasonably
probable that it would have obtained a contract, not that it was
guaranteed to do so. Stated another way, [Plaintiffs] may recover if,
but for [defendant’s] wrongful acts, it is reasonably probable that a
contract would have been entered. This reasonable probability may
result from an unenforceable express agreement, an offer, or the
parties’ current dealings, but not merely from prior dealings or an
existing business relationship between the parties. 258
257
Blackwell v. Eskin, 2007 PA Super 20, 916 A.2d 1123, 1127-28 (2007) citing Reading Radio,
Inc. v. Fink, 833 A.2d 199, 211 (Pa.Super.2003), appeal denied, 577 Pa. 723, 847 A.2d 1287
(2004) (quoting Strickland v. University of Scranton, 700 A.2d 979, 985 (Pa.Super.1997)).
258
Baier v. Jersey Shore State Bank, 2009 WL 2843325, at *17 (M.D. Pa. 2009) (McClure, J.)
(internal citations and quotations omitted).
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“It is not enough for a plaintiff to show merely that defendant’s actions had the
incidental consequence of affecting plaintiff’s business relationships with third
persons.”259 “A plaintiff must show that the defendant acted for the malevolent
purpose of interfering with the plaintiff’s existing ... business relationships.”260
“The second element requires proof that the defendant acted for the specific
purpose of causing harm to the plaintiff.”261 “The wrong ordinarily requires
conduct intended to interrupt negotiations or prevent the consummation of a
contract.”262 “[T]he second prong is satisfied if defendant acts improperly and
with the knowledge that such interference is substantially certain to occur.”263
“The third element requires proof that the defendant’s actions were improper
under the circumstances presented.”264 “The presence of a privilege is not an
affirmative defense, rather, the absence of such a privilege is an element of the
cause of action which must be pleaded and proven by the plaintiff.”265 “Whether a
defendant is privileged or justified in a particular course of conduct is defined by
259
Devon Robotics v. DeViedma, 2012 WL 3627419, at *16 (E.D. Pa. Aug. 23, 2012) (Joyner,
J.).
260
Id. citing Valley Forge Convention & Visitors Bureau v. Visitor’s Servs., Inc., 28 F.Supp.2d
947, 951 (E.D.Pa.1998).
261
Phillips v. Selig, 2008 PA Super 244, 959 A.2d 420, 429 (2008) (internal citations omitted).
262
Orange Stones Co. v. City of Reading, 87 A.3d 1014, 1025 (Pa. Commw. Ct. 2014) (citing
Glenn v. Point Park College, 441 Pa. 474, 481, 272 A.2d 895, 899 (1971)).
263
Id. citing RESTATEMENT (SECOND) OF TORTS § 766 cmt. j; § 766B cmt. d (1979).
264
Phillips, 959 A.2d at 429.
265
Synthes, Inc. v. Emerge Med., Inc., 2014 WL 2616824, at *19 (E.D. Pa. June 11, 2014) citing
Bahleda v. Hankison Corp. 323 A.2d 121, 122-123 (Pa.Super.1974).
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“the rules of the game,” or the “area of socially acceptable conduct which the law
regards as privileged.”266
Pennsylvania has adopted the Restatement Second of Torts proposition that
the interference must be improper, i.e., without privilege or justification.267 To
determine impropriety includes consideration of: “(a) the nature of the actor’s
conduct; (b) the actor’s motive; (c) the interests of the others with which the
actor’s conduct interferes; (d) the interests sought to be advanced by the actor; (e)
the social interests in protecting the freedom of action of the actor and the
contractual interests of the other; (f) the proximity or remoteness of the actor’s
conduct to the interference; and (g) the relations between the parties.”268
In applying these factors, comment b to section 767 is also instructive:
The issue in each case is whether the interference is improper or not
under the circumstances; whether, upon a consideration of the relative
significance of the factors involved, the conduct should be permitted
without liability, despite its effect of harm to another. The decision
therefore depends upon a judgment and choice of values in each
situation. This Section states the important factors to be weighed
against each other and balanced in arriving at a judgment; but it does
not exhaust the list of possible factors.269
266
Orange Stones Co., 87 A.3d at 1025, citing Glenn v. Point Park College, 441 Pa. 474, 482,
272 A.2d 895, 899 (1971).
267
See Empire Trucking Co., Inc., v. Reading Anthracite Coal Co., 71 A.3d 923 (Pa. Super.
2013).
268
RESTATEMENT (SECOND) OF TORTS § 767, and see, Phillips, supra ([The] third element...is
determined in accordance with the factors listed in Restatement section 767).
269
RESTATEMENT (SECOND) OF TORTS § 767 cmt. b (1979).
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In making this choice of values in individual cases, the Pennsylvania
Supreme Court has advised that when the purpose of the defendant’s conduct is, in
whole or in part, to protect a legitimate right or interest that conflicts with the
interests of the plaintiff, a line must be drawn and the interests evaluated.
Although this evaluation of interests is not always susceptible of precise definition,
it is clear that the central inquiry is whether the defendant’s conduct is sanctioned
by the “rules of the game” which society has adopted.
Therefore, the parties are on notice pursuant to Fed. R. Civ. P. 56(f)(3) that
summary judgment will be entered if no opposition is filed within thirty (30) days
of the date of this Memorandum Opinion and Order; that I intend to enter summary
judgment in favor of Mifflinburg Telegraph as to Count XI against Heidi Criswell,
and against Mifflinburg Telegraph as to Count XI as to Dale Criswell.
5.
Count XII: Misappropriation and Misuse of Trade Secrets
and Confidential Information in Violation of Pennsylvania
Uniform Trade Secrets Act 12 Pa.C.S. § 5301, et. seq.,
(“PUTSA”) against Heidi Criswell and Dale E. Criswell
The policy behind trade secret law is “the maintenance of standards of
commercial ethics.”270 “Under PUTSA, a person has misappropriated a trade
secret ‘when he acquires knowledge of another’s trade secret in circumstances
giving rise to a duty to maintain its confidentiality and then discloses or uses that
270
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).
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trade secret without the other’s consent.’”271 “PUTSA defines a “trade secret” as:
“Information, including a formula, drawing, pattern, compilation including a
customer list, program, device, method, technique or process that: (1) derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use; or (2) is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy.””272
It is clear from the evidence that summary judgment as to Heidi Criswell is
appropriate as to Count XII, as she took Mifflinburg Telegraph’s customer lists for
use at Wildcat. There is simply a paucity of evidence as to Dale Criswell
generally, including any culpability as to this count; summary judgment will
therefore be denied as to him.
6.
Count XIV: Procuring Information by Improper Means
against Heidi Criswell and Dale E. Criswell
Pennsylvania has adopted RESTATEMENT OF TORTS § 759, Procuring
Information by Improper Means, which provides “one who, for the purpose of
advancing a rival business interest, procures by improper means information about
another’s business is liable to the other for the harm caused by his possession,
271
Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617, 704–05 (E.D. Pa. 2014) citing Bimbo
Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 110 (3d Cir.2010) (citing 12 Pa. Cons.Stat. §
5302).
272
Synthes, Inc., 25 F. Supp. 3d at 705 citing 12 Pa. Cons.Stat. Ann. § 5302
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disclosure or use of the information.” “Moreover, the comments to § 759 clearly
indicate information that is procured under this section need not rise to the level of
a trade secret.”
273
“It only need be confidential business information.”274
It is clear that Heidi Criswell took confidential business information,
including data files from Mifflinburg Telegraph and used them at Wildcat;
summary judgment shall be entered in Plaintiff’s favor. However, once again,
there is no evidence to support a finding that Dale Criswell acted to appropriate
confidential business information; accordingly, summary judgment will be entered
in his favor.
7.
Count XV: Defamation against Heidi Criswell
Mifflinburg Telegraph has not moved for summary judgment on this count.
Defamation is codified in Pennsylvania at 42 Pa. C.S.A. § 8343:
(a) Burden of plaintiff.--In an action for defamation, the plaintiff has
the burden of proving, when the issue is properly raised:
(1) The defamatory character of the communication.
(2) Its publication by the defendant.
(3) Its application to the plaintiff.
(4) The understanding by the recipient of its defamatory
meaning.
(5) The understanding by the recipient of it as intended to be
applied to the plaintiff.
(6) Special harm resulting to the plaintiff from its publication.
(7) Abuse of a conditionally privileged occasion.
273
Pestco, Inc. v. Associated Prod., Inc., 880 A.2d 700, 709 (Pa. Super. Ct. 2005) citing
RESTATEMENT OF TORTS§ 759 cmt. b.
274
Id.
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(b) Burden of defendant.--In an action for defamation, the defendant
has the burden of proving, when the issue is properly raised:
(1) The truth of the defamatory communication.
(2) The privileged character of the occasion on which it was
published.
(3) The character of the subject matter of defamatory comment
as of public concern.
Under Pennsylvania defamation law, it is for the court to determine whether
the statement at issue is capable of a defamatory meaning.275 A statement is
defamatory if it tends so to harm the reputation of another as to lower him or her in
the estimation of the community or to deter third persons from associating or
dealing with him or her.276 A statement indicating that the plaintiff has engaged in
criminal activity constitutes slander per se, obviating need for the Plaintiff to prove
‘special harm’ as element of defamation claim.277
Here, summary judgment should be entered against Heidi Criswell and in
favor of Mifflinburg Telegraph. but for Dale Criswell and against Mifflinburg
Telegraph. I again place the parties on notice, pursuant to Fed. R. Civ. P. 56(f)(3),
that summary judgment will be entered if no opposition is filed within thirty (30)
days of the date of this Order, in favor of Mifflinburg Telegraph as to Count XV
275
Keim v. County of Bucks, 275 F.Supp.2d 628 (E.D.Pa.2003).
276
Id citing U.S. Healthcare v. Blue Cross of Greater Philadelphia, 898 F.2d 914, 923 (3d
Cir.1990), cert. denied, 498 U.S. 816, 111 S.Ct. 58, 112 L.Ed.2d 33 (1990).
277
See Thompson v. Wagner, 631 F.Supp.2d 664 (W.D.Pa.2008).
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against Heidi Criswell, and against Mifflinburg Telegraph on Count XV as to Dale
Criswell.
8.
Count XVI: Civil Conspiracy against Heidi Criswell and
Dale E. Criswell
“In Pennsylvania, ‘to state a cause of action for civil conspiracy, the
following elements are required: (1) a combination of two or more persons acting
with a common purpose to do an unlawful act or to do a lawful act by unlawful
means or for an unlawful purpose; (2) an overt act done in pursuance of the
common purpose; and (3) actual legal damage.’”278 To prove a civil conspiracy, it
must be shown that two or more persons combined or agreed with intent to do an
unlawful act or to do an otherwise lawful act by unlawful means.279
Additionally, the Pennsylvania Supreme Court stated that proof of malice,
an intent to injure, is essential in proof of a conspiracy.280 This unlawful intent
must be absent justification. The test was set forth by that court eighty (80) years
ago, as follows.
278
Gen. Refractories Co. v. Fireman’s Fund Ins. Co., 337 F.3d 297, 313 (3d Cir. 2003), citing
Strickland v. Univ. of Scranton, 700 A.2d 979, 987-8 (1997) (citation and internal quotations
marks omitted) (cited in Allegheny General Hosp. v. Philip Morris, Inc., 228 F.3d 429, 446
(3d Cir.2000)).
279
See Landau v. Western Pennsylvania National Bank, 445 Pa. 217, 282 A.2d 335 (1971); Fife
v. Great Atlantic and Pacific Tea Co., 356 Pa. 265, 52 A.2d 24 (1947); Bausbach v. Reiff,
244 Pa. 559, 91 A. 224 (1914); Baker v. Rangos, 229 Pa.Super. 333, 324 A.2d 498 (1974).
280
See Miller v. Post Publishing Co., 266 Pa. 533, 110 A. 265 (1920); Miller v. Harvey, 215 Pa.
103, 64 A.2d 330 (1906); Irvine v. Elliott, 206 Pa. 152, 55 A.2d 859 (1903).
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Assume that what is done is intentional, and that it is calculated to do
harm to others. Then comes the question, Was it done with or without
“just cause or excuse”? If it was bona fide done in the use of a man’s
own property such legal justification would exist not the less because
what was done might seem to others to be selfish or unreasonable.
But such legal justification would not exist when the act was merely
done with the intention of causing temporal harm, without reference
to one’s own lawful gain, or the lawful enjoyment of one’s own
rights.281
The evidence presented in this matter shows that Heidi Criswell conspired
with Margaret Wolfe to take the 720 printer and bill it to Mifflinburg Telegraph. It
also shows that Heidi Criswell conspired with Darlene Sharp to convert the
Mifflinburg Telegraph 401K trusteeship.
Summary judgment will be entered in
favor of Mifflinburg Telegraph and against Heidi Criswell as to civil conspiracy.
However, there is no evidence that Dale Criswell conspired with anyone,
including his wife. He apparently had no knowledge of any of the torts Heidi
Criswell engaged in. The evidence shows that his knowledge of anything
regarding the move to Wildcat is minimal. Summary judgment as to this count
will therefore be entered in his favor.
9.
Count XVII: Unjust Enrichment against Heidi Criswell and
Dale E. Criswell
Pennsylvania law supports two species of unjust enrichment claims: “(1) a
quasi-contract theory of liability, in which case the unjust enrichment claim is
281
Rosenblum v. Rosenblum, 320 Pa. 103, 108-09 (1935).
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brought as an alternative to a breach of contract claim; or (2) a theory based on
unlawful or improper conduct established by an underlying claim, such as fraud, in
which case the unjust enrichment claim is a companion to the underlying claim.”282
The case at bar appears to be a claim of the latter, hinging upon other claims in the
Plaintiff’s complaint.
“Unjust enrichment is essentially an equitable doctrine.”283 “The elements
necessary to prove unjust enrichment are: (1) benefits conferred on defendant by
plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and
retention of such benefits under such circumstances that it would be inequitable for
defendant to retain the benefit without payment of value.”284 “The application of
the doctrine depends on the particular factual circumstances of the case at issue.”285
“In determining if the doctrine applies, our focus is not on the intention of the
parties, but rather on whether the defendant has been unjustly enriched.”286 In
other words, “benefits conferred on defendant by plaintiff, appreciation of such
benefits by defendant, and acceptance and retention of such benefits under such
circumstances that it would be inequitable for defendant to retain the benefit
282
Whitaker v. Herr Foods, Inc., 198 F. Supp. 3d 476, 492 (E.D. Pa. 2016).
283
Mitchell v. Moore, 729 A.2d 1200, 1203 (Pa. Super. Ct. 1999).
284
Id.
285
Id. at 1203-4.
286
Id. at 1204.
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without payment of value.”287 Employing somewhat circular reasoning, the
Superior Court of Pennsylvania has stated that “the most important factor to be
considered in applying the doctrine is whether the enrichment of the defendant is
unjust.”288
More helpfully, Pennsylvania has adopted the Restatement of Restitution for
determining whether there is unjust enrichment.289 The Restatement provides
guidance that unjust enrichment can occur through conversion (§40), interference
with a trade secret (§42), or through a fiduciary or confidential relation (§43).290
Further, “an unjust enrichment claim may be pled as a companion… to a claim of
unlawful or improper conduct as defined by law—e.g., a tort claim.”291 When
based on an underlying claim, an unjust enrichment claim shall fall where the
underlying claims are dismissed.292
Here, summary judgment should be entered as to Mifflinburg Telegraph and
against Heidi Criswell, as she took what she initially planned to purchase from the
business -- the customer lists, pricing information, contracts and goodwill.
However, there is again insufficient evidence as to Dale Criswell to find liability
287
Schenck v. K.E. David, Ltd., 666 A.2d 327, 328 (1995) (internal citations omitted).
288
Id.
289
D.A. Hill Co. v. Clevetrust Realty Inv’rs, 524 Pa. 425, 432, 573 A.2d 1005, 1009 (1990).
290
RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT § 40, 42-43 (2011).
291
Whitaker v. Herr Foods, Inc., 198 F. Supp. 3d 476, 493 (E.D. Pa. 2016).
292
Steamfitters Local Union No. 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912, 937 (3d
Cir. 1999).
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on his part. Therefore, summary judgment as to this count will be entered in his
favor.
10.
Count XII: Unfair Competition against Heidi Criswell and
Dale E. Criswell
11.
Count XVII: Violation of Section 43(A) of the Lanham Act,
15 U.S.C. § 1125 against Heidi Criswell and Dale E.
Criswell.
Unfair Competition
Nearly one-hundred years ago, the Pennsylvania Supreme Court defined
unfair competition as “anything done by a rival in the same business by imitation
or otherwise designed or calculated to mislead the public in the belief that, in
buying the product offered by him for sale, they were buying the product of
another manufacturer.”293 The spirit of the law can be expressed as “the deception
practiced in ‘passing off’ the goods of one for that of another.”294 “The law of
unfair competition also requires that a company, entering a field already occupied
by a rival of established reputation, ‘must do nothing which will unnecessarily
293
B.V.D. Co. v. Kaufmann & Baer Co., 272 Pa. 240, 116 A. 508, 508-09 (Pa.1922).
294
Volunteer Firemen’s Ins. Servs., Inc. v. Fuller, No. 1:12-CV-2016, 2012 WL 6681802, at *11
(M.D. Pa. Dec. 21, 2012) (citing Pa. State Univ. v. Univ. Orthopedics, Ltd., 706 A.2d 863,
870 (Pa.Super.Ct.1998)).
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create or increase confusion between his goods or business and the goods or
business of the rival.’”295
Unfair competition may not be construed as “a virtual catch-all for any form
of wrongful business conduct.”296 In fact, comment g to § 1 of the Third
Restatement of Unfair Competition itself explains that a “primary purpose” of that
section is “the identification and redress of business practices that hinder rather
than promote the efficient operation of the market.”
“Pennsylvania common law [of unfair competition] is identical to the
Lanham Act, 15 U.S.C. § 1125, except that the Lanham Act requires interstate
commerce.”297 Accordingly, I will address the two counts together.
295
Pennsylvania State Univ. v. Univ. Orthopedics, Ltd., 706 A.2d 863, 870–71 (Pa. Super. Ct.
1998) (internal citations omitted).
296
USX Corp. v. Adriatic Ins. Co., 99 F. Supp. 2d 593, 619–20 (W.D. Pa. 2000) (Diamond, J.)
(explaining that unfair competition “contextually is limited to claims designed to protect a
business from another’s misappropriation of its business organization or its expenditure of
labor, skill or money, i.e., injury to reputation, product, manner of doing business,
identification and so forth”), aff’d, 345 F.3d 190 (3d Cir. 2003). Indeed, our Court of
Appeals, albeit in the context of interpreting commercial insurance policies, has
reemphasized that unfair competition may require something more than suggested by the
post-Synthes jurisprudence. For example, in Frog, Switch & Mfg. Co. v. Travelers Ins. Co.,
193 F.3d 742, 748 (3d Cir. 1999), the court anchored its reasoning as to the potency of an
unfair competition on whether the offending company “misappropriated methods of gaining
customers” or “misappropriated information about the manufacture of . . . the resulting
product”—the former iteration being the more clearly actionable one.
297
Moore Push-Pin Co. v. Moore Bus. Forms, Inc., 678 F. Supp. 113, 116 (E.D. Pa. 1987)
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Lanham Act
The Lanham Act makes actionable the use of deceptive and misleading
marks. However, “it is not a panacea for every type of commercially tortious
conduct.”298
The Act provides, in relevant part, that a civil action exists when:
any person who, on or in connection with any goods or services, or
any container for goods, uses in commerce any word, term, name,
symbol, or device, or any combination thereof, or any false
designation of origin, false or misleading description of fact, or false
or misleading representation of fact, which-(A) is likely to cause confusion, or to cause mistake, or to
deceive as to the affiliation, connection, or association of
such person with another person, or as to the origin,
sponsorship, or approval of his or her goods, services, or
commercial activities by another person, or
(B) in commercial advertising or promotion,
misrepresents the nature, characteristics, qualities, or
geographic origin of his or her or another person’s goods,
services, or commercial activities,
shall be liable in a civil action by any person who believes that he or
she is or is likely to be damaged by such act.299
The Third Circuit has stated, “to prevail on its claim of unfair competition
under Section 43(a), we have said a plaintiff must prove by a preponderance of the
evidence: 1) that the defendant has made false or misleading statements as to his
298
§ 2:2.Injuries and complaints not redressable under Section 43(a), 1 Federal Unfair
Competition: Lanham Act 43(a) § 2:2
299
15 U.S.C. § 1125(a).
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own product [or another’s]; 2) that there is actual deception or at least a tendency
to deceive a substantial portion of the intended audience; 3) that the deception is
material in that it is likely to influence purchasing decisions; 4) that the advertised
goods travelled in interstate commerce; and 5) that there is a likelihood of injury to
the plaintiff in terms of declining sales, loss of goodwill, etc.”300 However, “the
act of making a false representation ‘for a purpose other than competition’ has also
been determined to be beyond the scope of the Lanham Act since, in one court’s
words, the Act would “have create[d] a federal tort of misrepresentation.’”301
“Federal courts have long held that § 43(a) of the Lanham Act extends
protection to unregistered trademarks.”302 A designation may only receive
protection, however, if the public recognizes it as identifying the claimant’s “goods
or services and distinguishing them from those of others.”303
“Section 43(a) of the Lanham Act prohibits actions like trademark
infringement that deceive consumers and impair a producer’s goodwill.”304 “It
300
Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19
F.3d 125, 129 (3d Cir. 1994) citing U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898
F.2d 914, 922–23 (3d Cir.1990), cert. denied, 498 U.S. 816, 111 S.Ct. 58, 112 L.Ed.2d 33
(1990) (quoting Max Daetwyler Corp. v. Input Graphics, Inc., 545 F.Supp. 165, 171
(E.D.Pa.1982)).
301
§ 2:9.Injuries and complaints not redressable under Section 43(a)—Miscellaneous, 1 Federal
Unfair Competition: Lanham Act 43(a) § 2:9
302
A.J. Canfield Co. v. Honickman, 808 F.2d 291, 296 (3d Cir. 1986).
303
1 J. McCarthy, Trademarks and Unfair Competition § 15:1 at 657 (2d ed. 1984).
304
Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 32 (2003).
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forbids, for example, the Coca–Cola Company’s passing off its product as Pepsi–
Cola or reverse passing off Pepsi–Cola as its product.305
This is precisely what Heidi Criswell did. She began the Wildcat business
by leading other to believe that she was the proprietor of Mifflinburg Telegraph.
Heidi Criswell was misleading customers to believe that she was the owner of a
new Mifflinburg Telegraph business by marketing Wildcat (after she resigned) as
Mifflinburg Telegraph under “new management” and placing miseleading reorder
cards in Mifflinburg Telegraph customer orders leading customers to reorder with
Wildcat. The United States Supreme Court has held “that a plaintiff suing under §
1125(a) ordinarily must show economic or reputational injury flowing directly
from the deception wrought by the defendant’s advertising; and that that occurs
when deception of consumers causes them to withhold trade from the plaintiff.”306
In Paragraph 29 of Mifflinburg Telegraph’s statement of facts they indicate
that it communicated outside of Pennsylvania with both Ricoh and Continental
Benefits Group. Ricoh provides financing for its products through its State of
Georgia office; Continental Benefits operates through its State of New Jersey
office.
305
Id.
306
Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1391 (2014).
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However, for the federal Lanham act to apply, it is insufficient for
Mifflinbrug Telegraph to do business in interstate commerce. “Plaintiffs must
show that the statements were introduced into interstate commerce.”307 “The
interstate commerce jurisdictional predicate for the Lanham Act merely requires a
party to show that the defendant’s conduct affects interstate commerce, such as
through diminishing the plaintiff’s ability to control use of the mark, thereby
affecting the mark and its relationship to interstate commerce.”308 “Purely
intrastate disputes do not fall under the Lanham Act.”309
Although Mifflinburg Telegraph attempts to bring this dispute under the
purview of the Lanham Act by indicating that it has contracts in other states, those
contracts, and the work of Wildcat, are not for the goods at issue here. “’In
commerce’ means all commerce which may be regulated by Congress.”310 While
it is clear that Congress may regulate Contintental’s administration of Mifflinburg
Telegraph’s 401K plan, Congress has no authority to regulate Wildcat and
Mifflinburg Telegraph’s printing products for local Mifflinburg customers.
Mifflinburg Telegraph’s argument here is untenable.
307
Grubbs v. Sheakley Grp., Inc., 807 F.3d 785, 802 (6th Cir. 2015).
308
Browne v. McCain, 611 F. Supp. 2d 1073, 1079 (C.D. Cal. 2009) (emphasis added).
309
Mother Waddles Perpetual Mission, Inc. v. Frazier, 904 F. Supp. 603, 611 (E.D. Mich.
1995).
310
Id.
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Consequently, summary judgment will be denied as to Count XVII, the
Lanham Act claim against Heidi Criswell. However, summary judgment will be
granted on Count XII as to the state tort of unfair competition as to Heidi Criswell.
It is evident that she made several attempts to pass off her work as that of
Mifflinburg Telegraph.
There is no evidence in the record as to liability as to Dale Criswell as to
either count. Accordingly, summary judgment will be granted in his favor here
and against Mifflinburg Telegraph.
12.
Compensatory Damages Award
I made a compensatory damages finding in my September 7, 2017 Order of
Default Judgment against Wildcat.311 For the same reasoning employed in that
Order, I find that an award totaling $172,162.57, comprising of $157,500.00 in
damages to goodwill, $5,358.00 for the printer, and $9,304.57 for the forensic
computer recovery services, in compensatory damages is rationally related to the
amount demanded in the complaint. Heidi Criswell is jointly and severally liable
with Wildcat for this amount.
13.
Punitive Damages Demand
I decline to award punitive damages. Under Pennsylvania law, punitive
damages are only available to compensate “for conduct that is outrageous, because
311
ECF Nos. 146 and 147.
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of the defendant’s evil motive or his reckless indifference to the rights of
others.”312 Fundamentally, punitive damages are penal in nature; the objective is to
punish a tortfeasor for his outrageous conduct and to deter him from similar
conduct in the future.313 Pennsylvania has adopted Section 908(2) of the
Restatement (Second) of Torts, which permits punitive damages only for conduct
that is “outrageous because of the defendant’s evil motive or his reckless
indifference to the rights of others.”314 Accordingly, a punitive damages claim must
be supported by sufficient evidence to establish: (1) that the defendant had a
subjective appreciation of the risk of harm to which the plaintiff was exposed; and
(2) that he acted or failed to act in conscious disregard of that risk.315
“Although ordinary negligence will not support an award of punitive
damages, ‘punitive damages are appropriate for torts sounding in negligence when
the conduct goes beyond mere negligence and into the realm of behavior which is
willful, malicious, or so careless as to indicate wanton disregard for the rights of
the parties injured.’”316 To establish a punitive damages claim, “the state of mind
312
Hutchison v. Luddy, 870 A.2d 766, 770 (Pa. 2005) (citing Feld v. Merriam, 485 A.2d 742,
747 (Pa. 1984)).
313
See id.; see also SHV Coal, Inc. v. Continental Grain Co., 587 A.2d 702, 704 (Pa. 1991).
314
Feld, 485 A.2d at 747 (1984) (quoting Chambers v. Montgomery, 411 Pa. 339, 192 A.2d 355
(1963); RESTATEMENT (SECOND) OF TORTS, § 908(2)).
315
See Feld, 485 A.2d at 1097-98.
316
Young v. Westfall, No. 4:06-CV-2325, 2007 WL 675182, at *2 (M.D.Pa. Mar. 1, 2007)
(McClure, J.) (citing Hutchison, 870 A.2d at 770).
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of the actor is vital. The act, or the failure to act, must be intentional, reckless or
malicious.”317 A plaintiff must allege facts sufficient to support a plausible claim
demonstrating this intentional, wanton, reckless or malicious conduct.318 A
showing of mere negligence, or even gross negligence, will not suffice to establish
that punitive damages should be imposed.319
“The standard under which punitive damages are measured in Pennsylvania
requires analysis of the following factors: (1) the character of the act; (2) the nature
and extent of the harm; and (3) the wealth of the defendant.”320 The United States
Supreme Court has reiterated that the “most important indicium of the
reasonableness of a punitive damages award is the degree of reprehensibility of the
defendant’s conduct.”321 That Court continued, “we have instructed courts to
determine the reprehensibility of a defendant by considering whether: the harm
caused was physical as opposed to economic; the tortious conduct evinced an
indifference to or a reckless disregard of the health or safety of others; the target of
the conduct had financial vulnerability; the conduct involved repeated actions or
317
Hutchison, 870 A.2d at 770 (quoting Feld, 485 A.2d at 748).
318
See Twombly, 550 U.S. at 556.
319
Phillips v. Cricket Lighters, 883 A.2d 439, 445 (Pa. 2005).
320
Grossi v. Travelers Pers. Ins. Co., 79 A.3d 1141, 1157 (2013)
321
State Farm v. Campbell, 538 U.S. 408 (2003) (Kennedy, J.).
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was an isolated incident; and the harm was the result of intentional malice,
trickery, or deceit, or mere accident. “322
Although Heidi Criswell’s conduct was intentional and repeated, the harm
was only economic as opposed to physical, and it did not disregard the health or
safety of others. Moreover, evaluating the ‘wealth’ of Criswell would be to use the
term ‘wealth’ loosely. She was making between $10.75 and $11.75 during her
more than a decade term of employment with Mifflinburg Telegraph. She has
almost fully mortgaged Wildcat to finance the business. That is not to ignore the
wholly inappropriate nature of her actions. But to award punitive damages here
would be an overreach of my judicial responsibility to do justice.
14.
Attorney’s Fees
“The “American Rule” [is] that each party in a lawsuit ordinarily shall bear
its own attorney’s fees unless there is express statutory authorization to the
contrary.”323 Attorney’s fees and expenses may be awarded to a prevailing party in
a federal litigation where authorized by statute, court rule, or contract.324 In this
matter, Mifflinburg Telegraph seeks an award of attorney’s fees pursuant to both
the Pennsylvania Uniform Trade Secrets Act and the Lanham Act. However, as
described above, Plaintiff has not succeeded on the Lanham Act claim.
322
Id.
323
Hensley v. Eckerhart, 461 U.S. 424, 429 (1983).
324
See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 257, 95 S.Ct. 1612, 44
L.Ed.2d 141 (1975).
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Under the PUTSA “a court may award reasonable attorney fees, expenses
and costs to the prevailing party if… willful and malicious misappropriation
exists.”325 Plaintiff argues “willful and malicious misappropriation” on the part of
Wildcat.326 ‘Willful and malicious’ is defined as such intentional acts or gross
neglect of duty as to evince a reckless indifference of the rights of others on the
part of the wrongdoer and an entire want of care so as to raise the presumption that
the person at fault is conscious of the consequences of his carelessness.”327
I find here that the actions of Defendant were ‘willful and malicious.’328 In a
similar case, arising out of our sister court in the Western District of Pennsylvania,
the Honorable Donetta W. Ambrose found that “where the employee spent months
letting the employer believe that he was working in its best interest; used the
employer’s name, reputation, contacts, and resources to develop an automated
system; and then resigned, taking with him the system knowing full well that not
only was he misappropriating a trade secret but that he would also simultaneously
be depriving the employer of the ability to use that trade secret.”329
The factual scenario here is similar to that in Judge Ambrose’s case. Heidi
Criswell spent months negotiating a buyout of Mifflinburg Telegraph while
325
12 Pa. C.S. § 5305.
326
ECF No. 106 at 12.
327
18A SUMM. PA. JUR. 2D COMMERCIAL LAW § 19:45 (2d ed.).
328
However, I award only attorney’s fees, as Plaintiff did not request exemplary damages.
329
Id. see also B & B Microscopes v. Armogida, 532 F. Supp. 2d 744 (W.D. Pa. 2007).
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simultaneously, and surreptitiously, organizing the Wildcat business. She stole the
customer list; she misappropriated re-order forms; she intentionally deleted
Mifflinburg Telegraph’s computer files, hindering its ability to operate.
I turn now to the “sham affidavit rule” addressed above.
Federal Rule of Civil Procedure 56(h) Affidavit or Declaration
Submitted in Bad Faith. If satisfied that an affidavit or declaration
under this rule is submitted in bad faith or solely for delay, the court-after notice and a reasonable time to respond--may order the
submitting party to pay the other party the reasonable expenses,
including attorney’s fees, it incurred as a result. An offending party or
attorney may also be held in contempt or subjected to other
appropriate sanctions.
In its post-hearing brief, Mifflinburg Telegraph requests $178,679.29 in
legal fees and costs. An award of the entirety of fees and costs requested is
appropriate here. Heidi Criswell’s affidavit falls squarely in the “sham affidavit”
category. As described above, her affidavit is not in accordance with the other
evidence of record, including emails, contracts, billing statements, her resignation
letter, and even her own deposition testimony. She has been, as the English would
say, somewhat economical with the truth. As a sanction, I will not reduce the
requested attorney’s fees amount as I did for Wildcat, and I will instead award the
entire amount requested.
Heidi Criswell will also have thirty (30) days to respond, should she so
choose to do so, to the fees and costs I am ordering, pursuant to Rule 56.
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15.
Joint & Several Liability
Heidi Criswell is jointly and severally liable with the liability previously
directed against Wildcat.330 “A liability is joint and several when ‘the creditor may
sue one or more of the parties to such liability separately, or all of them together, at
his [or her] option.’”331 “Accordingly, ‘an assertion of joint and several liability is
an assertion that each defendant is liable for the entire amount, although the
plaintiff only recovers the entire amount once.’”332
III.
CONCLUSION
Dostoyevsky’s insight as to the accused’s own mental state is “ perhaps why
no other novelist’s work has been so widely drawn upon by fields and disciplines
that do not normally draw on fiction for their sources.”333 It was not the quality or
lack of lawyering here, that lead to the instant results. It was Heidi Criswell’s own
statements, oral and written, that resulted in the finding of liability without the
need to resort to a jury trial.
This case should serve as a warning to other picaresque employees that it is
never wise to spread the net while the bird you want to catch is watching. For the
330
September 7, 2017, ECF Nos. 146 and 147.
331
S.E.C. v. J.W. Barclay & Co., 442 F.3d 834, 843 (3d Cir. 2006) citing United States v. Gregg,
226 F.3d 253, 260 (3d Cir.2000).
332
S.E.C. v. J.W. Barclay & Co., Inc. 442 F.3d 834, 843 (3dCir. 2006) citing Golden v. Golden,
382 F.3d 348, 355 n. 5 (3d Cir. 2004).
333
PROSECUTING RASKOLNIKOV, supra, at 64.
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forgoing reasons the motion will be granted as to Heidi Criswell, denied as to Dale
Criswell, and for those counts enumerated above on which I have deferred ruling
pursuant to Federal Rule of Civil Procedure 56(f), final judgment will be deferred
for thirty (30) days.
Damages, attorney’s fees, and post judgment interest will be Ordered in
accordance with this Memorandum Opinion.
The amount, totaling, $350,841.86, is comprised of:
Computer forensic recovery:
$9,304.57
Rental payments on 720 printer:
$5,358.00
Damages to the business value:
$157,500.00
Attorney’s Fees:
$178,679.29
An appropriate Order follows.
BY THE COURT:
s/ Matthew W. Brann
Matthew W. Brann
United States District Judge
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