COMPUTER FRAUD AND ABUSE ACT UPDATE

The federal Computer Fraud and Abuse Act (CFAA) is most closely associated with criminal prosecutions brought by the Department of Justice. But the CFAA also provides for a civil cause of action for anyone who suffers damage or loss because of a violation of the statute. In light of the expansive reading that some courts have given to the law, victimized companies should give consideration to taking the civil route. A civil lawsuit gives the wronged party more control and may provide a quicker fix. By means of such a lawsuit, the victim can retrieve stolen data, enjoin illegal access to data, and even get compensatory damages for the theft and destruction of data.

The CFAA applies to all companies and all computers that are connected to the Internet. Potentially, there are multiple, distinct types of violations of the statute that could support a civil action. On a recurring issue in such cases--whether the defendant had authorization for his actions--the courts look at several factors:

* whether the defendant was an agent of the plaintiff's, with particular powers;

* whether an employment contract, such as may have been embodied in company rules and policies, was breached; and

* whether the defendant's use of the computer exceeded normal use that was expected by the plaintiff.

Recent Court Decisions
A real estate business was allowed to proceed with a civil action against a former employee for violations of the CFAA. In violation of his employment contract, the employee decided to quit and start a competing business. Before he returned the company's laptop, he deleted all of the data in it, including data that would have revealed his misconduct. Knowing that "deleted" files can be retrieved, he erased the incriminating data by loading into the laptop a secure-erasure program.

All of this, if proven in court, violated the CFAA as "transmission" of a program that damaged the computer (defined to include files in the computer), and as intentionally accessing the computer without authorization. Although the employee had not yet left his job when he installed the program, by law any authorization he might have had evaporated as soon as he violated the duty of loyalty to his employer.

In another case brought under the CFAA, a tour company secured an injunction against a competing company run by one of its former employees. The ex-employee improperly used confidential information from his former employer to enable his new company to glean pricing data from his former employer's website, so that his new enterprise could effectively undercut those prices.

Although the website was open to anyone, the unauthorized use of the confidential information, combined with the use of a "scraper" software program, violated the CFAA. On top of the injunction, the plaintiff could recover, as a compensable "loss" under the CFAA, the thousands of dollars it had paid in computer consultant fees for diagnostic work after the defendant's conduct was discovered.

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EXCLUDED HEIRS MAY STILL INHERIT

When Elizabeth was born out of wedlock in the 1950s, she was adopted soon afterwards by another family. As a young adult, she located her birth mother and formed a long-lasting relationship with her. Elizabeth also discovered that, through her mother, she was related to the beneficiaries of a large fortune. Two multimillion dollar trusts had been established to provide income to Elizabeth's mother during her lifetime. The remaining principal was to go to her "descendants," according to one trust, and to "each then living child of hers," according to the other trust.

Following a long battle, a court has found that Elizabeth is entitled to share in the fortune, notwithstanding the argument by her mother's other heirs that she was not her mother's "child" or "descendant" because she had been adopted out of the family. Looking at the applicable state law when the trusts were created, the court determined that, at such times, nonmarital children could be included as descendants or children of their biological parents for purposes of inheritance. There also was an overarching constitutional issue, as some courts have held that treating children born out of a marriage differently from marital children is a denial of equal protection of the law.

In Elizabeth's case, the issue would have been more clear-cut in her favor had the trust instruments simply included her as a beneficiary, either by more inclusive language or by using her name. Of course, up to a point, the creator of a trust or will has leeway in deciding which of his or her children to include as beneficiaries. But the law has been known to step in on behalf of children to achieve a measure of justice and fairness.

A case in point, which has yet to play out to a resolution, concerns the estate of Anna Nicole Smith. In her will, Smith left all of her estate, which could be greatly enhanced by many millions of dollars from her late husband's assets, to her son. Only months before both Smith and her son died, she gave birth to a daughter. Whether the omission of any future children from Smith's will was intentional or merely a drafting error, it is probable that Smith's daughter will inherit the estate.

Under the "omitted child" doctrine followed by a majority of courts, when a parent has a will and then has children, those children are treated as if they were born prior to the will, and they are afforded the same treatment as any other siblings. If, for whatever reason, the Smith estate passes outside of the will, the daughter still will likely receive the estate.

Update Your Estate Planning Documents
Your estate planning documents should be reviewed with a professional on a regular basis and kept current with your life changes. Birth, death, marriage, and divorce are but a few life changes that can significantly affect your estate planning. Don't wait until it's too late to revise your plans to reflect your wishes and circumstances.

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"HOURS OF SERVICE" UNDER THE FMLA

To be eligible for leave under the federal Family and Medical Leave Act (FMLA), an employee must have been employed by the employer for the preceding 12 months, and the employee must have put in at least 1,250 "hours of service" during that time. Neither the FMLA nor the Fair Labor Standards Act (FLSA) defines "hours of service."

When a hospital determined that a nurse it employed was about seven hours short of the 1,250 hours threshold, and therefore denied the nurse FMLA leave in connection with her surgery for carpal tunnel syndrome, the circumstances required a federal appellate court to construe the proper meaning of "hours of service."

Both sides agreed that, in terms of actual hours spent on the job, the nurse came up just short of the FMLA threshold. But the facts were not that cut and dried. Under a "Weekender" compensation program devised by the hospital to provide an incentive for nurses to work undesirable weekend shifts, for every two-week period during which the nurse worked 48 weekend hours, she was paid as if she had worked 68 hours instead. If the hospital had calculated the nurse's hours in her first year using the "bonus hours" in addition to the hours the nurse was at work, she would have been eligible for FMLA leave.

The court upheld the hospital's decision and declined to find it liable under the FMLA. While the legislation itself provided little guidance for the court, an FMLA regulation on the subject of the requirement of 1,250 hours does state that "[a]ny accurate accounting of actual hours worked under FLSA's principles may be used." Another regulation states that "all hours are hours worked which the employee is required to give his employer." In this case, the court reasoned that the bonus hours for which the nurse received extra compensation could not count as "hours of service" because she was not required to "give" them to her employer, but rather could spend that time for her own purposes.

The nurse argued to no avail that her case should have had the same outcome as another case decided by the same court, in which the court held that an employee's "hours of service" under the FMLA did include some hours not actually worked. In that case, however, the employee requested FMLA leave after successfully suing for wrongful termination and obtaining a remedy that included full service credit and back pay for the hours she would have worked but for the termination. Thus, the employee could use these hours that would have been worked in calculating FMLA eligibility.