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Turner v. Hubbard Systems, Inc.

United States District Court, D. Massachusetts

March 10, 2016

GREGORY P. TURNER, Plaintiff,
v.
HUBBARD SYSTEMS, INC., formerly known as and also doing business as JIM HUBBARD AND ASSOCIATES, INC., Defendant.

OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION

GEORGE A. O'TOOLE, JR. UNITED STATES DISTRICT JUDGE

The plaintiff asserts claims under the federal Computer Fraud and Abuse Act ("CFAA"), see 18 U.S.C. § 1030, as well as state law claims for conversion, intentional (or negligent) infliction of emotional distress, and unfair or deceptive business practices, see Massachusetts General Laws Chapter 93 A. The parties have cross-moved for summary judgment. The magistrate judge to whom this matter was referred recommended granting summary judgment on the CFAA claim in favor of the defendant for the reason that the plaintiff cannot meet the CFAA's $5, 000 threshold requirement for civil suits like this one. The magistrate judge also recommended that supplemental jurisdiction imder 28 U.S.C. § 1367 over the state law claims be declined and that they be dismissed without prejudice. The plaintiff filed objections to the magistrate judge's Report and Recommendation ("R&R"), to which the defendant has responded.

In addition to the plaintiffs objections to the R&R, he has filed other motions to supplement the record, certify legal questions to the Massachusetts Supreme Judicial Court, and appeal one of the magistrate judge's docket-management orders.

Having carefully reviewed the voluminous pleadings, party submissions, and record, as well as the R&R, I ADOPT the magistrate judge's recommendations that judgment be entered for the defendant on the CFAA claim and that jurisdiction be declined as to the state law claims.

The plaintiff has raised numerous objections, but they can be grouped into two categories. First, the plaintiff argues that the magistrate judge erred by finding that his alleged statutory damages do not meet the $5, 000 threshold necessary for a CFAA claim. Second, he argues that his damages under the state law claims exceed the $75, 000 amount in controversy requirement for diversity jurisdiction under 28 U.S.C. § 1332(a), making any consideration of supplemental jurisdiction imnecessary. Accordingly, he asserts that his state law claims should be addressed on the merits.

The important parts of the factual background can be summarized briefly. The defendant, Hubbard Systems, Inc., develops and markets a software suite known as Collection Partner. It also separately offers maintenance, support services, and updates to the software for an ongoing monthly fee. In the early 1990s, the plaintiff purchased a permanent license to use Collection Partner in his law practice. In 2011, the defendant claimed that the plaintiff was behind thousands of dollars in maintenance and other fees for Collection Partner. Collection Partner has a license key that unlocks the program and the various modules in its suite for use. That key can be set to expire, and in early 2011, the plaintiff received a key that, unknown to him, was to expire on June 1, 2011.[1]

Early in the morning of June 1, the plaintiff discovered that Collection Partner no longer operated. Collection Partner is integral to the plaintiffs business, and without it, he could not work. After email exchanges between the parties, a little before noon the same day the plaintiff received a key from the defendant that unlocked Collection Partner for two months. With the key, Collection Partner became operational again. After more discussions and payment by the plaintiff of $3, 500 for past support services, the plaintiff eventually received a key that permanently unlocked his software suite. It has not gone down since.

Out of the events of June 1 and their aftermath, the plaintiff makes extravagant claims of a variety of injuries. He claims that he is entitled to the entire value of the Collection Partner suite, the entire value of a host of merges and macros developed for WordPerfect that rely on Collection Partner, the entire value of the plaintiffs IOLTA account, the plaintiffs expected annual income through retirement, the $3, 500 the plaintiff paid the defendant, and damages for emotional distress.

I. Threshold Amount for the CFAA

Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. Pro. 56(a). The process on summary judgment is simple enough. "Once the moving party avers the absence of genuine issues of material fact, the nonmovant must show that a factual dispute does exist" Fontanez- Nuflez v. Janssen Ortho LLC. 447 F.3d 50, 54 (1st Cir. 2006) (quoting Ingram v. Brink's. Inc.. 414 F.3d 222, 228-29 (1st Cir. 2005)). Viewed through that lens, summary judgment shall enter "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett. 477 U.S. 317, 322 (1986).

The CFAA prohibits unauthorized access to private computer systems and allows recovery in a civil action for "compensatory damages and injunctive relief or other equitable relief." See 18 U.S.C. § 1030(g). The parties do not dispute that under the relevant provision of the CFAA, the plaintiff may recover "only if there is "loss . . . aggregating at least $5, 000 in value." See id § 1030(c)(4)(A)(i)(l), (g).

[T]he term "loss" means any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service [.]

Id §1030(e)(11).

The statute specifically provides that damages for a violation of the type alleged by the plaintiff "are limited to economic damages." Id § 1030(g). Thus, to survive a summary judgment motion, it was the plaintiffs burden to show that there was at least a dispute of material fact as to whether he suffered at least $5, 000 in economic damages.

The plaintiff alleged the several categories of injuries noted above. In her R&R, the magistrate judge concluded that the only true losses the plaintiff suffered stemmed from his temporary loss of the use of Collection Partner on June 1. The economic damages flowing from the interruption included the plaintiffs having had to pay his two employees for the day though they were idled by the disruption and his unproductive rental cost for his office space for the day.

The plaintiff continues to press here an argument already rejected by the magistrate judge: that the fact that the plaintiff regained the use of Collection Partner on June 1 is only "mitigation" of his damages, an affirmative defense which the defendant failed to plea in its answer and is thus barred from presenting here. The plaintiff maintains that the correct measure of damages is those he would have experienced if Collection Partner was never reactivated, namely, the entire value of the plaintiffs business.

Such an argument is, of course, counterfactual and thus absurd. Damages in a private CFAA action are "compensatory." See 18 U.S.C. § 1030(g). Compensatory damages are not measured by some hypothetical alternate set of circumstances, but rather by harm that actually occurred. The fact that the plaintiff was not harmed as much as he might have been had circumstances been different is not an effect of "mitigation"; it is reality.

Here, the plaintiff presented a small universe of potentially qualifying damages, all stemming from his Collection Partner software being out of commission on June 1. Even under a charitable viewing of the evidence, his expenses and lost income for that day total under $1, 500.[2]Whether or not the plaintiffs eventual payment to the defendant of the $3, 500 he was said to owe qualifies as a "loss" under the statute is therefore irrelevant. Viewed most generously to the plaintiff, the two categories together do not reach the $5, 000 requirement of the CFAA.

In his objections, the plaintiff for the first time claims that he was damaged in an additional way-that he wasted several hours trying to obtain from the defendant a permanent license key for Collection Partner. The plaintiff demands compensation, at his hourly rate, for this time and has requested leave to supplement the factual record to include these losses. His new damages theory is foreclosed. "Parties must take before the magistrate, 'not only their "best shot" but all of their shots.'" Borden v. Sec'v of Health & Human Servs.. 836 F.2d 4, 6 (1st Cir. 1987) (quoting Singh v. Superintending Sch. Comm.. 593 F.Supp. 1315, 1318 (D. Me. 1984)). Discovery ended months ago; the record is closed. If the plaintiff was injured in any way by having to spend time discussing with the defendant their mutual relationship, he needed to make that argument first before the magistrate judge, not here. See Fireman's Ins. Co. of Newark. N.J, v. Todesca Equip. Ca, 310 F.3d 32, 38 (1st Cir. 2002).

Unable to show damages reaching the $5, 000 threshold, the plaintiff's civil claim under the CFAA fails. Summary judgment shall enter in favor of the defendant for that claim.

II. Diversity Jurisdiction

This Court does not have diversity jurisdiction over the state law claims. The parties are indisputably diverse: the plaintiff lives in Massachusetts, and the defendant is located in Texas and incorporated in Delaware. However, in addition to the fact of diverse citizenship, the amount in controversy for the state law claims must exceed $75, 000 before federal courts have jurisdiction over them. See 28 U.S.C. § 1332(a). That requirement is not met here.

It is up to the plaintiff to show that the amount in controversy exceeds the jurisdictional threshold. Abdel-Aleem v. OPK Biotech LLC. 665 F.3d 38, 41 (1st Cir. 2012).

A plaintiffs "general allegation of damages that meet the amount requirement suffices unless questioned by the opposing party or the court." However, once the opposing party has questioned the amount, "the party seeking to invoke jurisdiction has the burden of alleging with sufficient particularity facts indicating that it is not a legal certainty that the claim involves less than the jurisdictional amount." This burden may be met by amending pleadings or submitting affidavits.

Id, at 41-2 (quoting Stewart v. Tupperware Corp.. 356 F.3d 335, 338 (1st Cir. 2004)) (citations omitted). "[T]he 'sufficient particularity' standard requires something more than a plaintiffs conclusory statements." Id. at 45.

In addition to the less than $5, 000 of damages particularly cognizable under the CFAA, the plaintiff has identified two other sources of damages: (1) time spent negotiating with the defendant after June l[3] and (2) emotional distress. As to the first category, the plaintiff assesses those damages at approximately $6, 250. (See Emergency Mot. for Leave to File Suppl. Mem. of Objs. to R&R, Ex. 1, Proposed Suppl. Aff. ¶ 34 (dkt. no. 308-1).) As to the second category, the plaintiff has provided no detail or even supposition. An affidavit from the plaintiff states that the defendant's conduct caused "emotional distress" whose "physical manifestation" took "the form of lost sleep and anxiety and headaches." (Gregory P. Turner Aff. ¶ 25 (dkt. no. 268).) He "took aspirin to combat depression and anxiety." (Id at ¶ 61.) The record contains no evidence of visits to any medical or psychiatric professional. The plaintiff has not articulated with any specificity how this seemingly-mild emotional distress makes up the gap between his other damages and the 575, 000 requirement. Cf Abdel-Aleem. 665 F.3d at 42-43 (dismissing claims for, among other things, emotional damages for "lack of substantiation").

It is the plaintiffs burden to show how and in what way he may have been injured, and how those damages exceeded $75, 000. He has not done so. This Court is without original jurisdiction over the plaintiffs state law claims. Considering the federal claim has already been disposed, I decline to exercise supplemental jurisdiction over them.

III. Supplemental Jurisdiction

The magistrate judge recommended against exercising supplemental jurisdiction. There is no substantial federal interest in retaining jurisdiction over and adjudicating purely state law issues. As the magistrate judge noted, the plaintiff will not be prejudiced by any statute of limitations, because under Massachusetts law, a plaintiff may refile his case in state court within one year of dismissal by a federal court for want of jurisdiction. See M.G.L. ch. 260, § 32; Liberace v. Conway. 574 N.E.2d 1010, 1012-13 (Mass. App. Ct. 1991). Moreover, since the R&R was entered, the plaintiff has filed a motion requesting the certification of seven questions of state law to the ...


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