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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.