Bridal Expo produces the Bridal Extravaganza Show in Houston, one of the largest bridal shows in the US. Hundreds of exhibitors and thousands of prospective brides attend; the show has been in business for 25 years and keeps databases of attendees and potential clients. Defendant Wedding Showcase scheduled the Houston Wedding Showcase for Feb. 2009, a few weeks after the Bridal Extravaganza at the same location. The individual defendants van Florestein and Moore, were key to creating the Wedding Showcase and are former Bridal Expo employees—show manager and assistant. They left Bridal Expo in July 2008, but not before Moore downloaded Bridal Expo’s databases and other information.
Defendants used Bridal Expo’s database to mail ads to vendors for Wedding Showcase’s November 2008 seminar. They used Google to advertise the Wedding Showcase as “Houston’s #1 Bridal Show,” and mailed a brochure to vendors using quotations attributed to “our” vendors and “our” brides that actually came from other bridal shows on the East Coast, produced by another company.
In an earlier state court suit, Bridal Expo brought claims for trade secret misappropriation, unfair competition, and related torts. The judge denied a TRO and after a hearing also denied a temporary injunction. Bridal Expo nonsuited the state case and sued in federal court, using the same claims along with a Lanham Act false advertising claim and a Computer Fraud and Abuse Act claim.
On the state claims, the district court refused to disturb the state court’s ruling on the temporary injunction. All the elements of collateral estoppel were present, though this of course only affected the availability of temporary relief, not a final adjudication on the merits. Given that only a month had passed since the state court denial, and that plaintiffs had held a successful bridal show in the interim (thus suggesting lack of harm), the court found no reason to revisit the state court’s decision.
On the false advertising claim, plaintiffs argued that “Houston’s #1 Bridal Show” was literally false, since Bridal Extravaganza is, in fact, the largest bridal show in Houston by any number of measures, and that the statement wasn’t puffery because it was unambiguous and needed no additional context to give it meaning. Also, they argued that the brochures were literally false because defendants have yet to produce a bridal show in Houston.
Defendants called the Google ads puffery, and argued that the use of “our” in the brochures referred to the principals of Wedding Showcase, who have produced many shows. Moreover, the brochures mentioned several times that the Houston Wedding Showcase is a new show.
The court held, based on Pizza Hut, that the Google ads were too ambiguous to be actionable, and were the kind of bald assertion or general statement of superiority on which no reasonable consumer would rely. See also In re Century 21-RE/MAX Real Estate Advertising Claims Litigation, 882 F .Supp. 915, 923 (C.D.Cal.1994) (holding that “# 1” was too vague to be actionable and “declared ... # 1 in the United States and the World" was puffery, because it was opinion and made no reference to what was #1). Anyway, defendants stopped running the ad.
As for the brochure, plaintiffs argued that the “our” statements were literally false, and also that the brochure made literally false claims that van Florestein and another defenant had a combined 25 years of experience. Moreover, they argued that, by scheduling their show shortly after Bridal Extravaganza at the same location, defendants were trying to confuse customers into thinking their show was the Bridal Extravaganza.
On this record, the court found no literal falsity. “Our” could readily, in context, refer to the show’s owners, one of whom ran the shows on the East Coast from which the “our” statements came. The brochure explained that the Houston Wedding Showcase would be “a new show … with a long history.” Likewise, “more than 25 years of combined experience” could refer to the sum of the two principals’ individual experience, not 25 years each. The court concluded that it was unlikely that a sophisticated vendor audience, familiar with the Houston wedding market, would be misled into thinking that the quoted brides and vendors were from Houston.
The evidence of confusion between the shows was that one of plaintiff’s employees heard from one vendor at the Bridal Extravaganza that he was confused about who was running the Wedding Showcase, but there was no evidence of any connection to the brochure, and this was insufficient to claim confusion overall, though this might be an issue for a jury.
The CFAA claim was based on 18 U.S.C. § 1030(a)(4), creating liability for a person who “knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value ….” For a civil claim, there are extra requirements; here, the key was “loss to 1 or more persons during any 1-year period ... aggregating at least $5,000 in value.” Loss includes costs of responding to an offense and conducting a damage assessment. Here, the claimed loss was the confidential trade secrets.
Defendants argued that their access wasn’t without authorization and didn’t exceed their authorization. Van Florestein and Moore accessed their work computers and took files to which they were allowed access as employees. They argued that there’s a difference between access to computers and use or disclosure of information obtained through that access.
There’s a split over the meaning of “authorization.” Some courts say that using files to harm the employer violates the CFAA even if the employee technically has authorization to access the files in the scope of her duties. Contrary to that, other courts have noted that, when Congress wanted to prohibit things like “communication” and “delivery,” it listed them. If Congress wanted to reach all wrongdoers who access information they then use to the detriment of their employers, it could have omitted the statute’s words of limitation altogether. Despite the conclusions of other courts, the district court determined that, given those statutory construction arguments and the rule of lenity (since the CFAA is also a criminal statute), “authorization” is not exceeded just because the employee breaches her duty of loyalty to an employer.
Here, the files were copied/downloaded on the defendants’ last day of employment. They hadn’t signed a confidentiality agreement or any other agreement restricting access to the files they’d been working on at Bridal Expo. It was “within the nature of their relationship” to use their computers and access the files at issue. Indeed, a key Bridal Expo employee saw them using the computer on their final day and didn’t complain, even though it was after they’d turned in their keys.
Thus, the court found plaintiffs were unlikely to succeed on the merits. Moreover, even had there been a likelihood of success, a preliminary injunction would have been unwarranted, based on the Fifth Circuit’s hesitance to grant injunctive relief against the use of information obtained through a past violation of the CFAA, where there was no potential for ongoing access.
The court stated, somewhat confusingly, that it would be willing to revisit the issue if defendants were continuing to use the vendor email list to advertise—even if there’s no likelihood of success on the merits? And then the court said that even if it had found likely success on the merits, it wouldn’t have entered an injunction, because plaintiffs hadn’t shown irreparable harm—that successful show they’d conducted since defendants entered the market—and defendants would suffer great harm if they couldn’t produce their show: they’d have to cancel contracts, unwind arrangements on short notice, and pay cancellation fees. About that email list: It’s unusual in a written opinion for a court to signal so overtly that, though it thinks there’s no legal basis for some behavior, it nonetheless expects a party to engage in that behavior, but that seems to be what happened here.
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