Delaware Business Litigation Report

Chancery Examines Computer Misuse Claims Against Former Employee and Awards Defamation Damages Against Former Employer

Laser Tone Business Systems LLC v. Delaware Micro-Computer LLC, C.A. No. 2017-0439-TMR (Del. Ch. Nov. 27, 2019).

In one of her final opinions before joining the Delaware Supreme Court, Vice Chancellor Montgomery-Reeves addressed various statutory computer misuse claims against a former employee and awarded $100,000 in compensatory damages for the former employer’s libel and slander. In Laser Tone v. Delaware Micro-Computer, plaintiff, a photocopier company, terminated the defendant employee after he refused to sign a non-compete agreement. In its subsequent lawsuit, plaintiff claimed that the defendant stole company information and deleted certain data from his company computer and cell phone devices before departing. Certain of plaintiff’s executives then communicated to third parties that the defendant was “a thief and a drug user.” Plaintiff brought a cause of action against the defendant for violating the Delaware Misuse of Computer System Information Act (“DMCSIA”) by allegedly stealing data and deleting certain other information from company systems. The defendant counterclaimed for libel and slander, arguing that plaintiff’s communications were false and had caused him significant mental and reputational harm.

After a two-day trial on the merits, the Court of Chancery found insufficient evidence to support a majority of the plaintiff’s theories of liability, but did find that the defendant had deleted certain data from his company laptop in violation of the DMCSIA. Finding no non-speculative evidence of harm, however, the Court awarded only nominal damages. The Court also found that plaintiff failed to prove that the defendant had stolen any data. Having determined that plaintiff failed to prove the defendant was a “thief,” the Court denied plaintiff’s affirmative defense of truth and entered judgment for the defendant on his defamation counterclaims. The Court, in its discretion, awarded $100,000 in damages, basing the award on evidence that the defendant had “lost two jobs, customers, and friends; and, [because] he fear[ed] his business [was] in jeopardy.”

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