Internet Library of Law
and Court Decisions

Eagle Investment Systems Corporation v. Einar Tamm, et al.

Court dismisses plaintiff's claim, brought under the Federal Wire and Electronic Communications Interception Act, 18 U.S.C. §§ 2510 et seq., ("Wire Tap Act") which arose out of the defendants' acquisition of an e-mail from plaintiff's comptroller to plaintiff's President after the e-mail had been sent and received. The court based its holding on its determination that the Wire Tap Act only prohibited the interception of electronic communications "during transmission." The court's holding did not preclude plaintiff from bringing a claim seeking relief for the interception of this communications under the Federal Stored Wire and Electronic Communications Act, 18 U.S.C. §§ 2701 et seq. (the "Stored Communications Act.")

Defendant Tamm and his company Compendium Research Corporation were hired to perform programming services for plaintiff Eagle Investment Systems Corporation ("Eagle"), a company which designs, develops and sells software for the financial services industry. The parties became embroiled in a dispute over the compensation due defendants for Tamm's services, with Tamm claiming he was due a licensing fee for certain software he apparently worked on. In the course of the dispute, Tamm sent several letters to plaintiff demanding payment. Annexed to one of these letters was an October 17, 2000 e-mail sent by plaintiff's comptroller to plaintiff's President, apparently describing certain contacts between the comptroller and Tamm. Plaintiff claimed this e-mail was stolen by defendants. Also annexed to one of these communications were various documents quantifying the sales of the disputed software, which plaintiff claimed were confidential and also stolen by defendants.

Plaintiff brought suit, alleging violations of the Federal Wire and Electronic Communications Interception Act, the Federal Stored Wire and Communications Act, and RICO. Defendants moved to dismiss both the Wire Tap Act and RICO claims. Finding these claims lacked merit, the court granted defendants' motion. The Stored Communications Act claim remained in the case.

The Wire Tap Act, among other things, makes it unlawful to "intentionally intercept electronic communications." The Act defines "electronic communication" as "any transfer of signs, signals, writing, images, sounds, etc." (emphasis added). The Act's prohibition on intercepting "electronic communications" was added by Congress under the Electronic Communications Privacy Act, by which Congress also enacted the Stored Communications Act. This latter Act prohibits the interception of stored electronic communications.

The Court determined that to violate the Wire Tap Act, a defendant had to intercept an "electronic communication" during its transmission. The Court stated that the Act's definition of "electronic communication" as the "transfer" of signs, etc. supported its conclusion. The Court also relied on the contemporaneous enactment by Congress of the Stored Communications Act, prohibiting the interception of stored communications, in reaching this result.

The Court's holding followed the lead of the Fifth Circuit in Steve Jackson Games Inc. v. United States, 36 F.3d 457 (5th Cir. 1994). The Court declined to follow the holding of the Ninth Circuit in Konop v. Hawaiian Airlines, Inc., 236 F. 3d 1035 (9th Cir. 2001) which did not find a "during transmission" requirement in the Act.

Finally the court dismissed plaintiff's RICO claim on the ground that it lacked the pattern and continuity elements necessary for such a claim.

This decision is of interest because of the different remedies provided by the Wire Tap and Stored Communication Acts. Thus, the Wire Tap Act provides for considerably higher statutory damages (compare 18 U.S.C. § 2520(a)(2) to 18 U.S.C. § 2707(c)). In addition, communications intercepted in violation of the Wire Tap Act may be excluded from evidence whereas those intercepted in violation of the Stored Communication Act may not.