Pulte Homes, Inc. v. Laborers’ Int’l Union of N. Am.: Sixth Circuit Rules that High-Volume Phone and Email Campaign Violates Computer Fraud and Abuse Act

Pulte Homes, Inc. v. Laborers’ Int’l Union of N. Am., Nos. 09-2245; 10-1673 (6th Cir. Aug. 2, 2011)

Slip opinion

The Sixth Circuit affirmed in part and reversed in part the United States District Court for the Eastern District of Michigan, which had granted the Laborers’ International Union of North America’s (“LIUNA”) motion to dismiss Pulte Homes’ claim that LIUNA had violated the Computer Fraud and Abuse Act (“CFAA”) by carrying out a phone and email campaign against Pulte. The district court held that Pulte failed to show that LIUNA intentionally caused damage to Pulte’s phone and email systems.

The Sixth Circuit held that Pulte had successfully stated a “transmission” claim under the CFAA but agreed with the district court that it had not stated an “access” claim. The Sixth Circuit concluded that Pulte alleged sufficient facts to state a transmission claim, which requires showing that the defendant intentionally caused damage. The court reasoned that LIUNA’s phone and email bombardment had caused damage to Pulte’s computer system by diminishing Pulte’s ability to send and receive calls and emails. Such damage was also intentional, the court found, because LIUNA likely knew it was causing damage even if it acted without actual knowledge of the consequences of its phone and email barrage. The Sixth Circuit agreed with the lower court that Pulte failed to state an access claim but articulated different reasoning, holding that LIUNA’s actions were not “without authorization” because Pulte allowed members of the public to contact its offices and executives by phone or email. In so holding, the court adopted a “diminished-ability” standard for assessing damage, which may broaden liability under the CFAA.

The Computer Fraud/Data Protection blog provides an overview of the case. Techdirt criticizes the decision for expanding the CFAA beyond its original purpose of combating computer hacking to cover emails sent as part of a labor protest. The Technology & Marketing Law Blog questions whether Pulte had suffered significant damage and whether the allegations were sufficient to demonstrate intent on the part of LIUNA.

After Pulte fired a construction worker in September 2009, LIUNA initiated a campaign to flood Pulte’s sales office and three Pulte executives with phone calls and emails. LIUNA asked its members to “fight back” by making phone calls and sending emails protesting Pulte’s labor practices and also used an auto-dialer to increase the volume of phone calls. The calls overloaded Pulte’s voicemail and email systems, limiting the number of emails that could be in any given inbox and interfering with Pulte employees’ normal communications with customers and vendors. One Pulte executive turned off her business cell phone to avoid the calls; customers had difficulty reaching the sales office; and Pulte employees could not access their email accounts. In holding as it did, the court adopted a “diminished-ability concept,” already endorsed by several district courts, in its interpretation of “damage” under the CFAA. The CFAA defines damage as “any impairment to the integrity or availability of data, a program, a system, or information.” In the absence of further statutory definition, the Sixth Circuit interpreted “impairment,” “integrity,” and “availability” according to their ordinary meaning and concluded that Pulte’s diminished ability to use its phone and email systems qualified as an impairment to the integrity and availability of those systems. When the Sixth Circuit turned to the element of intent, it decided that the district court had set too high of a standard. LIUNA did not need to know the actual consequences of its actions, the Sixth Circuit reasoned; the volume of calls and LIUNA’s exhortation to “fight back” indicated that LIUNA intended to cause some harm to Pulte, even if it did not understand the true extent of the damage.

In its ruling, the Sixth Circuit rejected the lower court’s restrictive reading of the CFAA. By holding that diminished ability to use a phone or email system constitutes damage, the Sixth Circuit has left open the possibility that coordinated phone or email campaigns – common tools of civic action – are subject to liability under the CFAA.

Michael Hoven is a 2L at Harvard Law School.