North American Marketing Solutions Inc v. Wright

Filing 9

ORDER DISMISSING CASE signed by Judge Rudolph T. Randa on 7/1/2014 GRANTING 8 Plaintiff's MOTION to Reopen Case/MOTION for Default Judgment. (cc: all counsel)(cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
NORTH AMERICAN MARKETING
SOLUTIONS, Inc.,
Plaintiff,
Case No. 13-C-472

-vsJONATHAN WRIGHT,
Defendant.

DECISION AND ORDER

North American Marketing Solutions, Inc. (“NAMS”) specializes in mail
fulfillment and billing services for fundraising and other companies. In this action,
NAMS alleges that Jonathan Wright stole proprietary data from NAMS‟ computer
network. Wright is in default – purposefully so. Indeed, when NAMS‟ investigation
of the theft led to Wright, Wright refused to discuss the matter on the advice of
counsel. Initially, the Court denied NAMS‟ request for injunctive relief, and it later
closed the case for administrative purposes. NAMS now moves to re-open and for the
entry of a default judgment that includes permanent injunctive relief. These motions
are granted.
In late August 2012, NAMS discovered that “salted” individuals in its Donor
Lists had received solicitation phone calls. “Salting” is a common practice in the
industry to guard against the unauthorized distribution and use of Donor Lists.
NAMS‟ investigation revealed that the calls were made by a fundraising company

operating under the name Community Awareness, Inc. (“CAI”), whose public
principal was a man named Joshua Wilson. Wilson consented to an interview through
counsel. Wilson stated that he had no idea the list was stolen, agreed to discontinue
the list, and advised that he had received the list from Wright. A subsequent email
exchange confirmed Wilson‟s account:
Wilson: [T]his was because you made a choice, with me having no
knowledge of you doing so, to obtain leads in a possibly illegal way.
When you first came to me with the idea of opening the business and
putting everything in my name, you told me you had gotten a good deal
on leads. I trusted you because I didn‟t think you would do anything to
put me in a position that I am in now.
…
Wright: It‟s my expectation that there‟s a strong chance the fact that
this is all my doing will come to light naturally. . . . I want you to know
that there‟s no way you‟re taking the fall for this. Absolutely not. You
can know it‟s never in the back of my mind because I‟ve always let the
emails be plenty clear about my „running things behind the scenes.‟
You have that, you‟ll always have that. So we know you won‟t take the
fall.
First, Wright violated the Electronic Communications Privacy Act (“ECPA”).
18 U.S.C. § 2701(a) (making it unlawful to intentionally access “a facility through
which an electronic communication service is provided” or “intentionally exceeds an
authorization to access that facility,” thereby “obtain[ing], alter[ing], or prevent[ing]
authorized access to a wire or electronic communication while it is in electronic
storage in such system . . .”). Therefore, NAMS is entitled to “any profits made by the
violator as a result of the violation . . .” § 2707(c) (Stored Communications Act

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(“SCA”), providing a civil remedy for violation of ECPA).

NAMS‟ expert

persuasively establishes that Wright unjustly profited to the tune of $113,737.00.
Second, NAMS requests punitive damages. The Fourth Circuit has held that
punitive damages can be awarded under the SCA even absent proof of actual damages.
Van Alstyne v. Elec. Scriptorium, Ltd., 560 F.3d 199, 209 (4th Cir. 2009) (finding “no
error in the district court‟s award of punitive damages absent a showing of actual
damages” under the SCA). This approach raises due process concerns, especially
when (as here) the defendant is not available to defend himself (although intentionally
so). See, e.g., E.E.O.C. v. Sterling Jewelers, Inc., 788 F. Supp. 2d 83, 89 (W.D.N.Y.
2011) (“to survive due process, punitive damages must be proportional to the amount
of compensatory damages owed”) (citing State Farm Mut. Auto Ins. Co. v. Campbell,
538 U.S. 408, 424 (2003)). However, unjust profits are generally considered to be a
“proxy” for actual or compensatory damages. George Basch Co., Inc. v. Blue Coral,
Inc., 968 F.2d 1532, 1539 (2d Cir. 1992). Accordingly, the Court‟s due process
concerns are alleviated because the requested amount of punitive damages
($100,000.00) is proportional to Wright‟s unjust profits. Moreover, Wright willfully
and intentionally violated the statute, § 2707(c), then refused to participate in this
litigation in an apparent attempt to make it more difficult for NAMS to obtain relief.
Thus, punitive damages are warranted to advance the goals of punishment and
deterrence. E.E.O.C. v. AIC Sec. Investigations, Ltd., 55 F.3d 1276, 1287 (7th Cir.
1995) (punitive damage award may not exceed “what is necessary to serve the
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objectives of deterrence and punishment”).
Third, NAMS requests attorney‟s fees.

Such an award is warranted and

especially proper in light of Wright‟s recalcitrant conduct. Van Alstyne, 560 F.3d at
209; § 2707(c); § 2707(b)(3). The hourly rates and work performed by NAMS in
pursuing this litigation were necessary and reasonable. ECF No. 8-3, Declaration of
Daniel J. Trueden, ¶¶ 19-24 (requesting $27,839.95 as the total amount incurred to
prosecute this lawsuit).
Fourth and finally, NAMS requests permanent injunctive relief. A plaintiff
seeking a permanent injunction must demonstrate that it has suffered an irreparable
injury; that remedies available at law, such as monetary damages, are inadequate to
compensate for that injury; that, considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted; and that the public interest
would not be disserved by a permanent injunction.

eBay Inc. v. MercExchange,

L.L.C., 547 U.S. 388, 391 (2006); but see Crane by Crane v. Ind. High Sch. Athletic
Assoc., 975 F.2d 1315, 1326 (7th Cir. 1992) (“To justify entry of a permanent
injunction, Ryan had to prove that he had no adequate legal remedy. He was not
required, however, to show irreparable injury”). While disgorgement of profits may be
considered an adequate legal remedy to the extent that it replicates NAMS‟ actual
damages, it is still an equitable remedy. Going forward, monetary damages are an
inadequate legal remedy. The best and likely only way to protect NAMS from future
misuse of its stolen Donor Lists is to issue an order prohibiting Wright from using
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them and directing Wright to destroy the copies he obtained. The balance of hardships
favors NAMS because Wright has no legal right to use or keep that which he stole.
Moreover, the public interest is not disserved by granting this relief.

Indeed,

Wisconsin law, which Wright also violated, expressly contemplates such relief. Wis.
Stat. § 943.70(5) (aggrieved parties “may sue for injunctive relief to prevent or stop
the disclosure of information which may enable another person to gain unauthorized
access to the data, computer programs or supporting documentation”) (emphasis
added).
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY
ORDERED THAT NAMS‟ motion to re-open and for default judgment [ECF No. 8]
is GRANTED. The Clerk of Court is directed to enter judgment accordingly.
Dated at Milwaukee, Wisconsin, this 1st day of July, 2014.
BY THE COURT:

__________________________
HON. RUDOLPH T. RANDA
U.S. District Judge

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