New York Law Allows Conversion Claims Involving Electronic Data
March 10, 2008
Plaintiff Louis Thyroff, a former insurance agent for Nationwide Mutual Insurance Company, sued Nationwide for conversion in a New York federal court. Thyroff claimed that Nationwide converted his property by repossessing computer software and hardware that contained Thyroff’s electronic records, both personal and professional.
The federal district court granted Nationwide’s motion to dismiss, but the Second Circuit Court of Appeals certified a question to the Court of Appeals of New York: “Is a claim for the conversion of electronic data cognizable under New York law?” The Court of Appeals of New York held that a party can state a claim for conversion of electronic data.1
The New York state court reasoned that although conversion traditionally involved tangible property, over the years New York courts have found that intangible property also could be converted. The court gave examples of shares of stock and the intangible property right to a musical performance as legitimate subjects conversion claims.
The court also noted that the strength of the common law is respond “to the demands of commonsense justice in an evolving society.” The demands of our society today dictate that conversion of electronic data should not be treated differently than data in hard copies. “A document stored on a computer drive has the same value as a paper document kept in a file cabinet.”
When the case returned to the Second Circuit, the court accepted the holding that electronic data could be converted.2 Thus, the court vacated the district court’s dismissal of the conversion claim and remanded the case to the district court for further proceedings. New deadlines for discovery and dispositive motions have been set and the case is currently proceeding in the United States District Court for the Western District of New York.
1Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272 (N.Y. 2007).
2Thyroff v. Nationwide Mut. Ins. Co., 493 F.3d 109 (2d Cir. 2007).