Roundup: 1st, 4th, 5th and 9th Circuits

Ruling may advance class action data breach claims; Contractual language cannot compel court to grant equitable relief; ADA doesn't require employers to offer "preferable" shifts; Probable cause kills malicious prosecution claim

1st Circuit: Ruling may advance class action data breach claims

In Anderson v. Hannaford Bros. Co., the 1st Circuit addressed the issue of whether data breach claimants have suffered legally cognizable damages. On Oct. 20, 2011, the court reversed a trial court’s dismissal of negligence and implied contract claims after a data breach.

National grocery chain Hannaford’s electronic payment processing system (EPS) was hacked in December 2007, resulting in the theft of 4.2 million credit and debit card numbers. A judicial panel consolidated 26 suits against Hannaford alleging breach of implied contract, implied warranty and duty of a confidential relationship; failure to advise customers of the theft of their data; strict liability; negligence and violation of the Maine Unfair Trade Practices Act.

The 1st Circuit ruled that the overt targeting of the EPS in order to use the card numbers rendered it reasonable for plaintiffs to take steps to protect against such misuse, and reinstated the negligence and breach of implied contract claims of plaintiffs who had incurred out-of-pocket mitigation expenses.

4th Circuit: Contractual language cannot compel court to grant equitable relief

On Oct. 26, 2011, the 4th Circuit decided in Bethesda Softworks, LLC v. Interplay Entertainment Corp. that contractual provisions cannot solely control whether a court can grant equitable relief.

Video game maker Bethesda sought to enjoin fellow video game maker Interplay from infringing on copyrights related to the “Fallout” game series. A district court denied Bethesda’s motion, and the company appealed the decision, claiming the court abused its discretion and misapplied the law when it concluded Bethesda failed to establish a likelihood of irreparable harm. Bethesda argued that it wasn’t required to demonstrate harm because of an Asset Purchase Agreement (APA) between the two companies, which stated that an APA breach would “result in irreparable injury.”

The 4th Circuit affirmed the district court’s denial, concluding that the lower court had not abused its discretion by looking beyond the APA, citing precedent from the 2nd and 10th Circuits. 

5th Circuit: ADA doesn't require employers to offer "preferable" shifts

The 5th Circuit ruled Oct. 19, 2011, in Griffin v. United Parcel Service, Inc. that an employer didn’t fail to make a reasonable accommodation for its employee.  

Rommel E. Griffin Sr. brought an Americans with Disabilities Act (ADA) suit against his employer, United Parcel Service (UPS), after 28 years of employment for failing to accommodate his Type II diabetes. Griffin took a medical leave of absence to treat his condition, and when he returned to work, his doctors restricted him to part-time work, which UPS obliged. Once completed, UPS assigned Griffin to a full-time night shift after his previous daytime shift was staffed. Griffin asked for a daytime shift under the ADA, but his medical documentation only stated that daytime work was “preferable.” When UPS rejected Griffin’s request, he retired.

A trial court concluded that Griffin wasn’t disabled and ruled in favor of UPS. On appeal, the 5th Circuit determined that Griffin’s diabetes did not qualify him as “disabled” under the ADA prior to 2008. Additionally, had Griffin been “disabled,” because of his nondefinitive medical documentation, UPS’s denial would not have been a failure to accommodate.  

9th Circuit: Probable cause kills malicious prosecution claim

The 9th Circuit’s decision in Roberts v. McAfee, Inc. on Nov. 7, 2011, highlights how serious an impediment establishing a lack of probable cause can be when pursuing a malicious prosecution claim.

Software company McAfee fired its former general counsel, Kent Roberts, in 2006 for backdating stock options. After an internal review, McAfee presented its findings to government lawyers, leading the Department of Justice to indict Roberts, and the Securities and Exchange Commission (SEC) to file a civil complaint against him. After McAfee produced previously undisclosed exculpatory emails during trial, the jury acquitted Roberts of two charges. Prosecutors then dismissed the outstanding counts with prejudice, and the SEC dropped its civil suit.

Roberts sued McAfee for malicious prosecution, defamation and false light. The district court denied part of McAfee’s anti-SLAPP (Strategic Lawsuits Against Public Participation) motion to dismiss the malicious prosecution claim because of conflicting evidence regarding what information McAfee turned over to the government, but granted its motion to strike Roberts’ defamation and false light claims as time-barred.

The 9th Circuit reversed the district court’s order denying McAfee’s anti-SLAPP motion to strike Roberts’ malicious prosecution claims. The court concluded that lying about facts is not enough to destroy McAfee’s probable cause.

 

Contributing Author

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