A federal judge in the United States District Court for the Eastern District of Missouri issued a ruling affecting the remedies an employer may seek when a departing employee misappropriates information stored electronically in Lasco Foods, Inc. v. Hall and Shaw Sales, Marketing, & Consulting, LLC.1 The court broadly interpreted the Computer Fraud and Abuse Act (CFAA),2 paving the way for a federal remedy for employers whose former employees delete and/or steal company information.


Factual and Procedural Background

Individual defendants Charles Shaw and Ronald Hall were employed by the plaintiff Lasco Foods, Inc. in managerial positions. When Hall and Shaw left the employ of Lasco, they formed defendant Hall and Shaw Sales, Marketing & Consulting, LLC. Lasco fi led a complaint with several counts, including a count that defendants violated the CFAA, and seven other claims under state law. Lasco alleged that Hall and Shaw failed to return their laptop computers, issued by Lasco, for 38 and 70 days, respectively, after Lasco demanded their return. Lasco further alleged that Hall and Shaw copied or downloaded confi dential and trade secret information and then deleted that information prior to returning their laptop computers. The defendants fi led a motion to dismiss Lasco’s two federal claims (Lasco also brought a claim under the Stored Wire and Electronic Communications Act) for failure to state a claim, and the seven state law claims for lack of jurisdiction.

The defendants argued that Lasco failed to plead the requirements for a CFAA claim.  The CFAA allows a cause of action for any person who suffers damage or loss by a violation of the act, so long as the damage sustained during a one-year period aggregates to at least $5,000 in value.3 Although there is dispute among courts whether a plaintiff must show both damage and loss for a successful CFAA claim, here, the court found that Lasco had plead facts showing both.


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