Appeals Court Revives Cybertheft Lawsuit Involving Cross-border Jurisdiction

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On Wednesday, the 2^nd U.S. Circuit Court of Appeals in New York revived a cybertheft lawsuit that had been previously rejected by a federal court in Connecticut on jurisdictional issues. The decision is of immense importance to companies as it clarifies the ability of employers pursuing causes of action against employees who commit cybertheft from beyond the border.

In the instant case, U.S.-based MacDermid Inc brought civil damages claims against a former manager under Connecticut state law, though the alleged misconduct had been committed from the employee’s home in Fort Erie, Ontario.

The MacDermid account manager, Jackie Deiter was a worker for Waterbury, the Ontario unit of Connecticut-based MacDermid Chemicals. She was terminated in April 2011 over matters not related to the lawsuit.

  

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However, MacDermid’s lawsuit against Deiter claimed that she had used her home computer to steal trade secrets from the company’s Connecticut server, and was liable under Connecticut laws. She was held liable for unauthorized computer access and misappropriation of trade secrets by MacDermid, because she had emaile customer data, laboratory reports, and pricing lists from the Waterbury server, soon after she learned she was going to be fired.

Deiter admitted to emailing the materials, but said it was an work-related issue, because she was unable to print at home from the laptop issued to her by her employer.

In November 2011, U.S. District Judge Warren Eginton in New Haven, said that he lacked jurisdiction in the lawsuit brought by MacDermid as Deiter had merely emailed information “from one computer in Canada to another computer in Canada.”

However, a unanimous three-judge panel of the 2^nd Circuit has now ruled that MacDermid’s server was a computer subject to Connecticut law, as it was physically located in Connecticut, and the fact that Deiter had accessed it from outside the state was immaterial.

Writing for the panel, Circuit Judge Barrington Parker observed, “Most Internet users, perhaps, have no idea of the location of the servers through which they send their emails … Here, however, MacDermid has alleged that Deiter knew that the email servers she used and the confidential files she misappropriated were both located in Connecticut.”

The case is MacDermid Inc v. Deiter, 2nd U.S. Circuit Court of Appeals, No. 11-5388.