Council on American-Islamic Relations Action Network, Inc. v. Gaubatz

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
COUNCIL ON AMERICAN-ISLAMIC
RELATIONS ACTION NETWORK,
INC., et al.,
Plaintiffs,
Civil Action No. 09-02030 (CKK)
v.
PAUL DAVID GAUBATZ, et al.,
Defendants.
MEMORANDUM OPINION
(June 24, 2011)
Plaintiffs Council on American-Islamic Relations Action Network, Inc. (“CAIR-AN”)
and CAIR-Foundation, Inc. (“CAIR-F”) bring this action against two sets of defendants: Paul
David Gaubatz and Chris Gaubatz (the “Gaubatz Defendants”); and the Center for Security
Policy, Inc. (“CSP”) and three of its employees, Christine Brim, Adam Savit, and Sarah Pavlis
(collectively with CSP, the “CSP Defendants”). Plaintiffs allege that Defendants conceived and
carried out a scheme to place Chris Gaubatz in an internship with CAIR-AN under an assumed
identity, which allowed him to remove and copy thousands of Plaintiffs’ internal documents and
to record private conversations involving Plaintiffs’ employees without consent or authorization.
Plaintiffs contend that Defendants thereafter publicly disclosed and published the contents of
those documents and recordings. In this action, Plaintiffs seek relief under Titles I and II of the
Electronic Communications Privacy Act of 1986 (the “ECPA”), 18 U.S.C. §§ 2510-2712, and the
common law of the District of Columbia.1
1
All the parties that have appeared in this action to date agree that District of Columbia
law applies to Plaintiffs’ common law claims.
There are three motions pending before the Court and addressed in this memorandum
opinion: the Gaubatz Defendants’ [34] Motion to Dismiss Under Rule 12(b)(6) of the Federal
Rules of Civil Procedure (“Motion to Dismiss”); Plaintiffs’ [43] Motion to Amend Complaint
(“First Motion to Amend”); and Plaintiffs’ [48] Motion for Leave to File Second Amended
Complaint (“Second Motion to Amend”). Upon consideration of the submissions by Plaintiffs
and the Gaubatz Defendants, the relevant authorities, and the record as a whole, the Court shall
grant in part and deny in part the Gaubatz Defendants’ Motion to Dismiss and grant Plaintiffs’
First Motion to Amend and Second Motion to Amend.
I. BACKGROUND
A. Factual Background
CAIR-AN is a self-described national Muslim advocacy group with a mission that
includes enhancing the understanding of Islam and promoting a positive image of Muslims in the
United States. Second Am. Compl. (“2d Am. Compl.”), ECF No. [48-4], ¶ 10.2 CAIR-F is an
organization supporting CAIR-AN and its mission. Id. ¶ 11. Both CAIR-AN and CAIR-F are
non-profit corporations incorporated in the District of Columbia. Id. ¶¶ 10-11. They share
physical office space in the District of Columbia that is generally closed to the public and
accessible to third parties only upon invitation. Id. ¶¶ 10-11, 27.
Chris Gaubatz is Paul David Gaubatz’s son. 2d Am. Compl. ¶¶ 12-13. CSP is a non-
profit corporation incorporated and located in the District of Columbia. Id. ¶ 14. Christine Brim,
2
This factual background is derived from the well-pleaded factual allegations in the
Second Amended Complaint, which becomes the operative iteration of the Complaint by virtue
of the Court’s decision today. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“[W]hen ruling
on a defendant’s motion to dismiss, a judge must accept as true all of the factual allegations
contained in the complaint.”).
2
Adam Savit, and Sarah Pavlis are all employed by CSP. Id. ¶¶ 15-17.
Sometime prior to April 2008, Defendants conceived a plan to infiltrate Plaintiffs’ offices
with the aim of obtaining Plaintiffs’ internal documents and recording conversations involving
Plaintiffs’ employees. 2d Am. Compl. ¶ 19. According to their plan, Chris Gaubatz would
attempt to secure an internship with CAIR-AN under an assumed identity and deliver any
materials that he was able to obtain from Plaintiffs’ offices to Paul David Gaubatz and the CSP
Defendants for further dissemination. Id. In furtherance of this plan, the Gaubatz Defendants
entered into two written agreements with CSP to provide CSP with materials. Id. ¶ 35.
Consistent with the agreed-upon plan, Chris Gaubatz sought and obtained an internship
with the office for CAIR-AN Maryland/Virginia in April 2008. 2d Am. Compl. ¶ 20. However,
in June 2008, after it was announced that the office for CAIR-AN Maryland/Virginia would be
closing, Chris Gaubatz sought an internship at CAIR-AN’s headquarters in the District of
Columbia. Id. ¶¶ 10, 21.
Chris Gaubatz obtained his internship with CAIR-AN under false pretenses. During the
application process, he made false statements and omitted important facts about his background,
interests, and intentions. 2d Am. Compl. ¶¶ 22-23. Among other things, he used an assumed
name and represented that he was a student at a liberal arts college, that his father was in the
construction business, and that he was a practicing Muslim. Id. ¶ 22. When Chris Gaubatz made
these representations, he knew them to be false, and he made them in order to induce Plaintiffs to
repose trust and confidence in him so that he might obtain an internship with CAIR-AN. Id. ¶¶
23-25. He succeeded and was hired as an intern. Id. ¶ 29.
As a condition of and in consideration for his internship, Chris Gaubatz signed a
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confidentiality and non-disclosure agreement (the “Confidentiality Agreement”). 2d Am. Compl.
¶¶ 29, 102. The other party to the agreement is identified as the “Council on American-Islamic
Relations.” Id. Ex. A (Confidentiality Agreement) at 1. The agreement provides:
Non-Disclosure of “Confidential Information”
I agree that I shall not at any time after the termination of my
internship with CAIR, use for myself or others, or disclose or divulge
to others . . . any trade secrets, confidential information, or any other
proprietary data of CAIR in violation of this agreement . . . . The
intern further agrees to take and protect the secrecy of, and to avoid
disclosure or use of, the “Confidential Information” in order to
prevent it from falling into public domain or into the possession of
persons not bound to maintain the confidentiality of Confidential
Information.
Id. Ex. A (Confidentiality Agreement) at 1-2. Paul David Gaubatz and the CSP Defendants were
aware of the Confidentiality Agreement because Chris Gaubatz told them that he had signed the
agreement. Id. ¶ 31.
Chris Gaubatz worked as an intern for CAIR-AN until August 2008, though he returned
to perform additional work over a weekend in September 2008. 2d Am. Compl. ¶ 32. During
the course of his internship, he sought to collect information about Plaintiffs and their employees
with the intention of publicly disclosing that information for profit and in order to cast Plaintiffs
in a negative light. Id. ¶ 36. To that end, he physically removed more than 12,000 of Plaintiffs’
internal documents without authorization and delivered those documents to Paul David Gaubatz.
Id. ¶¶ 37-38. Electronic documents, including e-mails and computer-generated spreadsheets,
were obtained by accessing Plaintiffs’ computers and computer systems with user-names and
passwords that were not assigned to him. Id. ¶¶ 40-41.
Chris Gaubatz also used a concealed electronic device to make audio and video
4
recordings of conversations involving Plaintiffs’ employees without authorization and consent.
2d Am. Compl. ¶ 42. He was able to compile over fifty computer discs containing recordings of
Plaintiffs’ employees. Id. ¶ 44. The Gaubatz Defendants delivered the recordings to CSP and
Christine Brim who, with the assistance of the other CSP Defendants, organized and edited the
recordings. Id. ¶¶ 45-46.
Defendants publicly disclosed the documents and recordings that they obtained from
Plaintiffs. The CSP Defendants provided a compilation of recordings to the third-party publisher
of WND Books and a website identified as WorldNet Daily, http://www.wnd.com (last visited
June 17, 2011). 2d Am. Compl. ¶ 47. Meanwhile, Paul David Gaubatz posted documents and
recordings on his blog, David Gaubatz, http://dgaubatz.blogspot.com (last visited June 17, 2011).
2d Am. Compl. ¶¶ 56-57. In addition, Paul David Gaubatz and a co-author wrote a book about
Chris Gaubatz’s internship with CAIR-AN. Id. ¶ 48; see also P. David Gaubatz & Paul Sperry,
Muslim Mafia: Inside the Secret World That’s Conspiring to Islamize America (1st ed., WND
Books 2009) (“Muslim Mafia”). In Muslim Mafia, the authors characterize Chris Gaubatz’s
internship as a “six-month counterintelligence operation,” admitting that Chris Gaubatz
“routinely load[ed] the trunk of his car with boxes of sensitive documents and deliver[ed] them
into the custody of investigative project leader P. David Gaubatz.” 2d Am. Compl. ¶ 50. The
book references and quotes from materials obtained from Plaintiffs’ offices, including internal
memoranda, minutes of board meetings, budget reports, real estate records, bank statements,
strategy papers, employee evaluations, and e-mails. Id. ¶ 51.
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B. Procedural Background
The original Complaint was filed on October 29, 2009. See Compl., ECF No. [1]. The
Complaint was filed in the name of the “Council on American-Islamic Relations,” which for
reasons that will soon become clear the Court will refer to as CAIR-AN. See infra Part III.A.
The Complaint named as defendants the Gaubatz Defendants and ten John and Jane Does whose
identities were then unknown but who were alleged to have participated in and benefitted from
the activities alleged in the Complaint. 2d Am. Compl. ¶¶ 12-14. The original Complaint
asserted a single claim under Title II of the ECPA and common law claims for conversion,
breach of fiduciary duty, breach of contract, and trespass. Id. ¶¶ 49-77.
Contemporaneous with the filing of the Complaint, CAIR-AN moved for a temporary
restraining order and a preliminary injunction. See Mem. in Supp. of Pl.’s Mot. for a TRO &
Prelim. Inj., ECF No. [2-1]. On November 2, 2009, after repeated efforts to contact the Gaubatz
Defendants proved fruitless, the Court held an ex parte hearing to address CAIR-AN’s request
for a temporary restraining order. See Min. Entry (Nov. 2, 2009). On November 3, 2009, the
Court granted in part and denied in part CAIR-AN’s motion for a temporary restraining order,
temporarily prohibiting the Gaubatz Defendants from making certain uses of materials obtained
from Plaintiffs’ offices and requiring the return of such materials to CAIR-AN’s counsel. See
Council on American-Islamic Relations v. Gaubatz, 667 F. Supp. 2d 67 (D.D.C. 2009).
On November 19, 2009, CAIR-AN and the Gaubatz Defendants jointly moved for a
consent order granting CAIR-AN’s motion for a preliminary injunction. See Joint Mot. to Enter
Consent Order Granting Prelim. Inj., ECF No. [19]. That same day, the Court entered the
proposed consent order. See Consent Order Granting Prelim. Inj., ECF No. [22]. Pursuant to
6
that order, the Gaubatz Defendants are (a) enjoined from making any use, disclosure, or
publication of any document obtained from any office or facility of CAIR-AN, any recording of
meetings of or conversations involving CAIR-AN’s officials or employees, and any copies of
such documents or recordings, (b) required to remove from any website or blog under their
control any such documents or recordings, and (c) required to return any such documents or
recordings, including any copies, to CAIR-AN’s counsel. See id. ¶¶ 1-4. Subsequently, the
Court clarified that its order permits the Gaubatz Defendants’ counsel, but not the Gaubatz
Defendants themselves, to retain copies of the documents at issue for indexing purposes. See
Order (Dec. 10, 2009), ECF No. [30], at 2. Absent further action from the Court, the preliminary
injunction will remain in effect throughout this action. See Consent Order Granting Prelim. Inj.,
ECF No. [22], ¶ 5.
Following resolution of CAIR-AN’s motion for a preliminary injunction, the Court
granted CAIR-AN leave to depose CSP based on CAIR-AN’s representations that CSP was
believed to be in possession of materials obtained from Plaintiffs’ offices. See Order (Dec. 10,
2009), ECF No. [30], at 4. CAIR-AN subsequently deposed Christine Brim as CSP’s designated
agent under Rule 30(b)(6) of the Federal Rules of Civil Procedure. See Tr. of Dep. of Christine
Brim, ECF No. [48-3]. To date, no other discovery has been authorized by the Court.
On December 20, 2009, the Gaubatz Defendants filed their [34] Motion to Dismiss. On
March 1, 2010, after the Gaubatz Defendants’ Motion to Dismiss was fully briefed, Plaintiffs
filed their [43] First Motion to Amend. On April 12, 2011, after Plaintiffs’ First Motion to
Amend was fully briefed, Plaintiffs filed their [48] Second Motion to Amend. All three motions
were fully briefed as of May 23, 2011 and remain pending. Because the three motions raise a
7
number of overlapping issues, they are addressed together in this memorandum opinion. While
the Court’s decision is based on the record as a whole, its consideration of these three motions
has focused on the following documents, listed in chronological order of their filing:
• The Gaubatz Defendants’ Motion to Dismiss: Defs.’ Mem. in Supp of Mot. to
Dismiss Under Federal Rule of Civil Procedure 12(b)(6) (“Defs.’ MTD Mem.”), ECF
No. [34-1]; Pls.’ Resp. in Opp’n to Mot. to Dismiss (“Pls.’ MTD Opp’n”), ECF No.
[37]; Defs.’ Reply Br. on Mot. to Dismiss (“Defs.’ MTD Reply.”), ECF No. [39].
• Plaintiffs’ First Motion to Amend: Pls.’ Mem. of P. & A. in Supp. of Pls.’ Mot.
to Amend Compl. (“Pls.’ MTA1 Mem.”), ECF No. [43-1]; Defs.’ Opp’n to Mot. to
File Am. Compl. (“Defs.’ MTA1 Opp’n”), ECF No. [44]; Pls.’ Reply Mem. in Supp.
of Pls.’ Mot. to Amend Compl. (“Pls.’ MTA1 Reply”), ECF No. [45].
• Plaintiffs’ Second Motion to Amend: Pls.’ Mem. in Supp. of Mot. for Leave to
File Second Am. Compl. (“Pls.’ MTA2 Mem.”), ECF No. [48-2]; Defs.’ Opp’n to
Pls.’ Mot. to File a Second Am. Compl. (“Defs.’ MTA2 Opp’n”), ECF No. [62]; Pls.’
Reply to Opp’n to Mot. for Leave to File a Second Am. Compl., ECF No. [64].
Recently, this action has focused on proceedings concerning Paul David Gaubatz’s
compliance with the preliminary injunction ordered by this Court. For the time being, those
proceedings are being conducted under seal. See Sealed Order to Show Cause (Apr. 18, 2011),
ECF No. [49]; Sealed Order (Apr. 28, 2011), ECF No. [57]; Sealed Order (May 3, 2011), ECF
No. [59]; Sealed Order (June 2, 2011), ECF No. [68]. The proceedings remain ongoing.
II. LEGAL STANDARDS
Under the Federal Rules of Civil Procedure, a complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. (8)(a), “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)). Rule 12(b)(6) provides a vehicle for parties to challenge the sufficiency of a
complaint on the ground that it “fail[s] to state a claim upon which relief can be granted.” Fed.
8
R. Civ. P. 12(b)(6). When presented with a motion to dismiss for failure to state a claim, the
district court must accept as true the well-pleaded factual allegations contained in the complaint.
Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009), cert. denied, __ U.S. __,
130 S. Ct. 2064 (2010). Although “detailed factual allegations” are not necessary to withstand a
Rule 12(b)(6) motion to dismiss, to provide the “grounds” of “entitle[ment] to relief,” a plaintiff
must furnish “more than labels and conclusions” or “a formulaic recitation of the elements of a
cause of action.” Twombly, 550 U.S. at 555. “Nor does a complaint suffice if it tenders ‘naked
assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct.
1937, 1949 (2009) (quoting Twombly, 550 U.S. at 557). Rather, a complaint must contain
sufficient factual allegations that, if accepted as true, “state a claim to relief that is plausible on
its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949. The plaintiff must provide more than just
“a sheer possibility that a defendant has acted unlawfully.” Id. at 1950. When a complaint’s
well-pleaded facts do not enable a court, “draw[ing] on its judicial experience and common
sense,” “to infer more than the mere possibility of misconduct,” the complaint has not shown that
the pleader is entitled to relief. Id.Under the Federal Rules of Civil Procedure, a party may amend its pleadings once as a
matter of course within a prescribed time period. See Fed. R. Civ. P. 15(a)(1). Where, as here, a
party seeks to amend its pleadings outside that time period, it may do so only with the opposing
party’s written consent or the district court’s leave. See Fed. R. Civ. P. 15(a)(2). The decision
whether to grant leave to amend a complaint is entrusted to the sound discretion of the district
9
court, but leave “should be freely given unless there is a good reason, such as futility, to the
contrary.” Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir. 1996), cert.
denied, 520 U.S. 1197 (1997). As the Supreme Court has observed:
If the underlying facts or circumstances relied upon by a plaintiff may
be a proper subject of relief, he ought to be afforded an opportunity
to test his claim on the merits. In the absence of any apparent or
declared reason—such as 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 by virtue of allowance of the amendment, futility of
amendment, etc.—the leave sought should, as the rules require, be
“freely given.”
Foman v. Davis, 371 U.S. 178, 182 (1962). “[A] district court has discretion to deny a motion to
amend on grounds of futility where the proposed pleading would not survive a motion to
dismiss.” Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930, 945 (D.C. Cir. 2004),
cert. denied, 545 U.S. 1104 (2005). Review for futility is practically “identical to review of a
Rule 12(b)(6) dismissal based on the allegations in the amended complaint.” In re Interbank
Funding Corp. Secs. Litig., 629 F.3d 213, 215-16 (D.C. Cir. 2010) (quotation marks omitted).
Because leave to amend should be liberally granted, the party opposing amendment bears the
burden of coming forward with a colorable basis for denying leave to amend. Abdullah v.
Washington, 530 F. Supp. 2d 112, 115 (D.D.C. 2008).
III. DISCUSSION
A. Plaintiffs’ First Motion to Amend
Plaintiffs’ First Motion to Amend is limited in scope. Plaintiffs request leave to amend
the Complaint to (a) clarify that references to the “Council on American-Islamic Relations” in the
Complaint are to CAIR-AN, (b) add CAIR-F as a second plaintiff, (c) include a claim for unjust
10
enrichment, and (d) introduce a handful of supplemental factual allegations in support of claims
already asserted. See Comparison of Compl. and Proposed First Am. Compl., ECF No. [50].
Because leave to amend is to be “freely given,” and because the grounds stated for the Gaubatz
Defendants’ opposition are insufficient to warrant denying the relief sought, the Court shall grant
Plaintiffs’ First Motion to Amend.
1. Scope
Because granting leave to amend is especially favored where the proposed changes do not
radically reshape the action, see Smith v. Cafe Asia, 598 F. Supp. 2d 45, 58 (D.D.C. 2009), the
Court will begin by addressing each of the four proposed changes and how they relate to this
case. As shown below, the scope of Plaintiffs’ First Motion to Amend is limited.
First, Plaintiffs propose to make a technical correction to clarify that references to the
“Council on American-Islamic Relations” in the caption and body of the original Complaint are
intended to refer to CAIR-AN, or the Council on American-Islamic Relations Action Network,
Inc. Despite the seemingly trivial nature of the proposed change, the Gaubatz Defendants spill a
fair amount of ink arguing against it. See Defs.’ MTD Mem. at 2-5, 25-26; Defs.’ MTA1 Opp’n
at 12-15. Their argument is difficult to follow, mostly because it seems to shift from one
moment to the next, but its basic structure is this: (i) this action was brought in the name of the
“Council on American-Islamic Relations”; (ii) the “Council on American-Islamic Relations”
does not exist; (iii) something that does not exist cannot be a “real party in interest”; (iv)
therefore, this action is not brought in the name of the real party in interest.
The argument is a strange one because the Gaubatz Defendants concede that the “Council
on American-Islamic Relations” changed its name to CAIR-AN in June 2007 and they introduce
11
documentary evidence showing as much. See Defs.’ MTD Mem. at 2; Decl. of Daniel Horowitz,
ECF No. [34-2], Ex. 7 (Articles of Amendment) & Ex. 8 (Certificate of Amendment). Entirely
consistent with this showing, Plaintiffs maintain that the references to the “Council on American-
Islamic Relations” in the original Complaint were the product of a simple mistake. See Pls.’
MTA1 Mem. at 3-4; Pls.’ MTA1 Reply at 6-7. They submit a sworn declaration by their counsel,
who explains that at the time the original Complaint was prepared, counsel was “unaware that the
organization had changed its formal legal name to ‘Council on American-Islamic Relations
Action Network, Inc.’ in 2007.” Decl. of Tillman Finley, ECF No. [45-1], ¶¶ 2-4. The Court
accepts that “[t]his mistake was made unknowingly and unintentionally and was not intended to
confuse or mislead Defendants, the Court, or anyone else.” Id. ¶ 6. Given this state of affairs,
the Court sees no good reason to deny Plaintiffs leave to clarify that references to the “Council on
American-Islamic Relations” are intended to be references to CAIR-AN.3
3
While the parties disagree as to the appropriate procedural lens for approaching the
issue, their disagreement is of no moment. Consistent with their view that the proposed
amendment would effect nothing more than a technical correction to the Complaint, Plaintiffs
claim that they need only comply with Rule 15. See Fed. R. Civ. P. 15(a). The Gaubatz
Defendants construe the proposed amendment as akin to substituting in the real party in interest
and therefore argue that Plaintiffs must meet the requirements of Rule 17. See Fed. R. Civ. P.
17(a). Yet another alternative may be Rule 21, which authorizes a district court to add or drop a
party on motion or on its own. See Fed. R. Civ. P. 21. While the Court agrees with Plaintiffs
that Rule 15 is the closest fit, granting Plaintiffs leave would be appropriate under all three Rules.
See Willoughby, 100 F.3d at 1003 (“[L]eave to amend [under Rule 15] should be freely given
unless there is a good reason . . . to the contrary.”); Lans v. Gateway 2000, Inc., 84 F. Supp. 2d
112, 120 (D.D.C. 1999) (“[I]t is appropriate to liberally grant leave to substitute a real party in
interest when there has been an honest mistake in choosing the nominal plaintiff.”), aff’d, 252
F.3d 1320 (Fed. Cir. 2001); Wiggins v. District Cablevision, Inc., 853 F. Supp. 484, 499 n.29
(D.D.C. 1994) (“[I]t is well established that after a responsive pleading has been served, the
standards for adding parties are the same whether the motion is made under Rule 15 or Rule
21.”) (quotation marks omitted).
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Second, Plaintiffs seek leave to add CAIR-F as a second plaintiff. Rule 21 allows a
district court to add a party “at any time” and “on just terms.” Fed. R. Civ. P. 21. Rule 20, in
turn, defines the contours of permissive joinder, providing that parties may be joined as plaintiffs
when (i) their claims “aris[e] out of the same transaction, occurrence, or series of transactions or
occurrences” and (ii) “any question of law or fact common to all plaintiffs will arise in the
action.” Fed. R. Civ. P. 20. When asked to decide whether permissive joinder is appropriate, the
district court should be guided by the underlying aims of joinder, which include promoting
judicial economy, expediting the resolution of disputes, and eliminating unnecessary litigation.
Swan v. Ray, 293 F.3d 1252, 1253 (11th Cir. 2002). Because the general preference is “toward
entertaining the broadest possible scope of action [that is] consistent with fairness to the parties,”
United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966), the joinder of plaintiffs is
ordinarily allowed at the election of the plaintiffs so long as both prongs of the test under Rule 20
are met, Acevedo v. Allsup’s Convenience Stores, Inc., 600 F.3d 516, 521 (5th Cir. 2010).
Attempts to join a party who satisfies the test for permissive joinder should generally not be
denied in the absence of undue prejudice, expense, or delay. Chavez v. Illinois State Police, 251
F.3d 612, 632 (7th Cir. 2001).
Applying these principles to this case is an easy matter. CAIR-AN and CAIR-F share
physical office space in the District of Columbia, and it is at those offices that the events
underlying this action were alleged to have transpired. See 2d Am. Compl. ¶¶ 10-11. Although
Chris Gaubatz’s internship is alleged to have formally been with CAIR-AN, both CAIR-AN and
CAIR-F claim an interest in the documents and materials allegedly taken from their shared office
space and employees of both organizations are alleged to have been the subjects of surreptitious
13
recordings made by Chris Gaubatz. See id. ¶¶ 29, 38, 40, 42. Unsurprisingly, CAIR-AN and
CAIR-F intend to pursue virtually identical legal claims in connection with these alleged events.
See id. ¶¶ 69-131. Without a doubt, their claims arise out of the same series of transactions or
occurrences and, as evidenced by the pages that follow, common questions of law and fact will
arise in this action.
Third, Plaintiffs seek to add a claim for unjust enrichment based on the same set of facts
underlying their other claims. The Gaubatz Defendants do not specifically respond to this aspect
of Plaintiffs’ First Motion to Amend. While they do offer a broader argument that granting leave
to amend would be futile because the First Amendment bars Plaintiffs’ claims or protects their
conduct, see Defs.’ MTA1 Opp’n at 2-8, an argument which presumably encompasses Plaintiffs’
unjust enrichment claim, the Court rejects that argument. See infra Part III.C.1. Meanwhile,
because Plaintiffs’ unjust enrichment claim does “no more than state an alternative theory of
recovery,” Foman, 371 U.S. at 182, granting leave to amend to add this claim is appropriate.
Fourth, Plaintiffs seek to add a handful of allegations to the Complaint that are designed
to flesh out the factual basis for the claims they have already asserted. For the most part, these
facts pertain to the nature of the documents and materials at issue in this action, the non-public
nature of Plaintiffs’ offices, the basis for Chris Gaubatz’s alleged fiduciary duties, and the
injuries allegedly flowing from the Gaubatz Defendants’ conduct. See Comparison of Compl.
and Proposed First Am. Compl., ECF No. [50]. Responding to these proposed changes, the
Gaubatz Defendants claim that “the new complaint is the old complaint” and suffers from the
same defects as the original Complaint. See Defs.’ MTA1 Opp’n at 2-8. Consistent with this
view, the Gaubatz Defendants have taken the position that their legal arguments apply equally to
14
the original Complaint and the proposed First Amended Complaint. See id.; Joint Status Report,
ECF No. [52], at 9. While the Court is inclined to agree that the addition of these factual
allegations is not likely to change the outcome of the legal issues presented, this certainly does
not provide a basis for denying leave to amend. Plaintiffs’ factual allegations merely fine-tune
the basis for the relief Plaintiffs seek in this action. Factual allegations of this kind, which clarify
but do not reshape the action, are rarely a bad thing.
2. Futility
The crux of the Gaubatz Defendants’ opposition to Plaintiffs’ First Motion to Amend is
the contention that the proposed amendments fail to improve upon the original Complaint. See
Defs.’ MTA1 Opp’n at 2. Arguing that “the new complaint is the old complaint,” the Gaubatz
Defendants rehash and incorporate the arguments raised in their Motion to Dismiss. See id. at 2-
8. The implication is that granting leave to amend would be futile (though the Gaubatz
Defendants never actually use that word outside of stating the standard of review). The argument
divides into three sub-parts.
First, the Gaubatz Defendants argue that leave to amend should be denied because the
First Amendment either protects their conduct or precludes Plaintiffs from securing any relief.
See Defs.’ MTA1 Opp’n at 2-8, 10-12. The Court addresses this argument below in resolving the
Gaubatz Defendants’ Motion to Dismiss, in which the argument was first raised. See infra Part
III.C.1. For present purposes, suffice it to say that the Court rejects the argument, and as a result
it cannot constitute grounds for denying Plaintiffs leave to amend.
Second, the Gaubatz Defendants argue that leave to amend should be denied because this
action became moot when the materials at issue were returned to Plaintiffs following the entry of
15
the Court’s preliminary injunction order. See Defs.’ MTA1 Opp’n at 8-9. This argument rests on
a number of faulty premises. Most importantly, the argument presupposes that this Court would
separately conclude both that Plaintiffs have failed to state a claim for relief under the ECPA and
that their common law claims are all barred by the First Amendment. Because the Court reaches
the contrary conclusion on both accounts, see infra Parts III.B.2, III.C.1, and III.C.2, the Gaubatz
Defendants’ mootness argument is misplaced. As the succeeding pages make clear, there
remains a live case or controversy for this Court to decide.
Third, the Gaubatz Defendants argue that granting Plaintiffs leave to clarify that CAIR-
AN is the entity referenced in the original Complaint “may affect diversity.” Defs.’ MTA1 Opp’n
at 12. This argument similarly presupposes that the Court would conclude that Plaintiffs have
failed to state a claim for relief under the ECPA, which serves as the basis for the Court’s federal
question jurisdiction, and that Plaintiffs would be unable to invoke the Court’s diversity
jurisdiction because there is an absence of complete diversity between the parties. However, the
Court concludes that Plaintiffs’ ECPA claims survive the Gaubatz Defendants’ Motion to
Dismiss. See infra Parts III.B.2 and III.C.2. As a result, this Court has original jurisdiction over
Plaintiffs’ claims under the ECPA and supplemental jurisdiction over Plaintiffs’ claims under
District of Columbia law because they form part of the same case and controversy. See 28
U.S.C. §§ 1331, 1367. Because this Court’s jurisdiction does not rest on the diversity of
citizenship between the parties, the Gaubatz Defendants’ argument is reduced to a non sequitor.
3. Undue Prejudice or Bad Faith
Leave to amend may be denied for a good reason, such as undue prejudice or bad faith.
See Willoughby, 100 F.3d at 1003. The Court can glean two basic claims of prejudice or bad
16
faith from the Gaubatz Defendants’ disjointed opposition.
First, the Gaubatz Defendants point to the length of this litigation as a basis for denying
Plaintiffs leave to amend. Plaintiffs filed their First Motion to Amend on March 10, 2010, at
which point this action had been pending for a shade over four months. True, the Gaubatz
Defendants’ Motion to Dismiss had been fully briefed when Plaintiffs’ First Motion to Amend
was filed, but the Court had yet to issue a final ruling on that motion and discovery pertaining to
the merits had not begun. In fact, because this action has been delayed by several proceedings
collateral to the merits, discovery is still yet to begin in earnest. Under these circumstances,
Plaintiffs sought leave to amend in a sufficiently timely manner.
More to the point, the length of a litigation cannot on its own justify denying leave to
amend; any delay must be accompanied by a showing of bad faith or prejudice. See Caribbean
Broad. Sys., Ltd. v. Cable & Wireless P.L.C., 148 F.3d 1080, 1084 (D.C. Cir. 1998). While the
Gaubatz Defendants paint Plaintiffs’ First Motion to Amend as a “dilatory tactic” and complain
that responding will require them to expend additional “time and expense,” Defs.’ MTA1 Opp’n
at 1-2, these contentions are either entirely conclusory or relate to the ordinary costs and
inconveniences incidental to defending against any lawsuit. They fall short of the “good reason”
required to deny leave to amend. Willoughby, 100 F.3d at 1003.
Second, the Gaubatz Defendants contend that the mere pendency of this action will have
a “chilling effect” on the exercise of their First Amendment rights. See Defs.’ MTA1 Opp’n at
11-12. The argument, which the Gaubatz Defendants support only with citations to the most
basic principles of First Amendment jurisprudence, again assumes that the First Amendment
either protects their conduct or precludes Plaintiffs from securing any relief in this action. As set
17
forth elsewhere, the Court finds this assumption to be misplaced. See infra Part III.C.1. Viewed
from a slightly different perspective, the alleged “prejudice” that the Gaubatz Defendants identify
has nothing to do with the effect of any proposed amendment, but is attributable to the action
itself. The argument begs the question at the heart of this litigation—namely, whether Plaintiffs
can prevail on the merits of their claims—and that question cannot be answered at this stage of
the proceedings. Because the Court concludes that the Gaubatz Defendants’ Motion to Dismiss
must be denied in large part, see infra Part III.C, the parties will need to conduct discovery, and
this action will remain pending, regardless of whether Plaintiffs’ First Motion to Amend is
granted.
The limited scope of Plaintiffs’ First Motion to Amend supports the conclusion that
granting Plaintiffs leave to amend will not cause the Gaubatz Defendants any undue prejudice.
Plaintiffs’ proposed changes for the most part effect technical corrections and fine-tune the legal
and factual basis for the relief they seek in this action. If anything, these amendments should
benefit the Gaubatz Defendants by providing them with greater notice of what Plaintiffs’ claims
are and the grounds upon which they rest.
The only meaningful expansion of this action that would flow from granting Plaintiffs’
First Motion to Amend pertains to CAIR-F, but the Gaubatz Defendants offer no good reason for
denying CAIR-F leave to join this action. Their opposition is silent on the matter, either
conflating CAIR-AN and CAIR-F or mentioning CAIR-F only in passing in the context of their
misplaced argument that there is an absence of complete diversity between the parties. See
Defs.’ MTA1 Opp’n at 4-8, 12-14. But allowing CAIR-F to participate in this action in lieu of
requiring it to bring a separate action will benefit the Gaubatz Defendants by minimizing the
18
possibility of inconsistent decisions and sparing them the vexation and expense of redundant
litigation.
In the end, the Gaubatz Defendants have failed to point to any undue prejudice that would
result from granting Plaintiffs leave to amend. Indeed, their claims of prejudice ring particularly
hollow given that they argue that “the new complaint is the old complaint” and maintain that the
legal arguments raised in their Motion to Dismiss apply equally to the First Amended Complaint.
See Defs.’ MTA1 Opp’n at 2-8; Joint Status Report, ECF No. [52], at 9. In other words, the
Gaubatz Defendants concede that Plaintiffs’ proposed amendments do not catch them by surprise
or radically reshape this action, let alone deprive them of an opportunity to mount a fair defense.
See City of Moundridge v. Exxon Mobil Corp., 250 F.R.D. 1, 6 (D.D.C. 2008) (“Undue prejudice
is not mere harm to the non-movant but a denial of the opportunity to present facts or evidence
which would have been offered had the amendment been timely.”) (quotation marks and
notations omitted). More broadly, the Gaubatz Defendants have failed to discharge their burden
of coming forward with a colorable basis for denying leave to amend. See Abdullah, 530 F.
Supp. 2d at 115. Therefore, the Court will grant Plaintiffs’ First Motion to Amend.
B. Plaintiffs’ Second Motion to Amend
In their Second Motion to Amend, Plaintiffs request leave to amend the Complaint to (a)
add the CSP Defendants as defendants, (b) add a claim under Title I of the ECPA and its
counterpart under District of Columbia law, and (c) add a claim for tortious interference with
contract. See Comparison of Compl. and Proposed Second Am. Compl., ECF No. [51]. Because
leave to amend is to be “freely given,” and because the grounds stated for the Gaubatz
Defendants’ opposition are insufficient to warrant denying the relief sought, the Court shall grant
19
Plaintiffs’ Second Motion to Amend.
1. Scope
The Court begins by addressing the three proposed changes and how they relate to this
case. The bottom line is that, while Plaintiffs’ Second Motion to Amend is more expansive than
their First Motion to Amend, the proposed changes still would not radically reshape this action.
First, Plaintiffs propose to add the CSP Defendants as defendants in this action. The
original Complaint named as defendants ten John and Jane Does whose identities were then
unknown but who were alleged to have participated in and benefitted from the Gaubatz
Defendants’ alleged misconduct. See Compl. ¶¶ 12-14. Following resolution of CAIR-AN’s
motion for a preliminary injunction, the Court granted CAIR-AN leave to depose CSP based on
CAIR-AN’s representation that CSP was believed to be in possession of materials obtained from
Plaintiffs’ offices, and therefore might be one of the defendants whose identities were unknown.
See Order (Dec. 10, 2009), ECF No. [30], at 4. On July 12, 2010, CAIR-AN deposed Christine
Brim as CSP’s designated agent under Rule 30(b)(6) of the Federal Rules of Civil Procedure.
See Tr. of Dep. of Christine Brim, ECF No. [48-3]. Based in part on CSP’s testimony during that
deposition, Plaintiffs now seek to add the CSP Defendants as defendants in this action. See Pl.’s
MTA2 Mem. at 2.4
Rule 21 allows a district court to add a party “at any time” and “on just terms.” Fed. R.
Civ. P. 21. Rule 20, in turn, defines the contours of permissive joinder, providing that parties
may be joined as defendants in a single action if (i) “any right to relief is asserted against them
4
Because the document is not paginated, the Court will refer to the page numbers
generated by the Court’s CM/ECF System.
20
jointly, severally, or in the alternative with respect to or arising out of the same transaction,
occurrence, or series of transactions or occurrences” and (ii) “any question of law or fact
common to all defendants will arise in the action.” Fed. R. Civ. P. 20(a)(2). In this case, the
CSP Defendants are alleged to be participants in the same scheme to infiltrate Plaintiffs’ offices
with the aim of obtaining Plaintiffs’ internal documents and recording conversations involving
Plaintiffs’ employees and, like the Gaubatz Defendants, the CSP Defendants are alleged to have
publicly disclosed and published materials obtained from Plaintiffs’ offices. See 2d Am. Compl.
¶¶ 2-5, 47. Moreover, Plaintiffs intend to assert the same set of legal claims against both sets of
defendants. See id. ¶¶ 69-131. In sum, Plaintiffs claim that the CSP Defendants are liable on
essentially the same legal theories and the same set of facts. As a result, granting Plaintiffs leave
to name the CSP Defendants as defendants in this action will promote judicial economy, expedite
the resolution of Plaintiffs’ claims, and eliminate unnecessary litigation. In short, it aligns with
the general preference “toward entertaining the broadest possible scope of action [that is]
consistent with fairness to the parties.” United Mine Workers of Am., 383 U.S. at 724.
Second, Plaintiffs propose to add a claim under Title I of the ECPA, commonly referred
to as to the Wiretap Act, 18 U.S.C. §§ 2510-2522, and its counterpart under District of Columbia
law, D.C. Code §§ 23-541-23-556. The claim is based on allegations that Chris Gaubatz, with
the assistance of Paul David Gaubatz and the CSP Defendants, used a concealed electronic
device to make unauthorized recordings of conversations involving Plaintiffs’ employees and
that Defendants later used and disclosed the contents of those conversations. See 2d Am. Compl.
¶¶ 70-78. These same factual allegations were raised in the original Complaint, but Plaintiffs at
that time only asserted common law claims in connection with those allegations. See Compl. ¶¶
21
3, 32. In other words, Plaintiffs now seek leave to “state an alternative theory of recovery.”
Foman, 371 U.S. at 182. Under these circumstances, granting leave to amend is appropriate.
Third, Plaintiffs propose to add a common law claim for tortious interference with
contract.5 The claim is based on allegations that Paul David Gaubatz and the CSP Defendants
interfered with Plaintiffs’ contractual relationship with Chris Gaubatz by inducing and assisting
Chris Gaubatz in breaching the Confidentiality Agreement by physically removing materials
from Plaintiffs’ offices and making surreptitious recordings of Plaintiffs’ employees. See 2d Am.
Compl. ¶¶ 111-116. In other words, the claim is based on essentially the same nucleus of facts
supporting Plaintiffs’ other claims. While adding the claim to this action will likely require the
parties to conduct discovery as to Paul David Gaubatz and the CSP Defendants’ awareness of
Chris Gaubatz’s alleged contractual relationship with Plaintiffs, that is a minor matter. The
addition of the claim to this case will not radically expand the scope of the litigation. Under
these circumstances, granting leave to amend is appropriate.
2. Futility
The Gaubatz Defendants’ opposition to Plaintiffs’ Second Motion to Amend is brief,
consisting of less than two pages. Once again, the crux of their opposition is that the proposed
amendments fail to improve upon the original Complaint, arguing that the “[t]he law is as clear
now as it was . . . when [their] motion to dismiss was filed.” See Defs.’ MTA2 Opp’n at 2. The
Court addresses the Gaubatz Defendants’ Motion to Dismiss below. See infra Part III.C. For
present purposes, suffice it to say that the Court will deny the Gaubatz Defendants’ Motion to
Dismiss in almost its entirety. The only component of the Motion to Dismiss that will be granted
5
Neither party addresses this claim in briefing Plaintiffs’ Second Motion to Amend.
22
has no bearing upon the proposed changes relevant to Plaintiffs’ Second Motion to Amend. As a
result, the Gaubatz Defendants’ arguments for dismissal do not constitute grounds for denying
Plaintiffs leave to amend.
The Gaubatz Defendants also suggest that Plaintiffs’ proposed claim under Title I of the
ECPA, commonly referred to as to the Wiretap Act, 18 U.S.C. §§ 2510-2522, and its counterpart
under District of Columbia law, D.C. Code §§ 23-541-23-556, would not survive a motion to
dismiss. See Defs.’ MTA2 Opp’n at 2. Among other things, these statutes make it a criminal
offense for any person to intentionally (a) intercept or attempt to intercept wire, oral, or electronic
communications or (b) procure any other person to intercept or attempt to intercept wire, oral, or
electronic communications. See 18 U.S.C. § 2511(1); D.C. Code § 23-542(a). Both statutes
create a private right of action for any person whose communications have been unlawfully
intercepted, used, or disclosed. See 18 U.S.C. § 2520; D.C. Code § 23-554. In this case,
Plaintiffs claim that Defendants violated the Wiretap Act and its District of Columbia analog
when Chris Gaubatz, with the assistance of Paul David Gaubatz and the CSP Defendants, used a
concealed electronic device to make unauthorized recordings of conversations involving
Plaintiffs’ employees and when Defendants later used and disclosed the contents of those
conversations. See 2d Am. Compl. ¶¶ 70-78
The Gaubatz Defendants argue, in a single sentence without citation to any legal
authority, that this claim would not survive a motion to dismiss because the ECPA6 “applies only
6
The Gaubatz Defendants do not even mention the District of Columbia’s analog to the
Wiretap Act in their opposition. While the Wiretap Act and its counterpart under District of
Columbia law have been described as “virtually identical,” Napper v. United States, __ A.3d __,
2011 WL 2226858, at *6 (D.C. June 9, 2011), there are textual differences between the two.
While those differences may or may not turn out to be important in this case, they are not
23
to servers and not to computers at an end user’s location.” Defs.’ MTA2 Opp’n at 2. In making
this argument, the Gaubatz Defendants clearly confuse Plaintiffs’ claim under the Wiretap Act
(Count One of the Second Amended Complaint) with Plaintiffs’ claim under the Stored
Communications Act (the “SCA”), 18 U.S.C. §§ 2701-2712 (Count Two of the Second Amended
Complaint). Both statutes fall under the umbrella of the ECPA (the Wiretap Act is Title I of the
ECPA and the SCA is Title II), but they are not concerned with the same conduct. Stated briefly,
the Wiretap Act is concerned with the contemporaneous interception of communications and the
SCA is concerned with the unauthorized accessing of stored communications. See 18 U.S.C. §§
2511, 2701. Consistent with this distinction, Plaintiffs’ Wiretap Act claim turns on the allegation
that Chris Gaubatz unlawfully recorded live conversations, while Plaintiffs’ SCA claim turns on
the allegation that Chris Gaubatz unlawfully obtained documents from Plaintiffs’ computer
systems. See 2d Am. Compl. ¶¶ 70-85. The Gaubatz Defendants’ argument that the ECPA
“applies only to servers,” Defs.’ MTA2 Opp’n at 2, may have some relevance to Plaintiffs’ SCA
claim, see infra Part III.C.2, but it has no bearing on the viability of Plaintiffs’ Wiretap Act
claim. Therefore, the Gaubatz Defendants have failed to show that amendment would be futile.
3. Undue Prejudice or Bad Faith
The Gaubatz Defendants have also failed to show that Plaintiffs’ Second Motion to
Amend is made in bad faith or that granting leave to amend would cause them any undue
prejudice. The Gaubatz Defendants’ cursory opposition does not use the word “prejudice,” but it
includes this paragraph:
Leave to amend should be denied. The new complaint’s statutory
material to this motion.
24
cause of action and the new insufficient legal theory could have been
filed nearly two years ago as part of the original complaint. The
third-party deposition was taken many months ago.
Defs.’ MTA2 Opp’n at 2. To the extent the Gaubatz Defendants intend to suggest that the timing
of Plaintiffs’ Second Motion to Amend alone justifies denying leave to amend, they are mistaken.
Delay alone cannot serve as grounds for denying leave to amend; any delay must be accompanied
by a showing of bad faith or prejudice. See Caribbean Broad. Sys., Ltd., 148 F.3d at 1084. Here,
the Gaubatz Defendants have failed to allege, let alone establish, any bad faith or prejudice.
In any event, while Plaintiffs could have acted sooner, Plaintiffs moved to amend in a
sufficiently prompt manner. Plaintiffs filed their Second Motion to Amend on April 12, 2011, at
which point the Court had yet to issue a final ruling on the Gaubatz Defendants’ Motion to
Dismiss and discovery pertaining to the merits of this action had not begun. To date, merits-
based discovery still has not begun.
In the end, the Gaubatz Defendants have failed to discharge their burden of coming
forward with a colorable basis for denying leave to amend. See Abdullah, 530 F. Supp. 2d at
115. For the reasons set forth above, the Court concludes that granting leave to amend is
appropriate in this case. However, in order to facilitate the prompt resolution of this litigation,
the Court shall require Plaintiffs to effect service of the Summons and the Second Amended
Complaint upon the CSP Defendants, and to file proof of service with the Court, on or before
July 25, 2011. See Fed. R. Civ. P. 21 (providing that a district court may impose “just terms” on
the addition of any party). If Plaintiffs fail to effect service of process by the designated date, the
Court will dismiss this action without prejudice against the CSP Defendants. No extensions will
be granted absent compelling circumstances.
25
C. The Gaubatz Defendants’ Motion to Dismiss
The Gaubatz Defendants’ Motion to Dismiss predates Plaintiffs’ requests for leave to
amend the Complaint. Nonetheless, the Gaubatz Defendants have consistently maintained that
their legal arguments apply with equal force to Plaintiffs’ Second Amended Complaint. See
Defs.’ MTA2 Opp’n at 2; Joint Status Report, ECF No. [52], at 9. In fact, when the Gaubatz
Defendants were directed to show cause why their Motion to Dismiss should not be denied
without prejudice with leave to re-file after tailoring their arguments to speak to the allegations
and claims raised in Plaintiffs’ amended pleadings, the Gaubatz Defendants elected to rest on
their arguments as previously articulated. See Min. Order (Apr. 13, 2011); Joint Status Report,
ECF No. [52], at 9. Therefore, in addressing the Gaubatz Defendants’ arguments for dismissal,
the Court will reference the allegations and claims in the Second Amended Complaint which, by
virtue of the Court’s decision above, is now the operative version of the Complaint. For the
reasons set forth below, the Court will grant in part and deny in part the Gaubatz Defendants’
Motion to Dismiss.
1. The Gaubatz Defendants’ First Amendment Defense
The First Amendment embodies our national commitment to the free exchange of ideas,
but its protections are not boundless. Ashcroft v. Am. Civil Liberties Union, 535 U.S. 564, 573
(2002). The heart of the Gaubatz Defendants’ defense to this action is their contention that the
First Amendment either protects their conduct or bars Plaintiffs from obtaining any relief. See
Defs.’ MTD Mem. at 11-17; Defs.’ MTD Reply at 1-5; Defs.’ MTA1 Opp’n at 2-8; Defs.’ MTA2
Opp’n at 2-3. It is not always easy to reconcile the freedoms afforded by the First Amendment
with the protections afforded to individuals by various statutes and the common law, but this
26
much is clear: the protections afforded by the First Amendment, far reaching as they may be, do
not place the unlawful acquisition of information beyond the reach of judicial review. Because
that is precisely what is at issue in this action, the First Amendment does not require dismissal of
Plaintiffs’ claims against the Gaubatz Defendants at this time.
The Gaubatz Defendants rely on the principle that if a publisher lawfully obtains truthful
information about a matter of public significance, then the government may not punish the
publication of that information in the absence of a governmental interest of the highest order.7
Smith v. Daily Mail Publ’g, 443 U.S. 97, 103 (1979). That principle is both well-established and
uncontroversial. However, it only applies where the publisher has “lawfully acquired” the
information. Cohen v. Cowles Media Co., 501 U.S. 663, 669 (1991). In this case, Plaintiffs
allege that the Gaubatz Defendants acquired the materials at issue in violation of Chris Gaubatz’s
contractual, fiduciary, and other legal obligations to Plaintiffs. In fact, crediting the factual
allegations in the Second Amended Complaint, the Gaubatz Defendants’ conduct was potentially
criminal.8 See supra Part III.B.2; infra Part III.C.2. If Plaintiffs’ allegations are to believed (and
7
For purposes of this motion, Plaintiffs do not dispute that the Gaubatz Defendants are
within the class of publishers entitled to invoke this principle or that their speech touched upon a
matter of public significance. The Court therefore has no occasion to address either issue.
8
Because the Gaubatz Defendants’ conduct was potentially criminal, there is no need to
define the precise contours of the concept of “unlawful acquisition” at this time, though several
courts have intimated that conduct considerably short of a criminal offense will suffice. See, e.g.,
Cohen, 501 U.S. at 671; Boehner v. McDermott, 484 F.3d 573, 579 (D.C. Cir.) (en banc), cert.
denied, 552 U.S. 1072 (2007); Veilleux v. Nat’l Broad. Co., 206 F.3d 92, 127-28 (1st Cir. 2000);
Food Lion, Inc. v. Capital Cities/ABC, Inc., 194 F.3d 505, 521-24 (4th Cir. 1999); Spear Pharm.,
Inc. v. William Blair & Co., LLC, 610 F. Supp. 2d 278, 288 (D. Del. 2009). Similarly, because
Plaintiffs allege that both of the Gaubatz Defendants were actively involved in unlawfully
acquiring Plaintiffs’ materials, the Court need not address where the line should be drawn
between unlawful acquisition and the passive acceptance of stolen materials. See Peavy v.
WFAA-TV, Inc., 221 F.3d 158, 193 (5th Cir. 2000), cert. denied, 532 U.S. 1051 (2001).
27
at this stage they must be), the Gaubatz Defendants did not gather information from Plaintiffs’
offices lawfully.
It is for this reason that the Gaubatz Defendants’ reliance upon the Supreme Court’s
decision in Bartnicki v. Vopper, 532 U.S. 514 (2001), is misplaced. That case involved the
“novel and narrow” question of what degree of protection the First Amendment provides to
speech that discloses the contents of an illegally intercepted communication where the defendants
“played no part in the illegal interception” and their “access to the information . . . was obtained
lawfully.” Id. at 518, 525. Answering that narrow question, the Bartnicki Court merely held that
“a stranger’s illegal conduct” does not preclude a First Amendment defense. Id. at 535. The
Court assumed, without deciding, that the government’s interest in protecting private
communications would justify prohibiting the interceptor’s own use of those communications,
noting that “[t]he normal method of deterring unlawful conduct is to impose an appropriate
punishment on the person who engages in it.” Id. at 529. Bartnicki only preserves a First
Amendment defense for the “law-abiding possessor of information” and “does not apply to
punishing parties for obtaining the relevant information unlawfully.” Id. at 529, 532 n.19.
Because Plaintiffs’ allegations take the Gaubatz Defendants outside the category of the “law-
abiding possessor of information,” Bartnicki is no shield.
However, that is not to say that the First Amendment is irrelevant to this case. It may, for
example, turn out that Plaintiffs will be unable to establish that some or all of the defendants in
this action participated in the unlawful acquisition of information. But there is another First
Amendment doctrine more relevant to the present motion—namely, the principle that the special
protections that the First Amendment affords defendants charged with defamation may also
28
extend to other kinds of legal claims where the plaintiff seeks damages for reputational or
emotional harm allegedly flowing from the publication of protected speech. See Snyder v.
Phelps, __ U.S. __, 131 S. Ct. 1207, 1215 (2011); Barr v. Clinton, 370 F.3d 1196, 1203 (D.C.
Cir. 2004). In those situations, regardless of how a claim is labeled, a plaintiff will often be
required to satisfy the more onerous showing required to recover what are referred to loosely as
“publication damages.” See Hustler Magazine v. Falwell, 485 U.S. 46, 56 (1988). Otherwise,
plaintiffs would be free to recast claims for defamation in another form and thereby “chok[e] off
the ‘breathing space’ necessary to safeguard ‘the freedoms protected by the First Amendment.’”
Barr, 370 F.3d at 1203 (quoting Hustler, 485 U.S. at 56).
In their Motion to Dismiss, the Gaubatz Defendants argue that Plaintiffs are attempting to
make an “impermissible end run” around the First Amendment by asserting what are effectively
defamation claims seeking publication damages in the guise of various statutory and common
law claims. But in response, Plaintiffs have expressly disclaimed damages for reputational or
emotional harm, see Pls.’ MTD Opp’n at 8, and the Court will hold them to that representation.
While that should be the end of the matter, the Gaubatz Defendants nevertheless complain that
Plaintiffs “plead[] damages in a vague and conclusory manner,” faulting Plaintiffs for failing to
come forward with specific factual allegations showing that they suffered damages that are not
for reputational or emotional harm. See Defs.’ MTD Reply at 1. However, Plaintiffs are not
required to plead with particularity damages that would typically be expected to flow from their
claims. See Fed. R. Civ. P. 8(a)(3), 9(g); Browning v. Clinton, 292 F.3d 235, 245 (D.C. Cir.
2002). Following discovery, Plaintiffs ultimately may or may not be able to prove that they
suffered damages that are not for reputational or emotional harm, such as actual pecuniary
29
damages. See Snyder v. Phelps, 580 F.3d 206, 218 n.11 (3d Cir. 2009) (noting that the First
Amendment “is inapplicable . . . when the plaintiff seeks damages for actual pecuniary loss, as
opposed to injury to reputation or state of mind.”), aff’d, __ U.S. __, 131 S. Ct. 1207 (2011). But
at this early stage, “the character of [Plaintiffs’] damage is not definite,” making dismissal on
First Amendment grounds inappropriate. Steele v. Isikoff, 130 F. Supp. 2d 23, 29 (D.D.C. 2000).
For the foregoing reasons, the Court will deny the Gaubatz Defendants’ Motion to
Dismiss insofar as it seeks dismissal of Plaintiffs’ claims based upon the protections afforded by
the First Amendment.
2. Plaintiffs’ Stored Communications Act Claim (Count Two of the
Second Amended Complaint)
Congress enacted Title II of the ECPA, or the SCA, 18 U.S.C. §§ 2701-2712, with the
aim of addressing what it perceived as the “growing problem” of unauthorized persons
deliberately gaining access to wire or electronic communications not intended to be available to
the public. S. Rep. No. 99-541, at 35 (1986), reprinted in 1986 U.S.C.C.A.N. 3555, 3589. To
that end, Congress criminalized the act of obtaining wire or electronic communications by
accessing without authorization a facility through which an electronic communication service is
provided. Section 2701(a) of Title 18 of the United States Code provides:
[W]hoever—
(1) intentionally accesses without authorization a facility through
which an electronic communication service is provided; or
(2) intentionally exceeds an authorization to access that facility;
and thereby obtains, alters, or prevents authorized access to a wire or
electronic communication while it is in electronic storage in such
system shall be punished as provided in subsection (b) of this section.
30
18 U.S.C. § 2701(a). By its terms, criminal liability under Section 2701(a) arises where a person
(i) “intentionally accesses” (ii) “a facility through which an electronic communication service is
provided” (iii) “without authorization” or by “exeed[ing] an authorization” given and (iv) thereby
“obtains . . . a wire or electronic communication” (v) while that wire or electronic
communication is in “electronic storage.” Id. Congress created a private cause of action for “any
. . . person aggrieved” by an intentional violation of Section 2701(a). Id. § 2707(a).
Plaintiffs claim that Defendants violated Section 2701(a) when Chris Gaubatz9 obtained
e-mails, computer-generated spreadsheets, and other electronic documents electronically stored
on their computers and computer servers, networks, and systems with user-names and passwords
that were not assigned to him. See 2d Am. Compl. ¶¶ 3, 37, 40-41, 60, 62, 80-85. The Gaubatz
Defendants’ arguments as to why this claim should be dismissed are disjointed and poorly
articulated. What is clear is that, at least for purposes of this motion, the Gaubatz Defendants do
not contest that Chris Gaubatz intentionally accessed Plaintiffs’ computers, that he did so without
proper authorization, that he thereby succeeded in obtaining access to electronic
communications, and that Plaintiffs would have standing to sue as aggrieved persons. The
Gaubatz Defendants instead limit their motion to four arguments. First, they argue that Section
2701(a) does not apply because Chris Gaubatz did not access “a facility through which an
electronic communication service is provided.” Second, they argue that Section 2701(a) does not
apply because the documents at issue were not in “electronic storage” at the time that they were
9
Of the various defendants, only Chris Gaubatz is alleged to have directly accessed
Plaintiffs’ computer systems; Paul David Gaubatz and the CSP Defendants are sued under a
theory that they conspired with or aided and abetted Chris Gaubatz in committing these acts. See
2d Am. Compl. ¶¶ 82-83. Neither Plaintiffs nor the Gaubatz Defendants have addressed whether
such a theory of liability is available under the SCA.
31
obtained. Third, they argue that Section 2701(a) does not apply because the documents at issue
were not “in transit” at the time that they were obtained. Finally, they argue that the application
of Section 2701(a) to the facts of this case would render the statute constitutionally infirm.
While the Gaubatz Defendants’ arguments may or may not bear fruit upon further development
of the factual record, they do not warrant dismissal at this early stage. The Court addresses each
argument in turn.
i. “A Facility Through Which an Electronic Communication
Service is Provided”
For liability to arise under Section 2701(a), a defendant must access “a facility through
which an electronic communication service is provided.” 18 U.S.C. § 2701(a). Citing to this
language, the Gaubatz Defendants contend that the SCA “applies to transfer facilities that
forward data to an end user,” such as “large servers tied to [internet service providers] or other
data carriers,” and does not extend its protections to “home or office computers.” Defs.’ MTD
Mem. at 23. In short, the Gaubatz Defendants argue that the SCA does not apply here because
Plaintiffs’ offices and office computers “are not a communications facility.” Id. While the
argument is not entirely without merit, it ultimately must fail because it rests upon a
misapprehension as to the relevant inquiry and the factual allegations relied upon by Plaintiffs in
support of their claim.
Given the complexity of the SCA, the slippage in the Gaubatz Defendants’ formulation of
the relevant inquiry is problematic. So at the outset, it is important to define that inquiry. Under
Section 2701(a), the question is not whether CAIR’s offices are a communications facility, but
whether Chris Gaubatz accessed a “facility through which an electronic communication service is
provided.” 18 U.S.C. § 2701(a). The reach of this language turns on the construction of two
32
terms—“facility” and “electronic communication service.”
Congress defined only the second of these terms. An “electronic communication service”
is “any service which provides to users thereof the ability to send or receive wire or electronic
communications.” 18 U.S.C. §§ 2510(15), 2711(1). Examples include telephone companies and
e-mail service providers, see S. Rep. No. 99-541, at 14 (1986), reprinted in 1986 U.S.C.C.A.N.
3555, 3568; H. Rep. No. 99-647, at 37 (1986), but the term is not so narrowly confined. The
language chosen by Congress captures any service that stands as a “conduit” for the transmission
of wire or electronic communications from one user to another. Quon v. Arch Wireless
Operating Co., Inc., 529 F.3d 892, 902 (9th Cir. 2008), cert. denied in relevant part, __ U.S. __,
130 S. Ct. 1011 (2009). To the extent the Gaubatz Defendants intend to suggest that liability
may arise under Section 2701(a) only where the electronic communication service is provided by
a third-party, such as a commercial internet service provider, they are mistaken. Congress
drafted Section 2701(a) broadly, and “providing an electronic communication service to the
public” is not part of the statutory inquiry. Devine v. Kapasi, 729 F. Supp. 2d 1024, 1027 (N.D.
Ill. 2010) (emphasis omitted). Consistent with this reading, several courts have concluded that
an employer may provide an “electronic communication service” to its own employees. See, e.g.,
Shefts v. Petrakis, 758 F. Supp. 2d 620, 635 (C.D. Ill. 2010); Bloomington-Normal Seating Co.,
Inc. v. Albritton, 2009 WL 1329123, at *4 (C.D. Ill. May 13, 2009); Ideal Aerosmith, Inc. v.
Acutronic USA, Inc., 2007 WL 4394447, at *6 (E.D. Pa. Dec. 13, 2007); Bohach v. City of Reno,
932 F. Supp. 1232, 1236 (D. Nev. 1996).
Meanwhile, the term “facility” is not expressly defined in the SCA, but the legislative
history and the term’s usage elsewhere reveals that Congress intended the term to include the
33
physical equipment used to facilitate electronic communications. The legislative history
indicates that Congress understood that an “electronic communication service” could be provided
through the same facilities that are used for an “electronic communication system,” see S. Rep.
No. 99-541, at 14 (1986), reprinted in 1986 U.S.C.C.A.N. 3555, 3568, which is defined as “any
wire, radio, electromagnetic, photooptical or photoelectronic facilities for the transmission of
wire or electronic communications, and any computer facilities or related electronic equipment
for the electronic storage of such communications,” 18 U.S.C. § 2510(14). This reading also
flows from the common definition of the term “facility” as “the physical means or equipment
required for doing something.” Oxford English Dictionary Online,
http://www.oed.com/viewdictionaryentry/Entry/67465 (last visited June 20, 2011). In this
context, the “something” that a facility must do is to serve as the physical means or equipment
“through which an electronic communication service is provided.” 18 U.S.C. § 2701(a).
While that much is clear, the interaction between the terms “facility” and “electronic
communication service” will not always present an easy question. When the definitions of each
term are incorporated into the operative statutory language, Section 2701(a) requires a defendant
to access the physical means or equipment “through which” a “service which provides to users
thereof the ability to send or receive wire or electronic communications” is “provided.” 18
U.S.C. §§ 2701(a), 2510(15), 2711(1). This formulation is admittedly a little unwieldy. What
does it mean in the real world? On the one hand, the statute clearly is triggered when a defendant
directly or indirectly accesses the physical server-side computer dedicated to running an e-mail
client by, for instance, downloading e-mails from the server. On the other hand, the statute
clearly is not triggered when a defendant merely accesses a physical client-side computer and
34
limits his access to documents stored on the computer’s local hard drive or other physical media.
See United States v. Steiger, 318 F.3d 1039, 1049 (11th Cir. 2003) (concluding that Section
2701(a) does not apply to the act of hacking into a personal computer to download information
stored on the hard drive), cert. denied, 538 U.S. 1051 (2003).
Mapping the world between these two poles may prove difficult, but the Court need not
undertake that endeavor in this case (or at least at this early stage) because the Gaubatz
Defendants are operating under the erroneous assumption that Plaintiffs’ SCA claim is confined
to the allegation that Chris Gaubatz accessed Plaintiffs’ office computers and limited his access
to documents stored on the computers’ local hard drives. See Defs.’ MTD Mem. at 23-25; Defs.’
MTD Reply at 19-25. Quite the contrary, Plaintiffs repeatedly allege that Chris Gaubatz accessed
their “computer servers, networks, or systems” (which the Court will simply refer to collectively
as “computer servers”).10 2d Am. Compl. ¶¶ 3, 40, 80-81. Plaintiffs contend that they use these
computer servers to provide an “electronic communication service” to their employees. See Pls.’
MTD Opp’n at 21-22. While the Gaubatz Defendants are correct that liability under Section
2701(a) would not arise if any unauthorized activity was limited to Plaintiffs’ office computers,
liability may arise if discovery reveals that Chris Gaubatz accessed Plaintiffs’ computer servers
and that those servers were the physical means “through which” a “service which provides to
users thereof the ability to send or receive wire or electronic communications” was “provided.”
10
Strictly speaking, Plaintiffs allege that Chris Gaubatz accessed their “computers or
computer servers, networks or systems.” 2d Am. Compl. ¶¶ 3, 40, 80-81 (emphasis added). The
term “computer” is expansive. It could encompass a server hosting an electronic communication
service, but it could also refer to a purely local office computer, one without any network access
whatsoever. Because its usage in the Second Amended Complaint is open to interpretation, the
Court will avoid the term here.
35
28 U.S.C. §§ 2701(a), 2510(15), 2711(1).
The Gaubatz Defendants’ argument may or may not turn out to have merit upon further
development of the factual record. Resolving that issue will require the parties to conduct
discovery as to which of Plaintiffs’ systems, if any, were accessed by Chris Gaubatz and whether
those systems were used to provide an electronic communication service. At this time and at this
stage of the proceedings, it is simply “premature and speculative” to interrogate further into the
nature of Plaintiffs’ systems. Becker v. Toca, 2008 WL 4443050, at *4 (E.D. La. Sept. 26, 2008).
Where, as here, a plaintiff alleges that it provides an electronic communication service through
its own systems and that the defendant intentionally and without authorization obtained stored
communications by accessing those systems, the plaintiff states a claim under Section 2701(a).
Expert Janitorial, LLC v. Williams, 2010 WL 908740, at *5 (E.D. Tenn. Mar. 12, 2010).
Before proceeding to the Gaubatz Defendants’ second argument, the Court pauses to note
that there is a red herring to be avoided in this case. True, Chris Gaubatz is alleged to have
accessed Plaintiffs’ local office computers, but that is largely beside the point (at least with
respect to Plaintiffs’ SCA claim). The point is that he is alleged to have used those local office
computers to access Plaintiffs’ computer servers and it is those servers that must be shown to
have provided an electronic communication service to Plaintiffs’ employees. Section 2701(a) is
agnostic on the question of how a defendant goes about “access[ing] . . . a facility through which
an electronic communication service is provided.” 18 U.S.C. § 2701(a). The result would be the
same regardless of whether Chris Gaubatz accessed Plaintiffs’ computer servers by sitting down
at one of Plaintiffs’ local office computers, by hacking in remotely through a personal computer
at home, or by somehow plugging in directly to the server itself.
36
ii. “Electronic Storage”
Section 2701(a) requires that an electronic communication be in “electronic storage” at
the time that it is improperly obtained. 18 U.S.C. § 2701(a). The term “electronic storage” is
elsewhere defined to include:
• “[A]ny temporary, intermediate storage of a wire or electronic communication
incidental to the electronic transmission thereof”; and
• “[A]ny storage of [a wire or electronic] communication by an electronic
communication service for purposes of backup protection of such communication.”
18 U.S.C. §§ 2510(17), 2711(1). Courts have struggled to define the reach of this language.
Generally speaking, the controversy centers on a recurring fact pattern—namely, when the
intended recipient of an electronic communication has downloaded the communication from the
computer server hosting the electronic communication service. See generally James G. Carr &
Patricia L. Bellia, The Law of Electronic Surveillance § 8:35 (West 2011 ed.). The majority of
courts that have addressed the issue have determined that “prior access is irrelevant to whether
the messages at issue were in electronic storage,” concluding that electronic communications that
are stored on a server hosting an electronic communication service after they have been delivered
to an end-user remain in “electronic storage” provided they are retained for purposes of backup
protection. Theofel v. Farey-Jones, 359 F.3d 1066, 1077 (9th Cir.), cert. denied, 543 U.S. 813(2004); see also Pure Power Boot Camp v. Warrior Fitness Boot Camp, 587 F. Supp. 2d 548,
555 (S.D.N.Y. 2008).
The Gaubatz Defendants argue that the electronic documents at issue in this case were not
in “electronic storage” because they were stored on the hard drives of Plaintiffs’ local office
computers at the time they were obtained. See Defs.’ MTD Mem. at 23-24. The argument rests,
37
in part, on a correct statement of the law. It is entirely non-controversial that “e-mail messages
downloaded and stored on, and subsequently accessed solely from, a user’s personal computer
do[] not fall within the SCA’s definition of electronic storage.” Thompson v. Ross, 2010 WL
3896533, at *5 (W.D. Pa. Sept. 30, 2010); accord Bailey v. Bailey, 2008 WL 324156, at *6 (E.D.
Mich. Feb. 6, 2008). This is because (assuming the computer is not used to provide an electronic
communication service) such communications are neither stored on a temporary basis “incident
to [their] electronic transmission” nor stored “by an electronic communication service for
purposes of backup protection of such communication.” 18 U.S.C. §§ 2510(17), 2711(1).
Nonetheless, the Gaubatz Defendants’ argument goes nowhere because it once again
turns upon a misapprehension as to the factual allegations relied upon by Plaintiffs in support of
their SCA claim. Plaintiffs have never limited themselves to alleging that Chris Gaubatz directly
accessed electronic documents stored exclusively on the hard drives and other physical media of
their local office computers. Rather, Plaintiffs allege that Chris Gaubatz improperly obtained
access to electronic communications while they were in electronic storage in the computer
servers used by Plaintiffs to provide an electronic communication service to their employees. 2d
Am. Compl. ¶¶ 80-81; see also Pls.’ MTD Mem. at 21-22. If those allegations are proven true,
liability may arise under Section 2701(a).
Once again, the Gaubatz Defendants’ argument may or may not turn out to have merit
upon further development of the factual record. But resolving that issue will require the parties
to conduct discovery as to which documents, if any, were accessed by Chris Gaubatz and how
those documents were stored and for what purposes. At this early stage, Plaintiffs have put
forward sufficient factual allegations to state a plausible claim for relief. See In re Intuit Privacy
38
Litig., 138 F. Supp. 2d 1272, 1277 (C.D. Cal. 2001) (concluding that allegations that the
defendant accessed data placed in electronic storage in plaintiffs’ computers satisfied the liberal
pleading requirements of Fed. R. Civ. P. 8(a)(2)).
iii. “In Transit”
The Gaubatz Defendants also argue that Section 2701(a) does not apply in this case
because the documents at issue were not “in transit” at the time they were accessed. See Defs.’
MTD Mem. at 24. However, the “in transit” requirement pertains only to claims arising under
Title I of the ECPA, commonly referred to as to the Wiretap Act, 18 U.S.C. §§ 2510-2522, which
addresses the improper “interception” of wire, oral, and electronic communications. The SCA,
meanwhile, is concerned with stored communications, and a plaintiff invoking its protections
need not establish that the documents accessed were “in transit” at the time they were accessed.
iv. The Gaubatz Defendants’ Constitutional Arguments
The Gaubatz Defendants contend that the SCA would be constitutionally infirm if applied
to this case. See Defs.’ MTD Reply at 19-21. Specifically, they argue that applying Section
2701(a) here would extend the statute to situations beyond the power of Congress to regulate
under its Commerce Clause power and would render the statute unconstitutionally vague. See id.For several reasons, these arguments do not warrant dismissal of Plaintiffs’ SCA claim at this
time. First, the Gaubatz Defendants raised these arguments for the first time in reply, depriving
Plaintiffs of an opportunity to render a meaningful response. See Baloch v. Norton, 517 F. Supp.
2d 345, 348 (D.D.C. 2007) (“If the movant raises arguments for the first time in his reply to the
non-movant’s opposition, the court [may] either ignore those arguments . . . or provide the non-
movant an opportunity to respond.”), aff’d, 550 F.3d 1191 (D.C. Cir. 2008). While the Gaubatz
39
Defendants purport to frame their constitutional arguments as a response to Plaintiffs’
“interpretation” of the statute, the interpretation referred to is the same one attributed to Plaintiffs
by the Gaubatz Defendants in their opening memorandum, meaning that there was no reason why
the Gaubatz Defendants could not have raised the argument at the outset. Second, even if the
Court were to consider the Gaubatz Defendants’ constitutional arguments, they turn upon a
misapprehension as to the factual allegations relied upon by Plaintiffs in support of their SCA
claim. In particular, the Gaubatz Defendants erroneously assume that Plaintiffs seek to hold
Defendants liable on the allegation that Chris Gaubatz accessed documents stored exclusively on
the hard drives and local media of Plaintiffs’ local office computers. Third, and most
importantly, resolving the Gaubatz Defendants’ constitutional arguments at this early stage
would be premature. The doctrine of constitutional avoidance counsels that federal courts should
refrain from deciding abstract and hypothetical constitutional questions and formulating rules of
constitutional law without reference to the particular facts to which they are to be applied.
Clinton v. Jones, 520 U.S. 681, 690 n.11 (1997). Before the Court can opine on the merits of the
Gaubatz Defendants’ constitutional arguments, the parties must conduct discovery as to what
documents, if any, may have been accessed by Chris Gaubatz and how those documents were
stored by Plaintiffs at the time they were obtained, on what systems, and for what purposes. If,
for instance, it turns out that Chris Gaubatz did not access a communication “transmitted in
whole or in part by a . . . system that affects interstate or foreign commerce,” 18 U.S.C. §§
2510(12), 2711(1), the Gaubatz Defendants’ constitutional arguments may have some merit. But
at this stage of the proceedings, it is too early to say.
For the reasons set forth above, the Court shall deny the Gaubatz Defendants’ Motion to
40
Dismiss insofar as it seeks dismissal of Plaintiffs’ SCA claim.
3. Plaintiffs’ Conversion Claim (Count Three in the Second Amended
Complaint
Under District of Columbia law, conversion is defined as the (i) “unlawful exercise” (ii)
“of ownership, dominion or control” (iii) “over the personal property of another” (iv) “in denial
or repudiation” of that person’s rights. Shea v. Fridley, 123 A.2d 358, 361 (D.C. 1956). In this
case, Plaintiffs claim that Defendants unlawfully converted (a) physical documents and (b)
electronic documents, including e-mails and computer-generated spreadsheets. See 2d Am.
Compl. ¶¶ 38, 40-41, 87. In their Motion to Dismiss, the Gaubatz Defendants contend that
Plaintiffs have failed to state a plausible claim of conversion as to both categories of documents.
See Defs.’ MTD Mem. at 17-18, 20.
i. Physical Documents
The Gaubatz Defendants first argue that Plaintiffs’ conversion claim must fail insofar as
it seeks recovery for the Defendants’ alleged taking of physical documents because all the
documents were slated to be shredded. See Defs.’ MTD Mem. at 17-18; Defs.’ MTD Reply at 8-
9. From this factual premise, the Gaubatz Defendants argue that Plaintiffs have failed to allege
that Defendants deprived them of a cognizable property right. See Defs.’ MTD Mem at 17-18;
Defs.’ MTD Reply at 8-9.
The Court cannot accept the factual premise to the argument. Plaintiffs have alleged that
Chris Gaubatz removed thousands of documents from Plaintiffs’ offices. See 2d Am. Compl. ¶¶
3, 38. Plaintiffs do not allege that any of these documents were slated to be shredded. Without
converting the Gaubatz Defendants’ Motion to Dismiss to a motion for summary judgment, the
scope of the Court’s review is limited to the allegations in the pleadings. See Fed. R. Civ. P.
41
12(d). Because the proffered argument requires the premature consideration of materials outside
the pleadings, it fails at the outset.
However, even accepting the factual premise, the argument rests on a misapprehension as
to the scope of an owner’s property rights under District of Columbia law. One of the many
sticks in the owner’s bundle of property rights is the right to destroy the property, Almeida v.
Holder, 588 F.3d 778, 788 (2d Cir. 2009), and Plaintiffs’ allegations that Defendants physically
removed thousands of Plaintiffs’ documents are sufficient to state a claim that Defendants
deprived Plaintiffs of their “right of destruction,” for lack of a better description. This right
assumes a heightened importance where, as here, the property in question is alleged to include
confidential, proprietary, and privileged materials. See 2d Am. Compl. ¶¶ 5, 51-52, 89. In this
case, even assuming that some sub-set of the thousands of documents allegedly removed from
Plaintiffs’ offices were slated to be shredded, Plaintiffs would not necessarily be precluded from
recovering for conversion as to those documents. Therefore, the Court shall deny the Gaubatz
Defendants’ Motion to Dismiss insofar as it seeks dismissal of Plaintiffs’ claim that Defendants
converted Plaintiffs’ physical documents.
ii. Electronic Documents
The Gaubatz Defendants next argue that Plaintiffs’ conversion claim must fail insofar as
it pertains to the “copying of digital files” because the mere copying of electronic data does not
constitute conversion. See Defs.’ MTD Mem. at 20. So far as the Court can tell, the argument
divides into two sub-parts. First, the Gaubatz Defendants argue that electronic data does not
qualify as the sort of “personal property” protected by the tort of conversion. See id. Second, the
Gaubatz Defendants argue that Plaintiffs’ factual allegations do not indicate that Defendants
42
exercised “ownership, dominion, or control” over Plaintiffs’ electronic data. See id.Whether the District of Columbia courts would accept the first argument is not clear.
While other courts have concluded that the law of conversion in other jurisdictions may protect
electronic data or information, see, e.g., Kremen v. Cohen, 337 F.3d 1024, 1034 (9th Cir. 2003)
(applying California law); Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283, 292 (N.Y. 2007)
(applying New York law), it remains an open question whether District of Columbia law would
protect intangible property of this kind, see Kaempe v. Myers, 367 F.3d 958, 963 (D.C. Cir 2004)
(observing that the District of Columbia courts have provided limited guidance on the protections
to be afforded to intangible property); Equity Grp., Ltd. v. PaineWebber Inc., 48 F.3d 1285, 1286
(D.C. Cir. 1995) (per curiam) (same). Meanwhile, Maryland, to which the District of Columbia
courts often look for guidance in the absence of other precedent, see Athridge v. Aetna Cas. &
Sur. Co., 351 F.3d 1166, 1171 (D.C. Cir. 2003), does not extend the tort of conversion to cover
intangible property rights beyond those that “are merged or incorporated into a transferable
document,” Allied Inv. Corp. v. Jasen, 731 A.2d 957, 965 (Md. 1999). Plaintiffs’ conversion
claim would be on shaky ground (to the extent it relates to electronic data) if the District of
Columbia courts were to adopt a similar approach.
But the Court need not decide this question because Plaintiffs have otherwise failed to
state a plausible claim for the conversion of electronic data. To recover for conversion under
District of Columbia law, the plaintiff must show that the defendant exercised “ownership,
dominion or control” over the plaintiff’s property. Shea, 123 A.2d at 361. This requires the
defendant to do something that “seriously interferes” with the plaintiff’s right to control the
property in question. Blanken v. Harris, Upham & Co., Inc., 359 A.2d 281, 283 (D.C. 1976).
43
While there may be other avenues for redress when the interference is less serious, suing for
conversion is not among them. Pearson v. Dodd, 410 F.2d 701, 707 (D.C. Cir.), cert. denied,
395 U.S. 947 (1969).
In this case, Plaintiffs’ Second Amended Complaint is devoid of factual allegations
indicating that Defendants exercised the requisite ownership, dominion, or control over
Plaintiffs’ electronic data. Whereas Plaintiffs allege that their physical files were removed from
their offices, there is no comparable, non-conclusory allegation pertaining to Plaintiffs’ electronic
data.11 At best, Plaintiffs have alleged that Defendants accessed and copied electronic data
(technically, Plaintiffs imply that Defendants copied electronic data, but the implication is clear
enough). See 2d Am. Compl. ¶¶ 40-41. However, a plaintiff fails to state a claim for conversion
where the defendant is only alleged to have made copies of documents while the plaintiff retains
the originals because the mere copying of documents does not seriously interfere with the
plaintiff’s right of control. See Furash & Co., Inc. v. McClave, 130 F. Supp. 2d 48, 58 (D.D.C.
2001) (citing Pearson, 410 F.2d at 706); accord FMC Corp. v. Capital Cities/ABC, Inc., 915
F.2d 300, 303-04 (7th Cir. 1990) (applying California law); Internet Archive v. Shell, 505 F.
Supp. 2d 755, 763 (D. Colo. 2007) (applying Colorado law). The exercise of ownership,
dominion, or control is an essential element of a claim for conversion under District of Columbia
law, and because the Second Amended Complaint is devoid of any allegation that Defendants
deleted, corrupted, or otherwise interfered with Plaintiffs’ control over their electronic data,
Plaintiffs have failed to state a claim that is plausible on its face. Therefore, the Court shall grant
11
Plaintiffs’ allegation that Defendants “exercise[d] . . . ownership, dominion, or control
over [their] property,” 2d Am. Compl. ¶ 88, is the sort of “formulaic recitation” of an element of
a cause of action that should be disregarded on a motion to dismiss, Twombly, 550 U.S. at 555.
44
the Gaubatz Defendants’ Motion to Dismiss insofar as it seeks dismissal of Plaintiffs’ claim that
Defendants converted Plaintiffs’ electronic data.
4. Plaintiffs’ Breach of Fiduciary Duty Claim (Count Four of the Second
Amended Complaint)
Under District of Columbia law, a plaintiff asserting a claim for breach of fiduciary duty
must allege that (i) the defendant had a fiduciary duty to the plaintiff, (ii) the defendant breached
that duty, and (iii) the breach was the proximate cause of an injury. See Paul v. Judicial Watch,
Inc., 543 F. Supp. 2d 1, 5 (D.D.C. 2008). In their Motion to Dismiss, the Gaubatz Defendants
focus on the first of these elements, arguing that Plaintiffs have failed to come forward with
factual allegations that would suggest that there existed a fiduciary relationship between Chris
Gaubatz and Plaintiffs. See Defs.’ MTD Mem. at 21-22; Defs.’ MTD Reply Mem. at 12-13. The
Gaubatz Defendants contend that there was no contractual relationship between the parties and
that “[i]t is not enough to say that Chris Gaubatz was an intern.” Defs.’ MTD Mem. at 22.
However, even assuming that no contractual relationship existed between Chris Gaubatz and
Plaintiffs, but see infra Part III.C.5, Plaintiffs have come forward with sufficient factual
allegations to survive a motion to dismiss.
Significantly, the District of Columbia courts have deliberately left the definition of a
“fiduciary relationship” open-ended, allowing the concept to fit a wide array of factual
circumstances. High v. McLean Fin. Corp., 659 F. Supp. 1561, 1568 (D.D.C. 1987); see also
United Feature Syndicate, Inc. v. Miller Features Syndicate, Inc., 216 F. Supp. 2d 198, 218
(S.D.N.Y. 2002) (“[T]he exact limits of what constitutes a fiduciary relationship are impossible
of statement.”) (quotation marks omitted). Deciding whether a fiduciary relationship exists in a
particular case requires “a searching inquiry into the nature of the relationship, the promises
45
made, the type of services or advice given and the legitimate expectations of the parties.”
Firestone v. Firestone, 76 F.3d 1205, 1211 (D.C. Cir. 1996) (quotation marks omitted). Because
the inquiry is fact-intensive, it is often inappropriate to decide whether a fiduciary relationship
existed even in the context of a motion for summary judgment. Id. Consistent with this
observation, courts have observed that a claim for breach of fiduciary duty is generally not
amenable to dismissal for failure to state a claim when the claimed ground for dismissal is the
absence of a fiduciary relationship. See Abercrombie v. Andrew College, 438 F. Supp. 2d 243,
274 (S.D.N.Y. 2006); Thompson, Cobb, Bazilio & Assocs., P.C. v. Grant Thornton LLP, 2002
WL 458997, at *6 (D.D.C. Mar. 25, 2002).
To the extent the Gaubatz Defendants intend to suggest that a fiduciary relationship can
never exist between an intern and the entity engaging the intern, the aforementioned authorities
foreclose such an expansive argument. Meanwhile, Plaintiffs allege that Chris Gaubatz secured
his internship only by making a number of affirmatively false statements and omitting material
information about his background, interests, and intentions with the specific intention of
inducing Plaintiffs to repose a measure of trust and confidence in him, and that as a result of the
trust and confidence reposed in him, Chris Gaubatz was afforded access to confidential,
proprietary, and privileged materials as well as non-public areas of Plaintiffs’ offices. See 2d
Am. Compl. ¶¶ 2, 19-20, 22-23, 25-26, 33, 93. These allegations imply a relationship akin to one
between employer and employee, which under some circumstances may suffice to support a
claim for breach of fiduciary duty under District of Columbia law. See Cahn v. Antioch Univ.,
482 A.2d 120, 131-32 (D.C. 1984). In any event, they suffice to suggest that the relationship
between Chris Gaubatz and Plaintiffs extended beyond the normal bounds of a contractual
46
relationship to form a special relationship founded upon trust and confidence. See Paul, 543 F.
Supp. 2d at 6. Whether Plaintiffs will be able to show that the relationship was grounded in a
higher level of trust than is normally present between those involved in arm’s-length business
transactions is a question that must be answered after discovery. Plaintiffs have stated a
plausible claim for breach of fiduciary duty. Therefore, the Court shall deny the Gaubatz
Defendants’ Motion to Dismiss insofar as it seeks dismissal of Plaintiffs’ claim for breach of
fiduciary duty.
5. Plaintiffs’ Claim for Breach of Contract (Count Five of the Second
Amended Complaint)
To state a claim for breach of contract under District of Columbia law, a plaintiff must
allege (i) a valid contract between the parties, (ii) an obligation or duty arising out of the contract,
(iii) a breach of that duty, and (iv) damages caused by that breach. Tsintolas Realty Co. v.
Mendez, 984 A.2d 181, 187 (D.C. 2009). In this case, Plaintiffs allege that Chris Gaubatz
breached the Confidentiality Agreement entered into between him and CAIR-AN and that the
other Defendants induced, aided and abetted, or conspired with Chris Gaubatz to breach the
agreement. See 2d Am. Compl. ¶¶ 100-110. In their Motion to Dismiss, the Gaubatz Defendants
argue that Plaintiffs have failed to state a valid claim for breach of contract for three reasons.
First, the Gaubatz Defendants argue that Plaintiffs have failed to show that there were two
parties to the agreement. The argument is this: (i) the supposed contract identifies the “Council
on American Islamic Relations” as the relevant counter-party; (ii) the “Council on American
Islamic Relations” does not exist; (iii) therefore, there were not two parties to the contract. See
Defs.’ MTD Mem. at 21. There are several problems with this argument. Not least among them
is that the second prong of the argument requires consideration of materials outside the pleadings
47
and the scope of the Court’s review at this time is limited to the allegations in the pleadings. See
Fed. R. Civ. P. 12(d). At this time, all that really matters is that Plaintiffs have specifically
alleged that CAIR-AN was a party to the Confidentiality Agreement. See 2d Am. Compl. ¶ 101.
That claim is entirely plausible given that Chris Gaubatz’s internship is alleged to have been with
CAIR-AN.
True, the agreement that is attached to and incorporated into the Second Amended
Complaint identifies the relevant counter-party as the “Council on American-Islamic Relations”
and not CAIR-AN, or the Council on American-Islamic Relations Action Network, Inc. See id.Ex. A (Confidentiality Agreement) at 1. Assuming without deciding that the reference is
ambiguous, Plaintiffs are nonetheless entitled to conduct discovery before being asked to prove
the existence of an enforceable agreement between Chris Gaubatz and CAIR-AN. Depending on
what evidence Plaintiffs are able to marshal, the Gaubatz Defendants’ argument may or may not
win out in a motion for summary judgment. See Novecon Ltd. v. Bulgarian-American Enter.
Fund, 190 F.3d 556, 564 (D.C. Cir. 1999) (“The party asserting the existence of an enforceable
contract bears the burden of proof on the issue of contract formation.”), cert. denied, 529 U.S.
1037 (2000). For now, it suffices to say that the question is one of intent, and it is a question that
is not amenable to resolution at this stage of the proceedings.
Second, the Gaubatz Defendants argue that Plaintiffs have failed to plead that the contract
was supported by adequate consideration. See Defs.’ MTD Mem. at 21. They contend that
“[p]roviding the job itself can’t be the consideration because the pleading alleges that defendant
worked for CAIR for months before signing the document and past conduct cannot be
consideration for a later contract.” Id. Plaintiffs do not allege that Chris Gaubatz was working
48
for CAIR-AN for months before he signed the Confidentiality Agreement; they allege that he
entered into the agreement in June 2008, the same month he is alleged to have secured his
internship with CAIR-AN. See 2d Am. Compl. ¶¶ 21, 101. Even if this were not the case, the
District of Columbia adheres to the majority position that continued employment may serve as
consideration for a new agreement if the employment is at-will. See Kauffman v. Int’l Bhd. of
Teamsters, 950 A.2d 44, 48 (D.C. 2008). Because there is no indication that Chris Gaubatz’s
relationship with CAIR-AN was anything other than at-will and terminable at the election of
either party, the Gaubatz Defendants’ argument must fail.
Third, the Gaubatz Defendants argue that, even if the parties entered into a valid
agreement, Plaintiffs have failed to point to any contractual obligation that was breached by Chris
Gaubatz’s alleged misconduct. See Defs.’ MTD Reply at 11-12. However, because this
argument was raised for the first time in reply, depriving Plaintiffs of an opportunity to render a
meaningful response, the Court declines to consider it on the merits. See Baloch, 517 F. Supp.
2d at 348. But even if the Court were inclined to reach the merits, the argument would fail. The
Gaubatz Defendants argue that “[if] a contract were formed, CAIR has not stated its contents”
and “has not pointed to a single provision of any contract, oral or written, that was breached.”
Defs.’ MTD Reply at 11. This is just wrong. Not only have Plaintiffs attached the form of the
alleged written agreement to their pleadings, but they have specifically identified which
provisions of the Confidentiality Agreement Chris Gaubatz allegedly breached. See 2d Am.
Compl. ¶ 103 & Ex. A (Confidentiality Agreement).
Nonetheless, couched within this argument is the suggestion, never fully articulated, that
the Confidentiality Agreement does not cover the materials alleged to be taken:
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[The Confidentiality Agreement] appears to be a barely modified
confidentiality agreement for a software company. The classes of
information covered by the agreement are information that relates to
legal research, Products software source code, object code, services,
development, processes, purchasing, accounting, flow charts,
marketing, merchandising, and/or any customer information, other
valuable business information or business practices.
Defs.’ MTD Reply at 11. The Gaubatz Defendants are referring here to the agreement’s
definition of “confidential information”:
“Confidential Information” shall be deemed to mean any information,
including, but not limited to: presentation and training manuals, and
that which relates to legal research, products software source code,
object code, services, development, processes, purchasing,
accounting, flow charts, marketing, merchandising, and/or any
customer information, other valuable business information or
business of CAIR which is disclosed by CAIR or on its behalf, before
or after the date hereof to the intern, either directly or indirectly, in
writing or by visual inspection.
2d Am. Compl. Ex. A (Confidentiality Agreement) at 1. Admittedly, the term is not defined with
model clarity. Most notably, despite the intervention of a colon and a non-exhaustive list of the
types of information covered, it appears that the parties may have intended the last few clauses to
modify “any information,” meaning that the agreement would cover not “any information”
whatsoever but rather “any information . . . which is disclosed by CAIR or on its behalf . . . to the
intern.” But the Court need not address that precise question now. It merely flags it as a
question that may require the parties’ attention in discovery. For now, it is sufficient to note that
the definition expressly includes “information that relates to legal research” and “valuable
business information,” and Plaintiffs have alleged that the materials taken by Chris Gaubatz
included privileged communications and documents containing Plaintiffs’ proprietary
information. See 2d Am. Compl. ¶¶ 5, 52, 65. Those allegations are sufficient to state a
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plausible claim that Chris Gaubatz breached the Confidentiality Agreement.
For the foregoing reasons, the Court shall deny the Gaubatz Defendants’ Motion to
Dismiss insofar as it seeks dismissal of Plaintiffs’ breach of contract claim.
6. Plaintiffs’ Trespass Claim (Count Seven in the Second Amended
Complaint
Under District of Columbia law, a trespass is (i) an unauthorized entry (ii) onto the
plaintiff’s property (iii) that interferes with the plaintiff’s possessory interest. Sarete, Inc. v. 1344
U. Street Ltd. P’ship, 871 A.2d 480, 490 (D.C. 2005). In this case, Plaintiffs’ trespass claim
divides into two branches. First, Plaintiffs claim that Chris Gaubatz committed a trespass merely
by entering their offices because he “only gained access to the property . . . through the use of
pretense, subterfuge, misrepresentation, and/or concealment.” 2d Am. Compl. ¶ 120. Second,
Plaintiffs claim that Chris Gaubatz committed a trespass by exceeding the consent he obtained
from Plaintiffs by “stealing documents, accessing restricted areas and networks, and recording
without permission conversations in Plaintiffs’ offices.” Id. The Gaubatz Defendants present
three reasons why they believe this claim should be dismissed.
First, the Gaubatz Defendants argue that Plaintiffs have failed to plead that “the premises
were private and not open to the public.” Defs.’ MTD Mem. at 22. Even assuming that a
plaintiff must plead that the property at issue was not open to the public in order to state a claim
for trespass (something this Court doubts), Plaintiffs do allege that their offices “are not generally
open to the public and may be accessed by third parties only upon invitation or authorization”
and that “[t]he public is not permitted access to the areas of the offices . . . where documents are
stored or maintained or where [Plaintiffs’] computers and computer servers, networks, and
systems are stored and maintained.” 2d Am. compl. ¶¶ 27-28. Given these express allegations,
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the Gaubatz Defendants’ first argument is without merit.
Second, the Gaubatz Defendants argue that Plaintiffs’ trespass claim must fail because
they have not alleged damages. See Defs.’ MTD Mem. at 22. However, provided the damages
are of the kind that would typically be expected to flow from a trespass, Plaintiffs are not
required to plead their damages with particularity. See Fed. R. Civ. P. 8(a)(3), 9(g); see also
Pearson, 410 F.2d at 707 (“The measure of damages in trespass is . . . the actual diminution of []
value caused by the [defendant’s] interference.”). Regardless, District of Columbia law allows a
plaintiff to recover nominal damages for trespass. Decker v. Dreisen-Freedman, Inc., 144 A.2d
108, 110 (D.C. 1958). Therefore, even assuming for the sake of argument that Plaintiffs could
not recover actual damages, that still would not be fatal to their claim.
Third, the Gaubatz Defendants argue that Plaintiffs’ trespass claim must fail because
Chris Gaubatz was authorized to enter Plaintiffs’ offices. See Defs.’ MTD Reply at 7-8. While
this argument was first raised in reply, the Court will address it because Plaintiffs arguably
opened the door in their opposition. See Pls.’ MTD Opp’n at 19. However, the argument is
unavailing. As an initial matter, it has no bearing on the second branch of Plaintiffs’ trespass
claim—namely, the contention that Chris Gaubatz exceeded the consent that he obtained from
Plaintiffs by doing things like accessing restricted areas and networks. As a general matter, “[a]
condition or restricted consent to enter land creates a privilege to do so only in so far as the
condition or restriction is complied with.” Restatement (Second) of Torts § 168 (1965).
Therefore, “on-site employees may exceed the scope of their invitation to access, and so not be
‘rightfully’ on, the employer’s property . . . at a place or time forbidden by their employer.” ITT
Indus., Inc. v. Nat’l Labor Relations Bd., 413 F.3d 64, 72 n.2 (D.C. Cir 2005).
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As to the first branch of Plaintiffs’ trespass claim—that is, the contention that Chris
Gaubatz committed a trespass merely by entering Plaintiffs’ offices because he obtained
Plaintiffs’ consent through subterfuge and fraud—the Gaubatz Defendants’ consent argument is
premature. Consent “given upon fraudulent misrepresentations” will not always defeat a claim
for trespass. Dine v. Western Exterminating Co., 1988 WL 25511, at *9 (D.D.C. Mar. 9, 1988).
Consent may be ineffective if “induced . . . by a substantial mistake concerning the nature of the
invasion of [the owner’s] interests or the extent of the harm to be expected from it and the
mistake is known to the other or is induced by the other’s misrepresentation.” Restatement
(Second) of Torts §§ 173, 892B(2) (1965); see also Desnick v. Am. Broad. Cos., Inc., 44 F.3d
1345, 1352 (7th Cir. 1995) (noting that it is no defense to trespass where “a competitor gain[s]
entry to a business firm’s premises posing as a customer but in fact hoping to steal the firm’s
trade secrets.”). Because this is precisely what Plaintiffs have alleged occurred here, whether the
Gaubatz Defendants’ argument will win out is a question that must await discovery.
For the foregoing reasons, the Court will deny the Gaubatz Defendants’ motion to dismiss
insofar as it seeks dismissal of Plaintiffs’ trespass claim. In summary, the Court will grant the
motion insofar as it seeks dismissal of Plaintiffs’ claim that Defendants converted Plaintiffs’
electronic data and will deny the motion in all other respects. The Gaubatz Defendants will be
required to serve and file their Answer to the Second Amended Complaint on or before July 8,
2011.
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IV. CONCLUSION
For the reasons set forth above, the Court shall grant Plaintiffs’ [43] First Motion to
Amend and their [48] Second Motion to Amend, on the condition that Plaintiffs serve the
Summons and the Second Amended Complaint upon each of the CSP Defendants on or before
July 25, 2011. The CSP Defendants will then have twenty-one days from the date of service to
serve and file a responsive pleading. See Fed. R. Civ. P. 12(a)(1)(A)(i). In addition, the Court
shall grant in part and deny in part the Gaubatz Defendants’ [34] Motion to Dismiss.
Specifically, the Court will grant the motion insofar as it seeks dismissal of Plaintiffs’ claim that
Defendants converted Plaintiffs’ electronic data and will deny the motion in all other respects.
The Gaubatz Defendants will be required to serve and file their Answer to the Second Amended
Complaint on or before July 8, 2011. Finally, the Court will hold an Initial Scheduling
Conference on August 17, 2011, at 9:00 a.m., in Courtroom 28A before Judge Colleen Kollar-
Kotelly. An appropriate order accompanies this memorandum opinion.
Date: June 24, 2011
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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