Brown Jordan International, Inc. v. Christopher Carmicle , 846 F.3d 1167 ( 2017 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-11350
________________________
D.C. Docket Nos. 0:14-cv-60629-RLR;
0:14-cv-61415-RLR
BROWN JORDAN INTERNATIONAL, INC.,
BJI HOLDINGS, LLC,
BROWN JORDAN SERVICES, INC.,
BROWN JORDAN COMPANY,
Plaintiffs - Appellees,
versus
CHRISTOPHER CARMICLE,
Defendant - Appellant.
__________________________________________________________________
CHRISTOPHER CARMICLE,
Plaintiff - Appellant,
versus
BJI HOLDINGS, LLC,
BROWN JORDAN INTERNATIONAL, INC.,
BROWN JORDAN SERVICES, INC.,
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GENE J. MORIARTY,
VINCENT A. TORTORICI, JR., et al.,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(January 25, 2017)
Before MARCUS and BLACK, Circuit Judges, and COHEN, * District Judge.
BLACK, Circuit Judge:
This case arises out of Christopher Carmicle’s termination from Brown
Jordan 1 in early 2014. The parties filed cross-complaints, and the two cases were
consolidated. After granting summary judgment in favor of Brown Jordan on
some of Carmicle’s claims, the district court conducted an 11-day bench trial and
entered judgment on behalf of Brown Jordan. Carmicle appeals, raising issues
regarding the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030, the
Stored Communications Act (SCA), 18 U.S.C. § 2701, wrongful discharge, and
breach of an employment agreement.
We affirm the district court. Carmicle’s CFAA arguments fail because
Brown Jordan suffered “loss” as defined in the CFAA. As to his SCA issues,
*
Honorable Mark Howard Cohen, United States District Judge, for the Northern District
of Georgia, sitting by designation.
1
We refer collectively to the Appellees as “Brown Jordan.”
2
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Carmicle waived his unopened-versus-opened-email argument because he did not
fairly present it to the district court, and Brown Jordan showed Carmicle exceeded
his authorization in accessing the emails of other Brown Jordan employees.
Lastly, the district court did not err in granting summary judgment on Carmicle’s
wrongful discharge claim or in concluding that Carmicle was terminated for cause
as defined by the Employment Agreement.
I. BACKGROUND
A. Factual Background
Carmicle began working for Brown Jordan in 2002. Carmicle rose swiftly
through the ranks at Brown Jordan, the parent company of a number of entities
engaged in the manufacture and sale of furniture for residential and commercial
use. By 2005, Carmicle was responsible for the national accounts of Brown
Jordan, which soon after led to his responsibility for a Brown Jordan subsidiary,
Brown Jordan Services. According to Brown Jordan, Carmicle was never formally
appointed as president of Brown Jordan Services, but was permitted to use the title
as a “customer facing accommodation.”
When Gene Moriarty became CEO of Brown Jordan, Moriarty requested
Carmicle enter into an Executive Employment Agreement with Brown Jordan.
The November 1, 2005 agreement solidified the terms of Carmicle’s employment
and is the only written employment agreement between Carmicle and Brown
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Jordan. Carmicle subsequently entered into Profits Interest Agreements with
Brown Jordan, pursuant to which Carmicle acquired a profits interest in BJI
Holdings, LLC, subject to the Agreements’ vesting and forfeiture provisions.
Moriarty testified that he and others began to have doubts about Carmicle
around 2011. Indication that Carmicle had been incurring excessive entertainment
expenses began to appear. It was also discovered that Carmicle’s wife was on
Brown Jordan’s payroll and Carmicle himself approved her salary. After a stern
warning about these actions, Moriarty gave Carmicle a second chance. Moriarty
also gave Carmicle greater responsibility making him responsible for Brown
Jordan Company, another Brown Jordan subsidiary, in addition to Brown Jordan
Services.
In 2013, Moriarty learned that Carmicle had breached his trust again by
incurring more unauthorized expenses. As far as Moriarty was concerned,
Carmicle had blown his second chance. Moriarty was ready to terminate
Carmicle’s employment for cause.
However, Moriarty was persuaded not to pursue termination at that time. In
the spring of 2013, Brown Jordan’s Board of Directors decided to hire an
investment bank and offer Brown Jordan for sale. Brown Jordan would be sold as
a whole to a single buyer, or alternatively, the commercial and consumer
businesses would be divided and offered to separate purchasers. In the event
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Brown Jordan were sold separately, Moriarty would likely remain with the
commercial business and Carmicle would remain with the consumer business, so
Moriarty would no longer have to work with Carmicle and the buyer of the
consumer business would have the benefit of continuity. Moriarty ultimately
agreed that it was best not to terminate Carmicle’s employment while Brown
Jordan was offered for sale.
In the meantime, Moriarty, Brown Jordan’s CFO, and Brown Jordan’s
General Counsel decided to pursue a management buyout (MBO) of the
commercial business. In connection with seeking lending to finance the MBO,
they prepared a financial model that differed from that prepared by Brown Jordan’s
investment bank for potential outside buyers.
In the summer of 2013, Brown Jordan began a transition from one email
service to another. To assist in that transition, Brown Jordan’s Chief Information
Officer provided a generic password—Password1—to Brown Jordan employees
and instructed each to test his or her new email account with that password.
Carmicle testified that he was suspicious that a subordinate employee he
considered difficult to manage was communicating directly with Moriarty, and that
both were lying to Carmicle about a personnel issue. This prompted Carmicle to
use the generic password to access their accounts and read their emails. From
there, Carmicle’s behavior began to snowball. Carmicle repeatedly accessed the
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email accounts of other employees, including his superiors, with the generic
password and used his personal iPad to take screenshots of hundreds of emails over
the next six months. Along the way, Carmicle learned about the MBO and the
second financial model. Carmicle also learned that Brown Jordan’s CFO was
scrutinizing his expenses.
As 2014 began, it became clear that Brown Jordan Services and Brown
Jordan Company had not performed well. Brown Jordan’s Board of Directors was
scheduled to meet in early 2014, and the poor performance of Brown Jordan
Services and Brown Jordan Company were on the agenda. In an attempt to save
his job, Carmicle wrote a letter to Brown Jordan’s Board of Directors in January of
2014, accusing Moriarty and others of various illegal and fraudulent activities,
including their preparation of a second financial model to the detriment of
shareholder value in an attempt to secure the consumer business through an MBO.
Concerned about Carmicle’s accusations, and because Carmicle had
expressed a fear of retaliation, the Board of Directors hired an independent
investigator. During the investigation into Carmicle’s allegations, Carmicle
revealed to the investigator that he had learned much of the information contained
in his letter by accessing others’ email accounts. The investigator ultimately
concluded Carmicle’s allegations were entirely without merit, and reported that
fact to the Board of Directors. The investigator also reported Carmicle’s email
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access and the fact Carmicle had used in excess of $100,000.00 in Brown Jordan
funds for unauthorized entertainment expenses. When the Board of Directors met
in February 2014, they decided that Carmicle’s employment should be terminated
for cause.
On February 17, 2014, Moriarty met with Carmicle and informed him of the
decision to terminate his employment for cause. Carmicle demanded that he be
permitted to take his personal laptop with him when he left, but was told it would
not be returned to him until Carmicle proved he had used his own funds to
purchase the laptop. As soon as he returned home, Carmicle used the “Find My
iPhone” application to remotely lock a different laptop owned by Brown Jordan,
rendering it inaccessible. Carmicle claimed he intended to lock his personal
laptop, and inadvertently locked the Brown Jordan-owned laptop. Carmicle also
claims to have subsequently lost the personal iPad with which he had taken
screenshots of emails, and was therefore unable to produce it during the course of
discovery.
B. Procedural Background
On March 11, 2014, Brown Jordan filed its initial Complaint against
Christopher Carmicle in the Southern District of Florida, asserting, among other
things (1) violation of the CFAA; (2) violation of the SCA; and (3) a declaration
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that Carmicle’s termination amounted to “cause” under their written employment
agreement.
Ten days later, Carmicle filed his initial complaint against Brown Jordan in
Kentucky state court. He asserted numerous claims, but only two claims are at
issue on appeal (1) wrongful termination, and (2) breach of contract. Carmicle’s
complaint was removed to federal court and transferred to the Southern District of
Florida. The two cases were then consolidated.
The district court denied both Carmicle’s motion to dismiss and for partial
summary judgment as to Brown Jordan’s CFAA and SCA claims, and granted
Brown Jordan’s motion for summary judgment on several claims, including
Carmicle’s wrongful termination claim.
The court then conducted an 11-day bench trial. In a lengthy memorandum
opinion, the district court concluded Carmicle’s employment was terminated for
cause (and that therefore Carmicle was not entitled to any profits interest or
severance pay) due to his improper access of other employees’ email accounts.
The district court also concluded the access of the email accounts violated the
CFAA and SCA.
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II. DISCUSSION
A. Computer Fraud and Abuse Act
Carmicle appeals the district court’s conclusion that he violated the CFAA.
Carmicle contends the evidence established Brown Jordan suffered no loss as it is
defined in the CFAA because he caused no damage to Brown Jordan’s computer
system and there was no “interruption of service.” The loss Brown Jordan claims
it incurred stems from a payment to an outside consultant, Crowe Horwath, to
assess how Carmicle accessed the emails, and a payment to a contractor, Kroll, to
sweep the office building for audio and video surveillance devices. Based on these
payments, the district court found Brown Jordan sustained a “loss” within the
meaning of the CFAA and awarded Brown Jordan damages.
Carmicle asserts there are two reasons that the alleged damages do not meet
the CFAA’s definition of “loss”: (1) Brown Jordan’s “loss” did not stem from an
“interruption of service;” and (2) Brown Jordan admits there was no damage to its
computers and it paid no money to remedy such damage—specifically the fee
Brown Jordan paid Crowe Horwath was unnecessary, and the fee Brown Jordan
paid Kroll to sweep its building for surveillance does not relate to Brown Jordan’s
computers at all and is not a compensable loss under the CFAA.
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1. Interruption of Service
Whether Carmicle violated the CFAA is a mixed question of law and fact,
which we review de novo. Reynolds v. McInnes, 338 F.3d 1201, 1211 (11th Cir.
2013). To the extent this issue involves the interpretation of the CFAA, it is a
question of law we review de novo. Vista Mktg., LLC v. Burkett, 812 F.3d 954,
962 (11th Cir. 2016).
“Whoever . . . intentionally accesses a computer without authorization or
exceeds authorized access, and thereby obtains . . . information from any protected
computer” violates the CFAA. 18 U.S.C. § 1030(a)(2)(C). “A civil action for a
violation of this section may be brought only if the conduct involves 1 of the
factors set forth in subclauses (I), (II), (III), (IV), or (V) of subsection (c)(4)(A)(i).”
18 U.S.C. § 1030(g) (emphasis added). Subclause (I), applicable to the instant
case, permits an action only if the plaintiff incurs a minimum “loss” of $5,000 as a
result of the defendant’s violation of the CFAA. 18 U.S.C. § 1030(c)(4)(A)(i)(I).
The CFAA provides that:
the term “loss” means 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 offenses, and any revenue lost, cost incurred, or
other consequential damages incurred because of interruption of
service.
18 U.S.C. § 1030(e)(11).
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The interpretation of “loss” as defined by 18 U.S.C. § 1030(e)(11) is an
issue of first impression in our Circuit. “As with any question of statutory
interpretation, we begin by examining the text of the statute to determine whether
its meaning is clear.” Harry v. Marchant, 291 F.3d 767, 770 (11th Cir. 2002) (en
banc). When we construe a statute, “we must begin, and often should end as well,
with the language of the statute itself.” Id. (quotations omitted).
Two circuits have interpreted the definition of “loss” as set forth in 18
U.S.C. § 1030(e)(11) to include the cost of responding to the offense, irrespective
of whether there was an interruption of service. See Yoder & Frey Auctioneers,
Inc. v. EquipmentFacts, LLC, 774 F.3d 1065, 1073-74 (6th Cir. 2014); A.V. ex rel.
Vanderhye v. iParadigms, LLC, 562 F.3d 630, 646 (4th Cir. 2009). The Yoder
court explained its reasoning:
“Loss” is defined in the disjunctive—it includes “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.” 18
U.S.C. § 1030(e)(11). It also encompasses “any revenue lost, cost
incurred, or other consequential damages incurred because of
interruption of service.” Id. If a plaintiff is able to establish a loss of
at least $5,000 in value, whether that be composed solely of costs
identified in the first clause, or solely costs identified in the second
clause, or a combination of both, then he may recover under the
statute.
Yoder, 774 F.3d at 1073.
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Although no Court of Appeals has interpreted the statute to require an
interruption of service in all cases, a more narrow view followed by some district
courts requires that any loss under the CFAA be the result of an “interruption of
service.” See, e.g., Cont’l Grp., Inc. v. KW Prop. Mgmt., LLC, 622 F. Supp. 2d
1357, 1371 (S.D. Fla. 2009). The court in Continental Group reasoned as follows:
This Court . . . concludes that all loss must be as a result of
“interruption of service.” Otherwise, it would appear that the second
half of the “loss” definition is surplusage. If loss could be any
reasonable cost without any interruption of service, then why would
there even be a second half to the definition that limits some costs to
an interruption of service. Rather, the better reading (though
reasonable minds surely can differ until the Court of Appeals decides
the issue) appears to be that all “loss” must be the result of an
interruption of service. This conclusion is supported by the legislative
intent in the CFAA, a criminal statute, to address interruption of
service and damage to protected computers.
Id.
We agree with the Fourth and Sixth Circuits. The plain language of the
statutory definition includes two separate types of loss: (1) reasonable costs
incurred in connection with such activities as responding to a violation, assessing
the damage done, and restoring the affected data, program system, or information
to its condition prior to the violation; and (2) any revenue lost, cost incurred, or
other consequential damages incurred because of interruption of service. See 18
U.S.C. § 1030(e)(11). The statute is written in the disjunctive, making the first
type of loss independent of an interruption of service. Yoder, 774 F.3d at 1073.
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Contrary to the assertion of the court in Continental Group, this interpretation does
not reduce “interruption of service” to surplusage. See Cont’l Grp., 622 F. Supp.
2d at 1371. “Loss” includes the direct costs of responding to the violation in the
first portion of the definition, and consequential damages resulting from
interruption of service in the second. Thus, under a plain reading of the statute,
Brown Jordan’s loss from Carmicle’s violation of the CFAA does not need to be
related to an interruption of service in order to be compensable.
2. Damages
As to Carmicle’s argument that Brown Jordan’s expenses were unnecessary
and were therefore not compensable, the district court made a finding of fact that
“[a]lthough Carmicle told [Brown Jordan] that he had accessed others’ emails
using that generic password before [Brown Jordan] retained Crowe Horwath,
[Brown Jordan] was unwilling to accept Carmicle’s word under the
circumstances.” During its investigation, Crowe Horwath was unable to access the
Brown Jordan-owned laptop because the password and PIN necessary to unlock
the laptop were not provided. While Brown Jordan was aware of one way that
Carmicle claimed he had accessed their systems, they had reason to doubt his
credibility. It was therefore reasonable for Brown Jordan to hire both Crowe
Horwath and Kroll to engage in an extensive forensic and physical review of
Brown Jordan’s systems to determine the extent of Carmicle’s hacking activity.
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These losses were incurred in the course of responding to the offense 2 and are
therefore compensable under the CFAA. See 18 U.S.C. § 1030(e)(11).
B. Stored Communications Act
The district court determined that Carmicle violated the SCA when he
accessed other employees’ emails without authorization. Carmicle contends he did
not violate the SCA because the emails Carmicle accessed were not held in
“electronic storage” as that term is defined by the SCA and because his email
access was authorized.
Anyone who “intentionally accesses without authorization a facility through
which an electronic communication service is provided; or . . . intentionally
exceeds an authorization to access that facility; and thereby obtains . . . access to a
wire or electronic communication while it is in electronic storage in such system”
is liable pursuant to the SCA. 18 U.S.C. § 2701(a); see also Vista Mktg., 812 F.3d
at 962. As with the CFAA issue above, whether Carmicle violated the SCA is a
mixed question of law and fact, which we review de novo. Reynolds, 338 F.3d at
1211. To the extent this issue involves the interpretation of the SCA, it is a
question of law we review de novo. Vista Mktg., 812 F.3d at 962.
2
Carmicle also contends there can be no loss under the CFAA unless it relates to fixing
damage to a computer or network. However, the definition of loss includes “any reasonable cost
to any victim, including the cost of responding to an offense . . . .” 18 U.S.C. § 1030(e)(11)
(emphasis added). The reasonable cost of responding to the offense—in this case, the
unauthorized email access—is not limited to damage to a computer or network.
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1. Whether the emails Carmicle accessed were in “electronic storage”
On appeal, Carmicle contends the emails he accessed were not in “electronic
storage” as that term is defined by the SCA because the emails had already been
opened by their intended recipients at the time he accessed them. Carmicle
concedes there is a split of authority over this issue, but asserts that the more
reasonable reading of the SCA exempts previously opened emails from the
purview of the statute.
The unopened-versus-opened-email issue was raised to our court in Vista
Marketing. We did not decide the issue in that case because the defendant
conceded that at least some of the emails were unopened by their intended
recipient at the time the defendant read them. Id. at 963. We noted that “much
debate” surrounded the issue. Id. (citing Theofel v. Farey-Jones, 341 F.3d 978 (9th
Cir. 2003), as amended by 359 F.3d 1066 (9th Cir. 2004); In re DoubleClick Inc.
Privacy Litig., 154 F. Supp. 2d 497, 511-12 (S.D.N.Y. 2001); Cheng v. Romo, No.
11-10007-DJC, 2013 WL 6814691, *3-4 (D. Mass. Dec. 20, 2013); Pure Power
Boot Camp v. Warrior Fitness Boot Camp, 587 F. Supp. 2d 548, 555-56 (S.D.N.Y.
2008); Comput. Crime & Intellectual Prop. Section, Exec. Office for U.S.
Attorneys, Searching and Seizing Computers and Obtaining Electronic Evidence in
Criminal Investigations, at 124 (3d ed. 2009); Orin Kerr, A User’s Guide to the
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Stored Communications Act and a Legislator’s Guide to Amending It, 72 Geo.
Wash. L. Rev. 1208 (2004)).
Once again, as in Vista Marketing, we will not “wade into the discussion” of
this complicated issue, but for a different reason. See Vista Mktg., 812 F.3d at 963.
Here, Carmicle did not fairly present the unopened-versus-opened-email issue to
the district court. We are unable to reach the merits of this issue of first impression
in our Circuit because “[w]e cannot allow [Carmicle] to argue a different case from
the case [he] presented to the district court.” See Irving v. Mazda Motor Corp.,
136 F.3d 764, 769 (11th Cir. 1998). “As an appellate court with no fact finding
mechanism, and, indeed without any factual averments made in the trial court, we
are naturally hesitant to consider this claim.” Access Now, Inc. v. Southwest
Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004).
The facts supporting Carmicle’s assertion that he never accessed unopened
emails were never explained in any document or argument before the district court,
and no discovery was ever conducted about them. See id. at 1332. When Brown
Jordan stated its position on the issue, Carmicle disavowed he was arguing for a
distinction between unopened and opened email, and put forth no facts that would
support his claim. Thus, “it would be improvident for us to try to grapple with the
important question whether” email that has already been opened by its intended
recipient fits into the definition of “electronic storage” in the SCA. Id. We detail
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Carmicle’s argument in the district court as to this issue to illustrate how the issue
was not fairly presented.
The unopened-versus-opened-email argument was most clearly presented in
Carmicle’s motion to dismiss. He contended, in one sentence, that the SCA was
inapplicable to the facts of his case because “an opened but undeleted email sitting
on a server is not a ‘stored communication’ within the meaning of the SCA,” and
cited two district court cases for the proposition.
By the time Carmicle filed his partial motion for summary judgment, the
focus of his argument had changed. Any reference to unopened or opened email
vanished. Instead, his argument was that any message sitting in a recipient’s
inbox, whether unopened or opened by the intended recipient, is not a “stored
communication.” Carmicle contended the only time a message is a stored
communication is during the brief interval when an email service stores a message
until the addressee downloads it. Carmicle asserted the only way the SCA could
be implicated is if a defendant “literally ‘intercept[s]’ the transmission during its
transmission.” Carmicle also asserted that the emails were not held in storage by
an internet service provider (ISP) for backup protection, but never mentioned the
unopened-versus-opened-email distinction.
Brown Jordan’s opposition to Carmicle’s motion for partial summary
judgment contended that “[c]ourts have not distinguished between unopened and
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opened email communications for the purposes of the SCA,” and included cases
supporting its interpretation of the unopened-versus-opened-email issue. See
Theofel, 359 F.3d at 1075, 1077; Pure Power Boot Camp, 587 F. Supp. 2d at 556;
Cardinal Health 414, Inc. v. Adams, 582 F. Supp. 2d 967, 977 (M.D. Tenn. 2008).
Carmicle’s reply in support of his motion for summary judgment made clear that
he was not arguing the unopened-versus-opened-email issue, stating:
Nor were the emails which Carmicle accessed “stored
communications” as is required by the SCA. BJI’s argument that
there is no differentiation between opened or unopened email misses
the point. Stored communications are those which are held by the ISP
immediately prior to delivery or stored by the ISP for back up. They
are not emails which have been delivered locally and are resting in
the inbox to which they were delivered.
(Emphasis added). Thus, Carmicle disavowed that he was arguing for a distinction
between unopened and opened email; rather, he was arguing that any email located
in an intended recipient’s inbox, whether unopened or opened, was not covered by
the SCA.
This was the last reference to the issue of unopened versus opened email by
the parties. During the 11-day trial in this case, neither Carmicle nor Brown
Jordan elicited any trial testimony on the subject, and Carmicle made no reference
to the issue in his pre-trial or post-trial proposed Conclusions of Law and Findings
of Fact. In contrast, on appeal, Carmicle fully briefs the issue.
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Carmicle had an opportunity to fairly present this argument before the
district court, but did not do so. Accordingly, this circumstance is not one in which
we elect to evaluate an issue not fairly presented to the district court.3 See Access
Now, 385 F.3d at 1332.
2. Whether Carmicle’s email access was authorized
Carmicle also contends he did not violate the SCA because his email access
was authorized. His argument is that Brown Jordan’s company policy states that:
[E]mployees at [Brown Jordan] should have no expectation of privacy
while using company-owned or company-leased equipment.
Information passing through or stored on [Brown Jordan] equipment
can and will be monitored. Employees should also understand that
[Brown Jordan] has the right to monitor and review Internet use and
e-mail communications sent or received by employees. Access to
another employee’s e-mail and internet usage is controlled by senior
management. No IT staff person is authorized to give out passwords
to users other than the account holder without the permission of senior
management. Managers and employees who need access for
legitimate [Brown Jordan] purposes to another employee’s e-mail
must request such access from a member of corporate senior
management.
(Emphasis in original). Carmicle contends that because he was a member of
“senior management” he was not required to request access from a member of
corporate senior management.
3
While we may choose to hear an argument fairly presented for the first time on appeal
in special circumstances, the issue here does not meet any of the five circumstances in which we
will consider such an issue. See Access Now, 385 F.3d at 1332.
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The district court concluded that even though the Computer and Internet
Policy uses the terms “employees,” “managers,” “senior management,” and
“corporate senior management” without definition, it found no ambiguity as to
whether Carmicle’s use of the generic password was authorized. The district court
determined it would be “unreasonable to interpret the Computer and Internet
Policy as authorizing [Carmicle] to exploit a generic password—which by
happenstance permitted Carmicle to access others’ email accounts without
requesting such access through appropriate and otherwise necessary channels—
solely on suspicion of dishonesty concerning the content of communications
between others, without any reason to suspect wrongful or illegal conduct prior to
doing so.” We agree. The district court did not err in determining Carmicle’s
email access was unauthorized.
In sum, Carmicle’s arguments regarding the SCA are either waived or fail on
their merits.4 We affirm the district court’s conclusion that Carmicle’s actions
violated the SCA.
4
We also reject Carmicle’s argument that he did not access a “facility” within the
meaning of the SCA. The language of the SCA requires intentionally accessing without (or
exceeding) authorization “a facility through which an electronic communication service is
provided.” 18 U.S.C. § 2701(a) (emphasis added). The SCA does not define “facility,” see
Garcia v. City of Laredo, 702 F.3d 788, 792 (5th Cir. 2012); however, the Oxford English
Dictionary definition of “facility” includes “the physical means or equipment for doing
something,” Oxford English Dictionary Online, http://www.oed.com/viewdictionary
entry/Entry/67465. “Electronic communication service” is defined as “any service which
provides users thereof the ability to send or receive wire or electronic communications.” 18
U.S.C. § 2510(15).
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C. Wrongful Discharge
Carmicle argues the district court erred in granting summary judgment in
favor of Brown Jordan on Carmicle’s wrongful discharge claim. He asserts that
under Kentucky law, 5 his discharge for reporting fraud and breach of fiduciary
duty on the part of senior management is actionable.
Under Kentucky law, there are only two situations where an employer’s
reason for discharging an employee is so contrary to public policy as to be
actionable: (1) “where the alleged reason for the discharge of the employee was
the failure or refusal to violate a law in the course of employment,” or (2) “when
the reason for the discharge was the employee’s exercise of a right conferred by a
well-established legislative enactment.” Grzyb v. Evans, 700 S.W.2d 399, 402 (Ky.
1985) (quotation omitted). Carmicle asserted a wrongful discharge claim under the
second situation recognized by Grzyb, alleging he was terminated after he provided
information on improper activities, and the district court addressed that issue.
Brown Jordan presented evidence that Carmicle used a generic password to access the
Microsoft Office 365 program, a cloud-based service. Microsoft Office 365 provides the ability
to send and receive emails. Thus, Microsoft Office 365 is a facility through which an electronic
communication service is provided.
5
Both parties agree that Kentucky law applies to this issue because the termination
occurred in Kentucky.
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Carmicle also attempted to assert a claim under the first situation, but the district
court denied amendment because the amended pleadings deadline had passed.6
The district court did not err7 in granting Brown Jordan’s motion for
summary judgment on this issue. Carmicle argued he was terminated after
providing information that corporate officers violated or were violating their
fiduciary duties to Brown Jordan. Carmicle premised his claim on the following
statute:
An officer with discretionary authority shall discharge his duties
under that authority:
(a) In good faith;
(b) On an informed basis; and
(c) In a manner he honestly believes to be in the best interests of the
corporation.
Ky. Rev. Stat. § 271B.8-420(1).
Carmicle contends this statute shows he had fiduciary duties to Brown
Jordan, and acting or failing to act otherwise than in good faith in the discharge of
his duties could have subjected him to liability. Accordingly, he argues, there is a
“clear, strong legislative expressing of public policy against” breaches of fiduciary
6
Carmicle tries to weave the public policy and violation of law arguments together in his
initial brief, but does not appeal the district court’s refusal to allow him to amend his complaint
to add allegations under the second prong.
7
We review the district court’s grant of summary judgment de novo. Fish v. Brown, 838
F.3d 1153, 1156 (11th Cir. 2016).
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duty in Kentucky. See Hill v. Kentucky Lottery Corp., 327 S.W.3d 412, 422 (Ky.
2010).
But even assuming that this statute could support a wrongful discharge
claim, the district court correctly concluded that the statute Carmicle cited did not
apply because he was not a director or corporate officer. Brown Jordan provided
evidence that Carmicle was not a corporate officer, and that his title of president
was an honorary one only. Carmicle’s status was that of a managerial employee
and Carmicle only had a “belief” that he was a corporate officer. The district court
did not err in granting Brown Jordan summary judgment on this issue.
D. Termination for Cause
Carmicle contends that in determining Carmicle was terminated for cause as
defined by the Employment Agreement, the district court ignored the requirement
that Carmicle be given notice of his alleged negligence or misconduct in writing,
and be given an opportunity to cure any such misconduct. He also argues that the
court erred in determining that each time Carmicle accessed the email of another
employee, he committed a separate occurrence of gross negligence or willful
misconduct.
At stake in this issue is Carmicle’s entitlement to profits interest and
severance pay. The Executive Employment Agreement he entered into with
Brown Jordan defines “cause,” among other things, as:
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Case: 16-11350 Date Filed: 01/25/2017 Page: 24 of 25
[T]he Executive’s gross negligence or willful misconduct in the
performance of his duties as an employee of [Brown Jordan] that is
not cured within seven (7) days following written notice by [Brown
Jordan] to the Executive of such gross negligence or willful
misconduct, or three (3) occurrences of the Executive’s gross
negligence or willful misconduct in any twelve-month period . . . .
The district court first concluded that the contract was governed by Florida
law, as stated in the contract. “In interpreting a contract under Florida law, we
give effect to the plain language of contracts when that language is clear and
unambiguous.” Equity Lifestyle Props., Inc. v. Fla. Mowing & Landscape Serv.,
Inc.¸ 556 F.3d 1232, 1242 (11th Cir. 2009) (quotations omitted). The district court
concluded this language unambiguously establishes two separate grounds for
termination with cause: (1) a single occurrence of gross negligence or willful
misconduct that is not cured within seven days following written notice thereof, or
(2) three occurrences of gross negligence or willful misconduct in any twelve-
month period, written notice of which is not required.
The district court did not err. The district court’s interpretation of the
employment agreement is reasonable. As the district court stated, “[i]t would be
unreasonable to interpret this language as requiring written notice and an
opportunity to cure both after a single instance of gross negligence or willful
misconduct and after three occurrences of gross negligence or willful misconduct
in any twelve-month period, inasmuch as such an interpretation would render the
definition either redundant or absurdly under-inclusive.” Further, the district court
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was correct to consider each of Carmicle’s separate access of emails as a separate
event. Carmicle was terminated for cause as defined in the Employment
Agreement and by incorporation in the Profits Interest Agreements.
III. CONCLUSION
We affirm the district court. Carmicle’s CFAA arguments fail because
Brown Jordan suffered loss as defined in the CFAA. As a matter of first
impression, we hold a “loss” does not have to stem from an “interruption of
service” to be compensable. Carmicle’s SCA arguments also fail. He waived his
unopened-versus-opened-email argument because he did not fairly present it to the
district court. Additionally, Brown Jordan showed Carmicle exceeded his
authorization in accessing the emails of other Brown Jordan employees. Lastly,
the district court did not err in granting summary judgment on Carmicle’s wrongful
discharge claim or in determining that Carmicle was terminated for cause as
defined by the Employment Agreement.
AFFIRMED.
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