A lawsuit filed by a Cody-based telecommunications company against a private citizen has been thrown out in federal court.
On June 4, U.S. District Judge Nancy Freudenthal dismissed Tri-County Telephone Association’s claims against Joe Campbell, accused by TCT of keeping a company computer after serving as board director for the company after that governing body was disbanded.
Freudenthal made her decision after receiving motions for summary judgement by both Campbell and TCT. A motion for summary judgement requests a case be thrown out because the other party has no case.
TCT cited two federal breaches of the Computer Fraud and Abuse Act in its claim, accusing Campbell of keeping a TCT computer containing alleged confidential information after the TCT board disbanded at the end of 2014, despite company requests to return it. Prior to then TCT had been a membership-owned cooperative, but it became a privately owned company.
TCT made the argument in its motion for summary judgement that Campbell broke two different provisions of the CFAA law, breach of contract and conversion.
Freudenthal found that Campbell committed neither and claims against him were dismissed with prejudice. She found that CFAA violations only occur if “unauthorized access provides a means to access information or helps him (Campbell) access information,” but the information Campbell acquired had been previously provided to him.
Freudenthal also criticized the fact TCT made no changes to its operations until after Campbell filed his suit.
“TCT apparently saw no need to upgrade its systems and protect against breaches until 2017 and 2018,” Freudenthal said. “Long after TCT became aware that Mr. Campbell wrongfully retained TCT equipment and data.”
In March, Campbell submitted a motion for summary judgement, making the argument CFAA protections only extend to hacking activity. Campbell said he merely downloaded documents onto a computer that was not protected (disconnected from TCT servers) while still a member of the board and continued to access these documents after the board disbanded. He said TCT could not prove damages within the CFAA statute.
Later that same month TCT also motioned for summary judgement based off its original claims against Campbell.
State-based claims against Campbell for conversion, breach of contract, tortious interference with a contract and business expectancy were also dismissed, but without prejudice.
TCT CEO Chris Davidson said the state-based claims are “the actual big ones” and will total at least $25 million.
On June 25 TCT filed the state claims in the Fifth Judicial Court.
The judge did agree with TCT that Campbell did act without authorization when continuing to access documents after told not to, but felt that this act alone did not rise to a CFAA infraction.
“She agreed with us that he used the computer when he was not authorized to do so,” Davidson said. “She took a narrow view of what that federal statute is.”
Freudenthal also mentioned that the information in Campbell’s possession was not unique to his computer and was already held in company servers.
“All of this suggests that TCT is not concerned with the integrity of the data … or a permanent loss of that data,” Freudenthal wrote in her decision. “Rather, TCT is concerned with the manner in which Mr. Campbell used that data. Such injury does constitute ‘damage.’”
While the federal case is closed, a civil case lives on.
In December 2015 Campbell filed a civil suit against TCT and numerous other defendants in Park County District Court, accusing Neil Schlenker of making a fraudulent purchase of TCT from Campbell and his wife Barbara, breaching fiduciary duties when he purchased the company in 2014 for $29 million. Davidson, CFO Steve Harper and former board members Dalin Winters, J.O. Sutherland, Daniel Greet, Clifford Alexander and John Johnston make up the most notable accused parties.
The Campbells contend when they were board members of the former TCT collective, the company was sold to the Meeteetse investor Schlenker at a discounted price outside the market value, defrauding value from the 825 members of the collective who held ownership shares at the time of the 2014 sale.
Although TCT held $12 million in debt at the time of the sale and needed $10 million more to cover “unseen liabilities,” the Campbells claimed the company also held $90 million in liquid assets.
The collective members and the Campbells are now plaintiffs in the class action suit. TCT however has filed a potential separate list of members who would take its side.
In TCT’s recently dismissed 2017 suit, the company claims Campbell published confidential information in court filings for his class action state suit and on a website.
Davidson said there was a wide range of documents illegally released, but internal bank documents took some of the largest precedence for concern.
“He took that information and tried to gut us with it,” Davidson said.
The company said these actions violated non-disclosure agreements and caused Union Bank to “eliminate certain business expectancies” relevant to a credit agreement between it and TCT.
TCT had plans to develop a Cody Data Center, assisted by a “prospective economic advantage with a developer to undertake the construction.”
“A huge thing for this area,” Davidson said of the project.
But because of the disclosure of documents TCT said it lost its economic advantage which “caused multiple parties to terminate negotiations regarding the data center”and lose many customers.
James Klessens, president of Forward Cody, testified on behalf of TCT. He said Campbell’s actions may have dissuaded TCT from setting up the Data Center because of the class action suit and general bad publicity generated around the company. A prospective tenant to the facility, Brian Robertson of VisiQuate Inc. also testified to this point and said his company did pull out because of the published confidential information.
The Campbell’s civil case is still pending and is scheduled for an April 2020 jury trial.