Thyroff v. Nationwide Mutual Insurance Co.

Brief Fact Summary.

Thyroff stored business and personal information on Nationwide’s computer system. When Thyroff was fired, Nationwide repossessed the system and blocked Thyroff from retrieving his information from the system.

Synopsis of Rule of Law.

Under New York law, a plaintiff may bring a claim of conversion for electronic data.

Facts.

Thyroff’s Agent Agreement with Nationwide permitted Thyroff to lease computer hardware and software for data collection at Nationwide (the “AOA system”). Thyroff used the AOA system for both business and personal purposes. Nationwide automatically uploaded all of the information from Thyroff’s AOA system (business and personal) to its centralized computers on a daily basis.

When Thyroff was terminated, Nationwide repossessed the AOA system and blocked Thyroff from retrieving his business and personal information from the AOA system. Thyroff sued Nationwide for a claim of conversion of his business and personal information stored on the AOA system.

Issue.

Is a claim for the conversion of electronic data cognizable under New York law?

Held.

Yes, a claim for the conversion of electronic data is cognizable under New York law.

Discussion.

As historical methods of resolving disputes becomes incompatible with emerging societal values, common law has evolved to broaden remedies available for the misappropriation of personal property.

The claim of conversion originally served to protect against interferences or misappropriations of tangible personal property. Since then, courts use a “merger” test to include intangible property rights (e.g., certificates of stock, promissory notes, and other papers of value), permitting claims of conversion to hold for the paper document version of such an interest.

Today, society’s reliance on computers and electronic data is substantial, if not essential, and some property rights now exist exclusively in electronic form. To restrict claims of conversion for intangible property rights would permit a suit for touching a company’s file room but would deny a suit for hacking into the file room’s mainframe and deleting its data. That does not make sense.

The information that Thyroff stored on his leased computer had value to him regardless of the format. In the absence of a significant difference in the value of the information, the law should equally protect both the physical and virtual forms of the information.