Lewis-Burke Associates LLC v. Widder ( 2010 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
LEWIS-BURKE ASSOCIATES LLC,
Plaintiff,
v. Civil Action No. 09-302 (JMF)
JOEL WIDDER,
Defendant.
MEMORANDUM OPINION
This case is before me for all purposes, including trial. It was scheduled to go to trial in
February of this year; however, on the eve of the pre-trial conference, defendant filed a motion to
dismiss based on lack of subject-matter jurisdiction, and the plaintiff filed a motion to amend the
complaint. Due to the pending motion and the extreme weather conditions at the time of the
scheduled trial, I found that it was both impossible and improvident to proceed to trial as
originally scheduled. Memorandum Order [#44], February 16, 2010. I will now address all
remaining motions before the Court, in the hopes of bringing this case to its conclusion.
I. Background
Plaintiff brings this case against Joel Widder, a former employee, alleging that he violated
a Non-Competition and Confidentiality Agreement that he had entered into with plaintiff.
Complaint (“Compl.”) ¶¶ 9-19. According to plaintiff, Widder took confidential and proprietary
information with him when he left the firm and solicited clients for a competing business. Id. at ¶
34. Plaintiff filed a motion for a temporary restraining order, which I granted in part, enjoining
defendant from (1) using for any purpose or sharing with anyone confidential or proprietary
information belonging to the plaintiff; and from (2) contacting plaintiff’s current and former
clients for purposes of soliciting them. Order Granting in Part and Denying in Part Motion for a
Temporary Restraining Order [#4], February 19, 2009. I also ordered the parties to discuss the
most appropriate means of preserving relevant electronically stored information (“ESI”) and
protecting privileged or confidential information contained therein. Id. The parties submitted
their report on the ESI, and I issued an order on the review of electronic devices. Order
Regarding Review of Electronic Devices [#11], March 13, 2009. Discovery closed on October
15, 2009, and on November 13, 2009 plaintiff filed a motion to compel production of documents
and a motion to compel compliance with document subpoenas. See Plaintiff’s Motion to
Compel Production of Documents [#26]; and Plaintiff’s Motion to Compel Compliance with
Document Subpoenas [#27]. Defendant did not submit any opposition to the motions, and I
granted the motions on December 8, 2009. On January 8, 2010, plaintiff filed a motion for
sanctions, which is currently pending before me, in relation to the two motions to compel. See
Plaintiff’s Motion for Sanctions [#29] (“Pl. Mot. for Sanctions”). On January 28, 2010, plaintiff
filed a motion in limine that sought to exclude certain testimony and to preclude defendant from
introducing into evidence a change in Lewis-Burke Associates LLC’s (“Lewis-Burke”)
commission policy. Plaintiff’s Motion In Limine [#32] (“Pl. Mot. In Limine”). On February 8,
2010, defendant filed a motion to dismiss for lack of subject-matter jurisdiction. Motion to
Dismiss [#38] (“Mot. to Dismiss”). The parties then filed their pre-trial statement on February
11, 2010, and plaintiff filed a motion to amend the same day. Plaintiff’s Motion to Amend
Complaint [#42] (“Mot. to Amend”). The Court was closed, due to inclement weather, from
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noon on February 5, 2010 until 10:00 am on February 12, 2010, the day of the pre-trial
conference. Thus, because the Court was closed for this long period of time, the motion to
dismiss, motion to amend, and pre-trial statements were not accessible to the Court until
February 12, 2010, the day of the pre-trial conference.
In light of the pending motions, I continued the trial until the pending motions were
resolved. At the pre-trial conference, I determined that I would hold an evidentiary hearing
regarding the motion for sanctions. That hearing was to be set after the scheduled jury selection;
however, in light of the continuance of the trial, the hearing was not held. I will reset the
evidentiary hearing on the motion for sanctions in a separate order. I will address the remaining
motions in turn.
II. Motion to Dismiss
Defendant moves to dismiss the case for lack of subject-matter jurisdiction under Rule
12(b)(1) of the Federal Rules of Civil Procedure. Mot. to Dismiss 1. Defendant argues that the
federal court’s jurisdiction over the matter is predicated on plaintiff’s claim under the Computer
Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, et seq.,1 and that plaintiff failed to meet the
jurisdictional threshold for the claim. Mot. to Dismiss 1. Rule 12(b)(1) concerns the power of
the Court to hear plaintiff’s case; as such, a party may raise the objection that a federal court
lacks subject-matter jurisdiction at any stage of the litigation. Fed. R. Civ. P. 12(b)(1);
Ghawanmeh v. Islamic Saudi Academy, 672 F. Supp. 2d 3, 7 (D.D.C. 2009) (quoting Arbaugh v.
Y & H Corp., 546 U.S. 500, 506 (2006); and Casanova v. Marathon Corp., 256 F.R.D. 11, 12
1
All references to the United States Code or the Code of Federal Regulations are to the
electronic versions that appear in Westlaw or Lexis.
3
(D.D.C. 2009)). Thus, “‘a Rule 12(b)(1) motion imposes on the court an affirmative obligation
to ensure that it is acting within the scope of its jurisdictional authority.’” Ghawanmeh, 672 F.
Supp. 2d at 7 (quoting Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9,
13 (D.D.C. 2001)).
Defendant also invokes Rule 12(b)(6) of the Federal Rules of Civil Procedure as grounds
for dismissal for plaintiff’s failure to state a CFAA claim. Mot. to Dismiss 1. The Federal Rules
of Civil Procedure require a pleading to contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The pleading should, thus,
“‘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)). More than a mere “formulaic recitation of the elements of a cause of action” must be
alleged to survive a motion to dismiss. Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478
U.S. 265, 286 (1986) (on a motion to dismiss, courts “are not bound to accept as true a legal
conclusion couched as a factual allegation”)). Thus, for a complaint to survive a motion to
dismiss, “[it] must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly,
550 U.S. at 570).
The CFAA is a criminal statute; however, subsection (g) of the statute provides a civil
cause of action to “any person who suffers damage or loss by reason of a violation” of the CFAA.
18 U.S.C. § 1030(g). Under the statute, such a person may obtain compensatory damages and
injunctive relief or other equitable relief, but only if the conduct leading to the violation of the
CFAA involves one of the factors “set forth in subclauses (I), (II), (III), (IV), or (V) of subsection
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(c)(4)(A)(i).” Id. The conduct relevant in this case is set forth in 18 U.S.C. § 1030(c)(4)(A)(i)(I),
which states that the CFAA is violated when there is a “loss to 1 or more persons during any 1-
year period . . . aggregating at least $5,000 in value.” 18 U.S.C. § 1030(c)(4)(A)(i)(I). Under the
statute, loss is defined 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 damages incurred because of interruption of service.” 18 U.S.C. § 1030(e)(11).
Thus, a “private plaintiff must prove that the defendant violated one of the provisions of §
1030(a)(1)-(7), and that the violation involved one of the factors listed in § 1030(a)(5)(B).”
LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1131 (9th Cir. 2009).
Plaintiff alleges that defendant violated subsection (a)(2) of the CFAA, which prohibits
“intentionally access[ing] a computer without authorization or exceed[ing] authorized access,
and thereby obtain[ing] . . . information from any protected computer.” 18 U.S.C. § 1030(a)(2).
Under the statute, “exceeds authorized access” is defined as “to access a computer with
authorization and to use such access to obtain or alter information in the computer that the
accesser is not entitled so to obtain or alter.” 18 U.S.C. § 1030(e)(6). Further, a “protected
computer” means “a computer . . . which is used in or affecting interstate or foreign commerce or
communication . . .” Id. at (e)(2)(B).
Therefore, to bring an action successfully under 18 U.S.C. § 1030(g) based on a violation
of 18 U.S.C. § 1030(a)(2), plaintiff must show that defendant:
(1) intentionally accessed a computer, (2) without authorization or
exceeding authorized access, and that he (3) thereby obtained
information (4) from any protected computer (if the conduct
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involved an interstate or foreign communication), and that (5) there
was loss to one or more persons during any one-year period
aggregating at least $5,000 in value.
Brekka, 581 F.3d at 1132.
Plaintiff alleges that defendant “was not authorized by Lewis-Burke to access, via its
protected computer systems, the Confidential and Proprietary Information for his personal gain or
that of a competitor.” Compl. ¶ 39. Further, it is through these actions that defendant “has
intentionally accessed a computer system without authorization and has exceeded his authority to
obtain information from a protected computer in violation of 18 U.S.C. § 1030(a)(2)(C).” Id. at ¶
40. Plaintiff further alleges that it has suffered damages and loss a result of defendant’s action in
an amount to be determined at trial. Id. at ¶ 41. Nevertheless, upon information and belief,
plaintiff alleges “the damages caused by Widder’s theft of highly confidential and proprietary
information far exceeds (sic) $5,000,” that “the reasonable expenditure of funds to conduct the
forensic analysis of Widder’s USB drive and Lewis-Burke’s computer has exceeded $5,000,” and
that the damages due to compromised integrity and the resulting reduced value of the
Confidential and Proprietary Information because of Widder’s actions far exceed $5,000. Id.
Defendant argues that the complaint “fails to make sufficient allegations of lack of
authorization on defendant’s part in accessing or copying Lewis-Burke’s computer data.” Mot. to
Dismiss 4. Further, defendant argues that “the complaint fails to allege damage or loss within the
statutory definition and fails to establish that the $5,000 jurisdictional threshold was met.” Id. I
will address each of these in turn.
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A. Access Without Authorization or Exceeding Authorization
The complaint alleges that when defendant accessed and obtained data from the
computer for personal use or that of a competitor, he acted without authorization or in excess of
the authorization he had to access that data. Compl. ¶¶ 39-40. In other words, according to
plaintiff, the defendant’s authorization to access certain information turns on defendant’s intent
for using the information once he obtained it. There is currently a split among the circuits that
have considered this question, but the United States Court of Appeals for the District of
Columbia Circuit has not yet considered the issue.
Plaintiff relies on a line of cases, referred to as the Citrin cases, which determine whether
authorization exists in light of a person’s duty of loyalty. See Int’l Airport Ctrs., LLC v. Citrin,
440 F.3d 418, 420-421 (7th Cir. 2006). In Citrin, Judge Posner determined that when a
contractor breached his duty of loyalty, his authorization to use an employer-provided laptop
ceased because his interests were adverse to the interests of the employer. Id. at 420. Thus, for
the Seventh Circuit, and courts following Citrin, violating the duty of loyalty or acting with
interests adverse to the employer voids the authorization an employee may have to access the
computer. Id. at 421 (citing State v. DiGiulio, 835 P.2d 488, 492 (Ariz. 1992). Plaintiff adopts
this argument and insists that defendant’s authorization ceased when he decided to leave the firm
and join a competing institution.
Defendant, however, urges the Court to follow the Brekka line of cases. In Brekka, the
Ninth Circuit Court of Appeals found that the plain language of the statute should be understood
to mean that when “an employer gives an employee permission to use [a company computer],”
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the employer is giving that “employee ‘authorization’ to access [it].” Brekka, 581 F.3d at 1133.
Thus, according to Brekka, “for purposes of the CFAA, when an employer authorizes an
employee to use a company computer subject to certain limitations, the employee remains
authorized to use the computer even if the employee violates those limitations.” Id. Only the
employer’s decision “to allow or to terminate an employee’s authorization to access a computer .
. . determines whether the employee is with or ‘without authorization.’” Id. “Exceeds authorized
access” is defined by the statute as “access[ing] a computer with authorization and [using] such
access to obtain or alter information in the computer that the accesser is not entitled so to obtain
or alter.” 18 U.S.C. § 1030(e)(6). The court in Brekka understood this to mean that “for purposes
of the CFAA, when an employer authorizes an employee to use a company computer subject to
certain limitations, the employee remains authorized to use the computer even if the employee
violates those limitations.” Brekka, 581 F.3d at 1133. Thus, according to Brekka, an employer’s
decision to allow or terminate an employee’s authorization is the determining factor as to
whether the employee is with or without authorization. Id.
In this case, there is no dispute that Widder was still an employee of Lewis-Burke when
he allegedly copied certain files to a thumb drive. Plaintiff claims that some of the access
occurred on defendant’s very last day as an employee of plaintiff; however, it still occurred while
he was in the employ of plaintiff, and plaintiff has not alleged to have terminated his
authorization to access the computer before he left its employ. There is an allegation that the
forensic exam demonstrated that certain files were accessed from the thumb drive after Widder
was no longer employed by Lewis-Burke; however, there is no allegation that Widder accessed
his Lewis-Burke computer or the server after his employment with it ended. The CFAA is
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concerned with access to a computer; Widder’s alleged access to data on a thumb drive would
fall outside of plaintiff’s CFAA claim.
In determining whether Widder exceeded his authorization, I am persuaded by the Brekka
line of cases, which have recently gained critical mass. See, e.g., Nat’l City Bank, N.A. v.
Republic Mortgage Home Loans, LLC, No. 09-CV-1550, 2010 WL 959925, at *2 (W.D. Wash.
Mar. 12, 2010); Bell Aerospace Servs., Inc. v. U.S. Aero Servs., Inc., 690 F. Supp. 2d 1267, 1272
(M.D. Ala. 2010); ReMedPar, Inc. v. AllParts Medical, LLC, 683 F. Supp. 2d 605, 611 (M.D.
Tenn. 2010). In Brekka, the court adopts a statutory interpretation of the CFAA that reflects the
plain reading of the statute. See Brekka, 581 F.3d at 1135. In doing so, the court determines that
“‘authorization’ depends on actions taken by the employer.” Id. Thus, as Brekka notes:
Nothing in the CFAA suggests that a defendant’s liability for
accessing a computer without authorization turns on whether the
defendant breached a state law duty of loyalty to an employer. If
the employer has not rescinded the defendant’s right to use the
computer, the defendant would have no reason to know that
making personal use of the company computer in breach of a state
law fiduciary duty to an employer would constitute a criminal
violation of the CFAA. It would be improper to interpret a
criminal statute in such an unexpected manner. See United States
v. Carr, 513 F.3d 1164, 1168 (9th Cir. 2008).
Brekka, 581 F.3d at 1135.
I believe that the D.C. Circuit, faced with this issue, would rule in a manner consistent
with both the Brekka cases and the plain meaning of the statute. The interpretation proposed by
Citrin would mean that the same employee might have different authorization to access the same
document on the same computer throughout his or her employ. For example, an employee might
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generate a report during the course of his employment, to which he would have authorized
access. If, as time progressed, the employee began looking for employment elsewhere, and he
accessed the report to refresh his memory as to what he did on the report so that he could better
describe his skills and abilities on his résumé or in an interview, under Citrin, he would have
accessed the report without authorization. Then, if the employee was internally promoted,
decided not to seek outside employment, and accessed the report to provide an example to one of
his new subordinates of how he liked reports written, his interests would again be aligned with
the employer, and his access would be authorized. In the extreme example, the same employee’s
authorization to access a document could concurrently be both with authorization and exceeding
authorization. For example, the employee could have authority to access a report to e-mail it out
for a superior to review, but his authorization might be exceeded if he then also decided to blind
copy his personal e-mail account, so that he would have a copy of the report to use as a writing
sample for a future job search. Congress could not have intended a person’s criminal and civil
liability to be so fluid, turning on whether a person’s interests were adverse to the interests of an
entity authorizing the person’s access. See, e.g., S. Rep. No. 99-432, at 21 (1986), as reprinted in
1986 U.S.C.C.A.N. 2479, 2494-95 (discussing amendment that “remove[d] from the sweep of
the statute one of the murkier grounds of liability, under which [an] employee’s access to
computerized data might be legitimate in some circumstances, but criminal in other (not clearly
distinguishable) circumstances that might be held to exceed his authorization”). Such an
interpretation is not only confusing, but antithetical to the rule of lenity, which forbids the Court
from “‘interpret[ing] a federal criminal statute so as to increase the penalty that it places on an
individual when such an interpretation can be based on no more than a guess as to what Congress
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intended.’” United States v. Villanueva-Sotelo, 515 F.3d 1234, 1246 (D.C. Cir. 2008) (quoting
Ladner v. United States, 358 U.S. 169, 178 (1958)). The CFAA is primarily a criminal statute,
with a civil cause of action, and a court is bound to interpret the statute consistently; thus, the
rule of lenity must be considered even in its civil application. See Leocal v. Ashcroft, 543 U.S.
1,12 n.8 (2004).
The CFAA was designed primarily to deter computer hacking. See A.V. ex rel.
Vanderhye v. iParadigms, LLC, 562 F.3d 630, 645 (4th Cir. 2009). Whatever Widder is alleged
to have done, he did not hack into the computer or access it without authorization. Further, he
had valid authorization to access the computer, and did not exceed that authorization by
accessing information that Lewis-Widder had indicated he was not entitled to access. See, e.g.,
Brekka, 581 F.3d at 1133. Whether Widder had permission to copy documents onto his thumb
drive or to subsequently use the data from a non-Lewis Burke computer, after he had left its
employ, is not a question that relates to his liability under the CFAA. “‘Exceeds authorized
access’ should not be confused with exceeds authorized use.” Bell Aerospace Servs., Inc., 690 F.
Supp. 2d at 1272-73, (citing Diamond Power Int’l, Inc. v. Davidson, 540 F. Supp. 2d 1322, 1343
(N.D. Ga. 2007)).
I will grant defendant’s motion to dismiss the CFAA claim. Defendant, however, also
seeks to dismiss the entire case, based on lack of subject-matter jurisdiction, arguing that the
Court only has jurisdiction over the other claims via supplemental jurisdiction. Plaintiff counters
that the Court has diversity jurisdiction and has moved to amend the complaint to reflect this. I
now will consider plaintiff’s motion to amend.
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III. Motion to Amend
Plaintiff’s initial response to defendant’s motion to dismiss was to file a motion to amend
the complaint. See Mot. to Amend. On the eve of trial, plaintiff presumably thought that the
most expeditious way to oppose defendant’s motion to dismiss was to ensure that the Court had
subject-matter jurisdiction by amending its complaint to allege diversity jurisdiction.
Rule 15 of the Federal Rules of Civil Procedure governs the amending and supplementing
of pleadings. See Fed. R. Civ. P. 15. Rule 15(a)(2) allows a party to amend its pleading with the
written consent of the opposing party or the court’s leave, noting that “the court should freely
give leave when justice so requires.” Id. “The decision to grant or deny leave to amend is within
the sound discretion of the trial court, [and] it is an abuse of discretion to deny leave without a
sufficient reason;” however, the liberal standard by which a court may grant leave to amend does
have its limitations. See, e.g., Becker v. District of Columbia, 258 F.R.D. 182, 184-86 (D.D.C.
2009) (citing Dove v. Wash. Metro. Area Transit Auth., 221 F.R.D. 246, 247 (D.D.C. 2004)).
While the Supreme Court has instructed that “the leave to amend shall be ‘freely given,’” it also
provides examples of when such leave may be denied, including undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party, and futility of amendment. Foman v.
Davis, 371 U.S. 178, 182 (1962); see also Belizan v. Hershon, 434 F.3d 579, 582 (D.C. Cir.
2006). The party opposing the amendment bears the burden of showing why leave should not be
granted. Becker, 258 F.R.D. at 184 (citing Dove, 221 F.R.D. at 247)).
Defendant asserts that the motion should be denied because: (1) the amendment would be
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futile; (2) the amount in controversy is insufficient to trigger the Court’s jurisdiction; and (3)
denying the motion would allow for “an orderly exploration of the jurisdictional issue” raised by
defendant. Defendant’s Opposition to Motion to Amend Complaint [#43] (“Def. Opp. to
Amend”) at 2-11. The third point is moot, as I have explored above the jurisdictional issue
raised by defendant. Thus, I will consider the first two points.
Defendant claims that the amendment would be futile. While a court may deny a motion
to amend on the grounds of futility,2 it may do so only “if the proposed claim would not survive a
motion to dismiss.” James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir.
1996) (citing Foman, 371 U.S. at 181-82; Moldea v. New York Times, 22 F.3d 310, 319 (D.C.
Cir.), cert. denied, 513 U.S. 875 (1994)). Defendant attacks plaintiff’s claim of diversity
jurisdiction on two fronts: (1) plaintiff’s amended complaint alleges diversity as of the date of the
amendment, and not at the time the action commenced, requiring the Court to draw an inference;
and (2) “the Second Amended Complaint [does] not rule out the possibility that the LLC had
other ‘members’ of unknown citizenship at the time the case was filed.” Def. Opp. to Amend 3.
Defendant argues that “the federal pleading standard . . . is not so flexible as to allow plaintiff to
demand the [C]ourt’s acceptance of all possible inferences,”3 but then he asks the Court to infer
that the parties’ citizenship at the time of the motion to amend was different than it was when the
complaint was filed, without providing any indication, other than speculation, as to why.
The standard of finding futility is whether or not the amendment would survive a motion
2
Foman v. Davis, 371 U.S. at 182.
3
Def. Opp. to Amend 4 (citing Iqbal, 129 S. Ct. 1937 (2009); Twombly, 550 U.S. 544
(2007)).
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to dismiss. James Madison Ltd. by Hecht, 82 F.3d at 1099. When considering a Rule 12(b)(1)
motion to dismiss, a court may consider materials outside of the pleadings. Lipsman v. Sec’y of
Army, 257 F. Supp. 2d 3, 6 (D.D.C. 2003) (citing Herbert v. Nat’l Acad. of Scis., 974 F.2d 192,
197 (D.C. Cir. 1992)). Plaintiff’s reply brief in support of its motion to amend includes a
declaration by April L. Burke, which clearly states that Burke is both the sole member of Lewis-
Burke and has continuously resided in Virginia. Plaintiff’s Reply Memorandum in Support of Its
Motion to Amend Complaint [#48] at Ex. A. Widder admits to residing in Maryland. See
Answer to Plaintiff’s First Amended Complaint [#25] at ¶ 2. In light of this, I cannot find that
plaintiff’s proposed amendment would be futile.
Defendant also claims that plaintiff’s claim of $75,000 is a bald assertion and that
“plaintiff fails to make any allegations that allow the [C]ourt to assess the validity of the claim
that the amount in controversy exceeds $75,000.” Def. Opp. to Amend 4. Plaintiff’s proposed
Second Amended Complaint does allege that the amount in controversy exceeds $75,000. See
Mot. to Amend, Ex. 1 at ¶ 3. Nevertheless, defendant wants the Court to deny plaintiff’s motion
to amend and refer to its damage calculations as fanciful. Mot. to Amend 5. A court should be
“very confident that a party cannot recover the jurisdictional amount before dismissing the case
for want of jurisdiction.” Rosenboro v. Kim, 994 F.2d 13, 17 (D.C. Cir. 1993). In the parties’
joint pretrial statement, plaintiff claims to have calculated damages to be $834,213. See Joint
Pretrial Statement [#35] at 16. Defendant characterizes these calculations as “beyond
speculation” and “into the realm of fantasy,” however, the Court may dismiss the case (or deny a
motion to amend), if “from the face of the pleadings, it is apparent, to a legal certainty, that the
plaintiff cannot recover the amount claimed . . .” Rosenboro, 994 F.2d at 17. It is not apparent
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from the face of the pleadings, “to a legal certainty,” that plaintiff cannot recover in excess of
$75,000. I will grant plaintiff’s motion to amend.
III. Motion In Limine
Plaintiff seeks to exclude from trial: (1) evidence of communications in September and
October 2008 between April Burke of Lewis-Burke and Andrew Givens of Public Broadcasting
Service (“PBS”), a client of Lewis-Burke, regarding Widder’s departure and Lewis-Burke’s work
for PBS; and (2) “any defense by Widder at trial that a putative change in his compensation at
Lewis-Burke somehow excuses his breach of his Non-Competition and Confidentiality
Agreement with Lewis-Burke (‘Non-Compete’).” Memorandum of Points and Authorities in
Support of Plaintiff’s Motion In Limine [#32] (“Memo. to Mot. in limine”) at 1.
A. Introduction of E-mail Communications between Burke and Givens
Plaintiff seeks to exclude evidence of the communications between Burke and Givens.
Specifically, plaintiff argues that DEX #1, a series of e-mail exchanges between Burke and
Givens, should be excluded on the following grounds: (1) that defendant failed to assert waiver
as an affirmative defense in his original answer or in his answer to plaintiff’s amended
complaint; (2) that the defense is futile, irrelevant, and predicated on inadmissible hearsay; and
(3) that its admission would be unduly prejudicial. Id. at 2. Defendant claims that it will call
Givens to testify at trial, and that his testimony will “show that plaintiff failed to show certain
elements of its prima facie case.” Defendant’s Opposition to Motion In Limine [#34] (“Def. Opp.
Mot. in limine”) at 1-2. Thus, according to defendant, the evidence does not implicate an
affirmative defense. Id.
While motions in limine can be useful, on occasion, they can create confusion because it
15
is impossible to predict confidently the exact flow and significance of the evidence elicited at
trial. It may be helpful to clear some brush away to expose what really is at stake.
An e-mail exchange between Burke and Givens is Exhibit 1 to Plaintiff’s motion. See Pl.
Mot. In Limine at Ex. 1. In the opening e-mail, dated March 24, 2008, Burke indicates to Givens
that she has the “distinct feeling” that Givens knows that defendant, Joel Widder, is leaving
plaintiff’s employ to go to work for what Burke calls “the National Group/Oldecker law firm.”
Id. She notes that since this entity consists of “guys [who] are [Given’s] close buddies from the
Hill” [i.e. Capitol Hill], she thinks that she can predict that PBS will be terminating its
relationship with Lewis-Burke. Id.
There must have been an intervening phone call, because Givens refers to it and indicates
that it was “concerning” the departure of Joel Widder from Lewis-Burke. Id. Givens then
indicates that it is his understanding that “pursuant to Section 6 of our contract [i.e., between
PBS and Lewis-Burke] we have concluded our relationship in a very amicable and professional
manner.” Id. Givens then conveys his belief that PBS is current on all of its outstanding balances
and thanks Lewis-Burke’s for all of its work on behalf of PBS. Burke then replies, within three
minutes, that all of PBS’s payments are current. Id.
First, Givens’s e-mail is hearsay insofar as it is offered for the truth of its contents.
Burke’s e-mails are not hearsay because they are statements of a party or of the representative of
a party. Fed. R. Evid. 801(d)(2).
Second, the relevance of Givens’s e-mail is questionable. There is nothing in it from
which a reasonable person could deduce that Burke was excusing or condoning any violation of
Widder’s contractual obligation to Lewis-Burke to neither solicit business from Lewis-Burke’s
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clients nor work for them after he left Lewis-Burke’s employ. I appreciate that during his
deposition Widder seemed to suggest that, although he never spoke to Burke, he somehow
deduced from his conversations with Givens that his working for PBS had been excused by
Burke in her conversations with Givens. But, clearly, what Givens may have told plaintiff is
hearsay and Widder cannot testify to it.
B. Givens’s Testimony
Widder adjures any reliance on out of court statements by Givens but plans to call him as
a witness to establish that the departure of PBS from Lewis-Burke was not caused by Widder’s
departure and would have happened in any event. But, Widder ignores that the only evidence I
presently have is Burke’s e-mail of September 24, 2008 in which she directly attributes the loss
of the PBS business to Widder’s departure from Lewis-Burke, a statement perfectly consistent
with a claim that Widder’s departure caused the loss of the PBS business.
I emphasize that I am speaking only of the information I presently have. I do not know as
much as I want to know about any conversations between Burke and Givens, or any other PBS
representative, about the how, why, and ultimate effect of Widder’s departure upon the
termination of the relationship between PBS and Lewis-Burke. Subject to an additional
discussion at the pre-trial conference and to a possible voir dire of the pertinent witnesses as to
this question, out of the hearing of the jury, I will defer ruling on the relevance of the potential
testimony I have summarized.
I should note in this context that I certainly appreciate Lewis-Burke’s point that Widder
violates the covenant by either soliciting PBS’s business or working for PBS while employed by
any one other than Lewis-Burke. Thus, how Widder’s new firm got PBS’s business may be
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irrelevant, if Lewis-Burke presses only its contention that Widder’s working for PBS was the
violation of the covenant.
C. Evidence Regarding Changes in Widder’s Compensation
Another issue raised in plaintiff’s motion in limine is the question of the relevance of any
testimony from Widder about a diminution of his expected compensation and its relation to any
alleged breach of his covenant not to compete. As Lewis-Burke correctly points out, the
covenant not to compete is, by its stated terms, an integrated agreement. There is not a word in it
about plaintiff’s compensation that could be interpreted to mean that his compensation and the
covenant not to compete were mutual obligations in that one was given in consideration of the
other. Accordingly, any testimony about his compensation is irrelevant.
IV. Conclusion
For the reasons stated herein, defendant’s motion to dismiss plaintiff’s CFAA claim will
be granted. Plaintiff’s motion to amend will also be granted. Defendant’s motion to dismiss the
case for lack of subject matter jurisdiction will be denied. Plaintiff’s motion in limine will be
denied in part and granted in part. A status conference and evidentiary hearing in this case will
be set in a separate order. The parties should be prepared at the status conference to set a trial
date in early October 2010.
A separate order accompanies this memorandum opinion.
Digitally signed by
John M. Facciola
Date: 2010.07.28
10:00:21 -04'00'
JOHN M. FACCIOLA
UNITED STATES MAGISTRATE JUDGE
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