Award of Damages Under the SCA

An 11th Circuit opinion was issued earlier this month about the award of damages in a civil cause of action under the federal Stored Communications Act.

The couple in the spotlight is Terri and Franklin Burnett. They, like in many marriages, had bumps and hurdles that eventually led them to couples counseling. Their counselor advised them to have an “open-book” marriage and encouraged them to share everything, including passwords to personal accounts. At this time, Franklin gave Terri his password to his Vista email account. He was the managing member of Vista, a telemarketing company.

Years later, during their divorce proceedings, Terri would use Franklin’s Vista account information to access his emails. The United States District Court for the Middle District of Florida concluded that Terri Burkett violated the Stored Communications Act.

During Terri and Franklin’s divorce hearing in 2007, Franklin claimed that Vista was closing down due to loss of sales profits.  Surprised by this news, Terri searched through his emails to find evidence of Vista’s financial situation. Terri discovered that Vista, in fact, was actually thriving financially, and Franklin had discussed the option of switching salaries and opening other offices with his brother.  After discussing the legality of the method used to obtain the financial evidence, Terri’s lawyer affirmed that she could use the emails in Court to receive compensation.  Thus, twenty-five percent of Vista’s profit went to Terri, and Franklin received the remaining seventy-five.

However, a few years after the divorce, Vista filed a lawsuit against Terri claiming that she violated the Stored Communications Act, which states that someone cannot hack into another’s electronic communication.  While the jury found Terri violated the act under 450 accounts, Vista received no awards of damages because “it is entirely unclear how Vista was damaged.”

Discontent with the outcome, Franklin appealed to the district judge stating how he believed he deserved $1,000.00 for each of Terri’s violations.  The judge declined attorney fees but awarded him a modest amount of $50,000.00 for statutory damages.

Franklin’s award still proved to be inadequate for him as Vista appealed to the Circuit Court.  During the trial, Vista argued that Terri was unauthorized access to any of Vista’s emails accounts, but the Court affirmed her status as an owner of Vista, which in turn, authorized her ingress of Vista’s emails.  Moreover, the Circuit Court agreed with Terri that the SCA precluded the District Court from statutory damages awards because the jury declared that no damages are available unless damages actually occurred, which Vista failed to show.

The case serves as an excellent example of how even when one party violates the SCA, the prevailing party may still receive no compensation for the other party’s infringement.  However, in other districts such as New York and Illinois, proof of actual damages is not required in order to receive statutory and punitive damages.  As Courts everywhere struggle to analyze claims under the SCA, it may be up to the Supreme Court to decide a final verdict.

 

Read the entire opinion from the 11th Circuit here: http://media.ca11.uscourts.gov/opinions/pub/files/201414068.pdf