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Turner v. Hubbard Systems Inc.

United States Court of Appeals, First Circuit

April 19, 2017

GREGORY P. TURNER, Plaintiff, Appellant,
HUBBARD SYSTEMS, INC., f/k/a Jim Hubbard and Associates, Inc., Defendant, Appellee.


          Gregory P. Turner on brief for appellant.

          Bethany P. Minich, Daniella Massimilla, and Litchfield Cavo LLP on brief for appellee.

          Before Torruella, Thompson, Kayatta, Circuit Judges.

          THOMPSON, Circuit Judge.

         The relevant facts in this case are few. Appellant Gregory Turner is a sole practitioner whose Massachusetts law practice is focused on recovering delinquent accounts. Appellee Hubbard Systems, Inc. ("HSI") is a Delaware software corporation that develops, markets, and sells a debt collection software program titled "Collection Partner." In December 1992, Turner entered into a rent-to-own agreement with HSI in which he was granted a temporary rental license for the use of Collection Partner. After making some initial payments and a deposit, Turner was to make monthly payments until he paid off the remaining balance for the software, at which time he would be given a permanent license. Turner made the final installment payment sometime in 1996, and the parties agree that thereafter Turner owned a permanent license to the software.

         HSI also provides monthly software maintenance services. Turner's rent-to-own agreement made clear that maintenance service fees would be charged every month and that such fees were "separate and apart from the monthly software license fee rental payment[s]" that Turner was required to make in order to gain a permanent license to the software.

         In late April 2011, HSI sent Turner a new license key to reflect an update in the software. That license expired on May 31, 2011. On June 1, 2011 Turner informed HSI that his Collection Partner software was not working.[1] Before noon that same day, HSI sent Turner a new license key that permitted him access to the software. Turner's license and access to the Collection Partner software has remained uninterrupted since the new license key was sent on June 1, 2011.

         The following year, Turner filed suit alleging that HSI violated the Computer Fraud and Abuse Act ("CFAA" or "the Act") when it issued a license key that expired on May 31, 2011, despite the fact that he owned a permanent license to the Collection Partner software. Turner also alleged state law claims of conversion, intentional (or negligent) infliction of emotional distress, and unfair and deceptive practices in violation of Massachusetts General Laws Chapter 93A. The district court accepted and adopted the magistrate judge's report and recommendation, granted HSI's motion for summary judgment, and denied Turner's motion to strike portions of HSI's motion as "beyond the scope of the pleadings." In addition to objecting to the magistrate judge's report, Turner also filed motions to supplement the record, certify legal questions to the Massachusetts Supreme Judicial Court, and appeal one of the magistrate judge's management orders before the district court judge. The district court judge denied all these additional motions in their entirety.

         Turner appeals the district court's order adopting the magistrate judge's report and recommendation, denying Turner's motion to strike, and granting HSI's motion for summary judgment.[2]


         "We review a district court's grant of summary judgment de novo, " viewing the facts in the light most favorable to the nonmovant. Burke v. Town of Walpole, 405 F.3d 66, 75 (1st Cir. 2005) (citing Valente v. Wallace, 332 F.3d 30, 32 (1st Cir. 2003)). "We review the denial of [a motion to strike a motion for summary judgment] for abuse of discretion." FDIC v. Kooyomjian, 220 F.3d 10, 16 (1st Cir. 2000); see also Dodi v. Putnam Cos., No. 95-2266, 1996 WL 489998, at *2 (1st Cir. Aug. 28, 1996) ("We review the district court's decision to strike for abuse of discretion.").

         A brief review of the relevant statutory framework may prove helpful here. Congress enacted the CFAA in 1984 to address the problems of computer crime and hacking. Pub. L. No. 98-473, 98 Stat. 2190; see also WEC Carolina Energy Sols. LLC v. Miller, 687 F.3d 199, 201 (4th Cir. 2012). Originally a criminal statute, in 1986 the Act was expanded to include a civil action component as well. Pub. L. No. 99-474, 100 Stat. 1213 (codified as amended at 18 U.S.C. § 1030); Miller, 687 F.3d at 201. Under the civil action provision, "[a]ny person who suffers damage or loss by reason of a violation of [18 U.S.C. § 1030] may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief." 18 U.S.C. § 1030(g). The term "damage" is defined as "any impairment to the integrity or availability of data, a program, a system, or information" and the term "loss" is defined as "any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service." 18 U.S.C. § 1030(e)(8), (11). The phrase "compensatory damages" is not explicitly defined in the statute.

         We, however, have held that not any damage or loss is compensable. Ef Cultural Travel BV v. Explorica, Inc., 274 F.3d 577, 585 (1st Cir. 2001) ("We do not hold, however, that any loss is compensable. The CFAA provides recovery for 'damage' only if it results in a loss of at least $5, 000. We agree with the court in In re Doubleclick Inc. Privacy Litigation, 154 F.Supp.2d 497 (S.D.N.Y. 2001), that Congress could not have intended other types of loss to support recovery unless that threshold were met. Indeed, the Senate Report explicitly states that 'if the loss to the victim meets the required monetary threshold, ' the victim is entitled to relief under the CFAA. S. Rep. 104-357, at 11. We ...

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