Int'l Airport Ctrs., L.L.C. v. Citrin - 440 F.3d 418 (7th Cir. 2006)

Rule:

Violating the duty of loyalty, or failing to disclose adverse interests, voids the agency relationship. Unless otherwise agreed, the authority of the agent terminates if, without knowledge of the principal, he acquires adverse interests or if he is otherwise guilty of a serious breach of loyalty to the principal.

Facts:

The employer lent the employee a laptop to use for work. The employee decided to quit the employer and go into business for himself, in breach of his employment contract. Before returning the laptop, the employee deleted all the data in it by transmitting a secure-erasure program to the computer, which was designed, by writing over the deleted files, to prevent their recovery. The district court dismissed the employer's suit.

Issue:

Did the employee violate his duty of loyalty to his employer?

Answer:

Yes.

Conclusion:

The court reversed, finding that whether by Internet download or by disk insertion, a program intended to cause damage was transmitted to the computer electronically. The employee also violated § 1030(a)(5)(A)(ii) because his authorization to access the laptop terminated when, having already engaged in misconduct and decided to quit the employer in violation of his employment contract, he resolved to destroy files that incriminated himself and other files that were also the property of his employer in violation of his duty of loyalty. The court noted that although the employee's contract authorized him to destroy data, it was unlikely that the provision was intended to authorize him to destroy data that he knew the company would have wanted.