State Wide Photocopy, Corp. v. Tokai Financial Services, Inc.
909 F.Supp. 137
In the United States District Court for the Southern District of New York
Case Number 94 Civ 8460 (SAS)
Before District Judge Scheindlin
Decided on August 03, 1995

Relevancy of the Case: Applicability of the ECPA when the employees of a service provider reroute confidential information to a competitor

Statutes and Provisions Involved

• The Racketeer Influenced and Corrupt Organizations Act, 18 USC § 1961
• The Electronic Communications Privacy Act, 18 USC § 2701

Relevant Facts of the Case

• The plaintiff’s company is in the business of leasing office equipment. Tokai, the defendant, provides lease financing. The plaintiff would submit the lease applications of their customers to the defendant.
• In February 1994, the plaintiff discovered that individuals at Tokai had misappropriated confidential information in customer applications. These individuals provided the information to Atlantic, one of the plaintiff’s competitors.
• The plaintiff has filed a complaint against Tokai and Atlantic, alleging the loss of four large contracts and goodwill amongst their customers. The defendants seek to dismiss the federal claims against them.

Prominent Arguments by the Counsels

• The plaintiff’s counsel:
  • The defendants have committed violations under the RICO Act. Tokai employees faxed the plaintiff’s customer applications to Atlantic.
  • Tokai violated Section 2701 of the ECPA by providing access without authorisation to the information in the lease applications.
• The defendant’s counsel:
  • Tokai did not have any motive to provide the information to Atlantic. The ECPA does not apply in the present case as Tokai is not a facility to electronically store information.

Opinion of the Bench

• Certain employees of Tokai received extra kickback money from Atlantic after rerouting the information to them. This sufficiently shows the validity of the plaintiff’s claims under the RICO Act.
• The plaintiff failed to prove the ECPA’s statutory application, as it was primarily designed to protect against computer hackers. There are no allegations stating that Tokai is a hacker.

Final Decision

• The court dismissed the plaintiff’s ECPA claim while ordering a pretrial conference for the RICO claim.

Arnav Kaman, an undergraduate student at Rajiv Gandhi National University of Law, Punjab, prepared this case summary during his internship with The Cyber Blog India in January/February 2024.