Turner v. Hubbard Systems, Inc.
2017 U.S. App. LEXIS 6743
| 1st Cir. | 2017Background
- Turner, a Massachusetts sole-practitioner debt-collection lawyer, purchased a permanent license to HSI’s Collection Partner software after a 1992 rent-to-own agreement; maintenance fees were charged separately.
- In April 2011 HSI sent Turner a license key that expired May 31, 2011; Turner reported an outage on June 1, 2011 and HSI provided a working license the same day, restoring uninterrupted access thereafter.
- Turner sued under the Computer Fraud and Abuse Act (CFAA), alleging HSI knowingly caused damage by sending an expiring license key; he also asserted state claims for conversion, emotional distress, and Chapter 93A violations.
- The district court granted HSI’s motion for summary judgment, denied Turner’s motion to strike portions of that motion, and dismissed the state claims for lack of the $75,000 amount-in-controversy required for diversity jurisdiction.
- On appeal Turner argued he met the CFAA’s $5,000 loss threshold by claiming prospective damages (including alleged annual income loss), and challenged the district court’s denial of discovery/evidence and refusal to strike defenses; the First Circuit reviewed summary judgment de novo and motion-to-strike for abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HSI violated 18 U.S.C. §1030(a)(5)(A) by causing damage to a protected computer | Turner argued the expired license temporarily deprived him of access, causing compensable damage/loss under the CFAA and prospective damages totaling at least $5,000 | HSI argued any outage was brief, access was restored same day, and Turner suffered no compensable losses meeting the CFAA’s $5,000 threshold | Court held Turner failed to show at least $5,000 in actual or reasonably provable prospective damages; CFAA claim fails |
| Whether prospective damages can be measured by hypothetical counterfactual losses | Turner sought to recover hypothetical future losses (e.g., annual income) he asserted he would have incurred if access had not been restored | HSI argued damages must be actual or reasonably expected and proven, not counterfactual speculation | Court held prospective damages (if available) must be reasonably expected and proven; speculative counterfactual losses are not compensable |
| Whether HSI’s references to mitigation/mistake were improper affirmative defenses that should be struck | Turner contended HSI raised unpled affirmative defenses (mitigation, mistake) and so its summary-judgment arguments were outside the pleadings | HSI relied on Turner’s failure to meet the statutory $5,000 threshold, not on affirmative defenses as a bar | Court held failure-to-prove statutory threshold is not an affirmative-defense bar; denial of motion to strike was not an abuse of discretion |
| Whether the district court had diversity jurisdiction over Turner’s state-law claims | Turner claimed state claims satisfied the $75,000 amount in controversy for diversity jurisdiction | HSI argued Turner did not show the requisite amount in controversy | Court held Turner failed to carry the burden to show more than $75,000 in controversy; state claims properly dismissed |
Key Cases Cited
- Burke v. Town of Walpole, 405 F.3d 66 (1st Cir. 2005) (summary-judgment review standard)
- Valente v. Wallace, 332 F.3d 30 (1st Cir. 2003) (summary-judgment review standard authority)
- FDIC v. Kooyomjian, 220 F.3d 10 (1st Cir. 2000) (abuse-of-discretion review for denial of motion to strike)
- WEC Carolina Energy Sols. LLC v. Miller, 687 F.3d 199 (4th Cir. 2012) (background on CFAA’s purpose and history)
- Ef Cultural Travel BV v. Explorica, Inc., 274 F.3d 577 (1st Cir. 2001) (CFAA $5,000 loss threshold applies to recoverable losses)
- Yershov v. Gannett Satellite Info. Network, Inc., 820 F.3d 482 (1st Cir. 2016) (plain-meaning approach to undefined statutory terms)
- CE Design Ltd. v. Am. Econ. Ins. Co., 755 F.3d 39 (1st Cir. 2014) (plaintiff’s burden to show amount in controversy)
- Abdel-Aleem v. OPK Biotech LLC, 665 F.3d 38 (1st Cir. 2012) (amount-in-controversy burden resting on federal plaintiff)
- In re DoubleClick Inc. Privacy Litig., 154 F. Supp. 2d 497 (S.D.N.Y.) (interpretation supporting $5,000 threshold for CFAA losses)