Hanger Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc.
556 F.Supp.2d 1122
In the United States District Court for the Eastern District of California
Case Number 2:06-CV-2879-GEM-KJM
Before District Judge G.E. Burrell, Jr.
Decided on April 14, 2008

Relevancy of the Case: Proving damage in a CFAA claim against former employees for stealing confidential data

Statutes and Provisions Involved

• The Computer Fraud and Abuse Act, 18 U.S.C. § 1030
• The Uniform Trade Secrets Act, Cal. Civ. Code § 3426

Relevant Facts of the Case

• The plaintiff’s patient care centres maintain hard copy and electronic files that include the patients’ medical information, referral sources, and contact information. This information is not available to the public and is classified as confidential.
• The plaintiff’s employees must sign an Employment Confidentiality/Training attestation. This agreement requires that the employees only use the information for business purposes. After signing this agreement, the plaintiff provided computer passwords to the employees.
• The defendants are the former employees of the plaintiff. The plaintiff’s claims against the defendant include federal computer fraud and abuse, state computer abuse, trade secret misappropriation, conversion, unfair competition, civil conspiracy, breach of contract, and breach of fiduciary duty.
• The plaintiff also claims that the defendants used its information to its detriment.

Prominent Arguments by the Counsels

• The petitioner’s counsel argued that the defendants used their computers in violation of CFAA. They misappropriated trade secrets, as defined by the Californian Uniform Trade Secrets Act.
• The defendants’ counsel submitted that there is no evidence indicating the third and fourth defendants accessing a computer without authorisation or with an intent to defraud.

Opinion of the Bench

• A jury can reasonably infer that the defendants’ conduct indicates an intention to defraud. The fourth defendant obtained the information for the defendant company.
• Further, the plaintiff had shown damage by demonstrating that sales at their office dropped when the defendants used the patients’ recall list obtained from the plaintiff.

Final Decision

• The court granted summary adjudication in the plaintiff’s favour for its CFAA claim while denying the remaining motions.

Anjini Pandey, an undergraduate student at Dr. Ram Manohar Lohiya National Law University, prepared this case summary during her internship with The Cyber Blog India in May/June 2022.