2010 U.S. Dist. LEXIS 124969
E.D.N.Y.2010Background
- Plaintiffs allege Emporos provided and supported a point-of-sale system that facilitated a data breach exposing customers' credit card information.
- A 2007 breach, linked to LogMeIn remote access, led to fines from card networks and replacement of the system.
- Plaintiffs sue for CFAA, gross negligence, negligent supervision, conversion, and breach of contract; seek damages and declaratory relief.
- North Carolina law governs contract, New York law governs tort claims; discovery pending to identify employee involvement.
- Emporos seeks dismissal under Rule 12(b)(6); court denies dismissal and allows discovery and trial proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CFAA claim is timely and properly pleaded | Plaintiffs contend the misappropriation was actionable and not time-barred | Emporos argues §1030(g) two-year limit and mischaracterization of access | Count V survives threshold timeliness review; statute of limitations issue not resolved on motion |
| Whether Emporos owed independent duties giving rise to gross negligence | Emporos breached duties beyond contract, including safeguarding access | Duties arise only under contract; no independent tort duty shown | Gross negligence pleaded; questions of duty and foreseeability for jury |
| Whether negligent supervision survives based on employer knowledge | Employer knew/should have known of employee misconduct | Duty to supervise arises from contract; required knowledge not shown | Count II not dismissed; discovery may reveal knowledge/propensity evidence |
| Whether the conversion claim is governed by New York law and not dismissed | New York has greater interest; electronic data can be converted | NC law applies; plaintiffs failed to plead ownership of information | Count III not dismissed; New York conversion law applied given locus of injury |
| Whether breach of contract claim survives given contract terms and conduct | Conduct alleged altered contract duties; implied obligations and good faith breached | Contract framework limits liability; alleged duties were contractual | Count IV not dismissed; factual development needed to determine scope of duties |
Key Cases Cited
- Curley v. AMR Corp., 153 F.3d 5 (2d Cir. 1998) (tort choice-of-law governs when applicable)
- 532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Ctr., Inc., 96 N.Y.2d 280 (N.Y. 2001) (economic-damages limitation in tort claims; contract issues separately)
- Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189 (N.Y. 1985) (place of wrong governs gross negligence analysis; jury question)
- Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283 (N.Y. 2007) (electronic records subject to conversion under New York law)
- Eight In One Pet Products v. Janco Press, Inc., 37 A.D.3d 402 (2d Dep’t 2007) (elements of conversion include ownership/possession of identifiable property)
- Riviello v. Waldron, 47 N.Y.2d 297 (N.Y. 1979) (scope of employment; questions for jury)
- Girden v. Sandals Intern., Ltd., 262 F.3d 195 (2d Cir. 2001) (employer liable for employee acts within scope of employment)
- Softel, Inc. v. Dragon Med. and Scientific Comms., Inc., 118 F.3d 955 (2d Cir. 1997) (choice-of-law and multinational aspects; interest analysis)
- Bakalar v. Vavra and Fischer, 619 F.3d 136 (2d Cir. 2010) (interstate business; interest analysis in conflicts of law)