Court: District Court, N.D. Illinois; June 4, 2015; Federal District Court
Plaintiffs Andrew Joseph, Isamu Fairbanks, Ian Doughty, and Martin Craig initiated a lawsuit against Defendants Lisa Carnes, Gregory Pease, Rick Jacobs, and Chris Hamilton on March 26, 2013, asserting claims under the Stored Communications Act (SCA) and for civil conspiracy. The civil conspiracy claim was dismissed with prejudice. Defendants moved for summary judgment on the SCA claim, which was denied by the court.
Local Rule 56.1 outlines the requirements for parties in summary judgment motions, stating that the moving party must submit a statement of undisputed material facts, which are deemed admitted if not contested by the opposing party. The nonmoving party must respond to each statement, referencing supporting materials; mere disagreements without evidence are insufficient. Unsupported legal conclusions or inadmissible hearsay will be disregarded, and strict compliance with the rule is mandated.
Fairbanks LLC, the plaintiff's company, is an Illinois limited liability entity with five members holding equal ownership. Defendant Chris Hamilton is an employee of Fairbanks, while Plaintiff Martin Craig is a venture capitalist with no formal ties to the company. Fairbanks LLC's email system, hosted by 123Together.com since 2005, is used by its members and employees through Microsoft Outlook. The company, rather than individuals, subscribes to the email service. The email system includes an "Archiving for Compliance" feature allowing email administrators to archive communications, which are stored in a database managed by a third party, Sonian, and can be searched by authorized users.
Pease inquired about an archiving system at Fairbanks, and upon discovering it was inactive, Hamilton explained how to enable it and its costs. Following Pease's direction, Hamilton activated the archiving service on October 26, 2012. After activation, designated email administrators could conduct company-wide searches, with Defendants Carnes, Hamilton, and Pease receiving "Search Admin Plus" (SAP) privileges. Pease and Carnes sought guidance from Hamilton on performing searches, leading Carnes to review emails exchanged by the Plaintiffs through their Fairbanks LLC email addresses.
The legal standard for summary judgment requires showing no genuine dispute exists regarding material facts, granting judgment as a matter of law (Fed. R. Civ. P. 56). Courts must view facts favorably for the nonmoving party, establishing a genuine dispute when evidence could lead a reasonable jury to rule for that party. The moving party holds the initial burden to prove no material fact dispute exists, while the nonmoving party must present specific evidence indicating a genuine issue for trial.
A violation of the Stored Communications Act (SCA) occurs if an individual intentionally accesses, without authorization, a facility providing electronic communication services or exceeds authorized access to obtain or alter communications in electronic storage (18 U.S.C. 2701(a)). The SCA allows for a private cause of action for unauthorized access. Exceptions to liability exist if access is authorized by the service provider, a user of that service, or specific sections of the law (18 U.S.C. 2701(c)). A "user" is defined as anyone authorized to use an electronic communication service (18 U.S.C. 2711(1), 2510(13)). Fairbanks LLC had the right to access the Plaintiffs' email accounts; the dispute lies in whether the Defendants were authorized by Fairbanks LLC to access those accounts.
Compliance archiving was implemented by Hamilton on October 26, 2012, with access privileges granted to Isamu Fairbanks, Pease, Carnes, and Hamilton by August 9, 2013. According to Fairbanks LLC's Amended Operating Agreement, management decisions require a Majority Interest among Members, and they possess various powers under Illinois law, including contract execution. The defendants contend that the addition of the archiving feature did not constitute a new contract and was easily activated. However, records indicate that the first invoice for company-wide email search capabilities was issued on November 1, 2012, and prior to that date, no email administrator could access archived emails. The archiving service was searchable at no additional cost, contradicting the defendants' claim of inherent access rights for email administrators. Activation of the archives requires administrator action, and the evidence suggests an extra cost for authorized access. The question of whether the purchase of the archiving service was authorized by Fairbanks LLC remains a material fact for the jury. The defendants argue they are exempt from liability due to archiving services being authorized by 123Together, citing statutory immunity for service providers managing electronic communications. However, legislative history indicates that service providers cannot delegate access authority to third parties without risking liability. The plaintiffs have presented sufficient evidence for a reasonable jury to potentially find in their favor regarding authorization issues.
Defendants contend that the Stored Communications Act (SCA) does not protect messages once they have been received by the addressee. The SCA safeguards communications in "electronic storage," defined as temporary storage incidental to transmission or storage for backup purposes. Since the communications at issue were already transmitted, the focus is on whether they were stored for backup. Most courts interpret electronic storage as applicable to backup storage regardless of timing. The archived emails were stored in a database, qualifying them under SCA provisions.
Regarding damages, Defendants argue that Plaintiffs cannot demonstrate actual damages. However, Section 2707(c) allows the Court to assess damages, including statutory damages, without necessitating proof of actual damages. Various district courts have determined that actual damages are not a prerequisite for recovery under the SCA, meaning Plaintiffs can still seek statutory damages.
Defendants assert that Plaintiffs waived their claims by voluntarily sending messages through an email system and lack the right to engage in unlawful conduct. They fail to provide legal authority supporting that voluntary use of electronic services waives rights under the SCA. Additionally, whether Plaintiffs engaged in unlawful conduct is not relevant to the current case. As a result, the Defendants’ Motion for Summary Judgment is denied.
