Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

Articles Posted in Internet Law
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In the case before the United States Court of Appeals for the First Circuit, the defendant, Randall Crater, was convicted of wire fraud, unlawful monetary transactions, and operating an unlicensed money transmitting business based on his involvement in a cryptocurrency scheme. The trial lasted eight days and was based on Crater's management of My Big Coin (MBC), a cryptocurrency company that allegedly misrepresented itself as a gold-backed digital currency and claimed a partnership with MasterCard. The defendant appealed two of the district court's rulings.Firstly, Crater argued that the district court violated his Sixth Amendment right to compulsory process by refusing to enforce subpoenas against three federal agency witnesses due to Crater's non-compliance with the agencies' Touhy regulations. Secondly, Crater contended that the district court did not perform its gatekeeping duty by admitting testimony from the government's cryptocurrency expert without holding a Daubert hearing.However, the Court of Appeals affirmed the district court's decision, stating that Crater's arguments could not be reconciled with controlling precedent or the record in the case. The court found that Crater's failure to show how the excluded testimony of the federal agents would have been both material and favorable to his defense invalidated his Sixth Amendment claim. Furthermore, the court held that Crater's objections to the expert witness's qualifications and methodology were insufficient to necessitate a Daubert hearing. View "US v. Crater" on Justia Law

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Motus and CarData both provide tools for managing businesses' reimbursement of employee expenses. Motus is a Delaware limited liability company with its principal place of business in Boston.. CarData is a Toronto-based Canadian corporation. Motus sued CarData for trademark infringement and related wrongs for its use of a particular phrase in the meta title of its website, Lanham Act, 15 U.S.C. 1051-1129. Motus argued CarData had "purposefully availed itself of the privilege of conducting activities within the U.S. and Massachusetts" by maintaining numerous offices in the U.S. and marketing itself to and interacting with U.S. and Massachusetts customers through its website.The First Circuit affirmed the dismissal of Motus's suit without prejudice, for lack of personal jurisdiction, and denial of its request for jurisdictional discovery. The purposeful availment requirement was not met because there was not “something more” connecting CarData to the forum state beyond its website which is available to anyone with internet access, in any state. Motus did not act diligently to present facts to the court to show why jurisdiction would be found if discovery were permitted. Motus left the court to guess whether CarData has any Massachusetts customers, receives any revenue from Massachusetts, or has any other business connection with Massachusetts. Jurisdiction cannot be premised on guesswork; the record does not support a finding that the operation of CarData's website and/or its commercial contacts elsewhere in the country constitute purposeful availment with respect to Massachusetts. View "Motus, LLC v. CarData Consultants, Inc." on Justia Law

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John Fanning founded Jerk LLC (Jerk) and Jerk.com in 2009. From 2009 to 2014, Jerk operated Jerk.com. In 2014, the Federal Trade Commission (Commission) filed an administrative complaint charging Jerk and Fanning with engaging in deceptive acts or practices in or affecting commerce in violation of the Federal Trade Commission Act. The Commission entered a summary decision finding Fanning personally liable for misrepresentations contained on Jerk.com. Fanning petitioned for review. The First Circuit (1) affirmed the Commission’s finding of liability and the recordkeeping provisions and order acknowledgement requirement of the Commission’s remedial order; but (2) vacated Fanning’s compliance monitoring provisions, holding that these provisions were overbroad and not reasonably related to Fanning’s violation. View "Fanning v. Fed. Trade Comm'n" on Justia Law

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The Eastern Orthodox monastic order began a spiritual affiliation with the bishops of the Russian Orthodox Church Outside of Russia (ROCOR)in 1965. Although the Monastery concedes it commemorated the bishops of ROCOR until 1986, it considers itself an independent entity. The Monastery's 35 monks worked on translating religious texts from their original Greek into English. The works were in demand amongst parishes, but the Monastery obliged requests on a limited basis. One of the monks went to Colorado where he formed Dormition Skete, dedicated to painting traditional Orthodox icons. A Skete member, the Archbishop, created a website devoted to the Orthodox faith. Based on postings on that site, the Monastery sued the Archbishop, in state court, for copyright infringement. The parties settled with the Archbishop acknowledging the Monastery’s ownership of the works. The website continued to include its translations; the Monastery filed a federal suit, 17 U.S.C. 101. The district ruled in favor of the Monastery, rejecting claims or public domain, that ROCOR was the true owner of the copyrights, and of fair use. The First Circuit affirmed. The Archbishop offered identical or near-identical versions of the works on his website for the precise purpose for which the Monastery originally created them, harming their potential market value. View "Soc'y of the Holy Transfiguration Monastery, Inc. v. Archbishop Gregory of Denver" on Justia Law

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Denson spent about a year in federal prison for mail and wire fraud after he got caught up in a "Nigerian" money scam, 18 U.S.C. 1341 & 1343. After persons in Africa emailed Denson saying that he had inherited the rights to an overseas company worth $9-plus million Denson called a local Secret Service office. An agent warned him not to participate and that he could be criminally liable. Denson took thousands of dollars from persons who had trusted him to help with some "window-washing invention" he had "a patent for." Denson called the agent again and admitted that he had "deceived" others into giving him money. Meeting with some agents two days later, Denson described his scheme. He had tried to get an undercover agent to "invest" $30,000 in an overseas-construction venture, handing the agent false documents. The First Circuit upheld sentences of 15 months for supervised release (sentencing range 4-10 months) and 30 months terms for the fraud convictions, to run consecutively with the 15-month term. The court rejected a challenge to a “willful blindness” jury instruction. View "United States v. Denson" on Justia Law

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Over seven days in 2009, Ocean Bank authorized six apparently fraudulent withdrawals, totaling $588,851.26, from an account held by Patco, after the perpetrators correctly supplied Patco's customized answers to security questions. Although the bank's security system flagged each transaction as unusually "high-risk" because they were inconsistent with the timing, value, and geographic location of Patco's regular orders, the system did not notify commercial customers of such information and allowed the payments to go through. Ocean Bank was able to block or recover $243,406.83. Patco sued, alleging that the bank should bear the loss because its security system was not commercially reasonable under Article 4A of the Uniform Commercial Code (Me. Rev. Stat. tit. 11, 4-1101) and that Patco had not consented to the procedures. The district court held that the bank's security system was commercially reasonable and entered judgment in favor of the bank. The First Circuit reversed the grant of summary judgment on commercial reasonableness and remanded for determination of what, if any, obligations or responsibilities Article 4A imposes on Patco. View "Patco Constr. Co., Inc. v. People's United Bank" on Justia Law

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Defendant sells brokerage and investment products and services, typically to registered broker-dealers and investment advisers that trade securities for clients. One of its services, NetExchange Pro, an interface for research and managing brokerage accounts via the Internet, can be used for remote access to market dynamics and customer accounts. A firm may make its clients' personal information, including social security numbers and taxpayer identification numbers, accessible to end-users in NetExchange Pro. Some of defendant's employees also have access to this information. Plaintiff, a brokerage customer with NPC, which made its customer account information accessible in NetExchange Pro, received notice of the company's policy and filed a putative class action, alleging breach of contract, breach of implied contract, negligent breach of contractual duties, and violations of Massachusetts consumer protection laws. The district court dismissed. The First Circuit affirmed. Despite "dire forebodings" about access to personal information, plaintiff failed to state any contractual claim for relief and lacks constitutional standing to assert a violation of any arguably applicable consumer protection law. View "Katz v. Pershing, LLC" on Justia Law

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Defendant, convicted of interstate stalking, cyberstalking, and mailing a threatening communication (18 U.S.C. 2261A(1)-(2), 876(c)), based on communications with his estranged wife and minor child, was sentenced to 137 months. The First Circuit affirmed. The district court acted within its discretion in denying a change of venue or transfer. There was sufficient evidence to support the convictions. Defendant waived challenge to the indictment under FRCP 12(e); he did not show good cause for failing to raise the challenge before trial. The court acted within its discretion in allowing evidence of prior bad acts and imposing the sentence.

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After agents traced an Internet site containing child pornography to a computer shop, they obtained a warrant and searched hard drives of the owner's personal computers, where they found files containing pornography. The owner was convicted of knowing possession of child pornography, 18 U.S.C. 2252(a)(4)(B) and sentenced to 84 months in prison. The First Circuit affirmed. A reasonable jury could rationally conclude beyond a reasonable doubt that defendant knew that his own computer contained the files, even if he did not download them himself, and that they were obtained by Internet file sharing.

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Hackers breached the security of the database for the grocery store where plaintiffs shop. The district court determined that plaintiffs failed to state a claim under Maine law for breach of fiduciary duty, breach of implied warranty, strict liability, and failure to notify customers. Although the court concluded that plaintiffs adequately alleged breach of implied contract, negligence, and violation of the unfair practices portion of the Maine Unfair Trade Practices Act, it dismissed those claims because alleged injuries were too unforeseeable and speculative to be cognizable under Maine law. The First Circuit affirmed in part, but reversed dismissal of the negligence and implied contract claims. Mitigation damages are available under those claims, for card replacement costs and credit insurance.