In Kosmicki Inv. Servs. LLC v. Duran, No. 1:21-cv-03488-DDD-SBPYY (D. Colo. Aug. 1, 2023), Kosmicki Investment Services LLC (KIS) brought a federal court action against a terminated employee (Joseph Duran) under the Computer Fraud and Abuse Act. As an employee, Duran had “access to KIS's highly confidential customer financial information, know-how, intellectual property [and] personal and financial information of customers” that was “stored on cloud databases.” In a previous state court action between the parties, the court ordered production of a ‘Seagate Drive’ in Duran’s possession because the special master determined the drive contained KIS’s property.
KIS then sought return of its property that was allegedly on Duran’s personal laptop, which he admittedly used to access the Seagate Drive on “multiple occasions.” Duran opposed production of his laptop, arguing KIS “identified no documents located on the Seagate Drive” that he “improperly retained.” The court concluded that documents on Duran’s personal laptop could be “both relevant and proportional to the needs of the case.”
The court reasoned: “Nothing in the record suggests that KIS would have been obliged, at this stage of the case, to specifically identify for Mr. Duran all documents that he may have improperly taken from KIS.” The court went on to note that "'relevance is not so narrowly construed as to limit a story to its final chapter, and neither party is entitled to make it impossible for all meaningful parts of the story to be told.'" In sum, the court declined to “conflate the discovery question at issue here with a predetermination of the merits of the underlying claims in the action.”
Sensitive to any inconvenience to Duran from temporarily surrendering his personal laptop and personal information, the court ordered the parties to negotiate a “joint proposed ESI protocol.” The court also ordered Duran to preserve all documents on his laptop until after the forensic imaging.
A key takeaway here is that companies should promptly disable departing employee access to confidential and proprietary company information. In this case, KIS alleged Duran used the Seagate device to download and retain electronic records from KIS's computer three days after his termination. If KIS had taken steps to ensure Duran no longer had access to its databases upon his termination, it likely would have avoided the problem that led to this litigation, and its associated costs.