Client Alert

Vista Marketing—The Eleventh Circuit Restricts a Plaintiff’s Right to Recover Statutory Damages

02 Mar 2016

The Eleventh Circuit recently addressed an issue under the Stored Communications Act (SCA) that has caused courts some consternation—are actual damages required to support an award of statutory damages under the SCA?

Vista Marketing, LLC v. Burkett, No. 14-14068, 2016 WL 425165 (11th Cir. Feb. 4, 2016), arose from an earlier divorce proceeding. Prior to filing for divorce, a husband and wife exchanged passwords to their email accounts to show “openness.”- The passwords were later used by the wife, Burkett, to conduct a surreptitious review of her husband’s emails in the Vista Marketing email system in order to establish that financial misrepresentations were being made to the divorce court by her former husband.

After the divorce was final, the husband’s company filed a civil suit alleging violation of the SCA due to Burkett’s actions. The first issue the court addressed is the often vexing question of when an email is still in “electronic storage” when it is with an ECS.[1] In this case, Burkett admitted that she had read some of the emails before her ex-husband. As in Councilman, this was sufficient for the Court to conclude that the emails were still in electronic storage with an ECS.[2]

Having affirmed the jury’s finding that the SCA had been violated based upon this analysis, the Court turned to the central question—could a plaintiff recover statutory damages in the absence of actual damages? This was an issue the Fourth Circuit in Van Alstyne v. Electronic Scriptorium, Ltd., 560 F.3d 199 (4th Cir. 2009), had previously addressed, and that Court concluded that the SCA does not permit an award of statutory damages in the absence of actual damages. However, there is a Circuit split on this issue because other courts have reached the opposite conclusion and found that actual damages are not a prerequisite to statutory damages.[3]

In this case, the Court focused on the “person entitled to recover” language contained in the remedial portion of the SCA[4] and concluded that actual damages had to exist before statutory damages could be awarded. The Vista Marketing Court ultimately analogized this case to Doe v. Chao, 540 U.S. 614 (2004), a case that interpreted similar, albeit slightly different language in the Privacy Act, which caused the Supreme Court to conclude that actual damages were required to recover statutory damages under the Privacy Act.

The case is important because cases with statutory damages are a favorite of the plaintiff’s bar, and it demonstrates the growing weight of authorities that require plaintiffs to prove actual damages before recovering statutory damages. In the class action context, the requirement of damages will also further complicate the plaintiffs’ case when they seek to obtain class certification of a case alleging violation of the SCA.

[1] These are two critical definitions for the SCA. “Electronic storage” is “(A) any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof; and (B) any storage of such communication by an electronic communication service for purposes of backup protection of such communication.” Andrew B. Serwin, Information Security and Privacy: A Guide to Federal and State Law and Compliance § 7:8 (West 2015) (citing 18 U.S.C. § 2510(17)). An “ECS” is “any service which provides to users thereof the ability to send or receive wire or electronic communications.” Id. (citing 18 U.S.C. § 2510(15)).

[2] Id. § 7:25 (citing U.S. v. Councilman, 418 F.3d 67 (1st Cir. 2005)).

[3] See, e.g., Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, 759 F. Supp. 2d 417 (S.D.N.Y. 2010); Freedman v. Town of Fairfield, Civil Action No. 3:03CV01048, 2006 WL 2684347, *3 (D. Conn. Sept. 19, 2006); In re Hawaiian Airlines, Inc., 355 B.R. 225, 230 (D. Haw. 2006); Cedar Hill Assocs., Inc. v. Paget, No. 04C0557, 2005 WL 3430562, *3 (N.D. Ill. Dec. 9, 2005); Shefts v. Petrakis, 931 F. Supp. 2d 916 (C.D. Ill. 2013) (Holding that plaintiffs have the ability to recover statutory damages under ECPA in the absence of a showing of actual damages.).

[4] 18. U.S.C. § 2707(c).




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