Labor & Employment – Computer Trespass – Tortious Interference

Employer sufficiently pleaded a valid claim for computer trespass.

We denied plaintiff’s motion to dismiss.

This case involved a twist on a familiar fact pattern in this Court involving a dispute between an employer and its former employee. Defendant company (NTG) asked plaintiff employee (Miller) —following his resignation—to assist with the transition resulting from his departure by ensuring that other company employees were aware of the location of key client information stored on the company’s computer system. The company alleged that the employee instead used his continued access to its computer system for nefarious purposes that caused it to suffer monetary injury. The present Motion concerned the legal sufficiency of the company’s allegations in support of several of its claims for relief arising from these facts.

Among other things, NTG contended Miller misrepresented his true intentions when he agreed to assist NTG with its plan to ensure continuous service to its clients following his departure. In reality, NTG asserted, Miller had no actual intention of helping NTG in this manner and instead sought to use this computer access for his own purposes, including the solicitation of NTG’s customers for his new venture. As an initial matter, we found that the fraud counterclaim satisfies Rule 9(b). NTG’s counterclaim is specific as to the content of Miller’s alleged misrepresentation as well as the date and other circumstances under which it was made Miller’s primary argument is that NTG’s allegations fail to show a causal connection between Miller’s misrepresentation and the harm it allegedly suffered.

Specifically, Miller asserted that the essence of the asserted misrepresentation—as pleaded by NTG— is that he stated he would work to provide the other NTG employees with access to client-related information stored on the company’s computer network in exchange for receipt of his former salary for the ensuing two weeks when, in reality, he never intended to perform this service for NTG. We found Miller’s argument to be unavailing because it reads the fraud claim too narrowly. NTG has alleged that Miller misrepresented his agreement to accept NTG’s offer because he secretly sought computer access for the purpose of inducing the company’s clients to leave NTG and follow him to his new business. At this initial stage of the proceeding, such an injury is causally related to Miller’s alleged misrepresentation. But for his false statement as to his willingness to assist NTG as requested, Miller would not have been able to obtain the computer access that he then used to accomplish the result of taking away NTG’s clients, using NTG’s proprietary information for his own purposes to the detriment of the company, “ransoming” data, and locking clients out of NTG’s systems. These allegations are enough to survive a motion to dismiss.

Next, Miller argued NTG failed to allege it reasonably relied upon Miller’s misrepresentation. We disagreed. We are satisfied that these allegations sufficiently allege the reliance element of a fraud claim. Accordingly, Miller’s Motion to Dismiss NTG’s fraud counterclaim is denied.

Miller sought to dismiss NTG’s claim for computer trespass on the theory that because NTG voluntarily gave Miller access to its computer systems it cannot claim that he acted without authority by accessing that system. As a result, Miller argued, NTG is unable to satisfy the elements of a computer trespass claim because it admits that his access to its computer system was authorized. The parties’ dispute on this issue hinges on whether North Carolina’s computer trespass statute requires that a defendant’s initial access to the computer at issue be unauthorized in order for a violation to exist or, alternatively, whether a violation can be found where the defendant uses the computer in an unauthorized manner regardless of whether his original access was permitted. because NTG has alleged that Miller exceeded his authorized use of NTG’s computer system, we found that it has pleaded a valid claim for computer trespass. Miller’s Motion to Dismiss is therefore denied as to NTG’s counterclaim for violation of N.C.G.S. § 14-458.

Finally, NTG alleged that Miller fraudulently obtained continued access to NTG’s computer systems after his resignation in order to persuade clients to leave NTG for his own financial benefit. These allegations are more than sufficient to allege unlawful methods of competition. For these reasons, the Court denied Miller’s Motion to Dismiss as to NTG’s counterclaim for tortious interference with contract.

Denied.

Miller v. RedGoose LLC (Lawyers’ Weekly No. 020-074-24, 18 pp.) (Mark A. Davis, J.) 2024 NCBC 74. Shanahan Law Group, PLLC by Kieran J. Shanahan for Plaintiff Dwayne Miller. Green Mistretta Law, PLLC by Robert A. Smith, Stanley B. Green, and Dawn T. Mistretta for Defendants RedGoose, LLC d/b/a Nerds to Go and Philip Carter. North Carolina Business Court