United States District Court, N.D. California
NovelPoster, a California General Partnership, Plaintiff:
David Nied, LEAD ATTORNEY, Keenan W. Ng, Katy Marie Young,
Michael Stephen Dorsi, Ad Astra Law Group, LLP, San
Daniel Canfield, an individual, Mark Javitch, an individual,
Defendants, Counters-Claimants: Carlton John Willey, LEAD
ATTORNEY, Willey & Bentaleb LLP, San Francisco, CA.
Mark Javitch, an individual, Daniel Canfield, an individual,
3rd party Plaintiffs: Carlton John Willey, LEAD ATTORNEY,
Willey & Bentaleb LLP, San Francisco, CA; Katy Marie Young,
LEAD ATTORNEY, Ad Astra Law Group, LLP, San Francisco, CA.
NovelPoster, a California General Partnership,
Counter-Defendant: Keenan W. Ng, LEAD ATTORNEY, Katy Marie
Young, Michael Stephen Dorsi, Ad Astra Law Group, LLP, San
Alex Yancher, Counter-Defendant: Katy Marie Young, LEAD
ATTORNEY, Michael Stephen Dorsi, Ad Astra Law Group, LLP, San
DENYING DEFENDANTS' SECOND MOTION FOR JUDGMENT ON THE
PLEADINGS Re: Dkt. No. 111
H. ORRICK, United States District Judge.
order concerns the second motion for judgment on the
pleadings filed by defendants in this case. I granted the
first motion with respect to plaintiff NovelPoster's
claims under the Computer Fraud and Abuse Act ("
CFAA" ) and California's Comprehensive Computer Data
Access and Fraud Act (" CDAFA" ) on the ground that
NovelPoster had failed to adequately plead damage or loss
within the meaning of either statute. NovelPoster has since
filed an amended complaint (" First Amended
Complaint" ) with additional details concerning the
damage and loss NovelPoster allegedly sustained as a result
of defendant's conduct. Defendants contend that the First
Amended Complaint still fails to adequately plead damage or
loss under the CFAA and CDAFA, and that it fails to properly
allege that defendants accessed or used a computer "
without permission," as required to state a claim under
the CDAFA. For the reasons discussed below, the motion is
following facts are alleged in the First Amended Complaint
and are presumed true for the purposes of this motion. Except
where otherwise indicated, most of the facts are also alleged
in NovelPoster's initial complaint and are set out in the
Court's August 4, 2014 order granting defendants'
first motion for judgment on the pleadings. See Dkt.
Nos. 1, 93. I repeat them here for ease of reference.
Failed business arrangement between the
is an online retailer that designs, sells, and distributes
" text-based poster products." FAC ¶ 3.
NovelPoster has no physical presence and is accessible only
through its website, www.NovelPoster.com, and other online
shopping portals. FAC ¶ 11. The business was founded by
Matt Grinberg and Alex Yancher in 2011. FAC ¶ 10.
operations are conducted exclusively online through a number
of software programs and websites, including Google and
Google Adwords, Goodsie, Etsy, Storenvy, Facebook and
Facebook Ads, Twitter, MailChimp, Stripe, and PayPal. FAC
¶ 12. NovelPoster uses several email accounts hosted by
Google. FAC ¶ 12. These include Contact@NovelPoster.com,
Matt@NovelPoster.com, and Alex@NovelPoster.com. FAC ¶
12. Contact@NovelPoster.com is the administrative account for
all of NovelPoster's Google email accounts, and access to
Contact@NovelPoster.com allows the user to access and control
both Matt@NovelPoster.com and Alex@NovelPoster.com, which are
the individual email accounts for Grinberg and Yancher,
respectively. FAC ¶ 12. Grinberg and Yancher used
Contact@NovelPoster.com and their individual email accounts
to communicate with customers and to store contact
information for designers, marketers, and other entities
" essential to the growth and operation of
NovelPoster." FAC ¶ 14.
first came into contact with defendants through Yancher, who
met defendant Daniel Canfield at a social event in San
Francisco, California in March 2013. FAC ¶ 16. Yancher
and Canfield agreed to pursue a potential business
arrangement by which Canfield's company, defendant
Javitch Canfield Group, would assume responsibility for
running NovelPoster " until it could be sold." FAC
¶ 16. Grinberg and Yancher met with Canfield and his
business partner, defendant Mark Javitch, several times
between March 2013 and May 2013 to discuss and negotiate the
details of the arrangement. FAC ¶ 17.
around May 3, 2013, optimistic that an agreement with
defendants would soon be reached, NovelPoster provided
defendants with the passwords to a number of its online
accounts, including Contact@NovelPoster.com and
NovelPoster's accounts with Google Adwords, Goodsie,
Facebook, Twitter, MailChimp, Stripe, and PayPal. FAC ¶
18. Grinberg and Yancher did not authorize defendants to
change the passwords to any of the accounts. FAC ¶ 18.
Nevertheless, on or around May 8, 2013, defendants changed
the passwords to each of the accounts without providing the
new passwords to NovelPoster. FAC ¶ 19. Grinberg emailed
defendants to inform them that while changing the passwords
was " totally fine for now," Grinberg and Yancher
" would need access to NovelPoster's accounts going
forward." FAC ¶ 21. In the same email, Grinberg
proposed final contract terms between the parties, including
the following points:
(i) Javitch Canfield Group would " take over all aspects
of operations except for poster design," while
NovelPoster would " continu[e] to be responsible for
additional poster design at a rate of one poster per
(ii) NovelPoster would maintain " ownership of all
NovelPoster related accounts."
(iii) Javitch Canfield Group would receive 80 percent of all
NovelPoster sales, as well as a ten percent equity share to
vest in two years.
(iv) Javitch Canfield Group would not compete with
NovelPoster " by creating their own text-based poster
accepted the terms via email on May 9, 2013. FAC ¶ 24.
around May 13, 2013, in line with the contract provision that
NovelPoster would maintain " ownership of all
NovelPoster related accounts," Canfield provided
NovelPoster with the new passwords the defendants had
created. FAC ¶ 27. On or around June 6, 2013, however,
defendants reversed course and again changed the passwords
for Contact@NovelPoster.com, Google Adwords, Goodsie,
Facebook, Twitter, MailChimp, Stripe, and PayPal, again
without providing the new passwords to NovelPoster. FAC
¶ 29. On the same date, defendants also accessed and
changed the passwords to Grinberg and Yancher's
individual email accounts, Matt@NovelPoster.com and
Alex@NovelPoster.com. FAC ¶ 30. Neither Grinberg nor
Yancher had authorized defendants to access the individual
email accounts or to change the accounts' passwords. FAC
¶ 30. The First Amended Complaint alleges that by
changing the various online account passwords, defendants
exceeded their authority " to operate, but not own,
NovelPoster" and " prevented [NovelPoster] from
restoring and reasserting the technical access barriers that
defendants had just overcome." FAC ¶ 29-30, 92.
10, 2013, Yancher emailed Canfield and Javitch, alerting them
that he knew they had accessed the individual email accounts
and read emails therein without permission. FAC ¶ 31.
Javitch replied and suggested a meeting to discuss the
situation. FAC ¶ 32. Yancher agreed to meet but
reiterated that defendants were not authorized to access the
individual email accounts or to change the accounts'
passwords. FAC ¶ 32.
parties met on June 13, 2013. FAC ¶ 33. Grinberg and
Yancher told defendants that " their business
relationship was not working" and that they wished to
terminate the agreement. FAC ¶ 33. Defendants refused,
insisting they would relinquish control of NovelPoster only
for a $10,000 fee. FAC ¶ 33. The next day, Grinberg sent
Canfield an email terminating the agreement and demanding
that defendants return all of NovelPoster's business
operations, including the passwords to NovelPoster's
online accounts. FAC ¶ 34. In a reply email sent the
same day, Javitch " refused to acknowledge the
termination of the agreement, reasoning . . . there was no
clause in the contract that addressed termination and
therefore the termination was not valid." FAC ¶ 36.
June 2013 and January 2014, defendants maintained control of
all aspects of NovelPoster's business and routinely
accessed, without authorization from Grinberg or Yancher,
NovelPoster's online accounts. FAC ¶ 41. Throughout
that period, defendants " cross-marketed NovelPoster
with other brands [they] promote" and misrepresented to
vendors and other business contacts that defendants were
authorized to enter binding agreements on NovelPoster's
behalf. FAC ¶ ¶ 39-40. In early December 2013,
NovelPoster discovered that defendants had shut down
Novelposter's website. FAC ¶ 43. This was "
right at the apex of the holiday season and the most
profitable part of the year for NovelPoster." FAC ¶
43. NovelPoster asserts that in 2012, it earned thirty
percent of its revenues in December; ...