New Jersey Court Finds Violation of Computer Related Offenses Act and Other Unlawful Conduct, Ordering Disgorgement of Profits, Attorneys' Fees and Punitive Damages
In B&H Securities, Inc. v. Duane Pinkey et al., the New Jersey Superior Court found that former employees taking computer files from – and using the files to unfairly compete with – their employer violated the Computer Related Offenses Act, N.J.S.A. 2A:38A-1 et seq. (“CROA”), and breached other common law and contractual obligations. The Court awarded actual damages, based on plaintiff B&H’s lost profits of $737,087.00, as well as punitive damages of $100,000 and attorneys' fees under the CROA.
The CROA prohibits, among other things, the unauthorized taking, destruction and accessing of computer files. The CROA is New Jersey’s equivalent to the Federal Computer Fraud and Abuse Act, 18 USC § 1030, a statute used more and more to challenge misappropriation of electronic data. The CROA provides for punitive damages and attorneys’ fees, which may not be otherwise recoverable under common law tort and breach of contract claims.
Here, former employees, Pinkney, Poisler and Palladino worked for B&H, which developed, installed and maintained security and safety systems for businesses to protect their properties and business records. Pinkney was a salesperson, Palladino provided customer support to B&H’s clients, and Poisler worked as an information technology manager. All three signed non-compete agreements, which included non-disclosure obligations, and acknowledgments of other confidentiality obligations.