The opinion
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
FOLEY INDUSTRIES, INC., )
)
Plaintiff, )
)
v. ) Case No. 4:21-00309-CV-RK
)
KAMMY NELSON, )
Defendant. )
ORDER
Before the Court is Defendant Kammy Nelson’s partial motion for judgment on the
pleadings and motion to dismiss Count I for lack of subject matter jurisdiction. (Doc. 32.)
Defendant brings the instant motion for partial judgment on the pleadings as to Counts IV and V
under Rule 12(c) and motion to dismiss Count I under Rule 12(b)(1) of the Federal Rules of Civil
Procedure. (Doc. 32). For the reasons below, Defendant’s partial motion for judgment on the
pleadings and motion to dismiss is GRANTED in part and DENIED in part.
Specifically, the Court holds as follows:
(1) Defendant’s partial motion for judgment on the pleadings is DENIED as to Count IV
(violation of the MCTA).
(2) Defendant’s partial motion for judgment on the pleadings is GRANTED as to Count V
(breach of the duty of loyalty).
(3) Defendant’s partial motion for judgment on the pleadings is DENIED as to Plaintiff’s
prayer for permanent injunctive relief.
(4) Defendant’s motion to dismiss for lack of subject matter jurisdiction is DENIED as to
Count I (breach of contract).
Background
For purposes of analyzing Defendant’s partial motion for judgment on the pleadings, the
Court “accept[s] the allegations contained in the complaint as true and draw[s] all reasonable
inferences in favor of the nonmoving party.” Cole v. Homier Distrib. Co., 599 F.3d 856, 861
(8th Cir. 2010) (citation and quotation marks omitted); Buckley v. Hennepin Cty., 9 F.4th 757, 760
(8th Cir. 2021).
Plaintiff serves as the exclusive Caterpillar dealer for Kansas and western Missouri,
providing the sale and rental of construction equipment and equipment for the oil and gas
industries. (Doc. 10 at ¶ 12.) On or about July 13, 2020, Defendant was hired as a Credit Manager
for Plaintiff. (Id. at ¶ 15.) As part of her daily duties, Defendant managed the credit department
and performed many tasks including exercising control over accounts receivable, performing
credit underwriting, establishing bad debt reserves, managing past-due accounts, coordinating with
Plaintiff’s legal department, collaborating with internal customers, managing credit risks, and
administering credit policies and standards. (Id. at ¶ 16.) As credit manager, Defendant had access
to confidential and proprietary information belonging to Plaintiff and its customers. (Id. at ¶ 18.)
To ensure protection of the confidential information, Plaintiff required Defendant to sign a non-
disclosure agreement (“NDA”) as part of her employment. (Id. at ¶ 19.) On July 13, 2020,
Defendant signed the agreement. (Id.) By the NDA’s terms, Defendant was prohibited from
disclosing the proprietary information of the company to anyone, except on a need-to-know basis,
and was prohibited from using the proprietary information for her benefit. (Id. at ¶ 21.)
Additionally, at the start of her employment, Defendant obtained and acknowledged a copy of
Plaintiff’s employee handbook, which noted that she was authorized to access and use Plaintiff’s
computers and information-technology system only for business purposes. (Id. at ¶¶ 22, 27.)
On January 15, 2021, Defendant received information indicating her employment with
Plaintiff would be terminated on January 18, 2021. (Id. at ¶ 30.) After receiving that information,
on or about January 15 through January 17, 2021, while at the office or using remote access to
Plaintiff’s computer systems, Defendant logged into the system on her company-issued computer
and forwarded dozens of emails and documents from her Foley email account,
KJNelson@foleyeq.com, to her personal email account, kammynelson@gmail.com. (Id. at
¶¶ 31, 32.) The forwarded emails contained Plaintiff’s proprietary information and/or confidential
information about and belonging to Plaintiff’s customers. (Id. at ¶ 33.) Defendant then deleted
the emails she forwarded to her personal account from her company-issued computer and/or
Plaintiff’s server. (Id. at ¶ 35.)
Additionally, Defendant modified and altered a number of emails, including one sent on
January 13, 2021, by Plaintiff’s Vice President of Sales, Jeff Fouraker, to Defendant’s supervisor,
Steve Liggett. (Id.at ¶¶ 33, 38.) The original email sent by Fouraker stated “Here’s another.”
(Id. at ¶ 38.) On or about January 16, 2021, Defendant altered and modified the original email to
insert the statement “result of your credit nazi” after the text “Here’s another.” (Id. at ¶ 39.)
Defendant then forwarded this altered email to her personal email account as well. (Id.at ¶ 41.)
On January 18, 2021, Defendant’s employment with Plaintiff was terminated, unrelated to
the forwarding and altering of the emails. (Id. at ¶ 48.) After Defendant’s termination, Plaintiff
routinely attempted to secure its technology infrastructure and noticed unusual activity on
Defendant’s account. (Id. at ¶ 49.) Plaintiff then conducted an internal preliminary examination
into the unusual activity and retained a third-party information technology expert to complete a
forensic review of Defendant’s company-issued computer devices and her Foley email account to
determine the full scope of the unusual activity. (Id. at ¶¶ 50, 51.) Plaintiff alleges between its
internal investigation, third-party forensic investigation, and associated legal fees, Plaintiff
incurred over $35,000 in damages as a result of Defendant’s actions. (Id. at ¶ 52.)
Plaintiff filed its First Amended Complaint (“FAC”) against Defendant on July 14, 2021,
asserting claims for: breach of contract (Count I); violation of the Computer Fraud and Abuse Act,
18 U.S.C. § 1030, et seq. (Count II); (3) violation of the Stored Communications Act, 18 U.S.C. §
2701 et seq. (Count III); violation of the MCTA (Count IV); and breach of the duty of loyalty
(Count V). The Court granted in part and denied in part Defendant’s first motion to dismiss.
(Docs. 13, 30.) The Court dismissed Count II (Computer Fraud and Abuse Act) and Count III
(Stored Communications Act) for failing to state a claim for which relief may be granted. (Doc.
30.) But the Court denied the motion to dismiss as to Count I, Count IV, and Count V, finding
they met the requirements for diversity jurisdiction under 28 U.S.C. §1332. (Id.)
In the instant motion, Defendant seeks judgment on the pleadings under Rule 12(c) as to
Counts IV and V, and dismissal under Rule 12(b)(1) as to Count I for lack of subject matter
jurisdiction.1
Legal Standards
Under Rule 12(c), “[a]fter the pleadings are closed – but early enough not to delay trial –
a party may move for judgment on the pleadings.” A party may assert a claim the complaint fails
1 Defendant further challenges the appropriateness of Plaintiff’s prayer for permanent injunctive
relief, alleging Plaintiff has failed to plead the requisite elements. (Doc. 33 at 7.) Defendant appears to
confuse the prayer for relief in Plaintiff’s FAC with a motion for a preliminary injunction or temporary
restraining order. Injunctive relief, however, “is a remedy and not a cause of action.” Goerlitz v. City of
Maryville, 333 S.W.3d 450, 455 (Mo. banc 2011). Accordingly, Defendant is not entitled to its request for
judgment on the pleadings as to Plaintiff’s prayer for permanent injunctive relief as pleaded in its FAC.
to state a claim upon which relief can be granted in a Rule 12(c) motion for judgment on the
pleadings. Rule 12(h)(2)(B). The standard of review for judgment on the pleadings under Rule
12(c) is the same as dismissal in Rule 12(b)(6). Buckley, 9 F.4th at 760 (citing Westcott v. City of
Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990)). To survive a motion to dismiss, a complaint must
allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is plausible if “the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court “accept[s] the allegations
contained in the complaint as true and draw[s] all reasonable inferences in favor of the nonmoving
party.” Cole, 599 F.3d at 861 (citation and quotation marks omitted). “In addressing a motion to
dismiss, [t]he court may consider the pleadings themselves, materials embraced by the pleadings,
exhibits attached to the pleadings, and matters of public record.” Illig v. Union Elec. Co., 652 F.3d
971, 976 (8th Cir. 2011) (citation and quotation marks omitted).
Discussion
I. Count IV – MCTA Claim
Defendant brings a partial motion for judgment on the pleadings as to Count IV for failure
to state a claim under the MCTA. Defendant argues the MCTA is narrower than its federal
counterparts because it applies only to persons who act “without authorization.” (Doc. 33 at 4.)
Therefore, Defendant contends Plaintiff’s “claim under the MCTA fails for the same reasons as its
claims under the analogous federal anti-hacking statutes that were previously dismissed by the
Court for failure to state a claim.”2 (Doc. 33 at 3.)
2 Even though Van Buren v. United States, 141 S. Ct. 1648 (2021), has yet to be cited by a single
Missouri court, Defendant argues the MCTA should be interpreted consistent with Van Buren. (See Doc.
37 at 6.) Defendant claims “[t]here is no reason to believe in this case that Missouri courts would not apply
the principles of Van Buren to limit the scope of the MCTA in the same fashion as the analogous federal
statutes.” (Id. at n.5 (citing State ex rel. Jackson v. Dolan, 398 S.W.3d 472 (Mo. banc 2013), and State v.
Mullenix, 73 S.W.3d 32, (Mo. Ct. App. 2002)).) In both Dolan and Mullenix, the courts addressed
provisions of the U.S. Constitution and analogous provisions of the Missouri Constitution. The Dolan court
noted that “provisions of our state constitution may be construed to provide more expansive protections
than comparable federal constitutional provisions, [and] analysis of a section of the federal constitution is
strongly persuasive in construing the like section of our state constitution.” 398 S.W.3d at 478 (citation
and quotation marks omitted). Defendant’s reliance on Dolan and Mullenix to support her argument is
misplaced. This case does not involve the interpretation of analogous federal and state constitutional
provisions, and Defendant offers no reason why that constitutional analysis should apply to analogous
federal and state statutory provisions. Nothing in Dolan or Mullenix supports a federal court applying a
Section 537.525 of the MCTA provides a civil remedy for violations of § 569.095,
RSMo. Section 537.525 provides:
In addition to any other civil remedy available, the owner or lessee of the computer
system, computer network, computer program, computer service or data may bring
a civil action against any person who violates sections 569.095 to 569.099 for
compensatory damages, including any expenditures reasonably and necessarily
incurred by the owner or lessee to verify that a computer system, computer network,
computer program, computer service, or data was not altered, damaged, or deleted
by the access.
§ 537.525.1. Section 569.095 provides, in relevant part:
A person commits the offense of tampering with computer data if he or she
knowingly and without authorization or without reasonable grounds to believe that
he has such authorization:
(1) Modifies or destroys data or programs residing or existing internal to a
computer, computer system, or computer network; or
(2) Modifies or destroys data or programs or supporting documentation
residing or existing external to a computer, computer system, or computer
network; or
(3) Discloses or takes data, programs, or supporting documentation,
residing or existing internal or external to a computer, computer system, or
computer network; or
(4) Discloses or takes a password, identifying code, personal identification
number, or other confidential information about a computer system or
network that is intended to or does control access to the computer system or
network;
(5) Accesses a computer, a computer system, or a computer network, and
intentionally examines information about another person;
(6) Receives, retains, uses, or discloses any data he knows or believes was
obtained in violation of this subsection.
§ 569.095.1.
Defendant relies primarily on InfoDeli, LLC v. W. Robidoux, Inc. to support her conclusion
that the MCTA applies only to persons who act “without authorization.” (See Doc. 33 at 4 (citing
No. 4:15-CV-00364-BCW, 2020 WL 1853699, at *8 (W.D. Mo. Feb. 28, 2020)).) The InfoDeli
court characterized the MCTA as “a civil cause of action for the owner or lessee of electronically-
federal statutory interpretation to a Missouri statute before a Missouri court has done so itself. Accordingly,
the Court declines to apply the reasoning and holding of Van Buren to this case.
stored data that is improperly accessed.” 2020 WL 1853699, at *8. Defendant argues the phrase
“improperly accessed” demonstrates civil liability arises only when a “defendant act[s] without
authorization in accessing” information. (See Doc. 33 at 4 (citing InfoDeli, 2020 WL 1853699, at
*9) (“Regardless of the statutory section under which a claim for violation of the MCTA might
arise, InfoDeli must demonstrate that WRI acted ‘knowingly and without authorization’ or
‘knowingly and . . . without reasonable grounds to believe’ it had authorization”).) Further,
Defendant argues the “without reasonable grounds” provision of § 569.095
appears to be a safe harbor provision that would save someone from criminal or
civil liability who accessed a computer under a mistake [of] fact where the person
was not actually authorized to access the system but reasonably believed such
authorization had been given. In any event, a fundamental requirement for liability
under the statute is that a person accesses a computer system without authorization
(either actual or reasonably apparent).
(Id. at 4 n.1.) Accordingly, Defendant contends Plaintiff’s MTCA claim fails because the
allegations show “Nelson was authorized to access her work email through her work computer.”
(Id. at 5.)
In opposition, Plaintiff argues “[n]owhere in any part of the MCTA is there any language
providing that a person must first access a computer system or data without authorization and then
modify it, as Defendant suggests.” (Doc. 36 at 3.) Specifically, Plaintiff claims “only one of the
six actions [in §569.095] is based on unauthorized access.” (Id.) Defendant argues in reply that
§ 537.525’s civil remedy “is more limited and requires unauthorized access as an essential element
of the claim.” (Doc. 37 at 2.).
However, § 537.525 uses only the word “access” and does not indicate whether or not that
access must be unauthorized. More importantly, the word “access” appears in a phrase addressing
the availability of damages, not describing the elements of an MCTA violation. See § 537.525.1
(authorizing compensatory damages for costs incurred to “verify that a computer system, computer
network, computer program, computer service, or data was not altered, damaged, or deleted by the
access”). In other words, § 537.525 provides only a civil remedy for violations of § 569.095, it
does not limit or expand the scope of violations under § 569.095.
Thus, the central question – and the question left unanswered by both parties – concerns
the meaning of “without authorization or without reasonable grounds to believe that he has such
authorization.” § 569.095. Two Missouri cases, Western Blue Print Co., LLC v. Roberts, 367
S.W.3d 7, 12 (Mo. banc 2012), and ATD Tools, Inc. v. Fisher, No. 4:21-CV-00108-SRC, 2021
WL 533734 (E.D. Mo. Feb. 12, 2021), inform the Court’s interpretation of the statutes here.
In Western Blue, the court denied a defendant’s a motion for summary judgment as to the
plaintiff’s MCTA claim. 367 S.W.3d 7 at 12. The defendant was the vice president of Western
Blue Print Co., and had access to information concerning revenues, costs, profits, and salaries, as
well as proprietary and confidential information. Id. After the defendant left to work for a
competitor, Western Blue discovered 47,203 files had been deleted from the defendant’s laptop,
including emails containing “customer names, company names, contacts, telephone numbers,
email addresses, sales activities, and related notes.” Id. at 21. Further, the defendant “left her
employ with possession of two compact discs” containing many of the files deleted from the
laptop. Id. Western Blue sued under § 537.525.1 of the MTCA. In denying the defendant’s
motion for summary judgment as to the MTCA claim, the Western Blue court noted:
While the jury could have inferred that [defendant] was authorized to retain these
copies because they were made in the regular course of business, an equally
permissible inference is that she retained these files after deleting them from her
laptop in an effort to undermine Western Blue’s ability to bid successfully on the
university contract, or conversely, to aid DocuCopy in making its bid, which would
be an unauthorized purpose.
Id. at 22. The question in Western Blue was not whether the defendant’s access was unauthorized.
As vice president, the defendant was authorized to access all the deleted and copied information.
Instead, the court recognized that destruction or use of information for an “unauthorized purpose”
was cognizable as violating § 569.095 even if the conduct otherwise occurred during the regular
course of business with authorized access. See id.
In ATD Tools, the court analyzed the MCTA in the context of a motion for a temporary
restraining order. 2021 WL 533734 at *1. The defendant was employed by the plaintiff. Id. As
a condition of employment, the defendant “agreed to utilize confidential information only for the
benefit of [the plaintiff].” Id. However, before ending his employment, the defendant “deleted
and destroyed almost all emails in his account from the two years prior to his departure,” and
“transferred [the plaintiff’s] information and documents to his own storage devices or accounts,”
including “information outside the scope of [defendant’s] job duties with [the plaintiff], which he
was not authorized to access or use.” Id. at *2. In holding there was a reasonable likelihood of
success on the merits of the plaintiff’s MCTA claim, the court stated only that the defendant
“deleted data from [the plaintiff’s] computer system and copied [the plaintiff’s] confidential
information to an external electronic storage device.” Id. at *5. The ATD Tools court considered
both information the defendant was authorized to access – i.e., his email account – and information
he was unauthorized to access. See id. Thus, unauthorized access is not the only relevant
consideration when considering violations of the MCTA. See also InfoDeli, 2020 WL 1853699,
at *8 (using the phrase “improperly accessed” to describe the conduct covered by §§ 537.525 and
569.095).
The Court finds the meaning of “without authorization or without reasonable grounds to
believe that he has such authorization” includes using information for an unauthorized purpose,
even if the individual making such use was authorized to access that information. For purposes of
this partial motion for judgment on the pleadings then, the Court will determine whether Plaintiff
has alleged an unauthorized purpose, not simply whether access was unauthorized.
Based on the allegations in Plaintiff’s complaint, the Court finds that Plaintiff has plausibly
stated a claim that Defendant used the information for an “unauthorized purpose.” On January 15,
2021, Defendant received information indicating her employment with Plaintiff would be
terminated on January 18, 2021. (Doc.10 at ¶ 30.) On or about January 15 through January 17,
2021, Defendant forwarded dozens of emails and documents from her Foley email account to her
personal email account. (Id. at ¶¶ 31, 32.) Defendant then deleted the emails she forwarded to her
personal account from her company-issued computer and/or Plaintiff’s server. (Id. at ¶ 35.)
Additionally, Defendant modified and altered a number of emails. (Id. at ¶¶ 37.) Defendant used
Plaintiff’s computers and information-technology system but was limited to doing so for business
purposes. (Id. at ¶ 27.) Defendant was prohibited from disclosing the proprietary information of
the company to anyone and was prohibited from using the proprietary information for her benefit.
(Id. at ¶ 21.) The forwarded emails contained Plaintiff’s proprietary information and/or
confidential information about and belonging to Plaintiff’s customers. (Id. at ¶ 33.) On these
alleged facts, drawing all reasonable inferences in Plaintiff’s favor, Plaintiff’s FAC alleges the use
of information for an “unauthorized purpose.”
Accordingly, Defendant’s motion for judgment on the pleadings as to Count IV is denied.
II. Count V – Breach of the Duty of Loyalty
In Count V, Plaintiff alleges Defendant breached her fiduciary duty of loyalty. In Missouri,
“every employee owes his or her employer a duty of loyalty.” Scanwell Freight Express STL, Inc.
v. Chan, 162 S.W.3d 477, 479 (Mo. banc 2005). “Activities that constitute a breach of the duty of
loyalty in this respect include using confidential information peculiar to the employer’s business,
soliciting customers before the end of the employment or other acts that result in direct
competition.” Western Blue, 367 S.W.3d at 17 (citing Scanwell, 162 S.W.3d at 480). Importantly,
a breach of the duty occurs “when the employee goes beyond the mere planning and preparation
and actually engages in direct competition.” Id.
Based on the allegations in Plaintiff’s FAC, the Court finds Plaintiff has failed to plausibly
state a claim for breach of fiduciary duty. Plaintiff alleges:
With [Defendant’s] possession of [Plaintiff’s] Proprietary Information, [Plaintiff]
is at risk of [Defendant] providing this information to competitors or otherwise
using the information for her own or a third-party’s benefit, in direct contravention
of the duties and obligations set forth in the Non-Disclosure Agreement and
Employee Handbook and under the law.
(Doc. 10 ¶ 56.) Plaintiff states only that Defendant possesses proprietary information. Plaintiff
has failed to allege, however, that Defendant has “us[ed] confidential information peculiar to the
employer’s business” in direct competition. Plaintiff’s argument that it does not know the “extent
[to] which Defendant has misused its confidential information” because they have received
“inconsistent, contrary, or implausible responses as to what she has since done with the Proprietary
Information she forwarded to her personal email account” is insufficient to allege direct
competition. (See Docs. 36 at 9; 10 ¶ 54.)
Even accepting Plaintiff’s allegations as true, the FAC fails to allege Defendant is “actually
engag[ing] in direct competition.” See Western Blue, 367 S.W.3d at 17. Accordingly, Defendant’s
motion for judgment on the pleadings as to Count V is granted.
III. Count I – Breach of Contract
Because judgment on the pleadings as to Count IV was denied, Defendant’s assertion that
Count I “by itself is insufficient to establish the requisite amount in controversy of more than
$75,000 for purposes of federal diversity jurisdiction under 28 U.S.C. § 1332(a)” can no longer
stand. (See Doc. 33 at 8.) The Court stated in its previous order that
[g]enerally, a complaint that alleges the jurisdictional amount in good faith will
suffice to confer jurisdiction, but the complaint will be dismissed if it appears to a
legal certainty that the claim is really for less than the jurisdictional amount.”
Larkin v. Brown, 41 F.3d 387, 388 (8th Cir. 1994). “The legal certainty standard is
met where the ‘legal impossibility of recovery [is] so certain as virtually to negative
the plaintiff’s good faith in asserting the claim.’” Schubert v. Auto Owners Ins. Co.,
649 F.3d 817, 822 (8th Cir. 2011) (quoting JTH Tax, Inc. v. Frashier, 624 F.3d 635,
638 (4th Cir. 2010)).
(Doc. 30 at 10.) Because Count IV remains, Plaintiff still alleges actual damages of $35,000.
The Court notes as before,
[t]o satisfy the federal jurisdictional amount, Plaintiff relies on its requests for
injunctive relief damages, punitive damages for Defendant’s breach of duty of
loyalty, and attorney’s fees under the MCTA. Although Plaintiff does not allege
facts showing that its claim for injunctive relief, punitive damages, or attorney’s
fees would exceed $75,000, it is not legally impossible that Plaintiff could recover
at least that amount. See [Peterson v. Travelers Indem. Co., 867 F.3d 992, 995 (8th
Cir. 2017) (citing Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760, 766 (8th
Cir. 2001))] (retaining subject matter jurisdiction on a claim where plaintiff only
alleged $5,000 in medical damages plus tort damages, punitive damages, and
attorney’s fees because, although plaintiff had not alleged facts showing her tort or
punitive damages or attorney’s fees would exceed $75,000, it was not legally
impossible for plaintiff to recover at least that amount).
(Id. at 11.) Accordingly, because the Court retains subject matter jurisdiction over Count I,
Defendant’s motion to dismiss for lack of subject matter jurisdiction is denied.
Conclusion
After careful consideration and for the reasons above, the Court ORDERS as follows:
(1) Defendant’s partial motion for judgment on the pleadings is DENIED as to Count IV
(violation of the MCTA).
(2) Defendant’s partial motion for judgment on the pleadings is GRANTED as to Count V
(breach of the duty of loyalty).
(3) Defendant’s partial motion for judgment on the pleadings is DENIED as to Plaintiff’s
prayer for permanent injunctive relief.
(4) Defendant’s motion to dismiss for lack of subject matter jurisdiction is DENIED as to
Count I (breach of contract).
/s/ Roseann A. Ketchmark
ROSEANN A. KETCHMARK, JUDGE
UNITED STATES DISTRICT COURT
DATED: May 2, 2022