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University Sports Publications Co. v. Playmakers Media Co.

July 14, 2010

UNIVERSITY SPORTS PUBLICATIONS CO., PLAINTIFF,
v.
PLAYMAKERS MEDIA CO., ET AL., DEFENDANTS.



MEMORDUM OPINION AND ORDER

Plaintiff University Sports Publications ("USP") brings this action against defendants, a group of former employees and current competitors, for their roles in an alleged scheme to steal confidential customer and sales information from a USP database. The heart of the case arises under state law: the complaint pleads causes of action for misappropriation of trade secrets, unfair competition, breach of fiduciary duty, and tortious interference with contractual relations. The case comes before this Court, however, because USP also alleges that defendants violated the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030, by accessing the database without authorization (or in excess of their authorization), which offense USP claims caused it to expend $10,500 on two audits to investigate potential system damage.

Defendants moved to dismiss the complaint on the ground that, inter alia, it did not adequately plead a CFAA claim. The Court converted the motion to one for summary judgment after it became apparent at oral argument that the pivotal issue was factual: whether any defendant had in fact accessed the database or any portion of the database without USP's permission. Having received supplemental submissions, the Court finds that the evidentiary record raises a genuine issue of material fact as to this issue.

BACKGROUND

USP sells advertising in sports-related publications. To facilitate business, it maintains an extensive database of customer leads and historical sales data. The database gives USP employees a valuable snapshot of the advertising purchasing habits of potential corporate clients by cataloguing such information as the date, location, cost, and size of a corporation's prior purchases and the names of the corporate employees who authorized the purchases. (Pl. 56.1 ¶¶ 50-51.) USP contends that this information, which took hundreds of man hours to compile and is not readily available to the public, constitutes a trade secret. (Compl. ¶ 65; Pl. 56.1 ¶ 51.) The database, which is password-protected, is housed on computer servers maintained by an information technology contractor, Databasaurus LLC. USP employees access the database remotely through specialized software installed on their work computers. (Pl. 56.1 ¶¶ 52-54.)

Shane Pitta worked as an advertising salesperson at USP from 1995 through 2006. (Def. 56.1 ¶ 24.) He used the database frequently during those eleven years and in the process became friendly with a Databasaurus computer administrator named Darnell Gentles, who serviced the database, had full access to it, and had authority to set access levels for USP employees. (Id. at ¶¶ 14-16, 25; Pl. 56.1 ¶ 65.)

Pitta left USP in 2006 and joined its competitor Playmakers two years later, where he colluded, according to plaintiff, with Gentles (who remained at Databasaurus) and Playmakers president Terry Columbus to raid USP's client base by pilfering the confidential information on the database. The primary evidence of this scheme is the testimony of Michael Acciarito, a disillusioned former Playmakers employee who worked under Pitta and Columbus from December 2008 through July 2009. (Acciarito Aff. ¶ 3.) Acciarito testified that he overheard numerous telephone conversations between Pitta and Gentles in which Pitta asked Gentles to provide him with USP sales data, (Id. at ¶¶ 17-18), and that Pitta eventually obtained large amounts of the data and distributed it to Acciarito and other Playmakers employees in an effort to boost the company's sales. (Id. at ¶¶ 6-10; Pl. 56.1 at 67-68.) No direct evidence reveals how, exactly, Pitta got the data-there are no dispositive emails or other documents. Certain circumstantial evidence suggests Gentles simply sent it to him. Acciarito testified to observing Pitta access the data through a document on his laptop computer, not through a remotely accessed database. (Acciarito Dep. at 315:21 -- 318:2.) This testimony does not preclude the possibility that Pitta obtained the data by accessing USP's system directly and then saving the data to his computer, but the testimony does slightly favor the other explanation (that Gentles sent the data to Pitta rather than granting him access to the database). Moreover, though Databasaurus and another technology contractor both audited the database after learning of the alleged data theft, they discovered no signs of entry by an unauthorized user. (Goldfeder Dep. at 167-70; Zeifman Dep. at 93; Pl. 56.1 ¶¶ 94-101.)

USP resists the conclusion that Pitta received the data from Gentles, rather than taking it directly from the database, because it would mean that Pitta did not violate the CFAA by accessing a computer system without authorization. Plaintiff claims there is at least a triable issue of fact as to whether Pitta accessed the database because, first, he knew Gentles, who had authority to grant him access, and second, Pitta provided Acciarito with a spreadsheet of sales data which, according to the results of a forensic analysis, had been copied directly from the database. (Pl. 56.1 ¶¶ 69-71.) Given these two facts, USP seeks to have a jury decide whether Pitta copied the spreadsheet himself or whether he simply received it from Gentles.

One piece of evidence, Pitta's laptop, might resolve this dispute conclusively, but it appears to have been destroyed. USP sent Playmakers a letter on July 31, 2009, stating its belief that the laptop contained evidence relevant to the looming litigation and requesting that the machine be preserved. (Pl. 56.1 ¶ 78.) Columbus received this letter and, according to her testimony, placed Pitta's laptop in her desk drawer, "under lock and key," before eventually turning it over to Playmakers' counsel. (Id. at ¶ 81.) But the laptop defendants eventually produced to USP is apparently not the laptop Pitta used at Playmakers during the relevant time period. In fact, a forensic examination has revealed that the produced laptop was not used at all during most of Pitta's time at Playmakers. (Id. at ¶ 87.) According to plaintiff's expert, the machine had been inactive for four months on July 31, 2009-the date Columbus received the preservation letter-when someone turned it on and, over the ensuing week, began downloading programs and documents to populate the machine's hard drive. (Id. at ¶ 92.) The laptop Pitta actually used during the time Acciarito says he misappropriated USP's sales data remains unaccounted for.

The complaint states claims for violation of the CFAA against Pitta and Gentles and for conspiracy to violate the CFAA against all four defendants (Pitta, Gentles, Columbus, and Playmakers). These claims form the lone basis for federal jurisdiction.

The complaint also states claims under state law for misappropriation of trade secrets, unfair competition, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and tortious interference with contractual relations.

LEGAL STANDARD

Summary judgment is proper if the moving party shows that "there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. Proc. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "In deciding whether there is a genuine issue of material fact as to an element essential to a party's case, the court must examine the evidence in the light most favorable to the party opposing the motion, and resolve ambiguities and draw reasonable inferences against the moving party." Abramson v. Pataki, 278 F.3d 93, 101 (2d Cir.2002) (internal quotation marks omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

A party opposing summary judgment "may not rely merely on allegations or denials in its own pleading; rather, its response must-by affidavits or as otherwise provided in this rule-set out specific facts showing a genuine issue for trial." Fed. R. Civ. Proc. 56(e). As the Court has noted, "[t]his requirement has particular relevance when a party's responsive documents are long on speculation and short on specific facts." Medici Classics Productions, LLC v. Medici Group, LLC, 683 F.Supp.2d 304, 307 (S.D.N.Y.2010); see Woodman v. WWOR-TV, Inc., 411 F.3d 69, 85 (2d ...


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