The Tax Man Cometh - Part Deux

We've already blogged that H&R Block case that came out of the United States District Court for the Western District of Missouri. You may recall this was the case where H&R Block was accusing a collection agency of illegally accessing its computer database in order to garnish their tax clienteles' tax return monies. One of the issues the collection agency raised when seeking to dismiss the case was that H&R Block hadn't properly pleaded damages it sustained for violation of the CFAA. We thought we should examine that issue a little further for your purposes.

What H&R Block did allege in its complaint was that "as a result of defendants' unauthorized, intentional access of H&R Block's protected computer system, H&R Block has suffered damages and a loss of no less than $5000.00, including but not limited to its costs to respond to this offense." SO - can an aggrieved party claim its costs "to respond to the CFAA offense" as a damage? Apparently the court thought so - it denied the defendants' motion to dismiss.

The CFAA requires that defendants' conduct must cause "loss to 1 or more persons during any 1-year period . . . aggregating at least $5000 in value." See 18 U.S.C. section 1030(a)(5)(B)(i). "Loss" is defined as "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 . . . ."

Thus, H&R Block had it right and so did the federal court. All you need to plead is damage in the form of the cost of "responding to an offense" and you have satisfied the damages pleading predicate of the statute. Call your next case!