Could a Lie on a Dating Website Violate the Law?

this statute? An employee checking Instagram and work? How is that obtaining or altering information? Your employer told you, Mr Jones, you work for me. Here is a PC. You will get all kinds of emails in this PC. You are never to use this email for a personal purpose. Joining me is David Thaw, a professor at the University of Pittsburgh Law School. David the case before the word involved a police officer who was convicted under the Computer Fraud and Abuse Act for taking a bribe to look up

a license plate in the police database. What was the basic issue confronting the justices here? This is an issue that has been circulating around for a couple of decades.

In various forms, and on its surface, it sounds very simple, which is, when someone who's using a computer that they have access to does something on that computer that they're not supposed to do but they're technologically able to do, is that a violation of the Federal Anti Hacking Statute, which prohibits not just unauthorized access but exceeding your authorized access. So on its face, it sounds like, if you do something that you're not supposed to do, you are exceeding

your authorized access. The problem is that, in practice, with modern computing and information systems, what your quote not supposed to do unquote is a much more complex question than simply are you allowed to access a given file on a computer, which was quite literally what the United States Congress was talking about in six when it adopted the

current version of the statute. That's in questions. What we're dealing with today are questions about complex sets of agreements and policies and contracts and many other things, even sometimes verbal instructions, for example, from an employer to an employee regarding what a person can and can't do with a computational device that they may carry around with them at

all times in use for multiple purposes. Some of the justices gave scenarios everyday life scenarios like lying about your weight on a dating app or browsing Instagram on a work computer. What were their concerns so they're getting at this complexity. A number of those questions were to acted at the government. And what I think the justices were trying to push it is the question of saying, well, wait a minute, isn't the way you want us the

court to interpret exceeds authorized access? Isn't that a whole lot more than just you're doing something that clearly, obviously you're not supposed to. Clearly, obviously you're not supposed to go into the file on the machine that is not for you. Aren't you now getting into things where a private entity can criminalize activities by writing a contract, where a dating app could make it criminal. Think about that.

Make it a federal time to lie about your weight for the purpose of getting access to another user's profile, or lie about your age. Making that the subject of federal criminal law is an incredible expansion beyond what Congress originally contemplated. And that's what the Justice's line of questioning was getting. It seems like Justice scourse, it's narrowed in

on that. He said that this risks making a federal criminal of all of us, and he called the case the latest in a long line of cases where the government has sought to expand federal criminal jurisdiction. Do you see that as the government trying to expand federal criminal jurisdiction. I can't speak to the government's motives, And it's actually very difficult really for anyone to speak to the government's motives, because governments don't have motives in that kind of sort

of a linear, continuous sense that we think of. Our Congress changes every two years, our executive changes no less than every eight years, and the arc of cases that Justice course it was describing was over the course of a couple of decades. But the point still remains that even if there isn't necessarily motive there, there has been

a trend in a direction. What I think he was probably getting at with less about motive and more about the building of an inertia, of an expansion of various federal criminal statutes that are used in prosecuting what more, traditionally, under our federalist constitution would be thought of as the province of the states to criminalize, and he and several of the other justices asked questions about that about doesn't

state law also criminalize this. My colleague, Professor Orn Kerr from the University of California at Berkeley, in his Amicust brief, he talked about the fact that there are other state laws that criminalize some of these activities and the federal criminal power. Many courts over the decades and centuries of the United States have looked at as something that should be used for its very specific purpose as outlined in the Constitution, not as something that is sort of a

catch all for when the states overlook something. My colleague, Professor Oren Kerr, from the University of California at Berkeley, in his Amaricust brief, he talked about the fact that there are other state laws that criminalize some of these

activities and the federal criminal power. Many courts over the decades and centuries of the United States have looked at as something that should be used for its very specific purpose as outlined in the Constitution, not as something that is sort of a catch all for when the states overlook something. Now, it's important to note here that this observation is not one necessarily of malintent, in fact, almost

certainly not anything other than good faith. One of the reasons that federal criminal prosecutions are often brought is because federal investigative agencies and really have far more resources and far more ability to coordinate, and in the case of investigating computer crimes, for example, those resources and interstate coordination can be key in successfully being able to not just investigate, but collect adequate evidence, apprehend and convict someone who has

perpetrated a crime. So what I would suggest leads to this observation again, which I think justice course is correct that there has been a trend in that direction. But what leads to it, I think is just a good faith effort on the part of law enforcement to try and marshal whatever resources they can to deal with an

incredibly growing problem. And I think what you saw from justice across almost the entire bench was a concern that the federal government doesn't have plenary police power, and the Court was expressing con turn that if there aren't some limits in that regard, then those federalist protections, the separation of the power between the federal government and the state

governments will start to erupt. And there have been cases where the federal government has prosecuted people under this statute where it seemed a little bit stretched, For example, the infamous case of Aaron Swartz. There have been a number the Aaron Sports case. I think one of the things that we're missing in the air in Sports case, and this is one of the reasons why it's not the

example I most commonly uses. We didn't have a full prosecution, trial, verdict, and full set of appeals, and that takes some of the story away. If you look at a case like the at least within computer crime circles, equally infamous case of Lori Drew or the case of Mr Ahernheimer, also known by his hacker handle of Weaves, those two cases illustrate the same type and set of concerns and have a fully developed record we can look at. In Lori Drew's case, not the judge entered a finding is not

guilty after the trial was concluded. That's really uncommon, and it was done in part because of this issue that we're talking about, that the platform in the mid two thousands of my Space could not arbitrarily right into its contract terms about what content users would put on the

website and thereby criminalized the activities. There's a concept in the law that you have noticed at the time of what is and is not criminal, and the Justice has talked a lot about this and the fact that allow in these private contracts to criminalize some activities and not others as a function of the contract rather than something that can be figured out clearly from the law itself, doesn't put people on notice. And there's a similar problem in the case of Mr Ahernheimer Um And in that

particular case, there's uh. I think a number of scholars, myself included, who viewed that the aggrieved parties went, shall we say, searching for a favorable prosecutor until they found one, and that was in large part why the Third Circuit Court of Appeals ultimately ended up rejecting the conviction on the unusual grounds that venue was improper. Do you think the potential fallout from a broad reading of this law is being exaggerated or are there implications for example, for

cybersecurity research and other areas that we don't think about normally. Yeah, there's an excellent question. I think it's one of the core questions that we have to deal with given the current wording of the statute and the degree to which the circuit Courts of Appeal has somewhat split on this question.

It certainly is not an exaggeration in the context of can either criminal prosecutions or the civil analog they remember there is in the in the Justice has talked about this in there, or there is a civil cause of

action that a private party can bring. And that actually happened in an employer employee case in the Middle District of Florida, I think in the late two thousands of It might have been early, and it involves somebody using Facebook too much at work, and the action was nothing more than a retaliatory action against someone who had filed an equal opportunity grievance against their employer. The court struck

it down. It sought for what it was, but it illustrated, and I've written in an article about this stat it illustrated much like the Lori Drew case, which Professor Kerr was involved in, and the Arnheimer case. It illustrates the ways in which an expansive reading of the statute can be used to criminalize things which might or might not otherwise be criminal, but aren't criminal as a function of

potentially violating in terms of a contract. What ms RU did terrorizing a child, that certainly I think should be and is criminal under the statutes that I believe that jurisdiction was was Missouri, where the child lived at the time, But she wasn't prosecuted under Missouri state law. She's prosecuted under a federal statute not designed for that purpose. And Justice has talked about that a lot in the Van

Buren case yesterday. So I think that in the context of overbroad prosecutions, yes in the context of security research, I think the answer is we just don't know enough yet. And I think part of the reason we don't know enough is we just don't have enough cases to see how courts would confront that and whether courts would say this clearly is not what Congress was talking about, and they're questioning. Most of the justices seemed critical of what

a broad reading of this statute might lead to. How do you think they'll come out? And it's always hard to read the tea leaves with the United States Supreme Court, but I did not hear a bench that was very favorable to the government's position, and I think that that's correct. From the particular disposition of this case. It's not often that when I hear oral argument for a case, I find myself more persuaded by the justices questioning than I was by the briefs and oral argument by counsel for

the parties. But the justice is questioning on the point of whether the activity in question was properly criminalized by a broad reading of a federal statute or by the states, which clearly have the power to make the act otherwise criminal. In this case, I think it was otherwise criminal in Georgia.

That was a very compelling argument, and it also fits nicely with what we call the rule of lenity, which is an assumption in criminal law that when there is ambiguity in a statute is construed in favor of the criminal defendant. Because we want to do everything possible to give people notice of what the government is telling them not to do by the commands and the criminal law. So something is ambiguous, we say, well, the Congress should be more clear. And I think that's the direction that

the Justices seemed to be leaning. Was Congress has ample opportunity to make this more clear. If they really wanted to be this broad, that would be my guess that this is not a court that's going to be favorable to the government's expensive reading where they're going to come out on the reasoning. I think we got a sense of how some of the individual justices are approaching it, but I did not see an census building on the reasoning for why an expansive interpretation of that particular clause

of the statute is appropriate. So I think it'll be real interesting to see how the opinions themselves come down. But I don't see five votes for the government's position. I'm not even entirely sure I see three votes for the government's position. Thanks David. That's David Thaw of the

University of Pittsburgh Law School. Near A Global Asset investment company has successfully next to five point eight billion dollar purchase of fifteen luxury US hotels from die Insurance Company after arguing the coronavirus outbreak drained value out of the transaction.

A Delaware judge concluded that mere A properly canceled the deal after the insurance company's response to the COVID nineteen pandemic meant it couldn't meet conditions for closing the sale of the hotels, which included iconic properties such as the West ND Saint Francis in San Francisco and the Lows

Santa Monica Beach Hotel near Los Angeles. This is decision is the first in Delaware addressing the legal consequences of corporate counters to the pandemic, and they provide a basis for other firms to walk away from deals they say we're crippled by COVID nineteen. My guest is a lawyer who represented Murray Mike Karlinsky, Global head of Complex Litigation at Quinn Emmanuel. The judge wrote a two D forty two page opinion tell us briefly why he decided to

cancel the deal. The starting point on this is that there are a number of cases that are right now pending in the various courts, mostly in Delaware, where you have deals that have terminated in the post pandemic or

during the COVID world. And those cases have common themes to them, which are that under the governing documents, the merger agreement or the acquisition agreement, there clauses in there that allow a buyer to terminate under certain circumstances, either the failure of certain conditions having been satisfied or representations that were aid that turned out to be false. This case is consistent with those cases and that the buyer here is seeking to terminate based upon failures by the

seller to comply with the terms of the agreement. We went through a full trial. We litigated this case in a very very expedited fashion over the course of three and a half months from start to finish, in what would otherwise be a three year litigation, but it was all compressed with the seller seeking to force the buyer to close and the buyer seeking to terminate the deal

based upon failures under the contract. The Court here by Chancellor Laster, after a trial and hearing all of the evidence and reviewing all of the materials that were submitted, ultimately concluded that the buyer our client Mira A Asset, had proven that the seller had failed to comply with various provisions of the agreements, which were conditions that had to be satisfied before the buyer would be required to close is the deal? The judge wrote that the other

side committed fraud about fraud what was he referring to? There? So one of the underlying questions in the case. This was a bizarre case because while we had the contract issues prior to entering into the contract. Uh and by the way, just so we're all clear, the contract here was to acquire luxury hotels in the United States and

some of the top name hotels. Prior to entering into the agreement, it became known to us the buyer that for six of the hotels, someone purported to transfer title to those hotels to their own names, and so, in other words, it raised the question as to whether the seller, who was going to be transferring these hotels to us in exchange for roughly six billion dollars in purchase price,

owned the hotels. So at the time the seller disclosed the existence of these six what we're called fraudulent deeds deeds on the properties to the buyer, there was an explanation that was given to the buyer. We were told, essentially, there's nothing really to worry about. This seems to be or this is the work of a twenty something year old uber driver with a criminal record, and it's really

nothing more than a nuisance. So to assuage the buyer's concerns about is there a problem here does the seller really own these hotels? We were given an explanation that was quite the ninth and the essential message was this is nothing really to worry about. What it turned out in fact, and what was ultimately demonstrated through the course of this case and a trial, is that there was

something much more sinister behind these deeds. There was an individ jewel and an organization who was responsible for those fraudulent deeds, and that the seller here had a long history, over a decade long, of litigation with this very sinister party, and that prior to signing the agreement, the seller actually knew that it was not the work of a twentysomething

year old uber driver. It was not a mere nuisance as it was portrayed to us, but rather there was something much much more sinister, uh and much more of a concern, And all of that was withheld from the from the buyer, and so the buyer signed an agreement it was unaware of any of these underlying facts and details and the fact that the seller knew were concealed from it. So the underlying the sinister person I'm referring

to was a fraudster in the court's eyes. But what the court is referring to when it said a fraud upon fraud is the the seller here defrauded the fire by withholding all of this information as to who was really behind these deeds and how big of a potential problem this really was. And we only learned about this as we the buyer, learned about these problems months and months later, when um some more of the facts started

to come out. And that is what the court is referring to when it referred to the seller having engaged in fraud about fraud. Was the judge's decision based more on that you perhaps couldn't get the proper title or was it problems because of the coronavirus outbreak? That's a great question, June. The court's decision is premised on two pillars.

One pillar was an argument that the coronavirus and the impact that COVID had on the hotel's at these particular fifteen luxury hotels was so significant that the seller started to make changes to the operations of these hotels in violation of obligations that it had under the contract. There's a provision which is standard in these contracts called an ordinary course covenant, and it basically says from the time I, as a buyer, signed the contract to the closing of

the contract, which could take many months. Here signing to closing was expected to be nine months or so. The seller, you're obligated to operate the business these hotels in the ordinary course, consistent with past practice. Here the seller made dramatic changes. It furloughed five thousand plus employees, and it

did a number of other things. And so one of the argument, and this is the one that was specific to COVID, was we said, this was a violation of that covenant and it gave the buyer an opportunity to turn eminate the deal. And the court agreed with us. So the court concluded, notwithstanding that these changes were made in the light of COVID, and they may have even been reasonable given COVID, they nevertheless violated the terms of

the merger agreement. That was the specific COVID issue. The other issue, which was the second pillar of the court's decision, related to this whole underlying title issue and the failures as we talked about a moment ago of the seller to make proper disclosures, and the way it all culminated was that one of the key things that is a buyer of real estate let alone, billions of dollars worth of real estate always has to have both for its own protection and because third party lenders who are going

to be lending the buyer proceeds to buy the deal is they have to have complete title insurance. When we buy a house, we buy title insurance to make sure that the title we're getting is is correct, it doesn't have clouds on it will so too in a deal

like this. But because of all of these issues that were raised both by the UH, the sinister character, plus the fact that there were all of these concealments by the seller itself that went on for months, and surprises that were ultimately sprung upon um the buyer here and the title insurance companies. When the deal was getting set for closing, the title insurers basically threw their hands up

and said, we can't provide complete title insurance here. We have real concerns because of these issues that have not been properly addressed by the seller. We're just not comfortable. And so they did something which known in the industry as raising exceptions. So they're saying we will provide title insurance for some, but not all, and then at all. Part was really really significant and so in the end,

that was another provision in the agreement that failed. The court found that the seller was obligated to make sure that the actions it took allowed title insurance that fully protected the buyer here as to any of this underlying fraudulent indeed scheme. And because the title insurers could not get comfortable uh and therefore wouldn't give that complete insurance,

the condition in the contract failed. And of course also the lenders who would have been asked to lend four billion dollars of third party financing for this transaction, they too said we're not comfortable, and they too said, if

there's not complete title insurance, we can't go forward. So that second pillar was fact specific to this case, and I think what compelled the court to the outcome as it related to this particular issue was the court understood contextually just how serious of an issue this was and why it ultimately led to the title insurers raising these exceptions, and that the blame for it lies at the feet of the seller because of all of its concealment throughout

the course of the deal process. Do you think that this case might in any way provide a precedent to torpedo other deals. Well, I don't like to use the word torpedo, I think though understanding the question, sure, I think the answer is that clearly this is a precedential decision on both the issues we went on and also one of the other issues that we didn't win on.

But with the court, the court issued here are two d and forty page opinions in one of the most detailed and thorough analyzes of these critical murder and acquisition related issues. So to your question, um, the it is it is clear that many of the other cases that are pending, both in Delaware and throughout the country, and I dare say even outside of the United States, are

looking to Vice Chancellor Laster's decision. I think there were courts that have been waiting on this decision, knowing that it was coming and it was imminent, and now that it has been issued, I do think this will become one of the seminal decisions in the field of mergers and acquisitions litigation as it relates to the M and A clause, that is, the material adverse effect clause, which again is a standard provision in these types of agreement,

and as they said earlier, the ordinary course covenant that the Court ultimately found in this case was violated. The Court goes through in more detail and analysis than any other decision that precedes it uh in going through and analyzing that ordinary course covenant. And so both the cases that are pending that involved termated deals will be looking to this case for its precedential value and its guidance.

But there's a second point here, which is the Court's opinion in this case will become must reading for any practitioner going forward that drafts murder and acquisition agreements, whether they be merger agreements acquisition agreements. The Court has provided clear guidance for I'll call it the rules of the road and the concepts around these various provisions that every practitioner who prepares one of these agreements or negotiates one

of these agreements must be aware of. And you took over this case from another firm just three and a half months before trial. You're dealing with witnesses in China, So just give me a little bit about you know, what went on behind the scenes, the kind of workforce you had, and how you dealt with all this. As we're all aware we were dealing with all of this

in the most of unusual times. We're dealing with all of this in the midst of a global pandemic, and so, as I said earlier, this was really three years of litigation compressed into roughly three and a half months. Delaware Chancery Court of Chancery in Delaware is one of the best equipped courts, and it's the court in which all of these cases tend to be filed because of choice of law and governing provisions. But the Court of Chancery is well equipped to deal with cases that move with

extreme expedition. And in cases like this, remember what is the seller here seeking. The seller is seeking to force my client mire A, the buyer, to close the transaction. They literally want the court to issue an order that says mi A, you must buy these hotels, and you must buy them at the contractual price of six billion dollars, even though in a pandemic world, we know those hotels are going to be worked significantly last and so in order to get to that potential outcome, things have to

happen very quickly. You can't afford a three year litigation, you can't afford a one year litigation. If ultimately there's the potential for the court saying you must buy that it has to happen quickly. So we understood that coming in, and it was just an extraordinary effort. I mean, we had a core team of twenty lawyers at my firm, and then we probably had another forty or forty or fifty lawyers who were assisting in the document reviews and

the document productions. This was nothing short of a herculean effort. In fact, by Chancellor Laster in his opinion very early on, points out just how extraordinary this was for both firms. I don't mean just my firm, but for the other side as well. And recognize that it was all being done remotely. So we had depositions of fifty witnesses. They

were being done by Zoom. Many of those witnesses were located in either China or Korea, so it was standard fair for depositions to start because we were taking a deposition of a witness on their daylight time. So we were starting depositions here in New York at six pm, seven pm, eight pm in the evening, and those depositions were running literally straight through the night. I had one deposition of a witness that ended at six fifty two am.

It was sunshine. Birds were chirping, my family was waking, and I was finishing up a deposition that had started six pm the night before. But we did it, and my team did it, and I can't uh tell you how proud I am of my team and this was an extraordinary effort. Thanks for being on The Bloomberg Laws Show. Mike. That's Mike Carlinsky, Global head of Complex Litigation at Quinn Emmanuel. And that's it for the edition of the Bloomberg Law Show. Remember you can always at the latest legal news on

our Bloomberg Law Podcast. You can find them on iTunes, SoundCloud, or at www dot bloomberg dot com slash podcast Last Law. I'm June gross O. Thanks so much for listening. Tune into The Bloomberg Law Show every weeknight a Champion Eastern right here on Bloomberg Radio