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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: October 2, 2019

Court Dismisses Conversion Claim Based on Copying Electronic Files

On September 19, 2019, Justice Platkin of the Albany County Commercial Division issued a decision in Center for Rheumatology, LLP v. Shapiro, 2019 NY Slip Op. 51511(U), dismissing a conversion claim based on the copying of electronic files, explaining:

Defendant argues that plaintiffs have not stated a claim for conversion because they have failed to allege that he exercised control over the patient encounter forms to their exclusion.

A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession. The subject matter of a conversion cause of action must constitute identifiable tangible personal property.

While the Court is aware of scattered decisions that suggest that copying of data may constitute conversion, it is difficult to square these decisions with the New York Court of Appeals’ statement that a conversion claim lies where the defendant’s exercise of control was to the exclusion of the owner’s rights. Moreover, as observed in note 3 of Fischkoff, the First Department decision relied upon by plaintiffs merely holds that retention of copies may be found to be conversion under the circumstances, especially if the originals were missing. Here, plaintiffs do not allege that the original patient encounter forms are missing.

(Internal quotations and citations omitted).

Commercial litigation often involves conversion claims. As this decision shows, conversion can involve not just physical objects, but also electronic data. However, as this decision also shows, not just any interference with electronic data can constitute a conversion. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding one person depriving another of her property, whether that property is tangible or intangible, or even involves money or electronic files.

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