Z's IT Consulting Services, Inc. v. Hunt Law Group, LLC
2024 IL App (3d) 230333 (2024)
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Rule of Law:
Under Illinois law, a claim for the tort of conversion is not cognizable for purely intangible property, such as passwords and access codes, unless those intangible rights are merged into an identifiable, tangible document over which the defendant exercised wrongful dominion.
Facts:
- In 2005, Hunt Law Group, LLC (Hunt) retained George Zabran as an IT consultant to create and manage its IT infrastructure, including servers, email, and the domain name.
- Zabran established and maintained the passwords and access codes necessary to control Hunt's computer systems.
- Hunt alleged that Zabran withheld these passwords and access codes in 2005 and 2006 despite requests for them.
- Following a deterioration of their working relationship and a billing dispute, Hunt employees again requested the passwords and access codes from Zabran in 2020, but he did not provide them.
- Hunt discharged Zabran on October 24, 2020.
- Hunt further alleged that upon his discharge, Zabran deleted sensitive information from its servers.
- Zabran provided a partial list of passwords on October 28, 2020, and additional data on November 11, 2020.
- Due to the delay in receiving the information, Hunt allegedly suffered business disruptions and incurred costs of approximately $6300 to hire a new IT consultant.
Procedural Posture:
- Z’s IT Consulting Services, Inc. filed a breach of contract complaint against Hunt Law Group, LLC in the Circuit Court of Du Page County.
- Hunt filed an answer and a counterclaim against Z's for conversion.
- The circuit court dismissed Hunt's initial counterclaim, first amended counterclaim, and second amended counterclaim.
- Hunt filed a third amended counterclaim for conversion against Z's and its principal, George Zabran.
- The plaintiffs moved to strike and dismiss the third amended counterclaim pursuant to section 2-615 of the Code of Civil Procedure.
- The circuit court granted the motion to dismiss with prejudice, holding that the passwords and access codes were intangible assets and could not support a conversion claim under Illinois law.
- Hunt, as appellant, appealed the dismissal to the Appellate Court of Illinois, Third District.
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Issue:
Does the wrongful withholding of intangible electronic information, such as passwords and access codes, constitute a valid claim for the tort of conversion under Illinois law?
Opinions:
Majority - Justice Albrecht
No. The wrongful withholding of intangible electronic information like passwords and access codes does not constitute a valid claim for conversion under current Illinois law. The essence of conversion in Illinois requires the wrongful deprivation of tangible personal property, or intangible rights that are merged into a tangible document. Citing the Illinois Supreme Court's decision in In re Thebus, the court reaffirmed that conversion requires an 'identifiable object of property' that is tangible or connected to something tangible. While other jurisdictions have expanded the tort to cover modern digital assets, Illinois adheres to the 'merger doctrine' outlined in the Restatement (Second) of Torts. The passwords and access codes at issue are purely intangible and were not merged into a specific, tangible document that Z's or Zabran converted. The court declined to expand the common law tort, stating that such a change is a policy decision best left to the Illinois Supreme Court or the legislature.
Concurring - Justice Anderson
No. While there is no meaningful difference between a tangible key and a digital passcode, and misappropriation of passwords should logically support a conversion claim, an intermediate appellate court is bound by existing Illinois Supreme Court precedent. The controlling case, In re Thebus, limits conversion claims to tangible property or that which is connected to something tangible. Therefore, it is the prerogative of the Illinois Supreme Court, not this court, to expand the scope of the tort to encompass purely digital assets.
Dissenting - Justice Holdridge
Yes. The withholding of passwords and access codes should constitute a valid claim for conversion. The dissent argues that a password is a 'digital key,' and if the case involved the withholding of physical keys, the act would unquestionably be conversion. The mere fact that the 'key' lacks a tangible element should not prevent a valid claim. The dissent finds persuasive the reasoning of other jurisdictions that have modernized the tort of conversion to protect intangible property and believes Illinois should take the next logical step to do the same.
Analysis:
This decision reaffirms the traditional, narrow scope of the tort of conversion in Illinois, declining to expand it to cover purely intangible digital assets like passwords. It highlights the judicial tension between adhering to established precedent (stare decisis) and adapting common law torts to the realities of the Information Age. The case signals that, absent a change by the Illinois Supreme Court or legislature, litigants seeking remedies for the misappropriation of purely digital data must use causes of action other than conversion. The strong special concurrence and dissent indicate this area of law is ripe for review by a higher court.
