Computer Fraud & Abuse Act

Legal Update: Supreme Court,
Fourth Circuit and N.C. Courts
Brian S. Clarke
Assistant Professor of Law
Charlotte School of Law
The Supreme Court
 Nitro-Lift Techs. v. Howard (US 2012)
 Arbitration and Covenants Not to Compete
 Question of arbitrability of the covenant not to compete
dispute was a question for an arbitrator not a court
 MORAL: If you want to carve the covenant out of the
arbitration provision, do it explicitly
The Supreme Court
 Pending Cases
 Vance v. Ball State University, No. 11-556 (June 25, 2012).
 Does the Faragher/Ellerth defense apply to . . .
 harassment by those whom the employer vests with authority to direct
and oversee their victim’s daily work,
 Is it limited to those harassers who have the power to “hire, fire,
demote, promote, transfer, or discipline” their victim.
 PREDICTION: A supervisor does not necessarily have to have
authority to hire and fire
The Supreme Court
 Pending Cases
 Genesis HealthCare Corp. v. Symczyk, No. 11-1059 (June 25, 2012).
 The validity of “tactical mooting” in the FLSA collective action
context to end a case
 FLSA collective actions are one the rise
 Several pending locally
 PREDICTION: True tactical mooting effectively eliminates the
“case or controversy” needed for Article III standing.
 However, true tactical mooting will likely be rare
 Does plaintiff seek injunctive relief? Declaratory relief? Does the Rule 68
Offer of Judgment address those?
The Supreme Court
 Pending Cases
 Sandifer v. U.S. Steel, No. 12-417.
 What constitutes "changing clothes" within the meaning of section
203(o) of the FLSA?
 Deals with the donning and doffing of Personal Protective Equipment
in an industrial workplace
 In a collective bargaining agreement, the employer and the union can
agree that “changing clothes” is not compensable
 PREDICTION: “Changing clothes” means donning and doffing of
PPE and can be excluded from compensable time under 203(o) of
the FLSA.
The Fourth Circuit Bench
 The current makeup of the court . . .
 Regan (R) Nominee: 1
 Wilkinson (Va.)
 G.H.W. Bush (R) Nominee: 1
 Niemeyer (Md.)
 Clinton (D) Nominees: 3 ½
 Traxler (S.C.)
Motz (Md.)
King (W.Va.)
Gregory (Va.) [1/2]
Shedd (S.C.)
Gregory (Va.) [1/2]
 G.W. Bush (R) Nominees: 3 ½
 Duncan (N.C.)
Agree (Va.)
 Obama (D) Nominees: 6
 Davis (Md.)
 Diaz (N.C.)
Keenan (Va.)
Floyd (S.C.)
Wynn (N.C.)
Thacker (W.Va.)
The Fourth Circuit Bench
Ideologically, most people would categorize the current judges
as follows . . .
 Liberal (general perception)
 Three . . . Motz, Davis, Wynn
 Conservative (general perception)
 Three . . . Shedd, Niemeyer, Wilkinson
 Moderate (general perception)
 Nine . . . Traxler, Keenan, Diaz, Floyd, Thacker, Duncan, Agee,
Gregory, King
The Fourth Circuit Bench
Overview of Decisions . . .
 Reversals of Judgments for the Employer (pro-employee):
11 (of 40) [27.5%]
 Other Generally Pro-Employee Positions: 4 (of 40) [10%]
 TOTAL PRO-EMPLOYEE DECISIONS: 15 (of 40) [37.5%]
 Neutral Application of Well Established Law: 17 (of 40)
 Generally Pro-Employer Positions: 8 (of 40) [20%]
The Fourth Circuit Bench
Themes over the last year . . .
 The moderation trend continues (or has stabilized)
 The days of the Fourth Circuit as the most employerfriendly circuit are
 It is more important than ever for HR to do things the
right way on the front end.
Computer Fraud
& Abuse Act:
Computer Fraud & Abuse Act
WEC Carolina Energy Solutions, LLC v. Miller,
687 F.3d 199 (4th Cir. 2012)
 One of three cases of first impression for the 4th Cir. this year
 Miller was a Project Director for WEC
 Had company laptop, etc.
 WEC had policies prohibiting employees from saving work files
to personal devices or using company resources for nonbusiness purposes
 Miller left WEC to go to a competitor and, allegedly, took a
bunch of confidential information with him
Computer Fraud & Abuse Act
WEC Carolina Energy Solutions, LLC v. Miller
 Miller allegedly used WEC confidential information in a
customer presentation 20 days later on behalf of his new
 The new employer beat out WEC for the customer’s business
 WEC sued, asserting various state law claims and a claim under
 CFAA creates a civil claim against any individual who accesses a
computer network without authorization or in excess of his
authorization and causes damage of at least $5,000
 Miller moved to dismiss the CFAA claim
Computer Fraud & Abuse Act
WEC Carolina Energy Solutions, LLC v. Miller
 Fourth Circuit adopted a narrow interpretation of CFAA
 Joined the Ninth Circuit (YIKES!)
 Court concluded that CFAA only addresses “access” to the
network, not what a person does with information on the network
If an individual is authorized to access a computer network, that is
the end of the discussion for CFAA purposes
“Exceeding Authorized Access” does not mean misusing data, files,
etc. (or even misappropriating them)
 CFAA claims are effectively dead in the employment context
Fair Labor Standards Act
Minor v. Bostwick Laboratories, Inc., 669 F.3d
428 (4th Cir. 2012).
 On May 6, 2008, Kathy Minor (and several others) met with
Bostwick’s COO
 Reported that Minor’s supervisor routinely altered employees’ time
sheets to reflect that they had not worked overtime when they had.
 Six days later, Bostwick fired Minor
 The reason given: “too much conflict with her supervisors and the
relationship just was not working.”
 Bostwick also claimed to have met with Minor’s co-workers and “had
determined that she was the problem.”
Fair Labor Standards Act
Minor v. Bostwick Laboratories, Inc.
 Minor sued for retaliation under the FLSA
 Bostwick moved to dismiss on the ground that an informal,
intracompany, oral complaint was not protected activity under
the FLSA
 FLSA prohibits retaliation against any employee “because such
employee has filed any complaint or instituted or caused to be
instituted any proceeding under or related to this chapter . . .”
 The District Court agreed and dismissed the claim
Fair Labor Standards Act
Minor v. Bostwick Laboratories, Inc.
 While Minor’s appeal was pending, the Supreme Court
decided Kasten v. Saint-Gobain Performance Plastics
 Kasten focused on the “filed” part of the anti-retaliation
 Held than an oral complaint is “filed” when it is made
 Left open the question of whether an informal, intracompany
complaint satisfies the “any complaint” part of the statute
 Fourth Circuit had to close the hole left by the
Supreme Court
Fair Labor Standards Act
Minor v. Bostwick Laboratories, Inc.
 So, is making an informal, oral, intracompany
complaint of FLSA violations protected conduct?
 YES . . .
 As long as the complaint is “sufficiently clear and
detailed for a reasonable employer to understand it, in
light of both content and context, as an assertion of
rights protected by the statute and a call for their
REDA and Wrongful
Pierce v. The Atlantic Group, Inc., 724 S.E.2d
568 (N.C. App.), disc. rev. denied, 731 S.E.2d
413 (N.C. 2012).
 Howard Pierce was a rigging supervisor for Atlantic
 Worked on maintenance projects at Nuclear
 Last assignment was at Duke Energy’s McGuire
Nuclear Station on Lake Norman
 OSHANC issued regulations regarding crane operators
and riggers – required certification
REDA and Wrongful
Pierce v. The Atlantic Group, Inc.
 Pierce was concerned about how to get the
certifications completed without disruption to
maintenance operations at McGuire
 He formulated a training plan in order to get the
certifications done with minimal disruption
 Atlantic and Duke did not respond to his plan
 He then was asked to take a vacation and then, while
on vacation, asked to come back for a limited
assignment at a lower pay rate
REDA and Wrongful
Pierce v. The Atlantic Group, Inc.
 Shortly thereafter, he was fired for falsifying his
timecard (although he claimed his action was
approved by his supervisor)
 Basically, entered a full day of work on a Friday but then
left work for a family emergency
 Sued, asserting claims for violation of REDA, wrongful
discharge in violation of public policy, defamation and
 Ds moved to dismiss, which was granted
REDA and Wrongful
Pierce v. The Atlantic Group, Inc.
 Can an internal complaint satisfy the “initiate any
inquiry” prong of protected conduct under REDA?
 HELD: NO, it cannot.
 More than an internal complaint, or suggestion, is required.
 Wrongful Discharge Claim
 P must plead a specific N.C. public policy that D allegedly
 Broad, general statutes will not suffice
Federal Legislation
 Nothing on the horizon.
 ACA is coming on-line over the next 2 years.
 The effect will be minimal outside of the benefits area
 The primary provision that is generally applicable is the
breastfeeding break requirement added to the FLSA
Employee Emails to Counsel
 N.C. State Bar Formal Ethics Opinion 2012-5
 Deals with an employee’s emails to the employee’s
personal attorney sent using the employer’s business
email system
 Generally, if the employer has a clearly written and clearly
communicated policy stating that all emails sent or
received on its system are the property of the employer
and EE has NO expectation of privacy . . .
 These emails are NOT privileged
Employee Emails to Counsel
 N.C. State Bar Formal Ethics Opinion 2012-5
 VERY different rules for emails sent by an employee
using an internet email account (,,
etc.) accessed from the ER’s computer system
 These remain privileged
 Can be SIGNIFICANT legal liability for accessing these
 Primarily under the federal Stored Communications Act
Unemployment Insurance
 H.B. 4 – signed by Gov. McCrory on Feb. 18, 2013.
 Goes into effect on July 1, 2013
 Significant changes to benefits
Reduced maximum weekly benefit amount
Reduced maximum duration
Changed calculation of benefit amount
Eliminated several “non-charging” benefit categories
 Small increase in SUTA tax (o.o6% per year).
Expunged Criminal Records
 Pending . . . S.B. 91
 Passed N.C. Senate (48-2) on March 5, 2013
 Now pending in N.C. House
 Would prohibit employers from requiring an
applicant for employment to disclose information
concerning any arrest, criminal charge, or criminal
conviction that has been expunged.
 Seems likely to pass.
Gun Control
 Several bills pending that would . . .
 allow concealed handguns in places where they are
currently banned
 prevent an employer from banning hand guns in
employees’ cars in the employer’s parking lot

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