PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1852
OPENRISK, LLC,
Plaintiff – Appellant,
v.
MICROSTRATEGY SERVICES CORPORATION,
Defendant – Appellee.
No. 16-1906
OPENRISK, LLC,
Plaintiff – Appellant,
v.
MICROSTRATEGY SERVICES CORPORATION,
Defendant – Appellee.
Appeals from the United States District Court for the Eastern District of Virginia, at
Alexandria. Anthony John Trenga, District Judge. (1:15-cv-01451-AJT-TCB)
Argued: September 14, 2017 Decided: November 13, 2017
Before WYNN, FLOYD, and HARRIS, Circuit Judges.
Affirmed by published opinion. Judge Harris wrote the opinion, in which Judge Wynn
and Judge Floyd joined.
ARGUED: Francis Gilbert Gleason, Jr., GLEASON & GLEASON, P.C., Ashland,
Massachusetts, for Appellant. Mark Thomas Stancil, ROBBINS, RUSSELL,
ENGLERT, ORSECK, UNTEREINER & SAUBER LLP, Washington, D.C., for
Appellee. ON BRIEF: Kathryn S. Zecca, Donald Burke, Shai D. Bronshtein,
ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER & SAUBER LLP,
Washington, D.C., for Appellee.
2
PAMELA HARRIS, Circuit Judge:
In 2011, OpenRisk, LLC contracted with MicroStrategy Services Corporation to
create a cloud environment that would host OpenRisk data and programming. But soon
after, OpenRisk faced insolvency, and three of its principal officers resigned. At issue in
this case is whether MicroStrategy wrongfully continued to provide services to
OpenRisk’s ex-employees after they had left and formed a new company, Spectant Group
LLC.
In particular, OpenRisk alleges that at the direction of its recently departed officers
and without its knowledge, MicroStrategy copied and transferred data from the OpenRisk
cloud environment to a new environment established for Spectant. And then, according
to OpenRisk, MicroStrategy deleted the data from OpenRisk’s environment, without the
notice of termination required by the parties’ contract. When OpenRisk became aware of
the copying and deletion of its data, it sued MicroStrategy for computer fraud under
Virginia’s Computer Crimes Act and for other state-law violations.
The district court granted summary judgment almost entirely in MicroStrategy’s
favor. The primary issue now on appeal is whether the district court correctly held that
the federal Copyright Act preempts OpenRisk’s computer fraud claims. We agree with
the district court that it does. We further agree that MicroStrategy is entitled to summary
judgment on OpenRisk’s other claims against it. Accordingly, we affirm the district
court’s judgment in its entirety.
3
I.
A.
OpenRisk was a start-up company that ceased operations in 2011, shortly after the
resignation of three of its key employees: President Craig Ott, Chief Technology Officer
Shajy Mathai, and Chief Scientist Richard Murnane. This dispute arises out of
MicroStrategy’s dealings with the three employees, before and, critically, after their
resignations.
Ott, Mathai, and Murnane began their relationship with MicroStrategy even before
they formed OpenRisk, using MicroStrategy-licensed software to develop a computer
program that would allow insurance companies to analyze exposure to natural disasters.
Their business model included the creation of a web-based platform that customers could
access on the “cloud,” or via the internet. To further this effort, they partnered with
investors to establish OpenRisk in January 2011, and in September 2011, OpenRisk
contracted with MicroStrategy for “cloud services.”
Under the parties’ contract, MicroStrategy agreed to provide OpenRisk with
access to space on MicroStrategy’s servers – a “cloud environment” – on which
OpenRisk would store data and run the software it was licensing. In exchange, OpenRisk
agreed to make initial payments to MicroStrategy of $15,000 on October 31 and
November 30, 2011, followed by quarterly payments of $63,000 thereafter, totaling
approximately $1.26 million over the contract’s five-year term.
But at the time it entered into this contract with MicroStrategy, OpenRisk was
already in dire financial straits. When OpenRisk was unable to close negotiations with a
4
new investor, Ott, Mathai, and Murnane all resigned from OpenRisk and formed a new
company, Spectant. And with MicroStrategy’s help, OpenRisk alleges, they took
OpenRisk’s data with them.
Specifically, OpenRisk points in its complaint to two key acts by MicroStrategy.
First, on December 13, 2011, just hours after receiving a cease-and-desist letter from
OpenRisk urging it to “cease and refrain from doing any work and making any efforts to
commercialize the OpenRisk property with [Ott, Mathai, and Murnane],” J.A. 1068–70,
MicroStrategy copied the data from the OpenRisk cloud environment and transferred it to
a new environment created for Spectant. And second, on or around January 11, 2012,
and after OpenRisk failed to make its first quarterly payment under the contract,
MicroStrategy deleted the entire OpenRisk environment and all of its contents from its
servers. Only after the data had been erased, on January 20, 2012, did MicroStrategy
provide OpenRisk with notice of contract termination for non-payment.
B.
OpenRisk sued MicroStrategy in the United States District Court for the Eastern
District of Virginia, invoking the court’s diversity jurisdiction. With respect to
MicroStrategy’s transfer of computer data from the OpenRisk to the Spectant cloud
environment, OpenRisk raised Virginia state-law claims of conversion of intellectual
property; computer fraud by embezzlement, larceny, and conversion under the Virginia
Computer Crimes Act (“VCCA”); and misappropriation of trade secrets. The deletion of
data from the OpenRisk environment, OpenRisk alleged, constituted unlawful trespass
under the VCCA. OpenRisk also claimed that MicroStrategy tortiously interfered with
5
the post-employment contractual duties owed to OpenRisk by its former employees, and
engaged in unlawful business and civil conspiracies under Virginia law. 1
At the close of discovery, MicroStrategy moved for summary judgment, arguing
that the federal Copyright Act preempts OpenRisk’s state-law claims for conversion and
computer fraud, and that OpenRisk had failed to put forward sufficient evidence to
support a favorable verdict on its other claims. OpenRisk cross-moved for partial
summary judgment on its computer fraud and trespass claims under the VCCA. The
district court ruled for MicroStrategy, denying OpenRisk’s motion and granting
MicroStrategy’s motion for summary judgment on all claims relevant here. 2
The court began with what is now the primary issue on appeal: whether state-law
claims arising from the copying and transfer of OpenRisk’s computer data are preempted
by the federal Copyright Act. The district court held that they are. In “substance,” the
district court explained, OpenRisk’s claims for conversion and, under the VCCA, for
embezzlement and larceny, all are premised on “underlying conduct” that falls within the
scope of copyright protection – the unauthorized copying of data – and thus preempted.
J.A. 527. As for the deletion of data from the OpenRisk environment, the court held,
OpenRisk could not prevail on its claim of trespass under the VCCA because it had failed
1
Under the express terms of the contract, the parties’ dispute is governed by
Virginia law.
2
The district court denied summary judgment on OpenRisk’s claim for
misappropriation of trade secrets, though it was skeptical that the claim ultimately could
succeed. Before OpenRisk filed its notice of appeal, the parties stipulated to dismissal of
that claim with prejudice.
6
to create a genuine issue of material fact as to whether it had sustained the requisite injury
as a result of MicroStrategy’s conduct. The court also noted a “substantial” threshold
question as to whether the deletion of data governed by a contract “even falls within the
scope” of the VCCA – a criminal statute – rather than giving rise to an ordinary breach of
contract action. J.A. 528.
With respect to OpenRisk’s claim for tortious interference, the district court held
that OpenRisk had “not come forward with evidence that would allow a reasonable fact
finder to conclude” that MicroStrategy had induced or caused OpenRisk’s former officers
to violate any contractual obligations they may have owed to OpenRisk. J.A. 526. On
the contrary: “The evidence . . . quite clearly shows that these officers, independent of
any interaction with MicroStrategy . . . had decided to leave OpenRisk and embark upon
the efforts they made to operate and create Spectant.” Id. Finally, the court granted
summary judgment to MicroStrategy on OpenRisk’s conspiracy claims, finding that
OpenRisk had failed to introduce sufficient evidence that the defendants had “engaged in
an agreement with anyone” to harm OpenRisk. J.A. 529. And in any event, the court
concluded, because the conspiracy claims were predicated on allegations of conversion,
larceny, and embezzlement that were themselves preempted, neither could go forward as
a matter of law.
OpenRisk filed a motion for reconsideration, which the district court summarily
denied. OpenRisk then filed two notices of appeal, and the appeals were consolidated
before this court. See Thomas v. Ford Motor Co., 244 F. App’x 535, 538 n.2 (4th Cir.
2007); see also Fed. R. App. P. 4(a)(2).
7
II.
A.
OpenRisk’s first argument on appeal is that the district court erred in holding that
its computer fraud claims under the VCCA are preempted by the federal Copyright Act.
We review the district court’s preemption determination de novo, Walker v. Medtronic,
Inc., 670 F.3d 569, 577 (4th Cir. 2012), and come to the same result. As the district court
concluded, OpenRisk’s computer fraud claims are preempted because, at their “core,”
they seek to impose liability for the unauthorized copying and distribution of data on
OpenRisk’s cloud environment, and thus are not “qualitatively different” from copyright
infringement claims. See Rosciszewski v. Arete Assocs., 1 F.3d 225, 230 (4th Cir. 1993).
Federal Copyright Act preemption is “broad and absolute.” United States ex rel.
Berge v. Bd. of Trs., 104 F.3d 1453, 1464 (4th Cir. 1997). Under § 301 of the Copyright
Act,
all legal or equitable rights that are equivalent to any of the exclusive rights
within the general scope of copyright . . . and come within the subject
matter of copyright as specified by sections 102 and 103 . . . are governed
exclusively by this title. . . . [N]o person is entitled to any such right or
equivalent right in any such work under the common law or statutes of any
State.
17 U.S.C. § 301(a). Congress precluded state-law actions to enforce rights protected by
federal copyright law in “the clearest and most unequivocal language possible,” so as to
“avoid the development of any vague borderline areas between State and Federal
protection.” Berge, 104 F.3d at 1464 (quoting H.R. Rep. No. 94-1476, at 130 (1976)).
Where Congress has struck the balance between the free flow of ideas in the public
8
domain, on the one hand, and the protection of certain forms of intellectual property, on
the other, § 301 ensures that states may not upset that balance by offering protection that
the Copyright Act does not. See id. at 1464–65; ProCD, Inc. v. Zeidenberg, 86 F.3d
1447, 1453 (7th Cir. 1996).
Section 301 thus “sets up a two-prong inquiry to determine when a state law claim
is preempted.” Berge, 104 F.3d at 1463. First, the work at issue – in this case, software
and data from the OpenRisk cloud environment – “must be within the scope of the
subject-matter of copyright as specified in 17 U.S.C. §§ 102, 103.” Id. If it is, then a
state-law claim is preempted if “the rights granted under state law” are “equivalent to”
those protected by federal copyright. Id. (internal quotation marks omitted). Here, there
is no question as to the first prong; OpenRisk does not dispute that the materials in
question fall within the scope of the subject matter of copyright. See, e.g., Trandes Corp.
v. Guy F. Atkinson Co., 996 F.2d 655, 659 (4th Cir. 1993) (explaining that a “computer
program . . . clearly comes within the ‘subject matter’ of copyright”). Accordingly, this
case turns on the second prong of the inquiry, and whether the rights OpenRisk seeks to
protect under state law are “equivalent to the exclusive rights reserved to the owner of a
copyright.” Id. at 659.
Chief among those federal-law “exclusive rights” are the rights “to reproduce” and
to “distribute copies . . . of the copyrighted work.” 17 U.S.C. § 106(1), (3). So to the
extent that OpenRisk’s state claims turn on an allegation that MicroStrategy made
unauthorized copies of the data on the OpenRisk cloud environment and then transferred
that data to Spectant, those claims are precisely “equivalent” to copyright law’s
9
prohibition of unauthorized reproduction and dissemination, and hence preempted. As
we have held, when the “core” of a state claim is the unauthorized copying of a computer
program, the federal Copyright Act precludes that claim from going forward. See
Rosciszewski, 1 F.3d at 230.
That general principle is readily applied to OpenRisk’s conversion claim – and,
indeed, OpenRisk no longer disputes that this claim is preempted. Under Virginia law,
“[c]onversion is the wrongful assumption or exercise of the right of ownership over
goods or chattels belonging to another in denial of or inconsistent with the owner’s
rights,” Maine v. Adams, 672 S.E.2d 862, 869 (Va. 2009) (internal quotation marks
omitted) – essentially, converting another’s property to one’s own use. And it is clear
that when a conversion claim – like OpenRisk’s – rests on an allegation of wrongful
copying and distribution of intellectual property, it is “equivalent” to a copyright
infringement claim and thus preempted under the Copyright Act. “[W]here the core of
the state law theory of recovery, as in conversion, goes to wrongful copying . . . it is
preempted.” Berge, 104 F.3d at 1464; see J.A. 525 (finding it “clear,” based on Berge,
that OpenRisk’s conversion claim is preempted).
Like the district court, we conclude that OpenRisk’s VCCA computer fraud claims
fare no better. The VCCA, a criminal statute with a private right of action, provides in
relevant part that “[a]ny person who uses a computer or computer network, without
authority and . . . [e]mbezzles or commits larceny . . . is guilty of the crime of computer
fraud.” Va. Code Ann. § 18.2-152.3(2). We have held already, reviewing an earlier
iteration of the VCCA, that when a claim is predicated on the copying of computer data,
10
the statutory requirement of “use of a computer” does not “qualitatively change the
nature” of the claim so that it is no longer preempted, because “use of the computer ‘is a
necessary condition to [the] copying.’” Rosciszewski, 1 F.3d at 230 (quoting 1 Melville
B. Nimmer & David Nimmer, Nimmer on Copyright § 1.01[B], at 1-14 n.62 (1992)). So
too for the requirement that the copying be done “without authority,” which also is a
necessary condition to copyright infringement. Id.
OpenRisk argues, however, that the VCCA’s predicate acts of embezzlement and
larceny are different, in that both contain “extra element[s]” that distinguish VCCA
computer fraud claims from a copyright infringement claim. And, indeed, when a state-
law claim requires an “extra element” – an element that goes beyond the elements of
copyright infringement, such as unauthorized reproduction or distribution – that claim
may be saved from Copyright Act preemption. See Berge, 104 F.3d at 1463 (quoting
Rosciszewski, 1 F.3d at 229–30). But, critically, not any “extra element” will do. Only
when an extra element “changes the nature of the action so that it is ‘qualitatively
different from a copyright infringement claim’” is preemption avoided. Id. at 1463
(quoting Rosciszewski, 1 F.3d at 229–30); see also, e.g., Tire Eng’g & Distrib., LLC v.
Shandong Linglong Rubber Co., 682 F.3d 292, 311 (4th Cir. 2012) (“A state cause of
action is not ‘equivalent’ and avoids preemption if the action requires an ‘extra element
[that] transform[s] the nature of the action . . . .’”) (quoting Laws v. Sony Music Entm’t
Inc., 448 F.3d 1134, 1144 (9th Cir. 2006)) (emphasis added).
Applying this standard, we have held that a state action for copying of computer
data is preempted by the Copyright Act notwithstanding an “extra element” requiring
11
“awareness or intent.” Rosciszewski, 1 F.3d at 230 (quoting Computer Assocs. Int’l, Inc.
v. Altai, Inc., 982 F.2d 693, 717 (2d Cir. 1992)). An intent element, we explained, does
not “qualitatively chang[e] a state claim from one of unauthorized copying.” Id. It may
alter the “scope” of the state claim as compared to a federal copyright action, but it does
not affect the underlying “nature” of the claim itself. Id. (quoting Computer Assocs. Int’l,
982 F.2d at 717). On the other hand, in yet another case involving alleged improper
acquisition of computer software, we held that a state claim for trade secret
misappropriation is not preempted when an “extra element” requires “the breach of a
duty of trust or confidentiality.” Trandes Corp., 996 F.2d at 660. Because that element –
“the employment of improper means to procure the trade secret, rather than mere copying
or use” – is the “core” of a trade secret misappropriation claim, we concluded, it
“qualitatively distinguishes such trade secret causes of actions from claims for copyright
infringement.” Id. (internal quotation marks omitted).
OpenRisk’s primary argument is that the VCCA predicate act of embezzlement
includes an additional element that transforms the “nature” of its claim, see Rosciszewski,
1 F.3d at 230, bringing it within the rule of Trandes Corp. According to OpenRisk,
embezzlement under Virginia law requires a showing that a defendant was “entrusted”
with property that he or she then wrongfully appropriated, and that extra element of
“entrustment” – much like the element of “duty of trust or confidentiality” at issue in
Trandes Corp. – is enough to save its claim from Copyright Act preemption. We
disagree.
12
The problem with OpenRisk’s argument is its premise: In fact, an embezzlement
claim under Virginia law does not include as an “extra element” a special relationship of
trust or confidence that might qualitatively distinguish it from a claim for copyright
infringement. Our preemption analysis focuses on “the elements” of a state cause of
action and not “the facts pled to prove” it, Trandes Corp., 996 F.2d at 659, so regardless
of whether OpenRisk has alleged in this case that MicroStrategy abused a trust
relationship, what matters are the necessary elements of embezzlement. And as we have
explained, the “traditional concept” of embezzlement includes both the “central element”
of the “conversion of property belonging to another” and also the “further element[]” that
the “property must have been in the lawful possession of the defendant at the time of its
appropriation.” United States v. Stockton, 788 F.2d 210, 216–17 (4th Cir. 1986). There
is no additional requirement – let alone an element at the “core” of the action, Trandes
Corp., 996 F.2d at 660 – that the defendant abuse a confidence in the course of
committing the crime. Stockton, 788 F.2d at 216–17. 3
Virginia’s embezzlement statute tracks this “traditional concept.” It does reach, as
OpenRisk urges, the theft of property that has been “entrusted” to a defendant and is thus
within his or her lawful possession. Va. Code Ann. § 18.2-111. But it also reaches the
3
The final element of the traditional crime of embezzlement is that a defendant
act with knowledge that his appropriation of property is unauthorized. Stockton, 788 F.2d
at 217. But as noted above, for Copyright Act preemption purposes, a knowledge or
intent element “alter[s] [an] action’s scope but not its nature,” and will not save from
preemption a claim otherwise resting on wrongful copying or distribution. Rosciszewski,
1 F.3d at 230 (quoting Computer Assocs. Int’l, 982 F.2d at 717).
13
theft of property that has been “delivered to [a defendant] by another or by any court,
corporation or company,” and has come within the defendant’s lawful possession by this
alternative means. Id. (emphasis added). And, as the Virginia courts have made clear,
“the existence of a formal fiduciary relationship is not necessary” for liability. Chiang v.
Commonwealth, 365 S.E.2d 778, 780 (Va. Ct. App. 1988).
This understanding of the elements of embezzlement is confirmed by the Supreme
Court of Virginia’s decision in Stegall v. Commonwealth, holding that a defendant may
be guilty of embezzlement for failing to return a rental car. 160 S.E.2d 566, 569 (Va.
1968). A customer has no special relationship of trust or confidence with a car-rental
company. Nevertheless, the court found it sufficient that the defendant was “entrusted”
with the car, in the sense that he “came into lawful possession of [it] through a rental
agreement.” Id. at 568–69. OpenRisk does not contend that an element of lawful
possession, by itself, would qualitatively distinguish its embezzlement claim from a
copyright infringement claim. Cf. Berge, 104 F.3d at 1463 (element requiring unlawful
possession affects scope but not nature of copying claim). Nor does OpenRisk take the
position that a contractual agreement like the one in Stegall is an element of Virginia
embezzlement law, or that, if it were, it would change the “core” of an embezzlement
action so as to save it from Copyright Act preemption. We think this is wise.
Agreements not to misuse copyrighted materials are a routine feature of the digital age –
every song purchase on iTunes is accompanied by an electronic promise not to violate the
exclusive rights set out in the Copyright Act – and if state-law actions to vindicate those
agreements were deemed qualitatively different from copyright infringement claims,
14
there would be little left of Copyright Act preemption. See 1 Melville B. Nimmer &
David Nimmer, Nimmer on Copyright § 1.01[B][1][a][iii] (2017) (state-law claim for
violation of “shrinkwrap license” agreement is attempt to “vindicate rights
indistinguishable from those accorded by the Copyright Act” and thus preempted).
In sum, embezzlement as defined by Virginia law does not include an “extra
element” that makes OpenRisk’s embezzlement claim “qualitatively different” from one
for copyright infringement. See Berge, 104 F.3d at 1463. As the district court explained,
the “substance” of OpenRisk’s embezzlement claim is based on the “same underlying
conduct” – the unauthorized copying and transfer of material from the OpenRisk cloud
environment – that would support a copyright infringement claim. J.A. 527. Any
additional element required to prove state-law embezzlement “relates to the scope” of
that action, id., and not to its “nature.” Rosciszewski, 1 F.3d at 230.
Application of the “extra element” standard to OpenRisk’s larceny theory is even
more straightforward, and leads to the same result. Under Virginia law, larceny is the
“wrongful or fraudulent taking of personal goods . . . , belonging to another, without his
assent, and with the intention to deprive the owner thereof permanently.” Foster v.
Commonwealth, 606 S.E.2d 518, 519 (Va. Ct. App. 2004) (quoting Dunlavey v.
Commonwealth, 35 S.E.2d 763, 764 (Va. 1945)). OpenRisk contends that a VCCA claim
predicated on larceny is qualitatively different from copyright infringement because it
involves the taking of property without the owner’s consent. But a copyright claim, too,
necessarily involves unauthorized reproduction, so this “extra element” is not “extra” at
all. See Rosciszewski, 1 F.3d at 230 (requirement that computer be used “without
15
authority” to copy programming does not distinguish computer fraud claim from
copyright infringement claim, which “necessarily involves using the computer without
authority”). The core of OpenRisk’s claim remains the unauthorized copying and
transfer of its data, and that claim is “equivalent to” a copyright infringement action and
thus preempted.
B.
OpenRisk next challenges the district court’s grant of summary judgment to
MicroStrategy on its computer trespass, tortious interference, and conspiracy claims.
Summary judgment is appropriate when there are no genuine issues of material fact and
the moving party – here, MicroStrategy – is entitled to judgment as a matter of law.
Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014). To defeat
summary judgment, the non-moving party, OpenRisk, must “provide more than a scintilla
of evidence – and not merely conclusory allegations or speculation – upon which a jury
could properly find in its favor.” Design Res., Inc. v. Leather Indus. of Am., 789 F.3d
495, 500 (4th Cir. 2015) (internal quotation marks omitted). We review the district
court’s award of summary judgment de novo, viewing the evidence in the light most
favorable to OpenRisk. Id.
First, OpenRisk alleges that MicroStrategy violated the VCCA’s computer
trespass provision, Va. Code Ann. § 18.2-152.4(A)(3), by deleting or altering the data on
the OpenRisk cloud environment in January 2012, when OpenRisk failed to make the
first quarterly payment on its contract. Not until after taking down the cloud
environment, OpenRisk claims, did MicroStrategy provide it with the 90-day notice of
16
termination for non-payment mandated by the parties’ contract. Under the VCCA, only a
party who is “injured by reason of a violation” of the computer trespass provision may
bring a private right of action, id. § 18.2-152.12(A), and the district court held that
OpenRisk had failed to come forward with the necessary evidence of injury. We agree.
As the district court explained, by the time MicroStrategy stopped maintaining the
OpenRisk cloud environment on its servers in January 2012, effectively erasing the
contents, “OpenRisk by its own declaration was out of business.” J.A. 528. And indeed,
as early as November 2011, OpenRisk’s CEO informed MicroStrategy that OpenRisk
would be “closing company operations” and that MicroStrategy should “discontinue all
services to OpenRisk.” J.A. 759. But as the district court emphasized, OpenRisk did not
request that MicroStrategy preserve or return the information in question. “There’s no
evidence that the information was needed by OpenRisk for any particular purpose or that
MicroStrategy was told [OpenRisk] needed it for any particular purpose.” J.A. 528.
OpenRisk argues that the district erred by adopting a per se rule that once a
company goes out of business, it cannot be injured by the destruction of its property.
According to OpenRisk, that rule fails to account for the decrease in OpenRisk’s
liquidation value that would have resulted from the loss of the material on its cloud
environment. But the district court did not announce the per se rule imagined by
OpenRisk; instead, it made a fact-specific determination that in this case, OpenRisk had
proffered no evidence that it had any need or use for the data in question at the time it
was deleted. We agree with that assessment of the record. OpenRisk’s conclusory
assertion that its liquidation value would have been affected negatively by
17
MicroStrategy’s actions is just that – a conclusory assertion without support in the record,
insufficient to defeat summary judgment. See Design Res., Inc., 789 F.3d at 500 (party
opposing summary judgment must point to more than “conclusory allegations or
speculation”).
Like the district court, J.A. 528, we also think that a “substantial” threshold issue
would be raised by application of the VCCA’s criminal trespass provision to what
appears to be a garden variety breach-of-contract claim. Much of OpenRisk’s argument
is directed to a contract provision that expressly allowed MicroStrategy to “irretrievably
delete” the metadata on the OpenRisk cloud environment 90 days after notice of
termination of the parties’ contract, J.A. 1236, and to whether MicroStrategy complied
with that provision when it deleted all of the OpenRisk content before sending a formal
notice of termination. But failure to comply with the terms of a business contract
generally is the stuff of civil suits for breach of contract, not criminal liability. And one
Virginia court already has held that the VCCA’s computer trespass provision does not
apply to a dispute between two parties to a business contract – a service provider and a
customer – over deletion of data relating to the customer’s site from the provider’s
servers: “[T]his is a question of breach of contract rather than criminal trespass. The
contract allowed [defendant AOL] access that might otherwise have been trespass. If the
access involved actions that violated the contract, then [p]laintiff can recover for breach
of contract.” CigarCafe, L.C. v. Am. Online, Inc., 50 Va. Cir. 146, 157 (Va. Cir. Ct.
1999). But like the district court, we may leave this question of state law for another day.
Because OpenRisk failed to come forward with evidence of injury, the district court
18
properly granted summary judgment to MicroStrategy on OpenRisk’s computer trespass
claim. 4
OpenRisk’s next claim is for tortious interference with contract, alleging that
MicroStrategy improperly interfered with post-employment contractual duties owed to
OpenRisk by its former officers. Those duties, OpenRisk alleges, included the “non-use”
of OpenRisk property, and MicroStrategy made such use possible by transferring
OpenRisk data to a cloud environment it had established for Spectant. The district court
granted summary judgment to MicroStrategy, holding that OpenRisk had not “come
forward with evidence that would allow a reasonable fact finder to conclude that [this]
conduct on the part of [MicroStrategy] induced the former officers” to violate any
contractual duty. J.A. 526. Again, we agree.
The district court “reviewed the evidence in the case” and determined that it
showed, “quite clearly,” that OpenRisk’s ex-employees made an “independent” decision
to use “whatever intellectual property OpenRisk may have had” when they established
their new company, Spectant. J.A. 526. And as the district court held, that is enough to
defeat a claim of tortious interference under Virginia law, which requires evidence that a
4
Tracking the terms of the VCCA’s computer trespass provision, which makes it
a crime to “[a]lter, disable, or erase any computer data,” Va. Code Ann. § 18.2-
152.4(A)(3), OpenRisk framed its computer trespass claim in terms of deletion and
alteration. It now suggests that the district court erred by addressing only its deletion
claim and not a separate claim for alteration. But the parties, like the VCCA, regularly
treated the two theories together as one claim, and the better reading of the district court’s
oral ruling is that “deletion” was used as a shorthand to cover both. In any event, because
OpenRisk has failed to provide evidence of injury resulting from MicroStrategy’s
decision to cease maintaining OpenRisk’s cloud environment, it can prevail on neither a
deletion- nor an alteration-based trespass claim.
19
defendant actually has “induc[ed] or caus[ed]” a breach of contract, Dunlap v. Cottman
Transmission Sys., LLC, 754 S.E.2d 313, 318 (Va. 2014) (quoting Chaves v. Johnson,
335 S.E.2d 97, 102 (Va. 1985)), taking affirmative action that is the proximate cause of
the breach. See Lockheed Info. Mgmt. Sys. Co. v. Maximus, Inc., 524 S.E.2d 420, 432–33
(Va. 2000).
OpenRisk does not dispute the district court’s evaluation of the record evidence so
much as it advances a different legal ground for recovery: According to OpenRisk, it is
enough that MicroStrategy’s actions “open[ed] up the door” to the former officers’
alleged breaches of contract, making it possible for them to use OpenRisk’s data. Br. of
Appellant OpenRisk at 55. That but-for causation theory, however, is plainly
inconsistent with Virginia law, which requires causation of the more direct and proximate
variety. See Lockheed, 524 S.E.2d at 432–33. And this is not surprising. Under
OpenRisk’s expansive alternative theory, liability could attach to any third-party vendor
that does business with a company’s ex-employees and thus makes it possible for them to
breach a post-employment contractual duty – by, for instance, providing them computer
terminals or servicing a copier. OpenRisk can point to no Virginia case taking such a
broad approach to tortious interference, and we have found none. 5
5
On appeal, OpenRisk argues that MicroStrategy committed tortious interference
not only by making it possible for its former officers to breach post-employment
contractual obligations, but also by inducing them to resign in the first instance. As
OpenRisk concedes, it did not raise that argument before the district court until it filed a
motion for reconsideration, which the district court denied without analysis.
Accordingly, the argument has not been preserved for appellate review, and we do not
address it. See Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999).
20
Finally, OpenRisk argues that the district court erred in granting summary
judgment to MicroStrategy on its claims for Virginia common law and statutory business
conspiracy. The district court relied on two alternative and independent grounds for its
decision: first, that OpenRisk had failed to proffer evidence from which a reasonable
factfinder could conclude that MicroStrategy had engaged in an agreement to harm
OpenRisk; and, second, that the conspiracy claims were based on underlying predicate
acts preempted by federal law.
We begin – and may end – with the district court’s second rationale. Under
Virginia law, OpenRisk can succeed on either of its conspiracy claims only if it has
“sustained damages as a result of an act that is itself wrongful or tortious.” Dunlap, 754
S.E.2d at 317. “If the underlying tort is dismissed for any reason, so, too, must the
corresponding conspiracy claim be dismissed.” Tire Eng’g & Distrib., LLC, 682 F.3d at
311 (Virginia civil conspiracy); see also Shirvinski v. U.S. Coast Guard, 673 F.3d 308,
321 (4th Cir. 2012) (Virginia business conspiracy). As the district court explained, that
rule entitles MicroStrategy to judgment as a matter of law on OpenRisk’s conspiracy
claims because – as the district court held and we now affirm – the state-law violations on
which they are predicated are preempted by the Copyright Act.
On appeal, OpenRisk argues that the district court misunderstood its complaint,
which in fact alleges as predicates not only the conversion, embezzlement, and larceny
claims deemed preempted by the district court but also unlawful deletion under the
VCCA and tortious interference. We need not decide whether OpenRisk’s reading of the
complaint – which is not apparent on its face – could be sustained. As OpenRisk
21
recognizes, its argument could justify reinstatement of its conspiracy claims only if one
or both of the potential additional predicates to which it points were improperly
dismissed by the district court. But as set forth above, the district court properly awarded
summary judgment on those claims, too. Because no possible predicate claim survives,
the district court correctly held that OpenRisk cannot prevail on its conspiracy claims for
that reason alone.
III.
For the foregoing reasons, we affirm the judgment of the district court.
AFFIRMED
22