The Traffic Stop, the K-9 and the Computer Check

After local Georgia police found “marijuana in a car that was stopped for lane infractions, Patrick Scott and Dorian Allen, the driver and passenger, respectively, were indicted for the possession of more than one ounce of marijuana.^” State v. Allen, 762 S.E.2d 111 (Georgia Court of Appeals 2014).  Scott and Allen then “moved to suppress the drug evidence as the fruit of an illegal seizure.”  State v. Allen, supra. After the trial judge granted their motion to dismiss, the prosecution appealed the ruling to the Court of Appeals.  State v. Allen, supra.

The Court of Appeals began its analysis of the issues in the case by explaining that

the sole witness at the suppression hearing was the patrol officer who initiated the traffic stop. On direct examination, he testified to the following. On September 13, 2012, while stationed in the median of an interstate to monitor traffic, the officer observed a 2012 Nissan Altima vehicle cross from the center lane of travel into `the fast lane.’ As the Altima passed the officer's stationary position, the officer saw the driver `pointing his finger all in the passenger's face.’ Concerned that the driver was distracted, the officer decided to catch up with the Altima. As he did so, the officer saw the Altima `make the same lane infractions again’; the officer also saw that the driver was `still reaching over with his fingers, pointing in the passenger's face.’ The officer initiated the traffic stop.

The officer walked to the Altima and informed the two occupants, Scott and Allen, that they were stopped because of lane infractions. The officer asked them whether they were having an argument. Scott answered no, and stated that he was just talking to Allen. The officer advised Scott that he would be writing him a courtesy warning for the lane infractions. The officer obtained from Scott his driver's license and obtained from Allen a South Carolina identification card.

The officer perceived Scott and Allen were nervous. Because of the lane infractions, the officer wanted to `see how [Scott] was on his feet’ to `make sure he wasn't intoxicated.’ The officer asked Scott to exit the vehicle; Scott got out of the vehicle and walked to the location designated by the officer. The officer conducted a pat-down search of Scott; after finding no weapon, the officer `engaged in general conversation with [Scott]’ while he wrote the courtesy warning.

State v. Allen, supra.

It was what happened next that led to the indictment and the motion to suppress:

But after writing the warning, the officer did not thereupon hand it (along with the identifications) to Scott, who was standing beside him. Instead, as the officer testified,

`[O]nce I completed the warning I had dispatch check both of their driver's license[s]. Mr. Allen's was through South Carolina and Mr. Scott's was through Georgia. While waiting on returns from GCIC to come back, waiting on dispatch I had asked Mr. Scott for consent to search his vehicle. Mr. Scott wouldn't deny nor consent to a search.’

The officer testified that Scott replied only that `you already got me stopped,’ and `[s]o at that time I had Mr. Allen exit the vehicle also and once Mr. Allen exited the vehicle I had them both stand at the front of my patrol car and I retrieved my K–9 partner Kazan out of the rear of my vehicle.’ When the officer walked the drug dog around the Altima, the dog showed a positive odor response. The officer put Kazan back into the patrol car, then began searching the Altima. While searching the interior of the vehicle, the officer received the requested GCIC information from dispatch; when the officer's search reached the trunk of the car, he discovered the marijuana.

`[O]nce I completed the warning I had dispatch check both of their driver's license[s]. Mr. Allen's was through South Carolina and Mr. Scott's was through Georgia. While waiting on returns from GCIC to come back, waiting on dispatch I had asked Mr. Scott for consent to search his vehicle. Mr. Scott wouldn't deny nor consent to a search.’

The officer testified that Scott replied only that `you already got me stopped,’ and `[s]o at that time I had Mr. Allen exit the vehicle also and once Mr. Allen exited the vehicle I had them both stand at the front of my patrol car and I retrieved my K–9 partner Kazan out of the rear of my vehicle.’ When the officer walked the drug dog around the Altima, the dog showed a positive odor response. The officer put Kazan back into the patrol car, then began searching the Altima. While searching the interior of the vehicle, the officer received the requested GCIC information from dispatch; when the officer's search reached the trunk of the car, he discovered the marijuana.

On cross-examination, the officer provided additional details. He testified that, when talking to Scott and Allen as they sat in the Altima, he had looked at the vehicle's interior, but had seen neither marijuana nor any drug paraphernalia; and he had not detected the odor of marijuana. The officer stated that, when Scott complied with his directive to step outside the Altima, Scott continued to appear nervous, but showed `no signs of being intoxicated or impaired.’ The officer had concluded, `[Scott] wasn't intoxicated.’

Additionally, the officer agreed that `the courtesy warning was completed at that time as we see in the video . . . when [he] contact[ed] dispatch’; that `[a]fter [he] completed the warning’ he `ran the license[s] at that point’; and that the `written warning was completed prior to [his] running the GCIC to dispatch.’

State v. Allen, supra.

The Court of Appeals then explained that in their motion to suppress evidence,

Scott and Allen argued that the drug evidence was discovered only after the officer had unlawfully expanded the traffic stop. In its order ruling thereon, the court recited that it had considered, inter alia, both the officer's testimony and the recording. The court set forth the state's position that the extended detention was authorized by the officer's need to run a computer check, then found, however, that `the officer did not begin this inquiry until . . . at the point when the officer had finished writing a warning citation for the traffic offense.’

The court also determined that it was the drug dog's response that provided probable cause to search the vehicle, but ruled that at the time the drug dog had so responded, Scott and Allen were being unlawfully detained -- i.e., detained without any articulable suspicion of criminal activity.

State v. Allen, supra.

The Court of Appeals then began its analysis of the facts and legal issues in the case, explaining, first, that the trial court judge “explicitly” includes in his

order this pertinent finding: `the officer did not begin this inquiry [the computer check at issue] until . . . the point when the officer had finished writing a warning citation for the traffic offense.’ This finding must be accepted, as there was evidence adduced at the hearing that supported it.  For instance, as detailed above, the officer unequivocally testified so. Moreover, the audio-video recording of the traffic stop supports the officer's account.

Construed most favorably to the upholding of the trial court's findings and grant of the suppression motion, the evidence showed that, before initiating the computer check, the officer had concluded the tasks related to the investigation of the lane infractions, including a determination that the driver Scott was not intoxicated. The officer, therefore, lacked articulable suspicion of any drug (or other) crime, as the officer's perception that Scott and Allen were nervous `did not support a finding of reasonable, articulable suspicion that would have justified prolonging the detention.’ [Quoting Nunnally v. State, 310 Ga. App. 183, 187(2), 713 S.E.2d 408 (Georgia Court of Appeals 2011).]

State v. Allen, supra.

The appellate court went on to outline the applicable legal principles, which derive from the 4^th Amendment’s ban on “unreasonable” searches and seizures:

As a general rule, an investigatory stop is not unreasonably prolonged by the time necessary to run a computer check. But it does not necessarily follow that an officer may initiate a computer check after completing the investigation into the basis for the traffic stop. Further, a police officer may check `for outstanding warrants or criminal histories on the occupants of a vehicle at a valid traffic stop’ based upon concerns for officer safety `as long as under the circumstances they do not unreasonably prolong the stop.’ But `[o]nce the tasks related to the investigation of the traffic violation and processing of the traffic citation have been accomplished, an officer cannot continue to detain an individual without articulable suspicion.’

A seizure that is justified solely by the interest in issuing a warning ticket to the driver can become unlawful if it is prolonged beyond the time to complete that mission. The officer's purpose in an ordinary traffic stop is to enforce the laws of the roadway, and ordinarily to investigate the manner of driving with the intent to issue a citation or warning. Once the purpose of that stop has been fulfilled, the continued detention of the car and the occupants amounts to a second detention.

Accordingly, the evidence here showed that the officer -- having accomplished the tasks related to his investigation into lane infractions and having no reasonable, articulable suspicion of criminal activity aside from the traffic violation -- unreasonably prolonged the duration of the traffic stop when he initiated the computer check.

State v. Allen, supra (emphasis in the original).

The Court of Appeals then went on to explain that the

foregoing, governing principles were recently reinforced by the Georgia Supreme Court's decision in Rodriguez v. State, [295 Ga. 362, 761 S.E.2d 19 (2014)] which recited:

`In some cases, a detention is prolonged beyond the conclusion of the investigation that warranted the detention in the first place, and in those cases, the courts generally have concluded that such a prolongation -- even a short one -- is unreasonable, unless, of course, good cause has appeared in the meantime to justify a continuation of the detention to pursue a different investigation.’

Construing the evidence in the instant case most favorably to the upholding of the trial court's findings and judgment, the investigation that warranted the detention in the first place -- for lane infractions -- had concluded. And there was no evidence that any `good cause . . . appeared in the meantime to justify a continuation of the detention in order to pursue a different investigation’ -- that began when the computer check at issue was initiated. (No evidence was adduced, and no argument has been made, that the computer check was intended to aid the officer in determining whether lane infractions had occurred.)

State v. Allen, supra (emphasis in the original).

The Court of Appeals then found that the evidence in this case,

when construed most favorably to the upholding of the trial court's findings and judgment granting the accused's suppression motion, shows that the officer had concluded his investigation that warranted the detention in the first place; that the computer check initiated thereafter was not related to the investigation of the basis for the stop (lane infractions); and that no good cause had appeared in the meantime to justify a continuation of the detention while the officer pursued a different investigation (that began when the computer check was initiated).

The continued detention -- even if a short one -- beyond the conclusion of the investigation that warranted the traffic stop in the first place was therefore unreasonable. Because the officer was not authorized to initiate a different investigation during that unlawful detention, it cannot be said that he was then engaged in the lawful discharge of his duties; `officer safety,’ thus, cannot serve as justification for the computer check or for the unlawful detention. Notably, the officer did not testify, nor did the prosecutor argue before the trial court, that officer safety played any role in the computer check, the prolonged detention, or the search for drugs in the Altima.

Given the foregoing, the state has demonstrated no basis to disturb the order granting Scott's and Allen's motion to suppress the drug evidence. When the evidence is viewed most favorably to the upholding of the trial court's findings and judgment, the trial court was authorized to conclude that the drug evidence was discovered as a result of an unconstitutional seizure.

State v. Allen, supra.

It therefore affirmed the trial judge’s granting the motion to suppress the evidence that supported the drug possession charge against Scott and Allen. State v. Allen, supra.  If you are interested, the news story you can find here provides more information about the traffic stop and how it led to the charges.

Child Pornography, Slack Space and “Possession”

After a “general court-martial composed of officer and enlisted members convicted [Shane A. Nichlos] . . . of two specifications of knowingly possessing child pornography in violation of Article 134, Uniform Code of Military Justice, 10 U.S.C. § 934”, and he was sentenced to “reduction to pay grade E–1, confinement for a period of six months, and a bad-conduct discharge”, he appealed. U.S. v. Nichlos, 2014 WL 4658951 (U.S. Navy-Marine Corps Court of Criminal Appeals 2014).  Nichlos raised four issues on appeal, but this post only examines two of them:  “that the military judge abused his discretion in failing to suppress evidence obtained from [Nichlos’] portable hard drive . . . based on an unconstitutional seizure; that his conviction for knowing possession of child pornography is legally and factually insufficient”.  U.S. v. Nichlos, supra.

The Court of Criminal Appeals began its analysis of the issues by explaining how the prosecution arose:

[Nichlos] was stationed at U.S. Fleet Activities Sasebo, Japan, aboard USS ESSEX (LHD 2). Following his promotion, [he] was required to find off-ship living accommodations. He secured a lease at an apartment building. While waiting for his lease to start, he stayed with a friend, Fire Controlman Second Class (FC2) SW. [Nichlos] was given a spare bedroom in which to sleep and store his personal belongings. Other petty officers also stayed at FC2 SW's apartment. The apartment had a common area that was used as a `crash pad’ and `an awful lot of people’ would use [it] as a place to `hang out.’ . . .

Intelligence Specialist Third Class (IT3) MD, a good friend of FC2 SW, also stored personal belongings at FC2 SW's apartment. On Thursday, 12 May 2011, IT3 MD picked up his laptop computer, a computer game, and several portable computer hard drives from FC2 SW's apartment. This gear had been stored in the common area of the apartment. One of the hard drives he believed was his and took with him was made by Western Digital. He brought his laptop, the portable hard drives, and other electronic media to his new apartment.

A day or so later, IT3 MD wanted to watch a movie. Knowing he had movies stored on his Western Digital hard drive, he accessed it and immediately realized it was not his hard drive, because he saw approximately 50 thumbnail images of young nude girls. He specifically recollected viewing an image of several young nude girls arranged in a cheerleader-type pyramid. Disturbed by the images he saw and initially thinking that he had inadvertently grabbed a portable hard drive belonging to FC2 SW, his good friend, IT3 MD accessed the root directory and ascertained that the hard drive belonged to [Nichlos].

The following Monday, still disturbed by the images he had seen, IT3 MD sought guidance from the ship's legalman chief and was advised to speak with the ship's security department. After informing security department personnel that he believed he had a portable hard drive with suspected child pornography, IT3 MD was told to retrieve the hard drive and bring it back to security department personnel.

Security department personnel contacted the Naval Criminal Investigative Service (NCIS) regarding IT3 MD's allegations and then turned the portable hard drive over to the NCIS. Special Agent LG received the Western Digital hard drive at approximately 1405 on Monday, 16 May 2011. At approximately 1430, IT3 MD signed a written sworn statement for Special Agent JP, who was working the case with Special Agent LG. . . .

At approximately 1730 that same day, NCIS agents interviewed [Nichlos]. During that interview, [he] gave consent to search his workspace aboard ESSEX, his living space at FC2 SW's apartment, and all his electronic media, to include his iPhone. He accompanied the NCIS agents to FC2 SW's apartment and cooperated fully throughout the process.

In addition to the Western Digital hard drive, NCIS agents seized [Nichlos’] Alienware laptop and iPhone, along with other electronic media. [His] electronic media items were sent to the Defense Computer Forensic Laboratory (DCFL) for forensic analysis. Forensic analysis revealed video files and digital images of child pornography [Nichlos’] laptop. It also revealed digital images of child pornography on [his] portable hard drive.

U.S. v. Nichlos, supra.

Nichlos argued, first, that the military judge erred by not suppressing the evidence obtained from his portable hard drive because it was seized and searched in violation of the 4^th Amendment. U.S. v. Nichlos, supra.  As Wikipedia explains, the 4^th Amendment gives U.S. citizens a right to be free from “unreasonable” searches and seizures. As Wikipedia also explains, a 4^th Amendment “search” occurs when law enforcement or other government conduct violates a reasonable expectation of privacy in a place or thing.  Wikipedia also notes that to have such an expectation of privacy, the person claiming to be the victim of an unreasonable search must have had (i) a subjective expectation of privacy in it (e.g., Nichlos must have believed that the hard drive was “private”) and (ii) society must accept that expectation of privacy as “reasonable.”

The Court of Criminal Appeals rather quickly dismissed Nichlos’ “search” argument, explaining that

[d]espite the fact that [Nichlos] had a bedroom at FC2 SW's apartment and stored his laptop there, he chose to leave his portable hard drive in an area where, by his own admission, `an awful lot of people’ would `hang out’ and access one another's electronic media. . . . The hard drive was neither labeled nor password protected. It was also similar to other portable hard drives located in the common area, to include the hard drive belonging to IT3 MD as evidenced by the fact that he mistakenly took it.

Additionally, the ease by which IT3 MD accessed [Nichlos’] portable hard drive and its child pornography images is further evidence that [he] did not have a reasonable expectation of privacy in this hard drive. See U.S. v. Barros, 481 F.3d 1246 (U.S. Court of Appeals for the 10th Circuit 2007) (holding that Barrows's `failure to password protect his computer, turn it off, or take any other steps to prevent third-party use’ demonstrated a lack of subjective expectation of privacy).

Based on the facts of this case, we conclude [Nichlos] did not have a subjective expectation of privacy in his portable hard drive left in the common area of FC2 SW's apartment. Additionally, we conclude -- at least with regard to the various Sailors who had unfettered access to FC2 SW's apartment and common area -- that [his] expectation of privacy was not objectively reasonable.

In this case, the military judge appeared to conclude that at the time IT3 MD took the portable hard drive, [Nichlos] had no expectation of privacy because he had left it in the common area. . . . However, as the testimony and facts developed, the military judge appeared to conclude that once IT3 MD was directed to retrieve [Nichlos’] hard drive, IT3 MD became a Government actor and this resulted in [Nichlos] developing a reasonable expectation of privacy. . . . We disagree and hold that [Nichlos] did not gain a reasonable expectation of privacy at the time IT3 MD was directed to deliver the hard drive to security personnel. . . .

U.S. v. Nichlos, supra.           

The court then took up Nichlos’ second argument on appeal, i.e., that

his conviction for knowingly possessing child pornography is factually and legally insufficient. First, [Nichlos] argues that since the three charged video files from his Alienware laptop computer were found in unallocated space the evidence was insufficient to prove `knowing possession.’ Second, [he] argues that because the digital images from his hard drive were found among nearly a thousand adult pornography images, this was insufficient to prove knowing possession. 

U.S. v. Nichlos, supra.

The appellate court began with the first argument, noting that Nichlos was charged with three “three specifications alleging [his] knowing possession of child pornography on or about 16 May 2011: three video files from [his] laptop (Specification 1); three digital images from the laptop (Specification 2); and, nine digital images from [his] portable hard drive (Specification 3).” U.S. v. Nichlos, supra. NIchlos argued, at trial, that the evidence

was insufficient to prove knowing possession in that the video files and some of the digital images had been forensically retrieved from the unallocated space of [Nichlos’] laptop and portable hard drive with no evidence as to when the files were created, accessed, or deleted.

The military judge partially agreed and acquitted [him] of the three digital images that served as the basis for Specification 2. With regard to Specification 3, the military judge acquitted [Nichlos] of seven digital images, which had been retrieved from the unallocated space on [his] portable hard drive. Because only images 8 and 9 had been retrieved in allocated space, the military judge allowed the members to consider these two images and the members convicted [Nichlos] of this specification.

U.S. v. Nichlos, supra.

The court then analyzed Nichlos’ sufficiency of the evidence argument as to the

three charged video files that were retrieved from unallocated space on [his] laptop. [Nichlos] does not contest that the girl in the three video files is, in fact, a minor. . . . Additionally, this minor is clearly involved in a sexual act and each video file is of the same minor girl. The trial counsel played a fourth video file pursuant to MIL. R. EVID. 404(b) of the same minor girl. This movie clip had a superimposed annotation in the middle of the screen with the following: `Jenny 9yo all clips.’ It was this linkage to `Jenny 9yo’ that provided the strongest circumstantial evidence of [Nichlos’] knowing possession of the three video files in unallocated space appearing to portray `Jenny 9yo.’

The Government presented a circumstantially strong case that [he] had, at some point, received, downloaded, and viewed child pornography videos. The Government called Ms. SH, a forensic expert with the Defense Computer Forensic Laboratory DCFL. In addition to her testimony, the Government relied on the forensic exploitation of [Nicklos'] laptop, portable hard drive, and iPhone to present its case.

First, the Government offered Prosecution Exhibit 3, a DCFL forensic report of [Nichlos’] iPhone. This exhibit contained three cookies revealing that on 24 December 2010, [he] had used the Google search engine and searched for and accessed a website responsive to [his] search term: `9yo Jenny pics.’

Second, the Government offered PE 4, a list of property files from LimeWire that contained the most recently downloaded files to [Nichlos’] laptop. These LimeWire property files were retrieved from unallocated space on [his laptop; however, the search terms that [he] entered and downloaded were highly indicative of child pornography and some of the downloaded files contained the unique naming convention “`9yo Jenny’ in various permutations. Because the LimeWire files were retrieved in unallocated space on [Nichlos’] laptop, Ms. SH was not able to retrieve any digital files that matched the digital files from the LimeWire download. Ms. SH testified that the file names in the LimeWire download were downloaded onto [his] laptop; however, because these files were retrieved from unallocated space, the only information attainable was the digital file names themselves.

Third, the Government offered PE 5, a list of [Nichlos’] recently accessed video files. Ms. SH conducted a search of [his] laptop for the most recently viewed movie files in the .mov and .qt format. Whenever a user accesses a movie or video file that contains the file extension .mov or .qt, a link file is automatically created by the program. . . . A link file creates a shortcut for the user and allows the user to `double-click’ on that file to access and view that particular video file. Ms. SH testified that even if the underlying digital file is deleted, the link file still exists on the computer. Additionally, Ms. SH testified that although she was not able to find the underlying video files associated with the link files, she was able to testify that at some point in time, these files had been viewed. . . . Of the ten recently viewed files that contain the .mov extension, three of them include the title `9yo Jenny.’ . . .

The Government's theory was that [Nichlos] had an interest in child pornography and a particularly unusual interest in images or video files that contained `9yo Jenny,’ the same prepubescent girl depicted in the charged video files. Based on the evidence and expert testimony that [he] had used his iPhone on 24 December 2010 to actively search for and access the website purportedly containing `9yo Jenny pics,’ this served as a circumstantial link to the charged video files of `9yo Jenny.’

U.S. v. Nichlos, supra.

The appellate court consequently found that there was “no question that [Nichlos] possessed child pornography; the question is whether [he] `knowingly possessed’ child pornography on the charged date.”  U.S. v. Nichlos, supra (emphasis in the original).

The Court of Criminal Appeals then went on to analyze that issue, noting that because of

its charging decision, the Government was required to prove [Nichlos] `knowingly possess[ed]’ the three charged video files (01864590.mpg; 01864588.mpg; and, 01864901.mpg) `on or about 16 May 2011.’ Accordingly, the critical issue we must now decide is not whether the appellant knowingly possessed these video files at any time from the date he acquired his computer until the date NCIS seized it. Instead, we must decide whether [Nichlos] knowingly possessed the three charged video files retrieved from unallocated space on or about 16 May 2011. Based on binding precedent . . . , we conclude that he did not. To support our conclusion, we first consider the technical aspects associated with unallocated space prior to considering whether a computer user can `possess’ a digital file, either actually or constructively, if that file exists only in the unallocated space of a computer.

According to . . . Ms. SH, unallocated space is the location on the computer where files are stored after having been permanently deleted. When a user permanently deletes a digital file that file continues to exist on the computer; however, it exists in unallocated space until the file is overwritten. Once a digital file is in unallocated space, the metadata associated with that file is stripped away (e.g. its name, when it was accessed, when it was viewed, when it was created, or when it was downloaded). . . . Ms. SH's testimony is consistent with federal courts that have defined unallocated space. . . . .

The CAAF has defined what constitutes `knowing possession’ for purposes of possession of child pornography. . . . To constitute `knowing possession’ for purposes of child pornography, the CAAF imported the definition of possession from the President's definition of `possess’ in Article 112a, UCMJ;^. U.S. v. Navrestad, 66 M.J. 262 (C.A.A.F. 2008).  Because Navrestad did not have actual possession or constructive possession of child pornography under that definition, the CAAF held that the evidence was legally insufficient.  Id.

In this case, the Government presented no evidence that [Nichlos] had the required forensic tools to retrieve digital files from the unallocated space of his computer. In fact, Ms. SH testified that once a digital file is in unallocated space, a user does not have the ability to access that digital file. . . . Because [Nichlos] was unable to access any of the video files in unallocated space, he lacked the ability to exercise “dominion or control” over these files. Navrestad, 66 M.J. at 267. . . .

Having defined `knowing possession’ for purposes of child pornography as requiring the possession to be both `knowing and conscious,’ Navrestad, 66 M.J. at 267, we hold that [Nichlos] did not `knowingly possess’ any of the three charged videos on the date charged (16 May 2011).  Bound by Navrestad, we also conclude that the evidence was legally insufficient to prove constructive possession on the date charged.

The CAAF has held that for the evidence to be legally sufficient on a constructive possession theory, a person must exercise `dominion or control’ over the child pornography digital files.  Navrestad, supra.  Based on the technical aspects associated with unallocated space, Ms. SH's testimony, and a lack of any evidence presented that the appellant was a sophisticated computer user in possession of the forensic tools necessary to retrieve digital files from unallocated space, we conclude that the evidence is legally insufficient to prove knowing possession on or about the charged date of 16 May 2011. 

U.S. v. Nichlos, supra.

The Court of Criminal Appeals therefore held that the “finding of guilty to Specification 1 of the Charge is set aside and that specification is dismissed.”  U.S. v. Nichlos, supra. It upheld the finding of guilty as to Specification 2 but set the sentence aside and “return[ed] the record to the Judge Advocate General for remand to an appropriate CA with a rehearing on the sentence authorized.”  U.S. v. Nichlos, supra. 

Emails, Breach of Contract and the Statute of Frauds

This post examines an issue that arose in a civil suit: United Propane Gas Inc. v. Pincelli & Associates Inc., 2014 WL 496932 (U.S. District Court for the Western District of Kentucky 2014).  The judge begins the opinion by explaining that the case was before

the Court upon Defendant, Pincelli & Associates Inc.'s (Pincelli), Motion to Dismiss. . . . Plaintiff, United Propane Gas Inc. (UPG), has responded. . . . Defendant has replied. . . . This matter is now fully briefed and ripe for adjudication. . . .

UPG alleges that through email communication, between UPG's President Eric Small and Pincelli's Vice President of Operations Kristin Ford, UPG and Pincelli formed an agreement that Pincelli would sell and UPG would buy propane at 97 cents per gallon for 50,000 gallons per week for one year. . . .

UPG alleges that Pincelli has refused to honor this agreement and sell UPG propane under the agreed terms. . . . UPG brings claims for breach of contract and breach of the covenant of good faith and fair dealing. . . .

United Propane Gas Inc. v. Pincelli & Associates Inc., supra.

He then outlined the law that applied to the motion to dismiss the suit:

The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a `short plain statement of the claim showing that the pleader is entitled to relief.’ Fed.R.Civ.P. 8(a)(2).  A defendant may move to dismiss a claim or case because the complaint fails to `state a claim upon which relief can be granted.’ Fed.R.Civ.P. 12(b). When considering a Rule 12(b)(6) motion to dismiss, the court must presume all of the factual allegations in the complaint are true and draw all reasonable inferences in favor of the non-moving party. . . .Even though a `complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.’ Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (citations omitted). Instead, the plaintiff's `[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).’ Id.(citations omitted).
A complaint should contain enough facts `to state a claim to relief that is plausible on its face.’ Id. at 570.  A claim becomes plausible `when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) (citing Twombly, supra). If, from the well-pleaded facts, the court cannot `infer more than the mere possibility of misconduct, the complaint has alleged -- but has not “show[n]”—that the pleader is entitled to relief.’  Ashcroft v. Iqbal, supra. `Only a complaint that states a plausible claim for relief survives a motion to dismiss.’ Id.

United Propane Gas Inc. v. Pincelli & Associates Inc., supra.

The judge then noted that Pincelli

moves to dismiss UPG's Complaint on the basis that there was not an enforceable contract. . . .  Specifically, Pincelli argues: (1) there was not a meeting of the minds; and (2) the email(s) referenced by Plaintiff does not satisfy the statute of frauds. . . . In support of its motion to dismiss, Pincelli attaches emails from August 1st to August 6th of 2013, which are referenced in the Complaint and are the basis for Plaintiff's contract claims.

The Court may view the emails because Plaintiff references them in the Complaint. Amini v. Oberlin College, 259 F.3d 493 (U.S. Court of Appeals for the 6th Circuit 2000) (stating that `documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim’). 

United Propane Gas Inc. v. Pincelli & Associates Inc., supra. For more on what is necessary to establish a valid contract, check out this site.

The opinion then quotes “in chronological order,” “the emails between Kristine Ford of Pincelli and Eric Small of UPG between August 1st and August 6th of 2013”. United Propane Gas Inc. v. Pincelli & Associates Inc., supra.

Kristin Ford (Pincelli) August 1 at 3:15 PM:

`Eric-

Just saw that the prices were creeping up a little. We are supposed to sign a 2m gallon (20,000/week) deal with Holston tomorrow for .96 gallon flat for the year starting in Oct 1. Are you sure you're not interested ...

Eric Small (UPG) August 1 at 3:45 PM

we could do 2–4m at 92–94 if that is the cheapest you have offered or will offer.

Eric Small August 6 at 9:17 AM:

WE NEED TO NAIL THIS DOWN !

Eric Small August 6 at 10:46 AM:

LAST CHANGE, 95 fixed.. yes it no

Kristin Ford August 6 at 10:10 AM:¹

.97/gallon. That's 1 cent more than MBV mid summer and 3 cents less than we discussed back in May. That is also the best deal/cheapest that we will sell to anyone and in this market now, you can have it in writing. We can do 50,000 gallons per week.

Eric Small August 6th at 11:27 AM:

Thank you so much but we don't pay more than competitors usually less..

Kristin Ford August 6th 10:30 AM:

You must've misunderstood me. You would be paying less.

Eric Small August 6th at 11:48 AM:

Holston is getting it for less

Kristin Ford August 6th at 10:53 AM:

No they're not. They adjusted their summer volume down because they could only take so much so we moved the price up 3 cents per gallon.

Eric Small August 6th at 12:18 PM:

Ok lets do it thanks

Kristine Ford August 6th at 11:20 AM:

Ill be back in the office about 6 tonight. Ill send you the contract.

Eric Small August 6th at 12:32 PM:

great thanks

Kristin Ford August 6th at 5:48 PM:

Attached is the contract discussed today along with the agreed terms-If we are in agreement I can fill in the appropriate `buyer’ information. I will be in the office after 10:30 tomorrow morning, or you can get me on my cell. I would like it if you or Charlie could come out to the plant in Manchester within the month. We will start production in mid-September, but to make sure that we are 100% in production and HD5 quality, I pushed the start date to October 15.’

United Propane Gas Inc. v. Pincelli & Associates Inc., supra.

The judge then explains that the plaintiff’s Complaint stated

18. Small responded by email dated August 6, 2013 stating `ok lets do it thanks.’

19. As evidenced by the written email exchanges, the parties formed an agreement that Pincelli would sell and UPG would buy propane at 97 cents per gallon, for 50,000 gallons per week for one year.

20. Pincelli has refused to honor such agreement and has refused to sell UPG the propane under the agreed terms.

United Propane Gas Inc. v. Pincelli & Associates Inc., supra.

The judge explained that in its motion to dismiss Pincelli & Associates Inc. claimed

there was no meeting of the minds because it is `undisputed that the parties intended for any agreement to be contingent upon a written agreement signed by both parties.’ . . . The Court finds that dismissal at this early stage of the litigation would not be appropriate and that Plaintiff's claim of the existence of a contract is not implausible. . . .

Dismissing Plaintiff's claims would require the Court to credit Defendant's version of the events over Plaintiff's, which is inappropriate at this early stage of the litigation. Plaintiff's claim that a contract was reached based on the emails is `plausible’ and, accordingly, will overcome a motion to dismiss.

United Propane Gas Inc. v. Pincelli & Associates Inc., supra.  Wikipedia outlines the elements of a valid contract in the article you can find here.  The Wikipedia entry you can find here explains the “meeting of the minds.”

Pincelli & Associates also argued that UPG’s Complaint should be dismissed because

it fails to allege a writing that satisfies Kentucky's statute of frauds.

Specifically, Defendant argues that the emails do not satisfy the statute of frauds under the Federal Electronic Signatures in Global and National Commerce Act (E–SIGN) or the Uniform Electronic Transactions Act (UETA). (Docket No. 5, at 9.) Kentucky courts interpret the writing requirement of the statute of frauds loosely and have determined correspondence similar to emails as sufficient to deny statute of frauds arguments. See, e.g., TWB Distribution, LLC v. BBL, Inc., 2009 WL 5103604 (U.S. District Court for the Western District of Kentucky 2009); Commonwealth Aluminum Corporation v. Stanley Metal Associates, 186 F.Supp.2d 770 (U.S. District Court for the Western District of Kentucky 2001).

United Propane Gas Inc. v. Pincelli & Associates Inc., supra.  In a footnote, the judge explained that while Kentucky cases “do not outright state that emails may satisfy the statute of frauds -- although it is implied -- there is no precedent contrary to such a result.” United Propane Gas Inc. v. Pincelli & Associates Inc., supra.  He also noted that the Kentucky statute of frauds “states that “[i]f a law requires a record to be in writing, an electronic record satisfies the law.” United Propane Gas Inc. v. Pincelli & Associates Inc., supra (quoting KentuckyRevised Statutes § 369.107(3)).

The judge went on to explain that

[a]dditionally, the UETA provides that electronically delivered documents and signatures affixed thereto can satisfy the statute of frauds.  Kentucky Revised Statutes § 369.102(8) defines an electronic signature as `an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.’

All emails from Pincelli between August 1st and August 6th contained, in the signature line of the email, Kristine Ford's name. . . . This Court believes that Kentucky courts would find that under the right circumstances -- where the intent and signature elements are present -- emails can satisfy the statute of frauds. Accordingly, the Court finds at this early stage of the litigation Plaintiff's claim of a contract is not implausible and will DENY Defendant's Motion to Dismiss as to the breach of contract claim.

United Propane Gas Inc. v. Pincelli & Associates Inc., supra.

As Wikipedia explains, the “statute of frauds refers to the requirement that certain kinds of contracts be memorialized in a writing, signed by the party to be charged, with sufficient content to evidence the contract.”  As Wikipedia also explains, the contracts encompassed by the statute of frauds include contracts that cannot be performed in one year, contracts for the sale of goods “totaling $500 or more”.  You can find the Kentucky statute of frauds provision here.  

And if you are interested, you can read more about the statute of frauds and email in the post you can find here.

(For some reason, I'm having formatting problems with this post . . . I've fixed all of them I can.  Apologies.)