Christian v. Betak

Background

Donald J. Christian and George M. Betak co-founded GoPlug LLC in 2018 and later converted it into GoPlug Inc., a California corporation that designs, manufactures, and sells electric-vehicle chargers. The complaint alleged that Christian was GoPlug’s president and that Betak was its chief financial officer, secretary, and computer-system administrator. Christian alleged that Betak controlled GoPlug’s computer services, including Christian’s GoPlug email account.

Christian alleged that he lost access to his GoPlug Gmail account and other online accounts in April 2022. He also alleged that Betak later shut down company operations and terminated GoPlug’s employees. Christian’s claims included a federal Computer Fraud and Abuse Act claim, a claim under California Penal Code § 502(c)(5) of the California Comprehensive Computer Data Access and Fraud Act, a breach-of-fiduciary-duty claim, and a claim for an accounting.

In an earlier order, the court dismissed the California computer-fraud, fiduciary-duty, and accounting claims with leave to amend, while denying dismissal of the federal computer-fraud claim. Christian then filed a First Amended Complaint. Betak moved to dismiss the three amended claims addressed in this order.

Judicial Notice

The court granted Betak’s request to take judicial notice of a March 31, 2022 Google Workspace invoice. The invoice showed that the subscription was billed to GoPlug Inc. The court concluded that the invoice was not reasonably subject to dispute and rejected Christian’s objections to its authenticity.

California Computer-Fraud Claim

Christian’s claim under California Penal Code § 502(c)(5) alleged disruption or denial of computer services. Under the statute, a person bringing a civil action must be the owner or lessee of the computer, computer system, computer network, computer program, or data that suffered damage or loss.

The court concluded that Christian had not plausibly alleged that he was a lessee of GoPlug’s Google Workspace or other GoPlug computer services. The noticed invoice billed the Google Workspace subscription to GoPlug Inc., not Christian individually. The court also rejected Christian’s assertions that personally paying for the service, signing Google’s terms, or setting a username and password made him the lessee.

The court further ruled that Christian’s allegation that he owned a personal computer did not establish disruption to that computer. His alleged inability to access GoPlug services remotely from that computer did not plausibly allege that the computer itself was disrupted. Finally, the court ruled that Christian’s alleged ownership of technical files stored on GoPlug’s Google Workspace did not give him standing under § 502(c)(5), because that provision concerns disruption or denial of computer services rather than damage to stored data.

The court granted Betak’s motion to dismiss the California computer-fraud claim and granted Christian leave to amend it.

Breach of Fiduciary Duty

The court explained that claims for injuries to a corporation generally belong to the corporation or must be brought derivatively by a shareholder on the corporation’s behalf. A shareholder may bring an individual claim only when the alleged injury resulted from violation of a special duty owed directly to that shareholder.

The court found that Christian’s amended allegations did not materially add facts supporting an individual claim. Instead, they added legal arguments about why he believed he could sue directly. The court rejected Christian’s argument that the alleged unavailability of a derivative action converted the corporate injuries into a direct claim. It also concluded that the alleged disruption of Christian’s computer services did not establish a special duty that Betak owed to Christian separately from duties owed to GoPlug.

The court granted Betak’s motion to dismiss the breach-of-fiduciary-duty claim and granted Christian leave to amend it.

Accounting Claim

Christian alleged that Betak’s control of GoPlug’s financial records and tax returns prevented him from determining his interest in GoPlug’s assets. Betak argued that Christian had not plausibly alleged that any balance was owed to him and that determining GoPlug’s assets and losses belonged to GoPlug.

The court found that Christian did not address those arguments and instead repeated his allegation that he was entitled to an accounting. Because the court had dismissed the fiduciary-duty and California computer-fraud claims, and because Christian did not allege or argue that the remaining federal computer-fraud claim supported an accounting, the court granted Betak’s motion to dismiss the accounting claim. The court granted Christian leave to amend that claim.

Disposition

The court granted Betak’s motion to dismiss Christian’s claims for violation of the California Comprehensive Computer Data Access and Fraud Act, breach of fiduciary duty, and an accounting. The court granted leave to amend each of those claims. If Christian chose to file a second amended complaint, it was due 60 days after the order. The order did not dismiss the federal Computer Fraud and Abuse Act claim.