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Second Circuit Certifies Question to N.Y. Court of Appeals: Can electronic data, computer programs, or electronic data saved in computer programs support a claim for conversion?

Posted in CASE SUMMARIES

Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400 (2d Cir. 2006)

The plaintiff in this case is an insurance agent formerly associated with the defendant insurance company. Plaintiff and defendant had executed an Agent’s Agreement, and defendant had required that plaintiff lease an agency office-automation system (“AOA”), including hardware and software, from defendant. During the 21 years he was an agent of defendant, plaintiff’s office operations were very much dependent on the AOA. Plaintiff and his staff entered business data and information onto the hard drives of the AOA system on a daily basis, and defendant then uploaded that information on a nightly basis from plaintiff’s computers onto defendant’s computers. In the process, defendant also uploaded plaintiff’s personal information.

Defendant cancelled the Agent’s Agreement, and subsequently denied plaintiff access to the AOA and reclaimed the AOA. In the process, defendant took various software programs (including Microsoft Word, PowerPoint, Excel, etc.) and various files, including personal email, documents, and other data that plaintiff stored on the system. Defendant also seized data that plaintiff had compiled on customers that plaintiff needed to retain his customers’ business once his relationship with defendant ended.

Thereafter, plaintiff sued for conversion, alleging that neither the AOA lease agreement nor the Agent’s Agreement granted defendant the right to take plaintiff’s personal or business information from the computers. Defendant’s seizure of plaintiff’s electronic information – both business records and personal information – formed the basis of plaintiff’s conversion claim.

The Second Circuit concluded that the trial court erred when it dismissed the conversion claim under FRCP 12(b)(6), but noted that New York law was unsettled with respect to whether a conversion claim may apply to electronic data. Since the issue was dispositive in resolving the case, the court certified to the New York Court of Appeals the question of whether electronic data, computer programs, or electronic data saved in computer programs can support a claim for conversion under New York law.