A former Corcoran Group broker is set to go to trial against the brokerage firm this month after winning a legal decision this summer over whether information on her company computer could be taken from her as she left the company. The decision highlights what information brokers can take from firms when they are fired.
On a Monday in March 2002, Corcoran executive vice president Tresa Hall called broker Sarit Shmueli into her office and dismissed Shmueli from her contract, supposedly for cursing in the office. Shmueli, according to a lawsuit she filed against Corcoran and Hall, returned to her desk and found the access code on her company computer changed, freezing her from information she had accumulated in her six years as a Corcoran broker.
A state Supreme Court justice ruled in August that the information on Shmueli’s computer could, like information on paper, be stolen (or, to use the legal term, “converted”). Corcoran had filed a motion claiming that the information on the computer belonged to the firm because the computer itself belonged to the firm. Justice Herman Cahn, however, dismissed Corcoran’s motion.
“Plaintiff [Shmueli] had an access code which presumably protected the materials she put on her computer from being read by, or forwarded to, others, without her consent,” Cahn wrote in his civil court decision. “This would be similar to a paper list being kept in plaintiff ‘s desk or file cabinet, furnished to her by Corcoran. Either the computer or the desk or the file cabinet could, in final analysis, be opened over plaintiff ‘s objection by someone who had another key or a record of the access code.”
The electronic information, Cahn decided, could be converted just as easily as information on paper. His decision allowed Shmueli to go forward with her lawsuit claiming that Corcoran had done just that.
“The court added that it was not extending [theft] laws to intangibles, generally, like Internet domain names,” Craig Ball, a forensic technologist and attorney, wrote in an email to The Real Deal, “but that two documents one virtual and the other tangible shouldn’t be treated differently simply because they are separated by the push of a print key.”
A Nov. 17 trial start date has been set in state Supreme Court to decide the lawsuit, said Barry Viuker, a lawyer with the law firm representing Shmueli. Shmueli declined to comment for this article, but did in August provide The Real Deal with a copy of a letter she sent to Hall on Mar. 19, 2002, that details what she wants from Corcoran, including a handwritten list of 380 investors, and information on former clients that she claims was on her Corcoran computer. The Corcoran Group, according to a spokesperson, does not comment on pending litigation involving the firm.
At this point, Viuker said, Shmueli seeks damages from Corcoran because of business lost from not having the list or the information. He couldn’t give the specific compensation amount, but Cahn’s August decision lists Shmueli’s desired compensation at $3 million.
Cahn’s decision on Corcoran’s motion isn’t likely to set a precedent for future lawsuits because it’s a trial court ruling, according to Ball, but it may serve as a touchstone for fired employees in situations involving electronic information. This may be especially true in the real estate industry, where brokers like Shmueli are independent contractors and not necessarily full-time employees.
“What is seen in this case locking the plaintiff out of the computer system is,” Ball explained, “increasingly common practice on the discharge of an employee. Shmueli’s status as an independent contractor distinguishes this case. Were the plaintiff an employee, the results might very well have been different. An independent contractor’s business connections probably don’t belong to the entity engaging the contractor. It’s a good idea to define these issues through a reasonable non-compete or employment agreement.”