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Appeals Court: No Criminal Prosecution for Recruiter’s Breach of Computer Network

American Staffing Association (04/16/12) Stephen Dwyer

The U.S. Court of Appeals for the Ninth Circuit, in California,
has ruled in U.S. v. Nosal that a former employee of a
search and placement firm, who persuaded the firm’s current
employees to access its computer data for the purpose of helping
him set up a competing business, could not be criminally
prosecuted under the federal Computer Fraud and Abuse Act.

After ending his tenure with the firm, the former employee
allegedly enlisted three current employees to access the
company’s computer records and help him set up his business.
After he was criminally indicted, the former employee moved to
dismiss the indictment on the grounds that the CFAA was designed
to prosecute computer hackers, not former employees who allegedly
misappropriate their former employers’ confidential
information. The appeals court agreed, ruling that the law was
not intended to prohibit persons from misappropriating the
information they have a right to access.

Staffing firms should note that in certain jurisdictions outside
California, staffing firm internal employees may be criminally
prosecuted under the CFAA for violating company computer policies
and misappropriating company trade secrets and confidential
information. Regardless of the jurisdiction, every staffing firm
should have clear policies prohibiting such activity.