Thrifty-Tel, Inc. v. Bezenek

I ran across one of my favorite cases, Thrifty-Tel, Inc. v. Bezenek, 46 Cal. App. 4th 1559 (2006), doing some research recently. Thrifty-Tel extended the common law tort of trespass to chattels to the computer age. The Bezenek’s teenage sons used a computer and a modem to obtain plaintiff’s access codes (which were then used to make long-distance calls without paying):

[T]he evidence supports the verdict on a trespass theory. . . Thrifty-Tel pleaded and proved a claim for trespass to personal property, and the defendants are properly liable under that label. Trespass to chattel, although seldom employed as a tort theory in California (indeed, there is nary a mention of the tort in Witkin’s Summary of California Law), lies where an intentional interference with the possession of personal property has proximately caused injury. . . . Prosser notes trespass to chattel has evolved considerably from its original common law application — concerning the asportation of another’s tangible property — to include even the unauthorized use of personal property: “Its chief importance now,” according to Prosser, “is that there may be recovery … for interferences with the possession of chattels which are not sufficiently important to be classed as conversion, and so to compel the defendant to pay the full value of the thing with which he has interfered. Trespass to chattels survives today, in other words, largely as a little brother of conversion.”  . . .

Id. at 1566-67. The Thrifty-Tel court also held that the boys’ use of the access code to make unauthorized calls did constitute fraud, even though no human relied on the boys’ access code:

Plaintiff’s cyber-fraud cause of action also applies a hoary common law theory to computer-age facts. The Bezeneks maintain they cannot be liable for fraud because the computer machinations did not constitute a misrepresentation and there was no evidence of reliance by Thrifty-Tel. Au contraire, asserts plaintiff: Ryan and Gerry’s use of the confidential access code was the legal equivalent of a misrepresentation that they were authorized users of its services, and plaintiff relied to its detriment on that misrepresentation when its computer automatically granted them access to the network. Plaintiff’s point is well taken. . . . True, no human at Thrifty-Tel received and acted on the misrepresentation. But California courts recognize indirect reliance. . . . Moreover, the notion that reliance by an agent may be imputed to the principal, even though the misrepresentation was never communicated to the principal, is ensconced in California law. . . . We view Thrifty-Tel’s computerized network as an agent or legal equivalent.

Id. at 1567, 1568. The fact that the plaintiff’s computer network is treated as the legal equivalent of an agent might have interesting implications in other contexts.

But what struck me re-reading Thrifty-Tel this time was the court’s effort to do equity and make sure the remedy matched the plaintiffs’ cause of action. While the plaintiff telephone company detected the boys’ activities almost immediately, it gave no notice to the boys’ parents until it filed suit at least four months later. As the court put it, “[t]he April Fools’ Day lawsuit provided the Bezeneks’ first notice of their sons’ computer hijinks.” The plaintiff sought damages under its “unauthorized usage” tariff under its California Public Utilities Commission rate schedule, including a $2,880 per day surcharge, a $3,000 “set up fee,” $200 per hour labor fees, as well as attorney fees and costs – totaling $33,720 in damages and nearly $14,000 in attorney fees and costs. The court allowed for the judgment for liability to stand, but remanded the case for the trial court to determine what actual damages the plaintiff suffered before it had an opportunity to mitigate the damages by alerting the Bezeneks to their sons’ activities.

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