Missouri Federal Court Finds Violations of Employment Agreement May Constitute Unlawful Access Under the Computer Fraud and Abuse Act

A recent Missouri federal court opinion describes an almost unbelievable scenario. Employees signed well-drafted employment agreements — containing such provisions as non-competition, confidentiality, promise of loyalty, and commitment to return employer’s property within 24 hours of termination of employment — and then incorporated and operated a competitor company while still employed. Moreover, they transferred the employer’s computer source code to their own computers, delayed returning their ex-employer’s property after resigning, cleansed their computers before producing them pursuant to a court order, and never did turn over the source code. The court granted summary judgment to the ex-employer with respect to liability, with only damages issues left to be tried, on the breach of contract counts. The court also ordered a trial as to liability and damages with regard to the ex-employer’s CFAA and trade secret misappropriation claims. Custom Hardware Eng’r’g & Consulting, Inc. v. Dowell, Case No. 4:10CV000653 ERW (E.D.Mo., Jan. 23, 2013).

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