In Pulte Homes, Inc. v. Laborers’ International Union of North America, Nos. 09-2245; 10-1673 (6th Cir. August 2, 2011).pdf, the Sixth Circuit reversed in part the district court’s dismissal of Pulte’s Federal Computer Fraud and Abuse Act (“CFAA”) claims and, in the process, further elucidated the “independent-federal-exception” to Garmon preemption over conduct “arguably subject” to section 7 or 8 of the National Labor Relations Act (“NLRA”). The Court also clarified the standards for pleading intent and damages on a transmission claim under the CFAA
Pulte terminated Roberto Baltierra from its construction crew for misconduct and poor performance. The Laborers’ International Union of North America (“LIUNA”), of which Baltierra was a member, claimed Pulte terminated Baltierra in retaliation for wearing a LIUNA shirt to work. As the Court explained, LIUNA “bombarded” Pulte’s offices and three of its executives with phone calls, both from hired automatic dialers and its members, and emails intended to overload Pulte’s systems in an effort to damage Pulte’s goodwill and relationships with its employees, customers, and vendors. Many of the thousands of emails included threats and obscene language. Four days into the phone and email “barrage,” Pulte’s general counsel contacted LIUNA requesting that LIUNA cease its attack. LIUNA, however, did not relent. Pulte then filed suit claiming, inter alia, violations of the CFAA. Pulte also sought a preliminary injunction to stop LIUNA’s communications. The district court, in separate rulings, denied the preliminary injunction request and dismissed the CFAA claims. Pulte appealed both rulings, and the appeals were consolidated before the Sixth Circuit.
This case is notable for three reasons:
1) The Sixth Circuit solidified the “independent-federal-remedy” exception to Garmon preemption, which permits a federal court to “decide labor law questions that emerge as collateral issues in suits brought under independent federal remedies.” The Court held that Pulte could prove LIUNA violated the CFAA without proving—or even implicating—the NLRA.
2) The Sixth Circuit, following the Third and Seventh Circuits as well as several district courts, endorsed the concept of “diminished ability” for damages under the CFAA. The court held that “a transmission that weakens a sound computer system—or, similarly, one that diminishes a plaintiff’s ability to use data or a system—causes damage.”
3) Even though the Sixth Circuit reinstated Pulte’s CFAA claims, the Court affirmed the district court’s denial of Pulte’s request for a preliminary injunction—but for a different reason. The Court held that dismissal was proper because Pulte failed to comply with section 8 of the Norris-LaGuardia Act (“NLGA”). Any party seeking a preliminary injunction in a case arising out of a labor dispute must strictly conform to the NLGA, and section 8 thereof requires a plaintiff to make “every reasonable effort to settle the dispute by negotiation.” The Court held Pulte had failed to do so.
The case is also significant for its interpretation and application of the CFAA. For more discussion of that subject, see this post.