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Estes Forwarding Worldwide LLC v. Cuellar

United States District Court, E.D. Virginia, Richmond Division

March 9, 2017

ESTES FORWARDING WORLDWIDE LLC, Plaintiff,
v.
MARCELO S. CUELLAR, Defendant.

          MEMORANDUM OPINION (DENYING DEFENDANT'S MOTION TO DISMISS)

          Henry E. Hudson United States District Judge.

         THIS MATTER is before the Court on Defendant Marcelo S. Cuellar's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6), filed on December 29, 2016. (ECF No. 8.) Both parties have filed memoranda supporting their respective positions. Oral argument followed on February 8, 2017.

         For the reasons stated herein, the Court will deny the Motion.

         I. BACKGROUND

         As required by Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court assumes Plaintiffs well-pleaded allegations to be true and views all facts in the light most favorable to him. T.G. Slater & Son v. Donald P. & Patricia A. Brennan LLC, 385 F.3d 836, 841 (4th Cir. 2004) (citing Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). At this stage, the Court's analysis is both informed and constrained by the four corners of Plaintiff s Complaint. Viewed through this lens, the facts are as follows.

         Plaintiff Estes Forwarding Worldwide LLC ("EFW"), a Virginia citizen, is a transportation logistics company. (Compl. ¶¶ 3, 5, ECF No. 1.) For many of its shipments, EFW relies on "at least three different vendors: a vendor to pick up the shipment from the customer and deliver it to the airport, a vendor to transport the shipment from airport to airport, and a vendor to transport the shipment from the airport to the delivery address." (Id. ¶ 7.) EFW has "invested significant time and expense, and years' worth of trial, error, and experience into its decision-making processes for determining the best transportation solution for any particular shipment, " which constitutes trade secrets. (Id. ¶ 10.) These trade secrets "are memorialized at EFW in spreadsheets and other computer information that reflect the decisions EFW has made when choosing transportation solutions for shipments, which information includes shipment information, type of freight and freight dimensions, routing decisions, vendor selection, vendor costs, and transit times." (Id. ¶ 11.)

         In early 2010, EFW hired Cuellar to work in its new operations unit in the San Francisco area. (Id. ¶ 18.) In connection with his hiring, EFW required Cuellar to sign a Confidentiality Agreement wherein he "agreed to protect EFW's confidential information, which included information regarding EFW's suppliers, the details of the manner in which EFW conducts its business, pricing and billing information, work in process, computer data, and financial information." (Id; see also Id. Ex. A.)

         Due to certain restrictions placed upon EFW by a customer, EFW was not permitted to install its own IT infrastructure on-site at its customer's location in San Francisco. (See Id. ¶ 20.) Therefore, EFW "needed an alternate way for [its] representatives to share information about shipments from the location." (Id.) Filling this void would serve two purposes: (1) it would allow "EFW representatives to communicate regarding each and every shipment, thereby ensuring the shipment would be delivered in accordance with the customer's requirements"; and (2) it would facilitate "recording shipment details, routing decisions, vendor selection, costs, and other shipment information further developed EFW's trade secrets." (Id. ¶ 21.)

         Consequently, "[a]cting on behalf of EFW and in furtherance of its business, [Cuellar] created a Google Drive account [(the "account")] to further these purposes." (Id. ¶ 22 (emphasis added).) This account "was to be used by EFW's on-site representatives, each of whom had signed confidentiality agreements similar to the" one signed by Cuellar. (Id.) "These employees accessed the [a]ccount by logging into efwsfo@gmail.com." (Id. ¶ 23.) "Each day, [Cuellar] and other EFW employees on site used the [a]ccount to record information such as the shipments being handled, the routing decisions being made, the selection of vendors, and cost information." (Id. ¶ 24.) Cuellar and others "recorded this information in a spreadsheet, one for each day" from 2009 to 2016, when EFW ceased doing work out of its San Francisco operation.[1] (Id. ¶¶ 24, 30.)

         EFW fired Cuellar on February 10, 2015, after which he moved to the State of Washington, where he now resides. (Id. ¶ 27.) In April 2015, Cuellar began working for AES Logistics, one of EFW's competitors. (Id. ¶ 29.) On May 19, 2016-over one year after his termination from EFW-Cuellar accessed the account from his home in Washington at approximately 2:25 a.m. local time. (Id. ¶ 31.) When accessing the account without having received prior authorization to do so, Cuellar removed both a recovery phone number associated with the account and a secondary email address on file "that went directly to EFW." (Id. ¶ 33.) Cuellar also changed the password for the account and created an archive of the spreadsheets that it contained. (Id. ¶¶ 34-35.)

         Later that day, after Cuellar arrived at his job at AES Logistics, he once again accessed the account at 6:28 a.m. (Id. ¶ 37.) He downloaded the entire archive that he created earlier that morning-containing more than 1, 900 spreadsheets generated by EFW employees in the San Francisco area-deleted the account, and logged off. (Id. ¶¶ 37-40.) "The following month, [Cuellar] went to work at CTE Logistics, also a competitor of EFW." (Id. ¶ 41.) Cuellar "is still in possession of the information from the [a]ccount." (Id. ¶ 42.)

         EFW officials received notice from Google about the unauthorized access, but that notice "only provided EFW with IP addresses for the devices or networks from which the access came, as well as approximate location information." (Id. ¶ 48.) Using that information, EFW was able to ascertain that the person who had accessed the account was a Comcast subscriber. (Id. ¶ 49.) In June 2016, EFW filed an action against Comcast in order to determine that subscriber's identity. (Id. ¶ 50.) Comcast sent Cuellar notice of EFW's attempt to identify the person who accessed the account in late June 2016. (Id. ¶ 53.) However, Cuellar's counsel made no attempt to offer any explanation to EFW for his client's unauthorized access until July 29, 2016. (Id. ¶ 54.)

         Plaintiff filed the present action on October 21, 2016 (ECF No. 1), alleging: (Count 1) breach of contract; (Count 2) violation of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030; (Count 3) violation of the Defend Trade Secrets Act of 2016, 18 U.S.C. §1836; (Count 4) unlawful access to stored communications, in violation of the Stored Communications Act ("SCA"), 18 U.S.C. § 2701; (Count 5) misappropriation of trade secrets pursuant to Va. Code Ann. §§ 59.1-336, et seq.; (Count 6) violation of the Virginia Computer Crimes Act, Va. Code Ann. §§ 18.2-152.1, etseq.; and (Counts 7 and 8) seeking a preliminary and permanent injunction.

         The Court finds that it has subject-matter jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331, 1332, and 1367.

         Defendant filed this Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) (ECF No. 8) on December 29, 2016, specifically challenging the sufficiency of Counts 2 and 4 of the Complaint.

         II. LEGAL STANDARD

         "A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citation omitted). The Federal Rules of Civil Procedure "require[] only 'a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to 'give the defendant fair notice of what the ... claim is and the grounds upon which it rests."' Bell Atl Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint need not assert "detailed factual allegations, " but must contain "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555 (citations omitted). Thus, the "[f]actual allegations must be enough to raise a right to relief above the speculative level" to one that is "plausible on its face, " rather than merely "conceivable." Id. at 555, 570.

         In considering such a motion, a plaintiffs well-pleaded allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiff. T.G. Slater, 385 F.3d at 841 (citation omitted). Legal conclusions enjoy no such deference. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         III. ANALYSIS

         Because Cuellar does not appear to challenge Counts 1, 3, 5, 6, 7, or 8, the Court will deny his Motion as to those claims and will limit its analysis only to Counts 2 and 4.

         A. Count Two: Violation of the Computer Fraud and Abuse Act

         In an effort to deter computer crime, Congress passed the Counterfeit Access Device and Computer Fraud and Abuse Act of 1984. Pub. L. No. 98-473, 98 Stat. 2190. Two years later, it expanded the Act with a revised version, the CFAA, Pub. L. No. 99-474, 100 Stat. 1213, which remains in effect today. While the CFAA is primarily a criminal statute designed to combat hacking, see A. V. ex rel Vanderhye v. (Paradigms, LLC,562 F.3d 630, 645 (4th Cir. 2009), it grants "[a]ny person who suffers damage or loss by reason of a violation of this section" the ability to bring a civil action "to obtain compensatory damages and injunctive relief or other equitable relief." 18 U.S.C. § 1030(g). "Notably, although proof of at least one of five additional factors is necessary to maintain a civil action, [2] ...


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