Rajaee v. Design Tech Homes, Ltd et al

Filing 42

MEMORANDUM AND ORDER. It is ORDERED that Defendants Design Tech Homes, Ltd. and Design Tech Homes of Texas, LLC's Motion for Summary Judgment (Document No. 25 ) is GRANTED IN PART, and Plaintiff Saman Rajaee's claims for violations of the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act are DISMISSED WITH PREJUDICE. It is further ORDERED that Plaintiff Saman Rajaee's remaining state law claims for misappropriation of confidential information, violation of the Texas Theft Liability Act, negligence, and conversion are DISMISSED WITHOUT PREJUDICE. (Signed by Judge Ewing Werlein, Jr) Parties notified.(gkelner, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
SAMAN RAJAEE,

§
§
§
§
§
§
§

Plaintiff,

v.

CIVIL ACTION NO. H-13-2517

DESIGN TECH HOMES, LTD and
DESIGN TECH HOMES OF TEXAS, LLC,§
§
§

Defendants.

MEMORANDUM AND ORDER
Pending is Defendants' Motion for Summary Judgment (Document
No. 25).

After carefully considering the motion, response, reply,

and applicable law, the Court concludes as follows.
I. Background

Plaintiff Saman Rajaee ("Plaintiff") is a Houston resident who
has worked in the residential home construction industry for over
twelve

years,

process. 1

collecting

numerous

business

contacts

in

the

In January 2012, Defendants Design Tech Homes, Ltd. and

Design Tech Homes of Texas, LLC (collectively, "Defendants") hired
Plaintiff to provide sales and marketing for them. 2

Plaintiff's

position required him to have constant access to email to be able

1

Document No. 39, ex. C

2

I d.,

ex. C

~ :3.

~

2 (Pl.'s Decl.).

to

"answer customer requirements

and be available as needed.

,,3

Defendants did not provide Plaintiff with a cell phone or smart
device. 4

Plaintiff

instead used his personal smart device,

an

Apple iPhone 4 (the "iPhone"), to conduct his work for Defendants. 5
Plaintiff's iPhone was connected to Defendants' Microsoft Exchange
Server,

allowing Plaintiff remotely to access the email,

contact

manager, and calendar provided by Defendants. 6
On or about February 2,

2013,

Plaintiff notified Defendants

that he would be resigning in two weeks, and Defendants immediately
terminated

Plaintiff. 7

Administrator,

Alvaro

3

Id., ex. C

~

Id., ex. C

~

Sandoval

later,

Defendants'

("Sandoval") ,

remotely

Network
wiped

:i.

5

days

4.

4

A few

Id., ex. C ~ 7.

6
Id.
The parties dispute the origin of this connection.
Plaintiff testifies that Defendants "encouraged [their] employees,
such as me, to use their own personal smart device," that he did
not have the technical knowledge to connect his smart phone device
to a Microsoft Exchange Server, and that "someone acting on behalf
of
[Defendants]" connected Plaintiff's iPhone to Defendants'
server.
Id., ex. C ~~ 5, 7.
Defendants state that Plaintiff
connected his iPhone without authorization, citing the declaration
testimony of their Network Administrator , Alvaro Sandoval, who
asserted that he himself did not connect the iPhone and was not
aware of the connection until the day of Plaintiff's resignation.
See Document No. 25 at 2-3; Document No. 26-1 at 2 of 109.

7

Document No. 39, ex. C

~

8.
2

Plaintiff's iPhone, restoring it to factory settings and deleting
all the data--both personal and work-related--on the iPhone. 8
Plaintiff sued Defendants, alleging that their actions caused
him to lose "more than 600 business contacts collected during the
course of his career,

family contacts

(many of which are located

overseas and some are related to family business), family photos,
business records,

irreplaceable business and personal photos and

videos and numerous passwords.,,9

Plaintiff alleges violations of

the Electronic Communications Privacy Act and the Computer Fraud
and

Abuse

violation

Act,
of

conversion. 10

the

misappropriation
Texas

Theft

of

confidential

Liability

Act,

information,

negligence,

and

Defendants move for summary judgment. 11

II. Legal Standard
Rule 56 (a)

provides that ,,[t] he court shall grant summary

judgment if 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."
this

burden,

the

R.

FED.

Crv.

56 (a) .

burden shifts

Once the movant carries

to

P.

nonmovant

the

to

show

that

8

Id., ex. A at 43:2-44:6, 49:7-14; id., ex. C ~ 9; id., ex.

9

Document No. 9

D.
~

10

Document No.9.

11

16 (2d Am. Compl.).

Document No. 25.
3

summary judgment should not be granted.

Morris v. Covan World Wide

Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).

A party opposing

a properly supported motion for summary judgment may not rest upon
mere allegations or denials

in a pleading,

and unsubstantiated

assertions that a fact issue exists will not suffice.

Id.

"[T]he

nonmoving party must set forth specific facts showing the existence
of a
case.

'genuine'
/I

Id.

issue concerning every essential component of its
"A pa.rty asserting

that

a

fact

cannot be or

genuinely disputed must support the assertion by:

(A)

citing to

or (B)

particular parts of materials in the record .

is

showing

that the materials cited do not establish the absence or presence
of a

genuine dispute,

or that an adverse party cannot produce

admissible evidence to support the fact./1

FED. R. Cry. P. 56(c) (1).

"The court need consider only the cited materials,
consider other materials in the record./1

but

it may

Id. 56(c) (3).

In considering a motion for summary judgment,

the district

court must view the evidence "through the prism of the substantive
evidentiary burden./1
2505, 2513 (1986).

Anderson v. Liberty Lobby, Inc., 106 S. Ct.

All justifiable inferences to be drawn from the

underlying facts must be viewed in the light most favorable to the
nonmoving party.
Corp.,

106 S.

Ct.

Ma tsushi ta Elec.
1348,

1356

(1986)

Indus.

Co.

v.

Zeni th Radio

"If the record,

viewed in

this light, could not lead a rational trier of fact to find/l for
the nonmovant, then summary judgment is proper.

4

Kelley v. Price-

Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir. 1993).

On the other

hand, if "the factfinder could reasonably find in [the nonmovant' s]
favor

I

then summary

judgment

is

standards of Rule 56 are met,

improper."

Even if

the

a court has discretion to deny a

motion for summary judgment if it believes that "the better course
would be to proceed to a full trial."

Anderson,

106 S.

Ct.

at

2513.
III. Analysis
1.

Violation of the Electronic Communications Privacy Act
Plaintiff alleges that "Defendants accessed Plaintiff's smart

device

without

and

authorization

willfully

destroyed

the

Plaintiff's communications stored on his smart device in violation
of 18 USC §2701(a) (1)

" 12

Stored Communications Act,

Title 18 U.S.C.

2701 is part of the

which Congress passed as part of the

Electronic Communications Privacy Act ("ECPA") to protect potential
intrusions

on

Amendment.

See Garcia v. City of Laredo, Tex., 702 F.3d 788, 791

(5th Cir. 2012).

individual

privacy

not

addressed

by

the

Fourth

Section 2701(a) (1) provides that whoever "inten-

tionally accesses without authorization a facility through which an
electronic communication service is provided

and thereby

12 Document No.
9 ~ 20. In his Response to Defendants' Motion
for Summary Judgment, Plaintiff waives this claim by failing to
defend it.
See Document No. 39.

5

obtains,

alters,

or

prevents

authorized

access

to

a

wire

or

electronic communication while it is in electronic storage in such
system shall be punished as provided in subsection
section.

18 U.S.C.

1I

§

2701(a) (1).

(b)

of this

Assuming that a cell phone

could be considered a "facilityll under the Stored Communications
Act,

the

Fifth

individual

Circuit

stores

has

to his

held

that

hard drive

electronic storage under the statute.

or

1I

"information
cell

phone

Garcia,

that

an

not

in

is

702 F.3d at 793.

Accordingly, Plaintiff's personal data that he stored on his iPhone
is not protected by Section 2701, and his ECPA claim is dismissed.
2.

Violation of the Computer Fraud and Abuse Act
Plaintiff

computer

and

alleges
caused

that

the

loss

"Defendants
of

accessed

Plaintiff's

economic damages valued at more than $5,000,"

Plaintiff's

records

causing

in violation of the

Computer Fraud and Abuse Act ("CFAAII), 18 U.S.C.

§

1030.13

Although

the CFAA is a criminal statute, Section 1030(g) provides a private
right of action "for [a]ny person who suffers damage or loss by
reason of a violation of this section.

1I

18 U.S.C.

§

1030(g); Fiber

Sys. Int'l, Inc. v. Roehrs, 470 F.3d 1150, 1156 (5th Cir. 2006).
"A civil action for a violation of this section may be brought only
if

the

conduct

involves

subsection (c) (4) (A)

13

1 of

(i).11

Document No. 9

~

the

18 U.S.C.

24.
6

factors
§

set

1030 (g).

forth in
The only factor

that is potentially relevant in this case is "loss to 1 or more
persons during any 1--year period
in value."

1d.

§

aggregating at least $5,000

1030(c) (4) (A) (i) (I)

.14

Defendants argue that Plaintiff's CFAA claim fails as a matter
of

law because Plaintiff has produced no evidence of any loss

cognizable under the CFAA that aggregates to at least $5,000. 15
Plaintiff responds that "[t]he present case relates to intentional

deletion of data and documents and

[Plaintiff]

has sufficiently

pled facts supporting a CFAA interruption of service and loss.
[have Defendants]
$5, 000.

proven that

[Plaintiff's]

Nor

losses are less than

,,16

Because Plaintiff bears the ultimate burden of proving loss at
trial, Defendants may move for summary judgment "by 'showing' --that
is, pointing out to the district court--that there is an absence of
evidence to support the nonmoving party's case."
Catrett, 106 S. Ct. 2548, 2554 (1986).

Defendants are not required

to produce evidence negating Plaintiff's claim.
Defendants have argued that

Celotex Corp. v.

Plaintiff has

1d. at 2553.

Once

no evidence of

loss

14 The statute's other factors
that may give rise to a civil
cause of action involve medical records, physical injury, threats
to public health or safety, and damage affecting United States
Government computers used in furtherance of the administration of
justice, national defense, or national security.
See 18 U.S.C.
§ 1030 (c) (4) (A) (i) .

15

Document No. 25 at 13-15; Document No. 40 at 4-5.

16

Document No. 39 at 17 (emphasis in original).
7

within the meaning of the statute,

it is Plaintiff's burden to

produce evidence--not merely to rely on his pleadings--in order to
demonstrate the existence of a genuine issue of material fact.

See

id. at 2552 ("[T]he plain language of Rule 56(c) mandates the entry
of summary judgment,

after adequate time for discovery and upon

motion, against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party's
case,

and on which that party will bear the burden of proof at

trial."); Modrowski v. Pigatto, 712 F.3d 1166, 1170 (7th Cir. 2013)
(on

summary

defendants

judgment

motion

pointed out

the

[plaintiff's]

involving
gap

that

CFAA

claim,

they believed

"once

the

existed

in

case, he was obliged to point to evidence that,

if

believed by the trier of fact, would be sufficient to show that his
loss did in fact exceed $5,000").
Although

Plaintiff

does

not

argue

that

he

has

produced

evidence of statutory loss, he does cite--albeit in a footnote and
without explanation--to paragraph 11 of his Declaration, in which
he describes the losses he suffered as a result of Defendants'
deletion of his personal data. 17
(1)

Plaintiff testifies that he lost:

pictures of his personal home rehabilitation project,

decreased

the

value

of

the

remodel

by

at

least

which

$50,000;

(2) pictures and video of family, friends, and his dogs, which he
values at $3,500;

17

See id.

(3) all cell phone contacts after 2009, which he

at 17 n.90; Document No. 39, ex. C ~ 11.
8

values

at

over

$50,000

based on his

diminished employability;

(4) all of Plaintiff's text messages, which he values at $1,000;
and

(5)

all of his notes and email accounts,

which he values at

$600. 18
Defendants reply that none of these qualify as "loss" under
the CFAA.19

The CFAA defines "loss" as "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

because of interruption of service."

Id.

§

damages

1030 (e) (11).

incurred
"The term

'loss' encompasses only two types of harm: costs to investigate and
respond to an offense,
interruption."

and costs incurred because of a service

Alliantgroup,

610, 630 (S.D. Tex. 2011)
Ltd.

(BVI)

v.

Godlevsky,

L.P.

v.

Feingold,

(Rosenthal, J.)
719 F. Supp.

803 F.

2d 766,

776-77

(Ellison, J.); Nexans Wires S.A. v. Sark-USA,

Supp.

2d 468,

562-63 (2d Cir. 2006)

(S.D.N.Y.

2004),

2d

(citing Quantlab Techs.

2010)

472-78

Supp.

(S.D. Tex.

Inc., 319 F.

aff'd 166 F.

App'x.

559,

(holding $10 million in lost profits caused

by misappropriation of confidential data was not recoverable under
the

CFAA,

which

permits

recovery

of

lost

revenue

only

when

connected to an "interruption of service.")); see also Resdev, LLC

18

Document No. 39, ex. C

19

~

11.

Document No. 40 at 4-5.
9

v. Lot Builders Ass'n, Inc., 6:04-CV-13740RL31DAB, 2005 WL 1924743,
at *4 (M.D. Fla. Aug. 10, 2005)
listing

potential

injuries

("By use of the term 'cost' and its

directly

associated

with,

or

with

addressing, an unauthorized-computer-access event, the CFAA plainly
enumerates a

narrow grouping of

'loss'

distinct from- -and thus

excluding--the far greater range of losses that could flow from a
violation of the CFAA..").
Plaintiff has not produced evidence of any costs he incurred
to investigate or respond to the deletion of his data, nor do the
losses and damages for which he does produce evidence arise from an
"interruption of service."

See M-I LLC v. Stelly,

(Ellison, J.)

759, 780 (S.D. Tex. 2010)

733 F. Supp. 2d

("case law has consistently

interpreted the loss provision to encompass only the costs incurred
as a result of investigating or remedying damage to a computer, or
costs incurred because the computer's service was interrupted");
Alliantgroup, 803 F. Supp. 2d at 630 (granting summary judgment on
CFAA claim where plaintiff
services

as

a

result

of

"does not allege an interruption of
[defendant's]

actions,

or

any

costs

incurred to investigate and respond to an interruptions or any
service interruption"); Clinton Plumbing

&

Heating of Trenton, Inc.

v. Ciaccio, CIV. 09-2751, 2010 WL 4224473, at *6 (E.D. Pa. Oct. 22,
2010)

("Various courts have interpreted 'loss' to mean the remedial

costs of
done,

and

investigating a
costs

incurred

computer for damage,
while

10

the

computer

remedying damage
is

inoperable. ")

(citations omitted); Nexans Wires, 319 F. Supp. 2d at 477, aff'd,
166 F.

App'x 559

("Therefore,

if

[plaintiffs]

had lost revenue

because the computer systems . . . were down, that would seem to be
the type of lost revenue contemplated by the statute."); see also
Frees,

Inc. v. McMillian, CIV.A. 05-1979, 2007 WL 2264457, at *2

(W.D. La. Aug. 6, 2007)
from

plaintiff's

(although defendants allegedly deleted data

computer,

interruption of service").

plaintiff

"did

not

suffer

an

Accordingly, Plaintiff has not offered

evidence sufficient to raise a genuine issue of material fact that
he

sustained

$5,000

in

cognizable

"loss"

under

the

CFAA,

and

Plaintiff's CFAA claim is dismissed.
3.

Supplemental Jurisdiction
This Court's original jurisdiction is based solely on federal

question jurisdiction.
misappropriation of

Plaintiff's remaining causes of action--for

confidential

information,

violation of

the

Texas Theft Liability Act, negligence, and conversion--all arise
under and allege serious issues of Texas law.
Court

in

its

discretion

declines

to

Accordingly,

exercise

jurisdiction over these remaining state law claims.
§

1367 (c)

("The

district

courts

supplemental jurisdiction . . . if .

may

decline

the

supplemental
See 28 U.S.C.

to

exercise

(3) the district court has

dismissed all claims over which it has original jurisdiction.");
Enochs v. Lampasas Cnty., 641 F.3d 155, 161 (5th Cir. 2011)

11

("Our

general rule is to dismiss state claims when the federal claims to
which they are pendent are dismissed.") .
IV.

Order

For the foregoing reasons, it is
ORDERED that Defendants Design Tech Homes,

Ltd.

Tech Homes of Texas, LLC's Motion for Summary Judgment

and Design
(Document

No. 25) is GRANTED IN PART, and Plaintiff Saman Rajaee's claims for
violations of the Electronic Communications Privacy Act and the
Computer Fraud and Abuse Act are DISMISSED WITH PREJUDICE.

It is

further
ORDERED that

Plaintiff Saman Rajaee's

remaining state law

claims for misappropriation of confidential information, violation
of the Texas Theft Liability Act, negligence, and conversion are
DISMISSED WITHOUT PREJUDICE.
Plaintiff is reminded that the period of limitations to file
their state claims in state court is tolled for a period of thirty
(30) days after the claims are dismissed unless state law provides
for a longer tolling period.

28 U.S.C.

§

1367(d).

The Clerk shall notify all parties and provide them with a
signed copy of this Order.
SIGNED at Houston, Texas, on this

12

1l

~ of
day

November, 2014.