Opinion Roundup: California District Courts and the Computer Fraud and Abuse Act – January 2014 through June 2014 – Part Two

Author: Scripta Ad Astra Staff

This is part two of a three-part series on federal district court opinions in California related to the CFAA.  The first part can be found here.  The third part will be posted on Friday, July 25, 2014.  Stay tuned and check it out.

Enki Corp. v. Freedman, 2014 U.S. Dist. LEXIS 9169 (N.D. Cal. Jan. 23, 2014)
Judge: Paul S. Grewal, United States Magistrate Judge.

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Silicon Valley: “Two in the Box” References Two of Ad Astra’s Cases

Author: Katy M. Young

In HBO’s show Silicon Valley, the story takes place in one character’s home which he opens up to tech entrepreneurs who need a place to live and work in exchange for equity in their companies, called Hacker Hostel. In the episode titled “Two in a Box,” the characters struggle with landlord/tenant issues that are novel in the age of Airbnb. You can read a synopsis of the plot of the episode here.

Ad Astra had a hand in both of the landlord/tenant issues featured in this episode.

 

First:

“With Pied Piper on its feet, Jared announces he’s moving out of Noah’s guest house and back into his condo, which he’s been renting out on Airbnb. When Jared arrives at his condo he finds his tenant, Ludwig, is still there, claiming he can’t afford to live in the area because people like Jared have raised the cost of living. Ludwig refuses to leave, so Jared begins the long, expensive process of eviction.”

This part of the episode has many similarities to Huang v. Hingorani, Ad Astra Partner Wendy Hillger’s AirBnB-neighbors dispute case which was written up in the San Francisco Chronicle here.

Essentially, the Jared character on Silicon Valley learns the tough truth as the landlord in our case: You get a long, expensive eviction fight.   If you rent your property to one who pays to be there for more than 32 days, even if the rental agreement came through AirBnB, the SF Rent Board has held that the renter acquires traditional tenancy rights. Therefore, to remove a short-term vacation renter who pays to stay more than 32 days yet refuses to leave and keeps paying rent, the landlord’s only course of action is an eviction.

 

Here is the second issue in the episode:

“Erlich shows the Hacker Hostel to a new tenant, and later tries to kick out Jian-Yang so that a new incubee can move into his old room. Jian-Yang doesn’t take the news well and starts freaking out. Later, after Erlich unwittingly reveals why Jared is moving back into the garage, Jian-Yang decides to use California’s tenant laws to his own advantage and also refuses to move out.”

In 2015, Ad Astra represented one of the defendants in the lawsuit Housing Rights Committee of San Francisco v. HackerHome. HackerHome is allegedly a company that rents living space to tech entrepreneurs via the AirBnB platform in violation of San Francisco’s short-term rental law.  In Silicon Valley, the storyline begins in Erlich Bachman’s “Hacker Hostel,” which mirrors the alleged HackerHome activities in both name and function. While living and working in the Hacker Hostel, the main character Richard develops an algorithm meant to help musicians avoid copyright troubles but ends up creating the world’s most powerful file compression technology and becomes the darling of Silicon Valley investors after winning the Tech Crunch competition. The character who owns the Hacker Hostel wants to remove one of the tenants, Jian-Yang, whose company is underperforming so that he can make room for more people involved with Richard’s more successful business, but upon listening to Jared’s problem with his Airbnb renter, Jian-Yang realizes that he’s lived in the Hacker Hostel long enough to acquire tenant’s rights like Jared’s tenant and announces that Hacker Hostel will have to evict him because he’s not leaving.

Now Erlich Bachman and Jared each experience the same landlord/tenant problems that Ad Astra’s clients have had to tackle, although thus far, no one has sued Erlich Bachman for his Hacker Hostel activities.

I was particularly thrilled by this episode of Silicon Valley because usually it relates to my husband’s work in big data cloud computing and the show’s creator goes out of his way to make the show full of inside jokes relevant to tech workers in the real Silicon Valley. This time, our cases featured prominently in the story line and I got to be on the inside of the inside jokes!

Opinion Roundup: California District Courts and the Computer Fraud and Abuse Act – January 2014 through June 2014 – Part Three

Author: Scripta Ad Astra Staff

This is the third part of three part-series on federal district court opinions in California regarding the CFAA.  The first part of this series can be found here.  The second part of this series can be found here.

Overall, California district courts have regularly followed the holdings in Nosaland Brekka regarding “use” versus “access.”  In summary, courts in the Ninth Circuit have generally held that the CFAA does not prohibit misusing information, such as in a trade secrets misappropriation violation: if you are allowed to access information, what you do with that information is not a violation of the CFAA, even if it is contrary to the interests of your employer.  On the other hand, if were not allowed to access information – say you quit or were fired – then a CFAA claim could likely withstand Ninth Circuit scrutiny.

It will be interesting to see how the courts make their decisions, especially as the divide between employment-based CFAA claims (“inside hacker” claims) and non-employment-based (external “hacker” claims) become more prevalent. Of course, you can always come back to Scripta Ad Astra to read about the latest CFAA, computer crimes, and cyber security developments.

NetApp, Inc. v. Nimble Storage, 2014 U.S. Dist. LEXIS 65818 (N.D. Cal. May 12, 2014)
Judge: Lucy H. Koh, United States District Judge.

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What to Expect When You are Going Through a Divorce

Author: Regina Franco

Divorce takes time.

Once you decide to file for divorce, the next thing you want to do is quickly move on to the next chapter of your life, but divorce doesn’t happen that quickly. There is a mandatory waiting period required by California law and no judgment of divorce can be entered sooner than 6 months from the date the Petition for Dissolution was served onto the Respondent.

While 6 months may feel like a long time, there is a lot of paperwork that needs to be done and taking the proper time to work through your case will oftentimes prove to be time well spent. Divorce can be complicated. A divorce is essentially creating two new families out of one. This requires careful thought in order to make sound decisions about support, property division, and custody.

Divorce is not easy and over the course of at least 6 months, divorce will consume you. It is important that you choose your attorney wisely as the right relationship will make a positive impact on you as you transition into your new life.

Lenovo and Superfish Sued Under The Computer Fraud and Abuse Act.

Written by Keenan W. Ng

It was recently discovered that Lenovo has been selling laptops with preinstalled adware that creates a catastrophic security hole in the web browser leaving users vulnerable to hacks. Superfish, a small company in Palo Alto, develops the adware. Plenty has been written about the technical aspects of the security flaw and more will be written going forward.  As the ramifications of the Superfish vulnerability play out in the community, at least two lawsuits* have been filed. More lawsuits certainly will come. One of these cases, Sterling International Consulting Group (“SICG”) v. Lenovo, Inc. and Superfish, Inc.(collectively, “Lenovo”), alleges violations of the Computer Fraud and Abuse Act. SICG seeks class action certification and was filed in the Northern District of California. The problem with Sterling is that the plaintiffs may have a hard time establishing the authorization element of the CFAA.

Allegations

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What is CCP 170.6, and How do Attorneys Use It?

Author: Brian M. Worthington
The situation involving embattled Santa Clara County Court Judge Aaron Persky took a new turn this week when the Santa Clara District Attorney’s Office used California Code of Civil Procedure Section 170.6 to disqualify Judge Persky from an upcoming case. Some of our readers may be wondering, What is CCP 170.6?; When is it used?; and How do attorneys use it? We are here to answer those questions.

CCP 170.6 allows a party to a case (or the attorney representing that party) a one-time opportunity to disqualify a judge who is prejudiced against a party or the party’s cause. It applies equally to criminal and civil cases and has varying time restrictions depending on the type of calendaring system used in the County in which the case is being heard. A party can use CCP 170.6 to disqualify a judge assigned for all purposes, a judge assigned for a trial, or even a judge assigned for a specific motion.

The disqualification must be done in writing or orally under oath. The legal basis for a 170.6 disqualification (sometimes called “papering” a judge) is the bias against a party or cause. But in practice CCP 170.6 has almost unlimited applications—we have seen situations where a judge is disqualified due to personal conflicts with a particular attorney; where a judge has a blind spot toward a particular legal issue; or where a judge is perceived to have a habit of punishing too harshly or too leniently in particular criminal matters.

The ability to exercise a CCP 170.6 disqualification is a major tactical weapon for an attorney. For instance, if an attorney is handling a case where police misconduct is a major element of the defense, the attorney will want to avoid judges with strong law-enforcement ties or history of disregarding police misconduct. CCP 170.6 allows the attorney to do that. But an attorney must exercise great care in making the decision because the attorney can only choose which judge to disqualify, not the new judge assigned. On some occasions, the newly assigned judge may be just as bad on the particular issue as the original judge, or may even be worse on other issues that can come into play. Even using a disqualification and getting a great new judge is not always a cure-all for the client because if the new assigned judge is too favorable, the opposing party can turn around and disqualify the new judge. This leads to an interesting tête-à-tête between the opposing attorneys.

We hope this brief entry helps explain what CCP 170.6 is and how attorneys use to try help their clients. Thank you for reading.

Opinion Roundup: California District Courts and the Computer Fraud and Abuse Act, July 2014 through February 2015 – Part One

Author: Scripta Ad Astra Staff

This week, we will have a two-part series on all of the substantive California district court Computer Fraud and Abuse Act opinions from July 2014 through February 2015. These posts are a follow up to a three – part series I wrote last summer discussing CFAA opinions from January 2014 through June 2014.

I decided to include some 2015 opinions in this Round Up because (1) there were not that many substantive opinions in the latter half of 2014 and (2) because I was a bit tardy on getting this post up – I figured I would bring you up to speed.

The next post will be on Friday, March 20. I hope you check it out!

Sprint Solutions, Inc. v. Pacific Cellupage Inc., 2014 U.S. Dist. LEXIS 101397 (C.D. Cal. July 21, 2014)

Judge: Christina A. Snyder, United States District Judge.

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Not Exactly A Midsummer Night’s Dream for Some

Author: David Nied

The Ninth Circuit has handed down two significant decisions under the Computer Fraud and Abuse Act in the past week.   In the first decision, United States v. Nosal, the court affirmed the CFAA conviction of David Nosal, a former Korn/Ferry employee who left to start his own competing business with several co-workers.  After Nosal and his co-workers left, Korn/Ferry revoked their computer access credentials.  Nevertheless, the departed employees used the computer access credentials of Mr. Nosal’s executive assistant—who remained at Korn/Ferry—to obtain access to the company’s proprietary database.  The court held that “without authorization” under the CFAA was unambiguous and means “accessing a protected computer without permission.”  Nosal argued that since his former executive assistant was authorized to access the company’s computers, he had not violated the statute.  Not so, said the court:  “once authorization to access a computer has been affirmatively revoked, the user cannot sidestep the statute by going through the back door and accessing the computer through a third party. Unequivocal revocation of computer access closes both the front door and the back door.”  Ad Astra’s David Nied and Michael Dorsi, and former associate, Keenan Ng, submitted an amicus brief on behalf of a former client and in support of the United States in which they discussed the importance of the remedies under the CFAA to small, entrepreneurial businesses in the Bay Area.  You can read The Recorder’s summary of the decision here. The Recorder quoted Mr. Nied’s observation that the decision “confirms that [small businesses] have a tool available to them under the CFAA to protect their business, their intellectual property, and their trade secrets from former employees.”

In the second decision, Facebook v. Vachani, the court concluded that a social-media aggregator, Power.com, and its principal, Steven Vachani, had violated the CFAA by continuing to use Facebook users’ accounts to send spam email and messages to other Facebook users to promote Power.com after Facebook had sent them a cease and desist notice.  Like Mr. Nosal, the defendants argued that they had not violated the CFAA because they had the consent of the Facebook users to send out the emails and messages.  The Ninth Circuit, however, concluded that the cease and desist notice revoked any permission the defendants had to use Facebook’s computers and that the defendants used Facebook’s computers “without authorization” after that point in time.  The court returned the case to the trial court to re-calculate Facebook’s damages from the date of the cease and desist notice.  The takeaway for small business owners is to send out a cease and desist notice the moment you become aware that a third party may be accessing your computers or cloud-based accounts without permission.  You can read more about the decision in The Recorder.

 

 

Opinion Roundup: California District Courts and the Computer Fraud and Abuse Act, July 2014 through February 2015 – Part Two

Author: Scripta Ad Astra Staff

This is the second part of a two part-series on federal district court opinions in California regarding the CFAA. The first part of this series can be found here.

NetApp, Inc. v. Nimble Storage, Inc., 2015 U.S. Dist. LEXIS 11406 (N.D. Cal. January 29, 2015)(“NetApp II”)

Judge: Lucy H. Koh, United States District Judge

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A Fact Investigation Conducted by Outside Counsel in response to an Employee’s claim of Harassment and Discrimination is Privileged

Author: Wendy Hillger

The California Court of Appeal recently held that outside counsel’s fact investigation of an employee’s harassment and discrimination claims conducted prior to litigation was protected by the attorney-client privilege and work product doctrine.

It has long been California law that when there is a claim of discrimination, harassment or retaliation, the employer must inves­tigate.  This investigation must be thorough, objective and complete.  To help assist with these requirements, some companies have hired outside legal counsel.  This ruling resolves the issue about whether outside legal counsel’s work and communications were privileged.  Companies now should not hesitate to investigate an employee claim with outside counsel.

The Court also ruled that assertion of the “avoidable consequences” defense (the employer took reasonable steps to prevent and correct harassment, but the employee failed to use those measures) in the subsequent lawsuit did not waive the privilege as to a post-employment investigation.

[City of Petaluma v. Superior Court (Andrea Waters), Case No. A145437]