Hately v. Watts (P)

In this case invoking the Virginia Computer Crimes Act and the federal Stored Communications Act, the district court erred both in finding that (1) the plaintiff failed to demonstrate the requisite statutory injury under state law, and (2) the plaintiff’s previously opened and delivered emails stored by a web-based email service were not in statutorily protected “electronic storage” under federal law.

When a federal court exercises supplemental jurisdiction over a state law claim, federal common law governs the preclusive effect of the federal court’s disposition of that claim. The federal rule of decision in such cases is to apply state preclusion law, unless the state preclusion law is incompatible with federal interests. Discerning no such incompatibility, this court applies Virginia preclusion law to determine that the doctrine of issue preclusion didn’t bar the plaintiff from litigating the adequacy of his allegations as to damages in a new complaint.

The plaintiff has pleaded facts that plausibly establish that he suffered consequential damages actionable under the Virginia Computer Crimes Act. The district court correctly held that previously delivered and opened emails, like those at issue, are no longer in temporary, intermediate storage incidental to their electronic transmission and, thus, do not fall within the scope of the Act’s subsection (A). But previously opened and delivered emails stored in a web-based email client are in “electronic storage” within the meaning of 18 U.S.C. § 2510(17)(B), which encompasses “any [1] storage of [2] such communication [3] by an electronic communication service [4] for purposes of backup protection of such communication.”

An entity that acts as an electronic communication service in one context may act as only a remote computing service in another context or, in still other contexts, may not act as either an electronic communication service or a remote computing service. For example, the court concludes today that companies such as Microsoft and Google function as an electronic communication services when they provide email services through their proprietary web-based email applications. But that doesn’t mean Microsoft and Google necessarily function as electronic communication services regarding other applications and services they offer, like cloud- based data processing and analytics services, or goods or products they sell or license, like hardware or software.

The messages a user of a web-based email service chooses not to delete — the messages that district court’s erroneous construction of subsection (B) leaves unprotected — are likely precisely the types of messages Congress sought to protect. By choosing to save such messages after reading them, the user indicates that the messages have sufficient personal, commercial, or other significance that they want to be able to access them again in the future. It defies logic that the unopened junk and spam email messages that a user leaves in his or her inbox or designated folder without opening would be entitled to more protection than those messages the user chooses to open and retain. This court doesn’t believe Congress intended such an absurd result when it enacted a statute intended to fill in the gaps in the then-existing privacy protections for electronic communications and therefore spur adoption of new communication technologies, like email.

Reversed and remanded.

Hately v. Watts (P), No. 18-1306, Mar. 6, 2019. 4th Cir. (Wynn) from EDVA at Alexandria (Trenga).

Categories: 4th U.S. Circuit Court of Appeals, Opinions, Published

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