Header graphic for print

Tilting the Scales

Business Issues with a Legal Slant

Declaring War on Drones Part Deux: Is a Drone Operator/Owner Liable for Trespassing?

Posted in Property Issues

FORT COLLINS, CO, USA, JULY 24, 2014:  Airborne radio controlled DJI Phantom quadcopter drone with GoPro Hero 3  camera  on a gimbal mount.

Last month Tilting discussed whether Daisy Duke and her Uncle Jesse faced civil or criminal liability for shooting down Boss Hogg’s drone trespassing over their property. To recap: Daisy Duke was sunbathing by her Uncle Jesse’s pool when a drone owned by Boss Hogg began hovering over the pool area. Daisy freaked out, and Uncle Jesse shot the drone out of the sky. Later he learned that Boss Hogg took photos of Daisy. This month Tilting considers whether Boss Hogg is liable to the Dukes for trespassing and invasion of privacy.

Does flying a drone over someone’s property constitute trespassing?

Yes. Trespassing can occur in two ways: (1) a person physically enters another person’s land without permission; or (2) a person causes an object to enter another person’s land without permission. The fact that the drone is in the airspace above the property, and not on the ground, does not matter because the property owner owns a reasonable amount of airspace above the property. Drone operators are likely adhering to FAA guidelines that recommend flying a drone less than 400 feet off the ground. In effect, the FAA claims the airspace over 400 feet. Understandably the property owner claims the airspace under 400 feet. Thus, flying a drone invades that airspace, and constitutes a trespass.

What about Invasion of Privacy?

A party may have an invasion of privacy claim for “nonphysical invasions” such as spying or wiretapping. For example, setting up a video camera in someone’s bedroom is an invasion of privacy. The plaintiff must prove that the invasion of privacy was something that would severely offend, humiliate or outrage the ordinary person. Using a drone to photograph or videotape someone in their backyard will likely meet this standard.

Does a drone owner face civil liability?

Yes in two ways. Boss Hogg may be liable for trespass or invasion of privacy under common law. If the drone typically flies over the property for a short period of time, and the property owner does not usually incur any costs to remove the drone, damages are likely limited to mental anguish.

The Dukes also have a claim under a new statute passed by the Texas Legislature two years ago. The law creates a private cause of action against the drone owner or user for using a drone to capture an image of the property owner (or tenant) or their property and allows the property owner to recover $5,000 for all of the images captured during each trespass, or $10,000 if the drone owner/operator discloses, displays or distributes the images. Another benefit to property owners is that they can recover court costs and attorney’s fees, which would not otherwise be recoverable. Boss Hogg will find himself in big trouble for violating this new law.

There is potential criminal liability as well. The new Texas law adds misdemeanor offenses for the drone owner/operator who uses a drone to photograph or video another person or privately owned property.

Tilting the Scales in Your Favor

If you operate your drone responsibly you should avoid any potential legal crashes. It is best to make sure that if you fly your drone off your property, you fly it over public property or have the other property owner’s permission to fly on their land. Similarly, you should not take any photographs or video on private property without a person’s or property owner’s permission.

Related Stories

Eminent Domain and Condemnation – What’s It All About?

Posted in Property Issues


Texan ranch owner Hugh Steerman (fondly known as “Gramps”) just received notice that his family’s fourth-generation, 2,000-acre, Rambling Steer Ranch is a possible pathway for the West Texas Rail from Fort Worth to El Paso. Gramps is concerned that the planned route will split the Rambling Steer, prohibiting cattle from being moved across the tracks to grass and water, and pressuring his wildlife harvest by introducing strange sound and light to the quiet. Can Gramps stop the train? If not, what can he expect?

Probably not. The best solution is to make the Rambling Steer Ranch appear less desirable than the other rail options or, and, failing that, to cut the best deal he can with West Texas Rail. A last resort is a lawsuit challenging the authority of West Texas Rail to condemn the property, and then challenging any damages awarded as being too little. A bare-bones overview of the condemnation process follows.

Adequate Compensation for Public Use

The Texas Constitution requires that adequate compensation be paid to landowners for property taken for public use through the exercise of the authority of Texas eminent domain. If acting under state eminent domain authority, constitutional amendments, effective January 2010, require a two-thirds supermajority of both houses of the Texas Legislature before eminent domain power can be delegated. If acting under the Federal Railroad Administration, federal eminent domain authority is slightly different, but the process is much the same. Assuming that West Texas Rail complied with the requirements for finding appropriate public use and public necessity under either Texas or federal eminent domain requirements for taking part of the Rambling Steer, and also gave timely notice of the required statement of landowner’s bill of rights, then what?

Negotiations with Condemnor

Now’s the time for Gramps to make his best pitch to West Texas Rail either to go around or to re-route to the outside boundary of the Rambling Steer to avoid depriving Gramps’ usage of the remaining property for grazing and water access, and for hunting. If West Texas Rail has the opportunity to re-align its rail along the Rambling Steer’s boundary, it will likely do so to avoid paying for additional damages to the remaining property and for the obvious public relations value of working with the existing landowners. If a mutual agreement cannot be reach, however, West Texas Rail will send to Gramps a final offer, with copies of a written appraisal, draft deed or easement, and the Texas Landowner’s Bill of Rights.

Special Commissioner’s Hearing

If the final offer is not accepted within fourteen days, West Texas Rail may initiate, but is not likely to act that quickly to file, a condemnation proceeding to exercise the power of eminent domain to transfer title to the property from Gramps to an entity duly empowered by the government. The condemnation lawsuit will be filed with the county court at law in the county where the Rambling Steer is located. A judge will appoint three disinterested real property owners in the county as special commissioners to assess damages only. The judge may accept special commissioners recommended by the litigating parties and may give each party an opportunity to challenge one of the court-appointed commissioners. The special commissioners must promptly schedule a hearing at the earliest practical time, but no earlier than the twentieth day after their appointment. Although not obligated to attend, Gramps (and any expert he may elect to use) may attend and testify as to the market value of the portion of the ranch being condemned, as well as to the damage that the rail project would cause to the remainder of the Rambling Steer. After the special commissioners render their decision, Gramps must file a written statement of objections in a timely manner if he disagrees with the decision.

Condemnor’s Right to Possession

After the conclusion of the special commissioners proceeding, West Texas Rail has the statutory right to obtain but, again, may choose to delay and to continue negotiating before taking possession of the property pending further litigation if: (a) it pays the money awarded either to Gramps or to the court, and (b) complies with related deposit and bonding requirements. If the court later rules that condemnation was wrongful, the temporarily displaced Gramps may recover damages if there was no right to condemn the Rambling Steer. If Gramps withdraws the deposited compensation, he waives all objections to the legality of the taking and may only contest the adequacy of the amount paid. If Gramps challenges the adequacy, and the county court at law judge later determines that the compensation paid was too high, Gramps must pay West Texas Rail back.

Tilting the Scales in Your Favor

If you receive notice of a condemnation proceeding possibly affecting your property, don’t ignore it. Instead, learn as much about the routes and the condemning authority as you can, possibly also investigating the condemnor’s eminent domain authority. Gather information identifying all the properties identified as likely candidates for the rail route and condemnation, particularly yours. Identify arguments that make your property less desirable than someone else’s and meet with an authorized condemnor representative on your property to point out the negative impacts of the proposed taking. Know that, for example, West Texas Rail will want to foster good will among those affected – they may be customers someday. If negotiations are unsuccessful, and you get to the special commissioners’ hearing, consider retaining counsel who will likely recommend hiring an expert witness. Even if you don’t get the damages award you seek from the special commissioners, you will probably want to have expert testimony before the county court judge.

Related Articles



Can You Videotape Someone Else’s Conversation?

Posted in Constitutional Rights & Issues

iphone videoCareful about protecting the safety of his customers, A.R. Remington, owner of Fishinabarrel Gun Range, installed surveillance cameras to blanket his premises, except the restrooms. Last week while target practicing with his Glock 9mm, Politician Ronald Crump made an off color joke about his likely opponent in the upcoming presidential election using a reference that only grandfathers would have said. Not only were Crump’s comments recorded by Fishinabarrel Gun Range, his opponent’s aide Sly Tapr happened to video the conversation on his phone which he posted on the internet. The recording went viral. Can Fishinabarrel operate surveillance cameras without advising its customers like Crump? Can Sly Tapr legally videotape Ronald Crump?

Yes to both. Generally speaking, Texas law does not prohibit surreptitious audio or video recording, either criminally or civilly, making it unlikely that a recording of a fraternity off-color chant or a surreptitious recording of an interview in a doctor’s office would be illegal or civilly actionable in Texas.

Texas Penal Statutes

Texas law prohibits photographs, videotape or other broadcasts of another in a bathroom or private dressing room. However, a broader prohibition of such imagery without the other’s consent and with the “intent to arouse or gratify the sexual desire of any person” was struck down by the Texas Court of Criminal Appeals. Texas’ Highest Criminal Court , in part, opined: (1) taking photographs in public places is generally constitutionally protected, because photographs are generally protected expression; (2) this First-Amendment-protected conduct doesn’t lose its protection even when the photographer is intending to arouse or gratify sexual desires; and (3) the statute cannot be defended as a permissible privacy protection because narrower statutes banning photographs in certain private places, such as bathrooms or dressing rooms or “inside [a person’s] home” exist and would be constitutional. For the record, eavesdropping into telephone conversations or hacking into computers are different issues, for which there are many criminal statutes. Texas law, for example, prohibits recording telephone conversations unless one party to the conversation is aware of the recording. The federal Wiretap Act generally is directed to criminalizing government and private conversations intended to be used in court or by law enforcement.

But, Can You be Sued?

Maybe. Texas case law generally recognizes the tort of invasion of privacy which includes: (1) intrusion on seclusion, and (2) public disclosure of private facts.

Intrusion on Seclusion

Either A.R. Remington or Sly Tapr must intrude on Ronald Crump’s private place or private matters, for example, videoing in a bedroom, entering a home without permission, or following, spying on and harassing. As the Fishinabarrel surveillance and the Sly videotaping involved a public place and public matters, neither is liable for invasion of privacy.

Public Disclosure of Private Facts

The offended party must establish that publicity of the private information would be highly offensive to a reasonable person, such as sexual relations, family disputes, unpleasant or humiliated illnesses where there is no legitimate public concern. While the viewing public might be offended, Ronald Crump’s statements “off the record” are not the kind of private information that would satisfy any Crump complaint of public disclosure of private facts, either by A.R. Remington’s Fishinabarrel surveillance or Sly Taper’s social media posting.

Tilting the Scales in Your Favor

Employers. If you are an employer, post signs advising the area is protected by video surveillance and include notification of your right to undertake surveillance in your Employer’s Handbook, but not including bathrooms or dressing areas.

Retailers. There is value in advising your customers, generally, that there are surveillance cameras. Not knowing where they are may discourage improper customer conduct.

Nursing Homes. Consider granting written authorization to the nursing home staff for video surveillance of your loved one’s living area if circumstances warrant.

General “Expectation of Privacy”. Although this seems to be a buzz phrase of late, as far as Texas law is concerned, unless it fits into one of the criminal or civil elements detailed above, it’s a nice phrase that probably does not warrant broad application in Texas.

Past Related Articles

Recording a Telephone Conversation in Texas

Recording a Sports Event – “Gentlemen Start Your Videos”

Declaring War on Drones: Is it a Crime to Shoot Down a Drone over Your Property?

Posted in Constitutional Rights & Issues, Criminal Law, Property Issues

Drone with CameraTrying to avoid the sweltering heat, “Uncle Jesse” Duke was in the garage working on his moonshine operation when he heard a loud shriek in the backyard. He ran to the back to find his niece, Daisy, sunbathing by the pool. Daisy shouted, “That drone keeps hovering over the pool area looking toward me. Do something about it Uncle Jesse!” Uncle Jesse quickly ran back to the garage, grabbed his trusty shotgun, and blew the drone out of the sky. An hour later Sheriff Coltrane showed up at Jesse’s house and asked, “Jesse, did you shoot a drone?” Jesse responded, “You’re durn right I did.” Sheriff Coltrane replied, “Well Jesse, that was Boss Hogg’s $2,000 drone you destroyed. I’m sorry, but I’m gonna have to arrest you.” Jesse said, “I didn’t commit no crime Sheriff. It’s my American right to defend my property.” Is Jesse right?

Can You Lawfully Shoot Down a Drone over Your Property?

Two reported cases in New Jersey and Kentucky deal with shooting drones flying over private property. Both times the shooters were charged with criminal mischief and related misdemeanors. As a starting point, your homeowner’s property is both the dirt and your improvements, and also a reasonable amount of airspace necessary to utilize your property. While you can’t complain that the American Airlines flight at 30,000 feet is trespassing on your property, a drone that’s only 200 feet off the ground…? Well, that’s probably a different story…

Earlier Tilting articles mentioned that each state has a “castle doctrine.” Although it varies by state, the “Castle Doctrine” generally allows homeowners to protect themselves, and in some cases their property, with force.   Beyond the “Castle Doctrine” Texas has another law that permits a property owner to use “force” when the property owner reasonably believes it is necessary to prevent a trespass on their land.   Using that Texas statute, the conduct may be justified and criminal liability may be avoided where the homeowner used “deadly force” (i.e., a gun) to shoot down the drone.

What about civil liability?

The homeowner’s action may also be justified against civil liability if the homeowner can prove: (1) the trespassing Drone was not privileged to be above the homeowner’s property (such as to avoid an emergency); (2) the homeowner reasonably believed the trespass by the Drone can only be prevented or terminated by the force used; and (3) the homeowner either requested the trespass cease, or reasonably believed that request would be useless or that substantial harm would be done before the request can be made. But there is no clear cut answer at this time, and these defenses would be decided by a court or jury.

Tilting the Scales in Your Favor

While no one wants their privacy intruded upon, we do not recommend shooting a drone out of the sky. While you might have good legal arguments to justify your actions – and probably have a jury’s sympathy – it will still be a costly process, particularly when you may be one of the first cases of this kind in the state. Obviously, your liability exposure is compounded if you happen to miss the drone and hit another person or their property.

Having said that the drone owner does not necessarily get away scot-free. In 2013 the Texas Legislature passed a law that creates a private cause of action against the drone owner or user for using a drone to capture an image of the property owner (or tenant) or their property and allows the property owner to recover $5,000 for all of the images captured during each trespass, as well as court costs and attorney’s fees. The drone owner or user may also be liable to the homeowner for trespassing and for one of the torts of invasion of privacy (check out our other article this month “Can You Videotape Someone Else’s Conversation”). Next month we’ll explore this issue from the drone owner’s perspective, including federal regulations and recommendations for flying unmanned drones.

End-of-Year Bonuses? Possible Tax Pitfalls!

Posted in *Way Out - Advice, Legal Risk Management, Money

Business conceptAfter stepping down from running the family oil business (see last month’s article), Jed Clampett runs Mama’s Fried Pies, his late wife Rose Ellen’s fried pie business. With business booming, Jed decides to hire Elly May as the Vice President of Marketing so he can spend more time in the kitchen rather than sales. If Elly May remains with the company for a full five years, she will receive a base salary plus a $50,000 bonus, payable in $10,000 increments over five years with each increment vesting at the end of the calendar year (e.g., the first $10,000 vests on December 31, 2015) but not payable until the following June 1st. Does this retention bonus structure risk additional taxes to Elly May and Mama’s Fried Pies?

Internal Revenue Code Section 409A

Yes. Mama’s Fried Pies’ bonus agreement with Elly May does not comply with IRS Section 409A because the payment is not made by March 15, 2016. The vesting 2015 bonus must be included in Elly May’s 2015 taxable income when it vests. Worse yet, Elly May owes regular taxes plus a 20% excise tax ($2,000) on the bonus amount, plus interest at the underpayment rate plus one percent. Under the Internal Revenue Code Section 409A, Mama’s should have paid the vested retention bonus (a) on a predetermined date; (b) pursuant to a fixed schedule of payments; or (c) no later than March 15th of the calendar year following the year of vesting.

Tilting the Scales in Your Favor

To ensure that your bonus plan – either as an employee or paid by you as the employer – complies with the Internal Revenue Code, confer with your tax attorney or accountant to avoid the penalties of an IRS illegal bonus plan. Executives and employees receiving a retention bonus should confirm the legality of the arrangement before agreeing, and then consult with their employer. Likewise, employers must conform their bonus plans with the Internal Revenue Code to avoid conflicts, and possible litigation with their key employees. Now is the best time to review these bonus plans. Recently, the Internal Revenue Service ruled that if a bonus plan does not meet Section 409A’s requirements, but the company corrects the bonus plan no later than the year before the bonus first vests, the plan will be compliant.

Kudos to Jason Luter, ERISA and deferred compensation expert at Gray Reed, who just authored a client alert on this issue and assisted in editing this article.

Open Carry? Or Not?

Posted in *BTW - Noteworthy, Constitutional Rights & Issues, Legal Risk Management, Property Issues

CHL in TexasPolice Chief Steroid McMuscles reported that Colt Glockenhand who entered Wally-Mart with a shotgun was not charged with “engaging in the lawful open carry of a pump-action shotgun” – a violation of the Cut and Shoot town ordinance. However, when Colt entered Kreamy Kreme, loaded his shotgun and pumped it in front of witnesses, Chief McMuscles arrested him for breach of the peace. Wally-Mart did not have a posted sign prohibiting the open carry of guns; Kreamy Kreme did. Was Chief McMuscles on target?

Texas state law now pre-empts existing city ordinances in Dallas, Houston, San Antonio and Austin, despite a last minute effort by larger cities to opt-out of the “open carry” law. And, Yes, Chief McMuscles is right for two reasons: (1) ignoring a properly posted prohibition of either “open carry” or “concealed carry” is a Class A misdemeanor, (2) displaying a firearm or other deadly weapon in a public place in a manner calculated to alarm is a breach of the peace and a Class B misdemeanor.

Introducing the “open carry” bill, Wichita Falls Senator Craig Estes noted that Texas was one of only six states that did not permit its citizens to openly carry handguns under any circumstances. The other states are California, Florida, Illinois, New York, and South Carolina. To ban the open carrying of firearms, business must post a specifically worded sign at its entrance(s).

Tilting the Scales in Your Favor

Gray Reed attorney and Texas State Representative Jeff Leach tells us: “The ‘open carry’ bill was signed in to law by Governor Greg Abbott on June 13, 2015, and becomes effective (with a few minor exceptions) on January 1, 2016, making Texas the 45th state to allow some form of ‘open carry’ of handguns. Business and property owners who wish to prohibit open and concealed carry must closely observe the signage requirements.” Special thanks for his assistance in helping preparing this article, based on this legal update he recently drafted.

Signage Requirements:

  • To prohibit the “concealed” carry of handguns by licensed CHL (LTC) holders, the sign should include the following language (pursuant to Texas Penal Code Section 30.06):
    • “Pursuant to Section 30.06, Penal Code (trespass by license holder with a concealed handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing la), may not enter this property with a concealed handgun.”
  • To prohibit the “open” carry of handguns by LTC holders, the sign should include the following language (pursuant to Texas Penal Code Section 30.07):
    • “Pursuant to Section 30.07, Penal Code (Trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.”
  • To prohibit BOTH concealed and open carry of handguns, both signs should be posted.

General Information:

  • HB 910 authorizes individuals (with some exceptions) to obtain a license to openly carry a handgun where licensed carrying of a concealed handgun is permitted.
  • Openly carried handgun must be in a shoulder or belt holster, whether loaded or not.
  • Licensing of both concealed (CHL) or openly carrying a handgun (LTC) will not change. Both will be called LTC.
  • CHL holders may continue to carry handguns both concealed and open carry at no additional fee, nor will they be required to attend additional training.
  • New LTC applicants will be required to complete training updated to reflect new requirements addressing restraint holders for secure carry of handguns.

Even with a CHL (LTC), these weapons may not be carried concealed or “open carry” regardless of whether the handgun is holstered pursuant to Texas Penal Code §46.03 & §46.035:

A concealed handgun cannot be carried while the person is intoxicated.

  • In the premises of an establishment licensed to dispense alcoholic beverages for consumption on the premises, which derives 51% or more of its income from the sale of alcoholic beverages and has a conspicuous warning prohibiting firearms, if posted.
  • On the premises of a public higher education institution or private or independent institution of higher education, including any public or private driveway, street, sidewalk or walkway, parking lot, parking garage or other parking area
  • Inside the secured area of any airport, however a person may carry any legal firearm into the terminal that is encased for shipment purposes and checked as baggage to be lawfully transported on an aircraft pursuant to airline and TSA regulations.
  • In a place of religious worship if a proper TPC §30.06 warning is given.
  • In a hospital or nursing home if a proper TPC §30.06 warning is given.
  • In any court or offices used by a court unless pursuant to written regulations or written authorization from the court.
  • At any polling place on Election Day.
  • At any meeting of any governmental body if proper notice is posted pursuant to Texas Penal Code §30.06.


Glock on Board: Can you Keep a Handgun in Your Car if you Don’t have a Concealed Handgun License?

Texas Concealed Handgun Laws

Open-Carriers Pose a Threat to Restaurants with Liquor Licenses

WARNING to Liquor License Holders – “Open Carriers” Can Cost you your Liquor License

LEGISLATIVE UPDATE: HB 700 Seeks to Allow Handguns to be Carried Openly

Closely-Held Shareholder Derivative Actions are Alive and Well in Texas

Posted in *Way Out - Advice, Family Issues, Legal Risk Management

business people around a tableAfter 30 years of running his family-owned business, Hillbilly Oil Co., Jed Clampett decided to retire in 2013. The board of directors elects Jethro Bodine as Hillbilly’s President and Elly May as Vice President. Both Jethro and Elly May sit on the company’s board of directors. Soon after taking over, Jethro is presented with a proposed lease for the company’s land in Oklahoma. The operator offers Hillbilly Oil above-market bonus payment and royalty. Jethro turns it down though, thinking the company is better off drilling the land itself while oil prices continue to rise. Soon after Hillbilly begins drilling oil prices tank, causing the company to lose $5 million. Jed can’t believe to learn that Jethro rejected the proposed lease, and soon learns that Jethro bought the drilling equipment from a company that he has a 50% interest in and paid double market price, but never disclosed his interest to the other board members. He decides to file a derivative lawsuit against Jethro. Jethro responds to the lawsuit claiming the “business judgment rule” protects him from any liability and that Jed’s lawsuit also fails because he did not make a demand on the corporation. Is Jethro right?

Explaining Closely-Held Corporations and Shareholder Derivative Actions

A closesly-held corporation has fewer than thirty-five shareholders and its shares are not listed on a national securities exchange. Typically the shareholders of closely-held corporations are family members, but that is not a requirement to make the corporation “closely-held.” A shareholder derivative action involves a corporation’s shareholder bringing suit on behalf of the corporation against its officers or directors.

The Business Judgment Rule

The business judgment rule comes up in two contexts. First, it protects officers and directors from a shareholder’s derivative lawsuit for acts that are within the honest exercise of their business judgment and discretion. In other words, officers and directors are protected from liability for past actions that are “negligent, unwise, inexpedient, or imprudent.” Second, the business judgment rule applies to the board of directors’ decision of whether to pursue the corporation’s cause of action against the officers or directors.

The Texas Supreme Court recently held that while the business judgment rule applies to the merits of the shareholder’s lawsuit – that is, the shareholder must prove that the officer or director’s past action was fraudulent, oppressive, or an abuse of power – a shareholder in a closely-held corporation is not required to make a pre-suit demand on the corporation. Thus, unlike a shareholder of a publicly traded corporation, a shareholder of a closely-held corporation does not have to prove that the corporation violated the second instance of the business judgment rule: that the corporation’s board of directors acted fraudulently, oppressive, or abused its power in deciding not to pursue a lawsuit against one of its officers or directors for alleged mismanagement.

Tilting the Scales in Your Favor

Because Hillbilly Oil is a closely-held company, Jethro loses his argument that Jed failed to make a pre-suit demand on the corporation. And because Jethro engaged in a transaction in which he had a conflict of interest without disclosing that conflict to Hillbilly’s board, his “business judgment rule” defense likely fails as well. Minority shareholders in closely-held corporations like Jed should exercise their rights to bring derivative actions when the corporation’s officers and directors engage in abusive or oppressive activities.

Hack Attack?

Posted in *Way Out - Advice, Employment & Labor, Legal Risk Management, Social Media & The Internet

cyber securityBreathing a sigh of relief that he neither works for U.S. agencies requiring security clearances nor do his hiring policies require the details of mental illnesses, drug and alcohol use, past arrests, bankruptcies, Joe Hyre was oblivious to the ranting of Dez Grunteld, a whining employee who he fired last week. Over the weekend Dez hacked into the Ten U Us Employment records and downloaded personnel files containing social security numbers, dates of birth and credit histories of Ten U Us Employment’s people. Not satisfied, Dez deliberately crashed five of the company’s eight network servers as further retribution, permanently erasing all of the information, and forcing Ten U Us to shut down operations in its headquarters for two days sustaining losses in excess of $100,000. Can Joe Hyre instruct his Ten U Us employees to access Dez Grunteld’s old email account to investigate the damage Dez caused? Is Ten U Us responsible to the employees whose information was stolen?

Hack Grunteld Back?

Maybe Hyre can access Dez’s old email account to investigate the damage he caused. Among other things, the Electronic Communications Privacy Act (ECPA) regulates private individuals and businesses, arguably giving employees of private entities a right to privacy in their e-mail. While there are equally good arguments that employers who own the computer system used by their employees have the right to monitor employees’ e-mail, the simplest solution is for Ten U Us to follow the terms to which Dez Grunteld agreed in his employee handbook.

Responsible for Employee Files?

Yes, Ten U Us is almost certainly responsible to its employees for the loss of their sensitive personal information. The Texas Business & Commerce Code obligates businesses to implement reasonable procedures, including taking any appropriate corrective action, to protect the unlawful use or disclosure of any sensitive personal information collected or maintained by a company in the regular course of business, both for customers and employees. Moreover, Texas law imposes notification requirements for the breach and disclosure of sensitive personal information, even if only potentially exposed, for employees and customers alike.

Inside Jobs

Although the cyberbreach of more than 14 million U.S. government personnel records detailing, among other things, military records, job and pay histories and life insurance and pension information was the clever work of Chinese hackers, most business cyber breaches are inside jobs. Speaking of China, did you know that, over the centuries of repelling Mongolian invaders, the only time that the Great Wall of China was breached was in 1644? The gates at Shanhaiguan were opened by Wu Sangui, a Ming border general who disliked the activities of rulers of the Shun Dynasty. Whether in 1644 or 2015, the most likely breaches of your secure walls – whether they be fortifications or computers – is a dissatisfied employee like Wu Sangui or Dez Grunteld.

Tilting the Scales in Your Favor

Ideally? Immediately address resentful or disgruntled employees in a fair and benevolent way. For double coverage, however, plan for a possible separation or firing by implementing the following recommendations:

  1. Cyber Insurance. The detailed insurance company evaluation of your company’s IT department should become the blueprint for internal company protection of sensitive information. Premium costs, depending upon coverage and current IT protection systems can vary dramatically.
  2. IT Policy. Create and enforce an acceptable use policy for your Internet, Email and Computer systems.
  3. Content Filtering. With a content filtering device, monitor internet usage to restrict websites accessible to employees. Consider restricting access to personal emails – a common vehicle for “stealing” company files.
  4. Social Networking Sites. Deny, or at least limit, free access to social networking sites like, Facebook, Twitter and the like, as they invite inappropriate content, viruses, and theft.
  5. Password Integrity. Require separate and regular changed passwords for each employee who accesses a company computer and server. The password should not be known by anyone else.
  6. Regular Audits. Audit computer files for user access and deletion.
  7. Monitor server event logs.
  8. Use Terminal Servers if possible.
  9. Back up at least once a month. Test your backup because restoration data is frequently corrupted, or worse was never backed up at all.

Past Related Articles: Cyber Security: Forewarned is Fair-Warned

Don’t Be a Target: Mitigating Liability From Cyber Attacks

Weighing in – 1.2 Billion Usernames and Passwords. What, Me Worry About CyberSecurity?

Sony vs. N. Korea – Let Capitalism Fight Totalitarianism!

A Lawyer and a Juror

Posted in *Weighing In - IMHO

Jimmy StewartThis month I am flushing the format to talk about jury duty. I recently got selected to serve on a jury in a civil case. The experience fascinated me because, as a civil trial lawyer myself, it gave me the opportunity to see a trial from a juror’s perspective in the courtroom and in the jury room. My case lasted four days. Here are several observations to keep in mind for the next time you find yourself as a party in a trial.

It is a Civic Duty

When one of your friends tells you they received a jury duty notice in the mail, it’s usually not with a joyful tone. Rather, it’s with an exasperated huff. I think there is a simple explanation for that reaction: people have a daily routine, with existing obligations, and jury duty disrupts their schedule. But once selected, my fellow jurors took their responsibility seriously. Litigants should keep in mind that jurors want to see that the parties are taking the case as seriously as they are.

Courtroom Technology: An Asset and a Liability

Today’s technology has radically changed the way litigants can present their case. One hundred years ago, parties presented their evidence through oral testimony, usually without any documentary evidence, and almost certainly without any visual aids. Now parties can show videos, photographs, and documents and can “self-edit” to show the jury what evidence is important to their side of the case. Parties should take advantage of these capabilities. Technology is a “change of pace” in the courtroom and keeps the jury attentive. While jurors take the case seriously, it is tough to sit in a chair for a couple of hours listening to a lawyer and a witness talk back and forth –especially when the lawyer is sitting in his or her chair as well. Also, some jurors may be visual learners. Putting the document up on a screen, instead of simply reading the language, may help a juror better understand your case.

A word of caution about technology in the courtroom. If you are going to use it, you need to make sure it works in the courtroom before trial starts, and you need to know how to use it. Technology problems are distracting and kill your momentum. Think of yourself as the director of a movie – you want to show the jury the final, finished product. To put it another way, follow the Scout Motto: Be Prepared.

Jury Deliberations: Behind the Curtain

When the jury goes to deliberate they are given the “jury charge,” which contains the questions they are asked to answer. The jury charge also contains instructions and legal definitions. Sometimes these questions can be complicated. Nonetheless, it is important to know that jurors will make every effort to “get it right” with their verdict. This doesn’t mean they will decide the case based on sympathy, bias or prejudice. Rather, juries seek to render a verdict that is based on a common sense assessment of the facts.

Tilting the Scales in Your Favor

My service has reconfirmed my belief that the jury system works. If you end up as a party in a jury trial, respect the jury’s decision no matter the outcome. And if you are selected for jury duty, thank you for your service.