A federal court in Texas has dismissed an employment unfair competition case for lack of subject-matter jurisdiction. The plaintiff, Ennis Transportation, had sued its former employees in Ellis County, Texas for misappropriation of trade secrets and a violation of the Computer Fraud and Abuse Act.
The CFAA does contain criminal penalties, but litigants can maintain a civil cause of action and obtain legal and equitable relief under certain provisions of the Act. Increasingly, attorneys (particularly for employers) are federalizing garden-variety trade secrets disputes by adding CFAA claims, particularly after a number of court rulings making it easier to sustain unfair competition actions within the construct of the CFAA.
In this case, however, when the defendants attempted to remove the case to federal court in Dallas, Judge Jane Boyle remanded the case back to Ellis County, holding that the CFAA is a criminal statute and cannot form the basis for removal under federal question jurisdiction.
This is bizarre ruling, given that the CFAA provides for civil remedies. One other court has recognized removal jurisdiction as appropriate. See First Bank & Trust v. Haines, 2006 U.S. Dist. LEXIS 55811 (E.D. La. July 24, 2006).
Court: United States District Court for the Northern District of Texas
Opinion Date: 1/05/09
Cite: Ennis Transp. Co., Inc. v. Richter, 2009 U.S. Dist. LEXIS 462 (N.D. Tex. Jan. 5, 2009)
Law: Federal Rules of Civil Procedure