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Insurance Safety Consultants LLC v. Nugent

United States District Court, N.D. Texas, Dallas Division

December 31, 2019

CARRI D. NUGENT, Defendant.



         In this memorandum opinion, the Court sets out its findings of fact and conclusions of law following a bench trial held in this civil action arising out of a business dispute in which Plaintiffs Insurance Safety Consultants, LLC and Christopher Roberts bring claims against Defendant Carri Nugent under the Stored Communications Act and Electronic Communications Privacy Act for alleged unlawful email disclosures occurring after June 29, 2013. See Fed. R. Civ. P. 52(a)(1) (requiring trial court in nonjury cases to find facts specially and state separately its conclusions of law). All findings of fact are based on a preponderance of the evidence standard. The Court's memorandum opinion complies with the level of detail the Fifth Circuit requires for findings of fact and conclusions of law. See, e.g., Century Marine Inc. v. United States, 153 F.3d 225, 231 (5th Cir. 1998) (discussing standards). Though the Court carefully considered the trial testimony and exhibits, it has not set out its findings and conclusions in punctilious detail, slavishly traced the claims issue-by-issue and witness-by-witness, or indulged in exegetics, parsing or declaiming every fact, nuance, and hypothesis. Id. Instead, the Court's memorandum opinion contains findings and conclusions that provide a clear understanding of the basis for the Court's decision. See id.


         Chris Roberts (Roberts) and Kevin West (West) owned Safety and Environmental Solutions, LLC (SES). Proposed Jt. Order 3 (ECF No. 205). Defendant Carri D. Nugent (Nugent) worked for SES, but after Roberts and West had a dispute about SES's ownership, she began working for Insurance Safety Consultants, LLC (ISC) in January 2013. Id. As part of her new job, Nugent used her personal laptop computer to set up email accounts for herself and Roberts at ISC. Tr. 24-25 (ECF No. 218). Nugent had access to Roberts's ISC email account on her laptop. Id. 27:24-28:10.

         Also in January 2013, West and SES filed a lawsuit against Roberts and ISC in the 192nd Judicial District of Dallas County, Texas. Proposed Jt. Order 3. Nugent was deposed on March 1, 2013, and the state court held a temporary-injunction hearing on April 18, 2013. Id. 4. Sometime between March 1, 2013, and April 18, 2013, Nugent and her counsel met with West and SES's counsel. Id. Shortly after the April 18, 2013 injunction hearing, ISC terminated Nugent, and she returned to work for SES. Id. In her interrogatory responses, Nugent admits she sent Roberts's emails to West on April 22, 2013, and again on December 15, 2013. Id. One referenced email was sent May 12, 2014. Id.

         Roberts and ISC then filed their Original Complaint in this Court on June 29, 2015, later amended, asserting claims against Nugent under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (CFAA), the Electronic Communications Privacy Act, 18 U.S.C. § 2510 (ECPA), and the Stored Communications Act, 18 U.S.C. § 2701 (SCA). Compl. (ECF No. 1); 2d Am. Compl. (ECF No. 130). Nugent also filed a counterclaim against Plaintiffs. Nugent Am. Compl. (ECF No. 49). On September 11, 2018, the undersigned entered Findings, Conclusions, and a Recommendation on Plaintiffs' motion for summary judgment on Nugent's counterclaim and Nugent's motion for summary judgment on Plaintiffs' claims under the CFAA, ECPA, and SCA. FCR (ECF No. 180). The District Judge accepted these Findings, granted Plaintiffs' motion, dismissed Nugent's counterclaims with prejudice, granted Nugent's motion in part, and dismissed Plaintiffs' CFAA claims in totality and Plaintiffs' ECPA and SCA claims, relating to disclosures of intercepted information that occurred before June 29, 2013. Order Accepting (ECF No. 182); Judgment (ECF No. 183). Therefore, only Plaintiffs' ECPA and SCA claims concerning disclosures of intercepted information occurring after June 29, 2013, remained for trial.

         Thereafter, the parties waived their right to proceed before the District Judge and consented to have the undersigned United States Magistrate Judge conduct all further proceedings, including the trial and entry of a final judgment. Consent (ECF No. 186). The parties withdrew their demand for a jury trial (ECF No. 207), and the Court conducted a bench trial on August 20, 2019. The parties later submitted proposed findings of fact and conclusions of law per the Court's instruction.[1] The Court has reviewed the parties' proposed findings of fact and conclusions of law and now finds for Defendant on Plaintiffs' remaining SCA and ECPA claims.

         Legal Standards and Analysis

         As Plaintiffs, Roberts and ISC bear the burden of proof on all elements of their SCA or ECPA claims. Plaintiffs must prove each element by a preponderance of the evidence. United States v. Valdez-Robles, 37 Fed.Appx. 714, 714 (5th Cir. 2002) (per curiam) (citing United States v. Barksdale-Contreras, 972 F.2d 111, 115 (5th Cir. 1992)) (“A preponderance of the evidence means only that it is more likely than not that a fact is true.”). The Fifth Circuit has found “no indication . . . that Congress intended for conduct that is clearly prohibited by Title II [SCA] to furnish the basis for a civil remedy under Title I [ECPA] as well.” Steve Jackson Games, Inc. v. U.S. Secret Serv., 36 F.3d 457, 462-63 (5th Cir. 1994); see also Shefts v. Petrakis, 2012 WL 4049484, at *4 (C.D. Ill. Sept. 13, 2012) (“[T]he Court must reject Defendants' argument that if the Court finds that Defendants ‘accessed' any of Plaintiff's ‘stored communications,' it must automatically grant them summary judgment as to Count I, which alleges ‘interception.' The Court agrees that the same conduct cannot constitute both an ‘interception' and an ‘accession.'”). Accordingly, the Court first evaluates Defendant's conduct under the SCA's criteria.

         I. The Stored Communications Act

         The Court finds for Defendant on Plaintiffs' SCA claim. The SCA prohibits “intentionally access[ing] without authorization a facility through which an electronic communication service is provided . . . and thereby obtain[ing], alter[ing], or prevent[ing] authorized access to a wire or electronic communication while it is in electronic storage in such system . . . .” 18 U.S.C. § 2701(a)(1). “[A]n ‘electronic communication' is defined as ‘any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system . . . but does not include . . . any wire or oral communication . . . .'” Steve Jackson Games, 36 F.3d at 461 (quoting 18 U.S.C. § 2510(12)); 18 U.S.C. § 2711(1) (incorporating “the terms defined in section 2510 of this title” into the SCA). Email constitutes an electronic communication within the meaning of the statute. See Steve Jackson Games, 36 F.3d at 461-62. “While the SCA does not define the term ‘facility,' it does define the terms ‘electronic communication service' and ‘electronic storage.'” Garcia v. City of Laredo, 702 F.3d 788, 792 (5th Cir. 2012). An “‘electronic communication service'” is “‘any service which provides to users thereof the ability to send or receive wire or electronic communications.'” Id. (citing 18 U.S.C. § 2510(15) (incorporated by reference in 18 U.S.C. § 2711(1) of the SCA)). And electronic storage “is defined as ‘(A) any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof; and (B) any storage of such communication by an electronic communication service for purposes of backup protection of such communication.'” Cruz Lopez v. Pena, 2013 WL 819373, at *3 (N.D. Tex. Mar. 5, 2013) (citing 18 U.S.C. § 2510(17)); see also Steve Jackson Games, 36 F.3d at 461.

         However, electronic storage “encompasses only the information that has been stored by an electronic communication service provider, ” and not information that an individual stores to his hard drive. Garcia, 702 F.3d at 793 (citations omitted). In Garcia, Garcia claimed the defendants accessed text messages and images on her phone in violation of the SCA. Id. at 790. The Fifth Circuit held that the text messages and photos stored on Garcia's phone were not in electronic storage as defined by the statute, and, therefore, beyond the SCA's scope. Id. at 793. Specifically, the court explained, “information that an internet provider stores to its servers or information stored with a telephone company-if such information is stored temporarily pending delivery or for purposes of backup protection-are examples of protected electronic storage under the statute, ” but “information that an individual stores to his hard drive or cell phone is not in electronic storage under the statute.” Id. (citing Freedom Banc Mortg. Servs., Inc. v. O'Harra, 2012 WL 3862209, at *8-9 (S.D. Ohio Sept. 5, 2012); Hilderman v. Enea TekSci, Inc., 551 F.Supp.2d 1183, 1205 (S.D. Cal. 2008); Bailey v. Bailey, 2008 WL 324156, at *6 (E.D. Mich. Feb. 6, 2008) (unpublished)).

         The Court finds Plaintiffs did not carry their burden to prove Roberts's emails were in electronic storage. For Nugent to be liable under the SCA, Plaintiffs would have to prove that she intentionally accessed “a facility through which an electronic communication service is provided” without authorization to obtain Roberts's emails while they were in electronic storage. Here, Nugent “set up [her] laptop . . . to get copies of Mr. Roberts' emails” when she set up ISC's email accounts using Office 365. Tr. 75:22-25; 76:1-21; 78:12-25; 79:1-18; 82:11-18. Robert Shofkom, a Microsoft-certified systems engineer, testified at trial that “Office 365 is Microsoft's software” that enables “the client machines . . . [to] talk with the Microsoft exchange server.” Id. 119:1-5. He explained that it uses the “MAPI protocol” to synchronize email across devices. Id. 119:1-25; 120:1-7; 121:5-8. Outlook is the email client on a computer that communicates with the Office 365 exchange server. Id. 121:11-13. “[A]n outgoing email out of Outlook would go . . . from the client to the server, and then from the server it would go across the internet . . . to the various users.” Id. 123:9-16. The Office 365 exchange server must have stored these emails temporarily pending delivery or for backup protection for Roberts's emails to be considered “in electronic storage” at the time of Nugent's access. See 18 U.S.C. § 2510(17). Though “an OST file is what the MAPI protocol creates and what Office 365 creates as a storage container for all the mail, ” Plaintiffs elicited no testimony regarding whether Microsoft's “exchange server” stores emails, even temporarily. The name, “exchange server, ” seems to suggest it does not. The Court, thus, finds Plaintiffs did not carry their burden to prove by a preponderance of evidence that Roberts's emails were in electronic storage.

         Even if Plaintiffs had carried their burden on this element, the Court finds Plaintiffs' SCA claim would fail because 18 U.S.C. § 2701(a)(1) is not dependent on any “disclosure” or “use” like §§ 2511(1)(c) and (d). Rather, the SCA depends on the intentional “access” of stored, electronic communications. Nugent testified that she was sent home on April 19, 2013, where she remained until May 2, 2013. Tr. 80:10-13. During that time, she realized her ISC email access had been cut off, which would also include access to Roberts's emails. Id. 80:14-20. Accordingly, the Court finds any disclosure of Roberts's emails after that would have involved accessing ...

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