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Insurance Associates of Lamar County, LLC v. Bolling

United States District Court, S.D. Mississippi, Eastern Division

October 24, 2014

LEE BOLLING, Defendants.


DANIEL P. JORDAN, III, District Judge.

This case alleging claims under the Computer Fraud and Abuse Act ("CFAA") and Mississippi law is before the Court on Plaintiffs' Motion for Preliminary Injunction [7]. For the reasons that follow, the motion is granted.

I. Facts and Procedural History

Plaintiffs Insurance Associates of Lamar County, LLC, and Insurance Associates of Magee, Inc., are Mississippi-based insurance agencies. Plaintiffs hired Defendant Lee Bolling as a customer-service representative in February 2011. According to the Complaint and record evidence, Bolling "had limited access to [Plaintiffs'] client's files, which were stored on the remote server in Magee, Mississippi... to enable him to service Plaintiff[s'] customers." Compl. [1] ¶ 9. But Bolling did not "have unlimted access to all of [Plaintiffs'] customer files and reports e.g., certain business reports and client lists, as those files were restricted to allow only certain persons employed by Plaintiff[s] to access those lists and reports." Id .; see also Keyes Aff. [1-2] ¶ 6.

In November 2013, Bolling "unexpectedly resigned without giving notice." Compl. ¶ 11. After he resigned, Plaintiffs discovered that Bolling "had surreptitiously and impermissibly installed a program (GoToMyPC') on his computer that had been allowing him to access his [work] computer remotely." Id. ¶ 12. Soon thereafter, Plaintiffs "began receiving Agent of Record Letters stating that certain [of Plaintiffs'] clients wished to have the Joiner-Sigler Insurance Agency[, where Bolling is now employed, ] be their agent of record." Id. ¶ 13. Plaintiffs ultimately learned that "on or about November 11, 2013, Bolling impermissibly used [his supervisor's] password and gained unauthorized access to confidential data, generated proprietary company reports stored on Plaintiff[s'] remote server..., and then emailed them to himself." Id. ¶ 17; see also Keyes Aff. ¶¶ 7-9. The accessed files included Plaintiffs' client lists, which contain insureds' personal and property data and policy expiration dates. Armed with this information, Bolling "has been aggressively contacting Plaintiff[s'] clients to sell the same, or similar, services and products" as those offered by Plaintiffs. Compl. ¶ 22.

Plaintiffs filed their Complaint for Injunctive Relief and Money Damages on June 27, 2104 [1]. Plaintiffs assert a federal claim for violation of the CFAA and state-law claims for conversion, unfair competition, violation of the Mississippi Trade Secret Act ("MTSA"), Miss. Code Ann. § 75-26-5(1), tortious interference with business relations, and tortious interference with contract. After Bolling answered, Plaintiffs filed their Motion for Preliminary Injunction [7]. Bolling filed a three-page response [10], and Plaintiffs filed a reply [14]. The Court is prepared to rule.

II. Analysis

Bolling's primary argument in opposition to Plaintiffs' motion is that the Court lacks subject-matter jurisdiction and therefore cannot enter a preliminary injunction. The Court will address the jurisdictional issue first.

A. Subject-Matter Jurisdiction

Plaintiffs premise federal jurisdiction on 28 U.S.C. § 1331, which provides that district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Bolling argues that Plaintiffs' CFAA claims, which plainly arise under federal law, are substantively deficient insofar as Bolling "was an authorized use[r] of the computer system in question."[1] Def.'s Resp. [10] at 2. But jurisdiction under § 1331 is properly invoked when a plaintiff "pleads a colorable claim arising under' the Constitution or laws of the United States." Arbaugh v. Y&H Corp., 546 U.S. 500, 513 (2006); see Cervantez v. Bexar Cnty. Civil Service Comm'n, 99 F.3d 730, 733 (5th Cir. 1996) ("The assertion of a claim under a federal statute alone is sufficient to empower the District Court to assume jurisdiction over the case."). Federal-question jurisdiction can be defeated only if the federal claim is "immaterial and made solely for the purpose of obtaining jurisdiction" or is "wholly insubstantial and frivolous." Arbaugh, 546 U.S. at 513 n.10 (quoting Bell v. Hood, 327 U.S. 678, 682-83 (1946)). Because Plaintiffs pleaded a colorable CFAA claim, federal-question jurisdiction exists, and the Court has supplemental jurisdiction over Plaintiffs' state-law claims. 28 U.S.C. § 1367(a).

B. Motion for Preliminary Injunction

At the outset, the Court will rule on the motion without an oral hearing. The Fifth Circuit requires a district court to hold "a meaningful hearing" if "factual disputes are presented." Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 628 (5th Cir. 1996) (internal quotation marks omitted). "If no factual dispute is involved, however, no oral hearing is required; under such circumstances the parties need only be given ample opportunity to present their respective views of the legal issues involved.'" Id. (quoting Commerce Park at DFW Freeport v. Mardian Constr. Co., 729 F.2d 332, 342 (5th Cir. 1984)).

In this case, the parties received such an opportunity. Plaintiffs presented record evidence-including affidavit testimony-supporting their claims. Bolling failed to present any record evidence in response. Because there exist no factual disputes, no hearing is necessary.

"A preliminary injunction is an extraordinary remedy never awarded as of right." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). To obtain this relief, ...

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