Front, Inc. V Khalil
Front, Inc. v Khalil2013 NY Slip Op 31613(U)July 9, 2013Sup Ct, New York CountyDocket Number: 111597/11Judge: Donna M. MillsRepublished from New York State Unified CourtSystem's E-Courts Service.Search E-Courts (http://www.nycourts.gov/ecourts) forany additional information on this case.This opinion is uncorrected and not selected for officialpublication.
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[* 3]LSUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK : IAS PART 58- - - - - - - - - - - -XFRONT, INC.,Plaintiff,Index No. 111597111-againstPHILIP KHALIL, JAMES O'CALLAGHAN, andECKERSLEY O'CALLAGHAN STRUCTURAL DESIGN,PHILIP KHALIL,Third-party Plaintiff,-againstJEFFREY A. KIMMEL and MEISTER SEELIGFEIN LLP,&Third-party D e f e v ,., ,.-- ---------------PHILIP KHALIL,Second Third-partyPlaintiff,FI.-.-. - .*0Jut'22 2033-againstMARC SIMMONS,Second third-party defendant, Marc Simmons (Simmons), movesto dismiss the second third-party complaint (Khalil complaint).Defendant/second third-party plaintiff, Philip Khalil (Khalil),opposes the motion to dismiss and cross-moves for an ordersuppressing from evidence all emails and documentary evidence
[* 4]accessed from Khalil’s personal and business email accounts byplaintiff Front, Inc. (Front) and Simmons.This series of actions arises from an employment disputebetween Front and its former employee, Khalil.In the underlyingcomplaint Front alleges that Khalil worked together withdefendants from the United Kingdom to use Front’s confidentialand proprietary information to divert work from Front.Theunderlying complaint further alleges that three days after Khalilhad tendered his written resignation from Front, the company’snetwork engineer, Alex Yau, noticed an external hard drivestorage device attached to Khalil‘s office computer. Yaunotified Simmons, and the next morning Simmons discovered thatKhalil had downloaded files from the office computer, includingfiles containing Front’s allegedly confidential and proprietyinformation.The Khalil complaint alleges that, while Khalil was stillemployed by Front, Simmons, a partner of Front, accessed andconfiscated an external hard drive belonging to Khalil, thatcontained Khalil‘s emails and confidential information. TheKhalil complaint further alleges that Front did not have a policyprohibiting the use of company computers for the purpose ofpersonal email activity and did not inform employees that theircomputers would be monitored.It further alleges that Khalil hadexclusive use of his office computer and did not share it with2
[* 5]other employees, and that he had a reasonable expectation ofprivacy with respect to the electronic data stored on hiscomputer and his external hard drive.Finally the Khalilcomplaint alleges that Simmons acted with intent and malice, inretaliation for his decision to resign from the company and starta new business in New York which Simmons considered a competitor.The Khalil complaint asserts four causes of action: 1)damages for violation of the Stored Communications Act (SCA), 18USC§2707; 2) declaratory and injunctive relief, pursuant to theSCA, including but not limited to preclusion of the use ofKhalil‘s emails in this litigation; 3 ) conversion; and 4)declaratory and injunctive relief including but not limited toreturn of Khalil‘s emails and confidential information,preclusion of the use of that information and destruction of anycopies.Motion to DismissMoving to dismiss the first and second causes of action,Simmons argues that Front’s action of accessing and retainingKhalil‘s external hard drive does not constitute a violation ofthe SCA, which provides that a person violates the SCA who“(1) intentionally accesses without authorization afacility through which an electronic communicationservice is provided; or(2) intentionally exceeds an authorization to accessthat facility;and thereby obtains, alters, or prevents authorizedaccess to a wire or electronic communication while itis in electronic storage in such system. . . . I ’3
[* 6]18 USC 13-2701 (a).The SCA further provides:“(a) Cause of action.--Exceptas provided in section2703(e), any provider of electronic communicationservice, subscriber, or other person aggrieved by anyviolation of this chapter in which the conductconstituting the violation is engaged in with a knowingor intentional state of mind may, in a civil action,recover from the person or entity, other than theUnited States, which engaged in that violation suchrelief as may be appropriate.“b) Relief.--Ina civil action under this section,appropriate relief includes-(1) such preliminary and other equitable or declaratoryrelief as may be appropriate;(2) damages under subsection (c); and(3) a reasonable attorney’s fee and other litigationcosts reasonably incurred.“(c) Damages.--The court may assess as damages in acivil action under this section the sum of the actualdamages suffered by the plaintiff and any profits madeby the violator as a result of the violation, but in nocase shall a person entitled to recover receive lessthan the sum of 1,000. If the violation is willful orintentional, the court may assess punitive damages. Inthe case of a successful action to enforce liabilityunder this section, the court may assess the costs ofthe action, together with reasonable attorney feesdetermined by the court.”18 USC§2707.In support of his motion to dismiss, Simmons submits theaffidavit of Alex Yau, Front‘s network engineer.Yau states thaton the evening of March 23, 2011, he noticed an external harddrive device connected to the Front computer assigned to Khalil.The next morning Yau notified Simmons, and later that morning4
[* 7]Yau, Front director, Bruce Nichol, and Khalil viewed the contentsof the external hard drive. According to Yau, in addition tosome of Khalil‘s personal information, the device containedhundreds of thousands of files of Front‘s information. Yaustates that he was present and heard a discussion between Nicholand Khalil in which they agreed that Yau would transfer Khalil’sinformation to another external hard drive and give that deviceto Khalil.Yau states that he did copy the information to asecond external hard drive as agreed to by Nichol and Khalil, andthat later that day he gave the second device to Khalil.Yau further states that:“17. The copies of Khalil’s emails that were stored onFront‘s computer system were “dead copies,” meaningthere was no live activity and they were simply storedon the hard drive of Front‘s server.“18, The dead emails stored on Front‘s computer systemwere from an Exchange email account, which Frontprovided to Khalil for business use, and sent emailsfrom a Gmail account Khalil had apparently set uphimself.“19. No one at Front accessed live data to retrieveKhalil‘s emails from either account. Rather, Khalilcaused the emails Front subsequently reviewed to besaved on Front’s hard drive. Khalil ran the emailsfrom the personal account through Front’s Outlooksoftware, which resulted in Khalil saving a copy ofsent items through Gmail into the Front Exchangeaccount and Front’s Exchange Server backup systems.The default primary account that Front assigned toKhalil in the Outlook software was the Front-providedExchange account pkhalil@frontinc.com. A user, such asKhalil, can configure the Outlook software to interfacewith secondary accounts, such as Gmail. The defaultbehavior of Outlook is to copy all items sent byOutlook into the primary account, including emails sentthrough secondary email account services. Khalil savedthe emails from the personal account onto Front‘s5
[* 8]computer system in its entirety, including informationstored on the hard drive of Front's server."Aff of Alex Yau,7717-19.Khalil does not contest Yau's statement that Khalil hadstored copies of his personal emails on Front's computer system,Yau's explanation of how Front's computer storage system works,or that the external hard drive contained what appeared to beKhalil's personal information, as well as hundreds of thousandsof files of Front's information. In fact, Khalil does notdirectly address Yau's affidavit at all.Rather, Khalil contendsthat the allegations in his second third-party complaint must bedeemed true that "Mr. Simmons intercepted emails from my openGmail account, that through 'unauthorized' use of my officecomputer, that he accessed my 'active Outlook account,' throughwhich he intercepted 'emails being sent and received throughGmail and other accounts.'"supplied).Aff of Philip Khalil,724 (emphasisIn support of his contention, Khalil points to copiesof certain emails annexed to an affidavit of Simmons submitted byFront in an earlier stage of this litigation, which indicate thatthose emails were sent from Khalil's personal Gmail account,claiming that the emails show that Simmons was accessing livedata, not old emails stored on a hard drive.Although it is true that on a motion to dismiss, theallegations in a complaint must be accepted as true, and theallegations must be construed in a light most favorable to the6
[* 9]plaintiff, this is not the case where affidavits and evidentiaryB i o n d i v Beekman Hillmatter negate the essential facts alleged.House A p t . C o r p .I257 AD2d 76, 81 ( l s tDept 1999)Iaffd 94 NY2d659 (2000).Moreover, Khalil’s statement in his affidavit is not anaccurate characterization of what is alleged in his complaint.The Khalil complaint itself repeatedly alleges that Simmons“accessed” Khalil’s “external hard drive and reviewed itscontents“ and “accessed personal and confidential informationcontained on [his] office computer.” See Khalil complaint,and 6.885His complaint does not allege that Front or Simmonsdirectly accessed his Gmail account (as opposed to viewing copiesof emails that he saved on his office computer) and he does notemploy the word “intercepted,” which might imply that Simmonsdirectly accessed Khalil‘s personal email account on-line.Khalil‘s attorney similarly adds the word “intercepted“ to hisrestatement of the allegations of the complaint when that wordwas not contained in the complaint, in an apparent effort tosuggest that Khalil’s Gmail account was directly accessed bySimmons. Affirmation of Neil G. Marantz,731.This belated andsomewhat misleading use of the word “intercepted” by Khalil andhis counsel is insufficient to overcome the allegations of hisown complaint.Nor does it overcome Yau‘s sworn statement thatthe emails and other information inspected by Yau, Nichol and7
[* 10]Khalil on Khalil’s external hard drive, had been saved by Khalilon Front’s computer hard drive and then downloaded to theexternal hard drive, and were not obtained by Front by logging onto Khalil‘s personal email account via the internet.Moreover, the specific emails on which Khalil relYes in hisopposition to Simmons’s motion, to prove that Front accessed hispersonal email account, are dated January 24, 2011, November 16,2010, and March 21, 2011, and, thus, were sent or received priorto the date when Yau noticed the external hard drive attached toKhalil‘s office computer which was being used to copy documentsfrom that computer.The presence of those emails on Khalil’sexternal hard drive is, therefore, consistent with Yau’sexplanation that Khalil had saved, on his office computer, emailssent and received by him, and that no live communication on hisGmail account was accessed by Front, and does not establish thathis personal Gmail account was accessed.Though the language used in discussing computer systems canbe a bit confusing to lay persons, the case of Pure P o w e r BootCamp v W a r r i o r Fitness B o o t Camp ( P u r e Power) ( 5 8 7 F Supp 2d 548[SD NY 2008]), relied on by Khalil, is useful to understand whatthe SCA is and is not designed to prevent.In that case, theemployer directly accessed the former employee’s personal Hotmailaccounts by using the employee’s user name and password that hehad stored on his work computer and had allegedly given to8
[* 11]another former co-worker. In discussing the SCA the courtexplained that “[tlhe Act ‘aims to prevent hackers fromobtaining, altering or destroying certain stored electroniccommunications.II d . at 555 (citations omitted).The courtfurther explained that the majority of courts that have addressedthe issue of-electronic storage have determined that “e-mailstored on an electronic communication service provider’s systemsafter it has been delivered, as opposed to e-mail stored on apersonal computer, is a stored communication subject to the SCA.”Id.The court stated:“It is important to note from the outset, that this isnot a situation in which an employer is attempting touse e-mails obtained from the employer’s own computersor systems. Rather, the e-mails at issue here werestored and accessed directly from accounts maintainedby outside electronic communication service providers.”I d . at 554.See also H i l d e r m a n v Enea TekSci, I n c . , 551 F Supp2d 1183, 1204-1205 (SD Cal 2008)(emails stored on a hard drive donot constitute “electronic storage” for the purposes of the SCA)As the court explained in In re Doubleclick Inc. P r i v a c yLitigation (154 F Supp 2d 497, 511 n 20 [SD NY 20011), examplesof electronic communication service providers (in the year 2001when the case was decided) are America Online, Juno and UUNET.Gmail, would presumably also fall within that category. As notedabove, an employer’s computer hard drive (as well as theemployer’s own computer system) does not constitute an electroniccommunication service provider, and, thus, is not the focus of9
[* 12]the SCA.Unlike the situation in P u r e P o w e r , there is no evidencehere, other than Khalil‘s unsupported assertion in his affidavit,that Simmons or any other Front employee directly access hispersonal email account maintained by Gmail or any other outsideelectronic communication service provider.Rather, as the Khalilcomplaint alleges, Simmons accessed Khalil’s external’hard driveand information contained on his office computer, which, as Yauexplained, included copies of emails which Khalil saved on thecomputer supplied by Front, and then transfe’rredto his ownexternal hard drive.A s the courts in P u r e P o w e r and DoubleClick indicated,neither an office computer hard drive nor an external hard driveconstitute a “facility through which an electronic communicationservice is provided” (18 USC S 2 7 0 1 [a] [l]), for the purposes ofthe SCA.And as the P u r e P o w e r court also indicated, accessingcopies of emails stored by Khalil on his office computer anddownloaded by him to his external hard drive does not constitutea violation of the S C A .Thus, the court need not reach Simmons’s.argument that he was authorized to access the Front hard drive.Simmons‘s motion to dismiss the first and second causes of actionagainst him is, therefore, granted.Simmons also moves to dismiss the third cause of action forconversion, arguing that the cause of action for conversion was10
[* 13]not properly pled.“A conversion occurs when a party, ‘intentionally andwithout authority, assumes or exercises control overpersonal property belonging to someone else,interfering with that person’s right of possession’( C o l a v i t o v N e w York O r g a n D o n o r N e t w o r k , I n c . , 8 NY3d43, 49-50 [2006]). ‘Two key elements of conversion are(1) the plaintiff’s possessory right or interest in theproperty and (2) the defendant’s dominion over theproperty or interference with it, in derogation ofplaintiff’s rights.‘ ( i d . at 49-50 . . . [citationomitted]).‘ILynch v . C i t y of N e w York,---AD3d - - - - , 965 NYS2d 441, 446( I S tDept 2013).Simmons argues that Khalil failed to plead the two elementsof conversion set forth above, and merely alleged that byconfiscating the external hard drive that belonged to him,Simmons had committed conversion.The court, however, agreeswith Khalil, that his allegations that, without authorization,‘Simmons accessed his external hard drive and reviewed itscontents which contained personal emails, confiscated theexternal hard drive and exercised dominion and control over thathard drive and the information, satisfied the pleading standardsset forth above.In any case, evidence of the full contents ofthe external hard drive is not yet before the court.Citing P e l l a R e a l t y v C o m m i s s i o n e r of F i n .[lStDept(5 AD3d 278, 2792004]), Simmons also argues that a legal entitlement toYau’s unsupported assertion that Simmons had the authorityto access Front’s computer system in its entirety is insufficientto overcome Khalil‘s allegation.11
[* 14]the property is essential to a cause of action for conversion.Simmons contends that Khalil failed to allege that he had a legalright to retain the external hard drive, and that if, as Frontalleged in its original complaint against Khalil, the externalhard drive contained Front’s confidential information, thenKhalil would likely not have a legal right to retain it.However, even if Khalil might not have had a right to retainFront’s documents, he would presumably have a possessory right tohis own personal documents and the external hard drive, thoughwith Front‘s documents removed.2Citing Koeniges v Woodward (183 Misc 2d 347 [Civ Ct, NYCounty2000]),Simmons further contends that to survive a motionto dismiss, plaintiff must show that he has suffered compensatorydamages.However, the decision in Koeniges followed bothdiscovery and trial, and merely indicates that, there, theplaintiff had failed to prove the damages he was seeking, and notthat it was necessary to plead specific damages to state a causeof action for conversion.Furthermore, here, in addition to his claim for damages,pursuant to his fourth cause of action, Khalil is also seekinginjunctive relief in the form of return of his emails and otherallegedly confidential information, preclusion of their use by* The court notes, but does not speculate about the reasonwhy the relief requested by Khalil in his complaint does notinclude return of the actual external hard drive.12
[* 15]Simmons inthis litigation, or in any other way, and destruction of allcopies of the information, and return of his external hard drive.Although the court has seen copies of a limited number ofKhalil’s emails that were obtained by Front from Khalil’sexternal hard drive, the totality of Khalil’s documents obtainedby Front when it confiscated Khalil’s external hard drive is notyet known.It is similarly unclear whether any justificationexists for Front to retain copies of those yet-unknown documents.Thus, at this stage of the litigation, Simmons‘s motion withrespect to the third and fourth causes of action must be denied.Cross Motion to SuppressKhalil cross-moves to suppress from evidence all emails anddocumentary evidence accessed from his personal and businessemail accounts by Front and Simmons.TO the extent that Khalil seeks to suppress his emails basedupon the SCA, the court has already concluded that theinformation was not obtained in violation of the SCA.Khalil also relies on his right of privacy in his effort tosuppress the emails obtained by Front and Simmons.Khalilcontends, and Front has not contested, that the company had nopolicy barring the use of his office computer for personal emailactivity.Citing Scott v B e t h Israel M e d . Ctr. Inc. (17 Misc 3d934 [Sup Ct, NY County 2 0 0 7 ] ) , Khalil argues that he, therefore,13
[* 16]had a reasonable expectation of privacy with respect to anyinformation stored on his computer, and that his personalcommunications must remain out of his employer's reach.Khalilquotes the decision in In re Asia Global Crossing, Ltd. (322 BR247, 257 (Bankr, S D NY 2005) as setting forth the factors to beconsidered with respect to an employee's expectation of privacywith respect to his emails:'In general, a court should consider four factors: (1)does the corporation maintain a policy banning personalor
The Khalil complaint alleges that, while Khalil was still employed by Front, Simmons, a partner of Front, accessed and confiscated an external hard drive belonging to Khalil, that contained Khalil‘s emails and confidential information. The Khalil c
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