Federated IT, Inc. v. Anthony

FEDERATED IT, INC., Plaintiff, v. BARRENCE ANTHONY, et al., Defendants.

Civil Action No. 1:18cv1484 (LMB/JFA)

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

May 12, 2020

PROPOSED FINDINGS OF FACT AND RECOMMENDATIONS

This matter is before the court on plaintiff Federated IT, Inc.'s ("Federated IT" or "plaintiff") motion for default judgment against defendant Ashley Arrington. (Docket no. 41). Pursuant to 28 U.S.C. § 636(b)(1)(C), the undersigned magistrate judge is filing with the court his proposed findings of fact and recommendations, a copy of which will be provided to all interested parties.

Procedural Background

On December 4, 2018, plaintiff filed a complaint against defendants Barrence Anthony and Ashley Arrington. (Docket no. 1) ("Compl."). The complaint alleges ten counts: (1) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 ("CFAA"); (2) violation of the Virginia Computer Crimes Act, Va. Code Ann. § 18.2-152.1 ("VCCA"); (3) misappropriation of a trade secret under the Defense of Trade Secrets Act, 18 U.S.C. § 1836 ("DTSA"); (4) misappropriation of a trade secret under the Virginia Uniform Trade Secrets Act, Va. Code Ann. §§59.1-336-59.1-343; (5) breach of fiduciary duty; (6) tortious interference with existing contract; (7) conversion; (8) breach of contract; (9) conspiracy; and (10) statutory business conspiracy. (Compl. ¶ 1). On the same day as the filing of the complaint, a summons was issued as to the defendants. (Docket no. 2). On February 28, 2019, plaintiff filed a return of service confirming that the summons and complaint were served on defendant Arrington on February 25, 2019. (Docket no. 3). In accordance with Federal Rule of Civil Procedure 12(a), defendant Arrington's responsive pleading was due on March 18, 2019, twenty-one (21) days after she was served with a copy of the summons and complaint. Defendant Anthony filed a motion to stay the case pending the resolution of criminal proceedings on March 15, 2019 which the court granted the same day. (Docket nos. 4, 6). On September 30, 2019, plaintiff filed a motion to lift the court's stay which the court granted the following day on October 1, 2019. (Docket nos. 7, 10). Subsequently, the court ordered that defendants were to file their responsive pleadings to the complaint no later than October 9, 2019. (Docket no. 11). Defendant Arrington filed an answer to the complaint on October 9, 2019. (Docket no. 13).

The court issued a Scheduling Order on October 16, 2019 setting a discovery due date of March 13, 2020. (Docket no. 14). On October 30, 2019, plaintiff filed a discovery plan with the court. (Docket no. 19). The undersigned held an initial pretrial conference on November 6, 2019 and defendant Arrington attended the conference pro se. (Docket no. 22). On the same day, this court entered a Rule 16(B) Scheduling Order approving plaintiff's discovery plan. (Docket no. 23). The court also ordered that this civil proceeding was stayed against defendant Anthony given his recent Chapter 7 bankruptcy filing. (Docket nos. 25, 26).

Plaintiff filed a motion to compel initial disclosures and discovery responses from defendant Arrington on November 26, 2019 with a memorandum in support and a notice of hearing for December 6, 2019. (Docket nos. 28-30). On December 6, 2019, the undersigned held the hearing and plaintiff's counsel appeared, but defendant Arrington did not. (Docket no. 31). The court granted plaintiff's motion to compel in part and ordered defendant Arrington toserve her initial disclosures, her responses to interrogatories, and responses to certain document requests by December 20, 2019. (Docket no. 32). A copy of that order was mailed to defendant Arrington on December 6, 2019 and she was explicitly warned that failure to comply with the order could subject her to the entry of default. (Id.).

When defendant Arrington failed to comply with the court's December 6, 2019 order, plaintiff requested an entry of default as to defendant Arrington on January 10, 2020 and noticed the request for a hearing on January 24, 2020. (Docket nos. 33, 34). Plaintiff's counsel appeared at the hearing on January 24, 2020, but defendant Arrington did not. (Docket no. 35). As defendant Arrington failed to comply with the court's order following the motion to compel, the undersigned granted plaintiff's request for entry of default. (Docket no. 36). The Clerk of Court entered default as to defendant Arrington later that day. (Docket no. 37).

On February 4, 2020, the District Judge ordered plaintiff to file a motion for default judgment, an accompanying memorandum in support, and a notice of hearing. (Docket no. 38). On March 16, 2020, plaintiff filed a motion for default judgment (Docket no. 41), a memorandum in support (Docket no. 42), a declaration of Matthew Bucholz (Docket no. 42-1, "Bucholz Decl."), a declaration of Peter Cohen (Docket no. 42-2, "Cohen Decl."), and a notice setting the motion for a hearing on April 10, 2020 (Docket no. 43). In accordance with Eastern District of Virginia General Order No. 2020-07, the hearing on plaintiff's pending motion for default judgment was continued to May 8, 2020. (Docket no. 44). On April 10, 2020, Eastern District of Virginia General Order No. 2020-12 was issued extending the time period for the suspension of all non-critical and non-emergency in-person proceedings through June 10, 2020. Accordingly, the undersigned cancelled the hearing scheduled for May 8, 2020 and instead ordered that any objections to plaintiff's motion for default judgment be filed with the court byMay 8, 2020 at 5:00 p.m. (Docket no. 45). A copy of that order was mailed to defendant Arrington. (April 13, 2020 minute entry). No objection to the motion for default judgment has been filed and the time for doing so has expired.

Factual Background

The following facts are established by the complaint and plaintiff's memorandum in support of its motion for default judgment. (Docket no. 42). Plaintiff provides cyber security, information technology, and analytic and operations support services. (Compl. ¶ 14). From its Arlington office, plaintiff managed a contract with the U.S. Army Office of the Chief of Chaplains ("CCRSS contract") which required the creation and maintenance of enterprise cloud services to host servers to provide a Financial Management System for U.S. Army Chaplain Corps activities. (Id. ¶¶ 15-16). To accomplish this, plaintiff provided stewardship over a U.S. Army-owned domain name registration through GoDaddy.com. (Id. ¶ 15). Plaintiff developed a SharePoint application for financial management transactions; routed a Help Desk email through an unclassified site; established a cloud-based infrastructure through Amazon Web Services; created and maintained a test environment, backup solution, and back-end database for analytics and metrics; and introduced a secure mechanism for users to log in and access the services provided. (Id.).

Plaintiff employed defendant Arrington as a project manager for the CCRSS contract from October 5, 2015 to December 23, 2016. (Id. ¶ 18). Defendant Arrington was defendant Anthony's direct supervisor and at some point during her tenure and unbeknownst to plaintiff, she and defendant Anthony engaged in a romantic relationship. (Id. ¶ 19). Defendant Anthony, as part of his role as senior systems engineer, controlled an encrypted file which contained network architecture diagrams, all relevant system passwords, administrative support documents,and other documentation which was critical to the operation of the cloud-based enterprise. (Id. ¶¶ 17, 20).

Due to job abandonment, failure to show up for work, and insubordination, plaintiff decided to terminate defendant Anthony's employment in December 2016. (Id. ¶ 21). Between December 7 and December 8, 2016, defendant Anthony deactivated all other administrator accounts except his own and refused to provide his replacement with the password to the master password file. (Id. ¶¶ 23-24). He also changed the responsible party contact information and the listed account ownership profile information on plaintiff's Amazon Web Services administrative account to "Anthony Enterprises." (Id. ¶ 25). Further, he changed the Help Desk email address to redirect emails to his personal Gmail account. (Id. ¶ 26). On December 8, 2016, defendant Anthony utilized his corporate Office 365 account to delete nineteen files from the corporate SharePoint project folder that included production encryption keys, account information, and network diagram files. (Id. ¶ 31). The deletion of this information hindered plaintiff's ability to properly perform the routine operation and maintenance of the Financial Management System. (Id.). Defendant Anthony also downloaded at least two files relating to plaintiff's management of the CCRSS system project. (Id.). He erased the hard drive on his work laptop, something he was not authorized to do, and made unauthorized images of the Army's servers which contained the Financial Management System, changing the user permission on these files and sharing the images to his own personal account. (Id. ¶¶ 32, 36). From December 8 to December 12, 2016, defendant Anthony gained and maintained unauthorized access to the CCRSS web application resulting in loss of productivity for the enterprise. (Id. ¶¶ 44-45). It was also discovered that defendant Anthony had changed the ownership information for the registration of the domain name with the registrar GoDaddy.com. (Id. ¶ 47). From December 12 to at least December 22,2016, defendant Anthony attempted thousands of "brute force cyberattacks" against the CCRSS web application system. (Id. ¶ 54). This necessitated a shutdown of one of the servers which resulted in a system outage for Help Desk emails from December 22, 2016 to January 5, 2017. (Id.).

Defendant Arrington resigned from plaintiff effective December 23, 2016. (Id. ¶ 55). Prior to her resignation, s...