Pulte Homes v. Laborers' International Union

Citation

Pulte Homes, Inc. v. Laborers' Int'l Union of North America, 648 F.3d 295, 191 L.R.R.M. (BNA) 2161 (Aug. 2, 2011) (full-text).

Factual Background

Plaintiff Pulte Homes, Inc., a home builder, brought suit against its former construction crew member, Roberto Baltierra and the Laborers’ International union of North America (“LIUNA”) for violations of several state-law torts and violations of the Federal Computer Fraud and Abuse Act (CFAA). Baltierra was terminated, according to Plaintiff, for misconduct and poor performance. LIUNA, however, claims that Baltierra was terminated for wearing a LIUNA t-shirt and that several other crew members were terminated in retaliation for their support of the union.

In addition to filing an unfair-labor-practice charge with the National Labor Relations Board, LIUNA executed a campaign to “fight back” against Plaintiff by making phone calls and sending emails to Plaintiff and encouraging others to do the same to flood Plaintiff’s corporate office with correspondence.

Trial Court Proceedings

The district court denied Plaintiff’s motion for a preliminary injunction to enjoin LIUNA’s phone and email campaign and Plaintiff filed an appeal.

LIUNA then moved to dismiss Plaintiff’s federal complaint alleging a failure to state a claim and labor preemption. Rather than address the issue of preemption, the district court (1) held that Plaintiff failed to state a claim under the CFAA, (2) withheld leave to amend, (3) declined to exercise supplemental jurisdiction over Plaintiff’s state-law claims, and (4) dismissed the entire suit with prejudice. Plaintiff appealed this decision as well and the appellate court consolidated the appeals.

Appellate Court Proceedings

Preemption

The ruling Millmen’s Union, Local 2020 v. Garmon, (the so-called “Garmon preemption”), strips courts of jurisdiction over conduct “arguably subject” to section 7 or section 8 of the National Labor Relations Act (NLRA). and requires them to “defer to the exclusive competence of the National Labor Relations Board." Sections 7 and 8 of the NLRA together protect certain labor practices and prohibit others, forcing courts to relinquish jurisdiction to the NLRB when a suit involves an “arguably protected” or “arguably prohibited” labor practice. An exception to this rule allows federal courts to “decide labor law questions that emerge as collateral issues in suits brought under independent federal remedies.”

The CFAA provisions that Plaintiff cites in its complaint prohibit knowingly transmitting information that damages a computer, and intentionally accessing a computer without authorization. Because these provisions prohibit conduct wholly unrelated o the labor laws, Garmon preemption does not preclude Plaintiff’s CFAA claims.

The appellate court did, however, rule that the district court was correct that it lacked jurisdiction to issue an injunction. Section 8 of the NLRA prohibits a court from granting an injunction “to any complainant . . . who has failed to make every reasonable effort to settle [a labor] dispute . . . by negotiation.” While Plaintiff’s general counsel did contact LIUNA requesting a cessation of the email and phone campaign, the appellate court determined that the Plaintiff had not made reasonable efforts to settle the claim in order to satisfy Section 8.

Failure to State a Claim

Transmission

To state a transmission claim under the CFAA, a plaintiff must allege that the defendant “knowingly cause[d] the transmission of a program, information, code, or command, and as a result of such conduct, intentionally cause[d] damage without authorization, to a protected computer.” LIUNA did not dispute that its communications constituted “transmissions” under the Act, or that Plaintiff’s email and telephone systems qualify as “protected computers,” and as such, the appellate court only addressed the issues of damages and intent, and determined that Plaintiff had properly alleged both.

The Plaintiff alleges that the volume of calls and emails prevented Plaintiff’s customers from reaching its sales offices and representatives and otherwise curtailed its normal business operations. Under the CFAA, “any impairment of the integrity or availability of data, a program, a system, or information” qualifies as “damage.” While the Act provides no definition for “impairment,” “integrity,” or “availability,” the court applied normal dictionary definitions for these terms and concluded that a transmission that “weakens a sound computer system — or, similarly, one that diminishes a plaintiff’s ability to use data or a system — causes damage.” Because Plaintiff was prevented from receiving at least some emails or phone calls as a result of Defendants’ actions, the court ruled that the Plaintiff had suffered damage under the CFAA. Further, the diminished-ability concept is not novel has already been adopted by a number of district courts.

In addition to alleging damage, a plaintiff citing the CFAA must also allege requisite intent for a transmission claim. The district court found Plaintiff’s intent allegations deficient because Plaintiff made no allegations that LIUNA fully grasped the actual consequences of its email campaign. The appellate court, however, determined that this standard was too high. The CFAA does not define “intentionally,” but to act “intentionally” commonly means to act “on purpose” — i.e., with a purpose or objective. Because LIUNA had characterized its campaign as “fighting back,” the appellate court reasoned that the requisite intent under the CFAA had been properly alleged by the Plaintiff.

Access

To state an access claim, a plaintiff must allege, among other things, that the defendant “intentionally accesse[d] a protected computer without authorization.” Once again, the term “without authorization” goes undefined by the statute, however, common usage dictates that someone who accesses a computer without authorization does so without sanction or permission. The appellate court also noted that the CFAA differentiates between “without authorization” and “exceeding authorized access.” Under the CFAA, "an individual who is authorized to use a computer for certain purposes but goes beyond those limitations . . . has 'exceed[ed] authorized access.'" By contrast then, someone who accessed a computer without authorization would have had no right of access whatsoever. Because LIUNA accessed Plaintiff’s public telephone and email systems, and because Plaintiff did not allege that LIUNA possessed no right to contact its officers, the appellate court determined that Plaintiff had failed to satisfy one of the elements of its access claim.