Circuit Split Watch: Is Personal Use of a Work Computer a Federal Crime?

This article first appeared in the June 4, 2012, issue of the National Law Journal’s Supreme Court Insider.

Could the Computer Fraud and Abuse Act be used to “turn ordinary citizens into criminals”? Or is this fear based on “far-fetched” and “wacky hypotheticals”?

Yes and yes, say the majority and dissent in United States v. Nosal, a recent 9-2 decision of the U.S. Court of Appeals for the 9th Circuit, sitting en banc. Chief Judge Alex Kozinski, writing for the majority, acknowledged that its reading of the CFAA splits from other federal appellate court decisions. A petition for certiorari could be filed this summer.

Employees of an executive search firm allegedly accessed the firm’s computer database to obtain information, which they gave to David Nosal, a former employee. Nosal intended to use the information to compete with the firm.

After this came to light, Nosal was indicted on twenty counts, including trade secret theft, mail fraud, conspiracy, and CFAA violations.

At issue on appeal is the phrase “exceeds authorized access” to a computer under the CFAA.

To Chief Judge Kozinski, access and misuse of information are two separate questions. The employees who allegedly fed Nosal information were authorized to access the firm database. They had permission. The problem was subsequent misuse of firm information. The solution is to prosecute the misuse or look to Congress to amend the CFAA, not to imagine words that are not there.

Otherwise, Kozinski said, scores of unsuspecting people who are authorized to use their work computers for business only, under computer-use policies, but check sports news, send personal emails, or engage in other non-work uses, even occasionally, could be guilty of a federal crime—exceeding authorized access.

Kozinski was also concerned that violating particular sites’ terms of use could be criminalized. For instance, eHarmony’s terms of use prohibit giving “inaccurate, misleading or false information.” Saying that you are “‘tall, dark, and handsome,’ when you’re actually short and homely, will earn you a handsome orange jumpsuit,” Kozinski surmised.

Kozinski noted that the majority’s reading of the CFAA veers from 5th, 7th, and 11th Circuit decisions and invited those circuits to reconsider.

Judge Barry Silverman, in dissent, was unimpressed.

This case is not about “playing sudoku, checking email, fibbing on dating sites, or any of the other activities” the majority discussed, Judge Silverman wrote. It is about “stealing an employer’s valuable information to set up a competing business with the purloined data.” The majority’s “far-fetched” and “wacky hypotheticals” miss the point.

Nosal’s co-conspirators were authorized to be in the firm system for firm business, not to steal its information. Silverman gave this example: “A bank teller is entitled to access a bank’s money for legitimate banking purposes, but not to take the bank’s money for himself.”

Other circuits got it right, Silverman explained. Those courts found that authorized access had been exceeded under the CFAA when a Citigroup employee used information from a company database to commit fraud, a Social Security Administration employee tracked old flames and potential new ones via the SSA system, and an employee of a government contractor used her work access to view then-candidate Barack Obama’s student loan records.

The Obama student loan case, from the 8th Circuit, was not discussed in the majority opinion.

At the request of the United States, the losing party in Nosal, the 9th Circuit stayed its mandate pending filing of a petition for certiorari. The en banc decision was issued in April, so a petition could be filed with the Supreme Court as late as July.

Circuit Split Watch: Help Wanted for Crack Sentencing Appeals?

This article first appeared in the October 17, 2011, issue of the National Law Journal’s Supreme Court Insider.

Congress passed the Fair Sentencing Act of 2010 to reduce the vast and heavily criticized disparity between crack cocaine and powder cocaine sentences.

Implementing the FSA has not been easy, though, as federal appeals courts have split over when it applies. Two of these cases could reach the Supreme Court soon as petitions for certiorari, and a third is already there.

In July, the 7th Circuit decided United States v. Holcomb, a consolidation of appeals involving four defendants. Each committed crack offenses before the FSA became law, but was sentenced after, receiving lower FSA sentences. For one defendant, the difference was 33 months (within the FSA range) versus 120 months (pre-FSA mandatory minimum).

A three-judge 7th Circuit panel, citing prior circuit precedent, found that the FSA only applies to offenses committed after it became law and that the sentencing date is irrelevant. As a result, the defendants would get the higher sentences. This had been the federal government’s position.

About a week later, though, Attorney General Eric Holder issued a “Memorandum for All Federal Prosecutors” that rejected this approach. Originally, prosecutors had been told that the FSA only applied to post-FSA offenses. However, as Holder explained, confusion in the courts and “the serious impact on the criminal justice system of continuing to impose unfair penalties” had caused him to review and change the policy. Going forward, the FSA would apply to post-FSA sentences, regardless of the offense date.

After the government notified the 7th Circuit of the policy change, the court denied rehearing en banc sua sponte. The vote was a tie, 5-5, leaving the earlier decision intact.

Chief Judge Frank Easterbrook, writing for the four other judges opposed to rehearing en banc, focused on 1 U.S.C. § 109. Under that section, repealing a statute does not “extinguish any penalty” of the old statute, except where expressly stated in the “repealing Act.” Put another way, the FSA is not retroactive unless it says so. And it doesn’t, Easterbrook concluded. He also saw no implied retroactivity.

Judge Ann Claire Williams, joined by the four other judges who voted for rehearing, called this result “wrong” and “nonsensical.” Judge Richard Posner, who joined Williams, but also wrote a separate individual dissent, went further, deeming it “gratuitously silly” and “perverse.”

The FSA, Williams noted, gives the Sentencing Commission “emergency authority” to promulgate guidelines consistent with the FSA “as soon as practicable.” Also, the FSA states that it is “restor[ing] fairness to Federal cocaine sentencing.” Williams questioned why Congress would rush to replace admittedly unfair sentences, only to continue imposing them.

As both sides pointed out, there is a 3-2 split among the federal appellate courts on when to apply the FSA. The 1st, 3rd and 11th Circuits are in sync with Williams’ opinion, while the 8th Circuit squares with the 7th Circuit holding defended by Easterbrook.

The 7th and 8th Circuit cases are likely to be appealed to the Supreme Court soon. Like the 7th Circuit, the 8th Circuit recently denied rehearing en banc. Also, an earlier 7th Circuit case on FSA retroactivity, Fisher v. United States, is already pending before the Court as a petition. It was distributed for the September 26 conference, but the Court took no action, perhaps waiting in anticipation of further petitions. (See also Dorsey v. United States, consolidated with Fisher below.)

Because of the circuit split, and the practical implications for many defendants, the Supreme Court may decide to grant certiorari. If so, the scenario will be different than most, since the winner in the 7th and 8th Circuits, the government, now disagrees with those decisions. In such cases, the Court can appoint an attorney to defend the judgments below. Often, as Legal Times has reported, former Supreme Court clerks get this nod.

The government has not appealed its losses in the 1st, 3rd and 11th Circuits, but the latter is still pending. On October 4, the 11th Circuit ordered rehearing en banc sua sponte.

Circuit Split Watch: Test-Tube Babies and Social Security

This article first appeared in the September 14, 2011, issue of the National Law Journal's Supreme Court Insider.

When Congress passed the Social Security Act in 1935, the idea of a child being born years after its father’s death might have provoked when-pigs-can-fly laughter. Now, through advances in science, such births are a reality, not to mention a source of controversy.

Federal appellate courts have recently split over the requirements for posthumously conceived children to receive Social Security survivor benefits. One petition for certiorari is already pending before the U.S. Supreme Court and two more could follow soon.

The most recent case in the split, decided at the end of August, is Beeler v. Astrue, from the U.S. Court of Appeals for the 8th Circuit.

Doctors diagnosed Bruce Beeler, an Iowa man in his thirties, with leukemia and recommended chemotherapy. Because he and his fiancée Patti wanted to have children, but understood that the treatment could cause sterility, Bruce had his semen banked at a fertility clinic prior to undergoing chemotherapy. He and Patti married within weeks.

Despite chemotherapy and later, a bone marrow transplant, Bruce Beeler died. Nearly two years later, Mrs. Beeler gave birth to their daughter and subsequently filed for Social Security survivor benefits on the girl’s behalf. The Social Security Administration denied the request, but a federal district court in Iowa disagreed and awarded benefits.

Judge Steven Colloton, a former Rehnquist clerk, writing for a unanimous 8th Circuit panel, reversed the district court and upheld the agency’s denial of benefits. Senior Judge Myron Bright, born in 1919, sixteen years before Social Security was enacted, and Judge Roger Wollman also sat on the panel.

The core dispute before the 8th Circuit was whether the daughter is a “child” of a deceased worker, as defined by the Social Security Act and related regulations. From Mrs. Beeler’s standpoint, the answer is simple: It is undisputed that Bruce, the deceased worker, is the biological father of the girl, so she is his child.

For the agency though, biology is not the end of the story, but a trigger to further inquiry. The next question, as the agency reads the Act, is whether the biological child could inherit under state intestacy law. If so, she is a “child” for purposes of Social Security benefits.

In this case, Iowa intestacy law did not recognize posthumously conceived children as heirs. As a result, the Beelers’ daughter did not qualify as a “child” for Social Security purposes. Iowa has since changed its law, the 8th Circuit noted, but not retroactively. The daughter also did not qualify under several other inapplicable provisions, apart from state law.

In upholding the agency’s state law inquiry, the 8th Circuit explained, it was joining the 4th Circuit on one side of a 2-2 circuit split. On the other side, the 3rd and 9th Circuits do not require further inquiry for biological children.

Three of these four federal appellate decisions are from 2011, with major actions in all three just last month. In August, the 8th Circuit ruled, the Solicitor General filed a petition for certiorari in the 3rd Circuit case, Capato ex rel. B.N.C. v. Commissioner of Social Security, and the 4th Circuit denied rehearing en banc in Schafer v. Astrue. In other words, there could soon be three cert petitions on a conflicting issue of nationwide importance pending before the Supreme Court.

New questions from new technologies are becoming a recurring theme on the Supreme Court’s docket with recent grants on subjects like GPS surveillance, DNA testing, and video games. Posthumous conception and Social Security benefits could be next.

Circuit Split Watch: GPS Surveillance

On Friday, a federal appellate court kept a circuit split alive.

As Appellate Daily previously reported, the D.C. Circuit held in August that GPS surveillance of a vehicle required a warrant, departing from the Seventh, Eighth, and Ninth Circuits. Friday's D.C. Circuit ruling denied en banc rehearing.

Dissenting from that denial, Chief Judge David Sentelle, joined by three other judges, wrote that "the panel’s decision is inconsistent not only with every other federal circuit which has considered the case, but more importantly, with controlling Supreme Court precedent set forth in United States v. Knotts, 460 U.S. 276 (1983)." Knotts upheld use of a radio transmitter placed in a vehicle without a warrant.

Earlier this year, on the other coast, the Ninth Circuit came to a different conclusion, upholding warrantless GPS surveillance and then denying en banc rehearing. Dissenting from that denial, Chief Judge Alex Kozinski, joined by four other judges, called the upheld surveillance "creepy and un-American" and a far cry from the bygone technology at issue in Knotts. 

The Ninth Circuit case is now at the Supreme Court, with a recently filed petition for certiorari. A D.C. Circuit petition is sure to follow. Given the growing Fourth Amendment implications associated with technology, coupled with the circuit split, not to mention close votes and spirited dissents within those circuits, the Supreme Court will no doubt give these petitions close attention.

It should be noted that the Supreme Court, in 2007, denied certiorari in the Seventh Circuit case (written by Judge Richard Posner). PACER records do not show a cert petition in the Eighth Circuit case.

Appellate Daily, Judges Series: Chief Judge David Sentelle and Chief Judge Alex Kozinski.

Eighth Circuit: Briefs E-Filed Starting October 1

The Eighth Circuit website is announcing new local rules effective October 1, 2010, with the following notation: "Counsel's attention is directed to [new] Rules 25A, 25B and 28A."

New Rule 25A contains a list of documents that "must be filed electronically," including briefs, but states that e-filing is "voluntary for all pro se litigants proceeding without counsel" (discussed further in new Rule 25B).  Per new Rule 28A, counsel will also provide paper copies of a brief to the court and other parties, but not until the clerk's office has reviewed and filed the e-brief.  For complete details, please see these rules at the link above.

Eighth Circuit: Camp and Copyright, Medieval-Style

Recently, the Eighth Circuit decided a copyright case in favor of Camp Kitaki, a YMCA summer camp in Nebraska, and its KnightQuest, a medieval-themed, interactive play that teaches campers certain values.  In the past, the camp had used Kastleland, another medieval- and value-themed interactive play, but this ended in 1998, when its author, Tom Frye, broke ties with the YMCA.  A dispute and settlement with stipulated judgment followed.  The Y agreed not to infringe the Kastleland copyright and Frye, to not enter Y property without consent.  Camp Kitaki then used a program called Jungleland. 

In 2007, the camp introduced KnightQuest, a new medieval-themed program.  Frye sued in federal district court, alleging copyright infringement and contempt related to the stipulated judgment.  The district court held in favor of the camp, finding no infringement and dismissing the case.

Upholding the lower court, the Eighth Circuit found that "Kastleland and KnightQuest are both [medieval-themed] interactive plays conducted at the same YMCA summer camp" and, in both, campers "join the characters on a quest and are guided through multiple challenges where they can acquire certain skills necessary to defeat the play's antagonists."  However, these "general idea[s] cannot form the basis for a copyright infringement claim," the panel said.  "[S]imilarities between two works that are limited to hackneyed elements" (internal quotation marks and citation omitted) do not make those works substantially similar.

Judges Series: Chief Judge William Riley

Although William Jay Riley has served on the U.S. Court of Appeals for the Eighth Circuit since 2001, and as its chief judge since 2010, he is a trial attorney at heart.  Before joining the bench, Chief Judge Riley was a trial attorney for twenty-eight years at Fitzgerald, Schorr, Barmettler & Brennan in Omaha, and headed that firm's litigation group.  He has been associated with various trial-related organizations: the National Board of Trial Advocacy (board-certified civil trial specialist), American College of Trial Lawyers (fellow and state committee chair), and American Board of Trial Advocates (member and state chapter president).  Also, Riley currently teaches trial practice as an adjunct professor at both the University of Nebraska-Lincoln and Creighton Law Schools.  See bios here, here, and here.  Other items of note: