Deletion of Electronic Data: Is it Trespass to Chattels or Conversion?

• Posted on: Mar 29 2023

By: Jeffrey M. Haber

In NW Media Holdings Corp. v. IBT Media Inc., 2023 N.Y. Slip Op. 30875(U) (Sup. Ct., N.Y. County Mar. 22, 2023) (here), Justice Melissa A. Crane addressed the question whether the destruction of millions of pages of data on a Google Workspace (“Workspace”) states a claim for trespass to chattels or conversion. As discussed below, Justice Crane concluded that the allegations concerning the destruction of such data sufficed to state a claim for conversion.

The Applicable Law

To state a cause of action for trespass to chattels, a plaintiff must allege “(1) intent, (2) physical interference with (3) possession (4) resulting in harm”.¹ A plaintiff must show that the “condition, quality, or value” of the chattel was “diminished” as a result of the defendant’s actions or that the plaintiff was deprived of use of the chattel “for a substantial time”.² 

A cause of action for trespass to chattels “overlaps with a claim for conversion”.³ However, the two causes of action are distinct. Allegations that the defendant “merely interfered with the plaintiff’s property” are “properly construed as an action to recover for trespass,” while allegations of “destruction or taking of the property” amount to a claim for conversion.⁴

Where electronic data is involved, “trespass to chattels” often includes an interference that causes damage to computer systems or involves the sending of unsolicited content.⁵ Moreover, where the alleged harm involves interference with physical devices containing data, courts have sustained a claim for trespass to chattels.⁶ 

To state a cause of action for conversion, a plaintiff is required to allege that they had legal ownership or a “superior right of possession” and that the defendant interfered with their right of possession.⁷ A plaintiff states a cause of action for conversion, rather than the related cause of action for trespass to chattels, where the plaintiff alleges that the defendant actually destroyed the property rather than just interfered with it.⁸ 

NW Media Holdings Corp. v IBT Media Inc.

NW Media was one in a series of cases between the former and current owners of the magazine and media business Newsweek. Plaintiff, NW Media Holdings Corp. (“NW Media”), claimed that after it purchased Newsweek from Defendant, IBT Media Inc. (“IBT”), the defendants conspired to destroy millions of pages of Newsweek data on the Workspace.

In particular, plaintiffs alleged that following the separation of IBT and Newsweek, Newsweek continued to maintain data for both companies in the “Newsweek Google Workspace” that was “exclusively owned by Newsweek”. Plaintiffs claimed that “[a]t all relevant times, [they] had a possessory right and interest in the electronic data, including all user accounts, emails, and documents stored in the Newsweek Google Workspace”. Nevertheless, said Plaintiffs, IBT’s current chief executive officer, Jonathan Davis (“Davis”), and IBT employee Younseok Choi (“defendant”) continued to have access to the Workspace following the sale of Newsweek, despite NW Media not employing them. Plaintiffs further alleged that after Newsweek issued a litigation hold in August 2020, Defendant David Jang (“Jang”) directed Defendant Etienne Uzac (“Uzac”) – the former chief executive officer of IBT – to “orchestrate the deletion of [problematic] documents and information from IBT accounts located in Newsweek’s Google Workspace”.

Plaintiffs maintained that after Davis first used his IBT account credentials to access and export data, the alleged “IBT conspirators” directed the deletion of documents and communications “associated with Newsweek’s former management team”. Plaintiffs alleged that 271 user accounts and their contents were deleted. Overall, defendants allegedly deleted approximately 1.8 terabytes’ worth of data.

Plaintiffs subsequently filed the complaint. Defendant moved to dismiss. The court granted in part and denied in part the motion, finding that the compliant stated a cause of action for conversion but not trespass to chattels.

The Court held that the allegations of the destruction of data did not suffice to state a claim for trespass to chattels. The Court explained that plaintiffs did not allege that defendant interfered with the Workspace in such a way that impinged its functioning, that defendant inserted unwanted data or that defendant deleted data directly off of Plaintiffs’ own devices.⁹ Rather, said the Court, the allegations in the complaint simply stated “that [defendant] deleted 1.8 terabytes’ worth of data off of the Workspace to the complete deprivation of Plaintiffs’ access”.¹⁰ If anything, concluded the Court, “that is a cause of action for conversion, not trespass to chattels”.¹¹ Accordingly, the Court denied the motion with respect to the claim for conversion.

The Court explained that the following allegations sufficed to state a claim for conversion: plaintiffs “had a possessory right and interest in the electronic data, including all user accounts, emails, and documents stored in the Newsweek Google Workspace”, the “data and information contained in the Newsweek Google Workspace [was] exclusively owned by Newsweek”, “[n]one of the Defendants had the authority to destroy Plaintiff’s’ business records or take them for their own use”, and defendant “accessed, exercised control over, and destroyed electronic data in the Newsweek Google Workspace without permission”.¹² 

In sustaining the conversion cause of action, the Court rejected a number of arguments advanced by defendant. For example, the Court rejected defendant’s argument that the complaint did not allege that any of the plaintiffs actually had a possessory interest in the data on the Workspace. The Court noted that “[w]hile Defendant is correct that Plaintiffs do not technically include an entity called simply ‘Newsweek,’ the complaint appear[ed] in at least one place to use the term “Newsweek” to refer to Newsweek LLC, which is one of the plaintiff entities.”¹³ Moreover, said the Court, “the complaint explicitly alleges that ‘Plaintiffs’ in general ‘had a possessory right and interest’ in the data stored in the Workspace”.¹⁴ Therefore, concluded the Court, “Defendant has not established entitlement to dismissal for failure to state a claim because, even if the complaint does allege that ‘Newsweek’ had an interest, it also allege[d] that Plaintiffs in general had an interest in the data in the Workspace”.¹⁵ 

The Court also rejected defendant’s argument that plaintiffs failed to allege that they were the “exclusive” owners of the data.¹⁶ Noting the absence of case authority supporting the argument, the Court found that “Plaintiffs only are required to allege that they had legal ownership or a ‘superior right of possession”.¹⁷

Finally, the Court rejected defendant’s argument that he was authorized to delete the data by a 50% owner of Newsweek. The Court noted that even though Davis, who was and remained a 50% owner of NW Media, allegedly directed defendant to delete the data, it did not mean that plaintiffs did not have a superior possessory interest in the material that defendant allegedly permanently deleted.¹⁸ The Court found that there was “no case law to support the proposition that one 50% owner has the unfettered right to permanently destroy—themselves or through an agent—data in which the other 50% owner has a possessory interest”.¹⁹

Footnotes

1. DeAngelis v. Corzine, 17 F. Supp. 3d 270, 283 (S.D.N.Y. 2014); Lavazza Premium Coffees Corp. v. Prime Line Distributors Inc., 575 F. Supp. 3d 445, 474 (S.D.N.Y. 2021) (“Under New York Law, [a] trespass to chattel occurs when a party intentionally damages or interferes with the use of property belonging to another.”) (citations and internal quotation marks omitted); School of Visual Arts v. Kuprewicz, 3 Misc. 3d 278, 281 (Sup. Ct., N.Y. County 003).
2. Twin Sec., Inc. v. Advocate & Lichtenstein, LLP, 113 A.D.3d 565, 565 (1st Dept. 2014); School of Visual Arts, 3 Misc. 3d at 281.
3. Lavazza, 575 F. Supp. 3d at 474.
4. Douglas v. Abrams Children Books, 2014 WL 12909009, at *7 (S.D.N.Y. Sept 26, 2014) (granting in part motion to dismiss, finding the complaint “state[s] a claim for conversion, not an ‘injurious trespass of Chattel’”) (citing, Sporn v. MCA Records, 58 N.Y.2d 482 (1983)); see also Manhattan Sports Rests. of Am., LLC v. Lieu, 137 A.D.3d 504, 504 (1st Dept. 2016) (finding allegations stated cause of action for trespass to chattels but not conversion since it was “not alleged that defendant exercised dominion and control” over the chattels); Fischkoff v. Iovance Biotherapeutics, Inc., 339 F. Supp. 3d 408, 414 (S.D.N.Y. 2018) (finding that “pure copying of electronic files without more” did not state a claim for conversion).
5. Spa World Corp. v. Lipschik, 2010 WL 11632681, at *13 (E.D.N.Y. Sept 9, 2010) (denying dismissal of trespass to chattels claim where defendants allegedly installed malicious Trojan virus on plaintiff’s website, requiring a shutdown of the computer system); School of Visual Arts, 3 Misc. 3d at 281 (denying dismissal of trespass to chattels claim where defendant caused “unsolicited e-mails” to be sent to plaintiff which “depleted hard disk space, drained processing power, and adversely affected other system resources”).
6. Banach v. The Dedalus Foundation, Inc., 2012 WL 251567 (Sup. Ct., N.Y. County Jan 18, 2012) (denying motion to dismiss trespass to chattel counterclaim where defendant alleged that plaintiff “intentionally deleted hard drive data on the computers it provided her to work from home”); Cohen v. Gerson Lehrman Grp., Inc., 2011 WL 4336683, at **7-9 (S.D.N.Y. Sept 15, 2022) (denying motion for summary judgment dismissing conversion and trespass to chattels claims where the defendant allegedly “engaged in unauthorized access to his workplace computer and unlawfully deleted or modified the defendant’s files”); Advanstar Communications Inc. v. Pollard, 2014 WL 4613020, at **2-3 (Sup. Ct., N.Y. County Sept. 16, 2014) (denying dismissal of trespass to chattels claim where counterclaim defendants allegedly “remotely wiped” the counterclaim plaintiff’s iPhone).
7. Grocery Delivery E-Servs. USA, Inc. v. Flynn, 201 A.D.3d 585, 586 (1st Dept. 2022); Abrams v. Pecile, 115 A.D.3d 565, 565-566 (1st Dept. 2014); NY Medscan, LLC v. JC-Duggan Inc., 40 A.D.3d 536, 537 (1st Dept. 2007); Lemle v. Lemle, 92 A.D.3d 494, 497 (1st Dept. 2012).
8. Douglas, 2014 WL 12909009, at *7 (citing, Sporn, 58 N.Y.2d at 487-488).
9. Slip Op. at *5.
10. Id.
11. Id. (citing, Douglas, 2014 WL 12909009, at *7).
12. Id. at *6.
13. Id. at *7.
14. Id. (quoting the complaint).
15. Id.
16. Id.
17. Id. at *7-*8 (citation omitted).
18. Id. at *8.
19. Id.

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. 

This article is for informational purposes and is not intended to be and should not be taken as legal advice.