Are Your Electronic Passwords Tangible Property That Can Be Converted?
Illinois law defines conversion as the intentional exercise of dominion or control over property which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the property. In other words, conversion is the wrongful deprivation of property from the person entitled to possession. This definition of conversion has been well settled for decades but does not shed light on the nature and extent of property. For example, are passwords to information systems “property” within the meaning of a conversion claim? On December 31, 2024, the Illinois Appellate Court answered this question in the negative.
Z’s IT Consulting Services., Inc. v. Hunt L. Grp., LLC
In Z’s IT Consulting Services., Inc. v. Hunt L. Grp., LLC, Hunt L. Grp, LLC (“Hunt”), filed a counterclaim against Z’s IT Consulting Services, Inc. (“Z’s IT”) alleging that Z’s IT committed the tort of conversion by withholding passwords and access codes necessary to gain entry to Hunt’s IT system. Hunt alleged that because of Z’s IT withholding Hunt’s passwords and access codes, the firm endured scanner failures and the inability to access its e-mail filters, domain registration, and phone systems. Hunt’s counterclaim for conversion was dismissed in trial court necessitating the appeal.
Appellate Court Decision
The Appellate Court noted that over time, the definition of the type of property necessary to state a claim for conversion has transformed. The Court also recognized that there are divergent decisions concerning what constitutes property that could be converted (i.e. the nature of the property). However, the Court held that Illinois law limits conversion claims to tangible property rights. The Court found that passwords and access codes were not tangible using the dictionary definition of tangible (“having or possessing physical form; corporeal” or “capable of being touched and seen; perceptible to the touch; capable of being possessed or realized.”). Although intangible property can be part of a conversion claim if the intangible property were merged with tangible property, the Court noted that Hunt failed to make such an allegation. Ultimately, the Court affirmed the trial court’s dismissal of the appeal.
While the decision in Hunt bars claims for conversion for entities that may withhold passwords or other access information, Illinois common law and statutes provide other remedies that can be pursued. For detailed insights and strategic advice on pursuing claims for the recovery of passwords or access information, you should consult Levin Ginsburg’s commercial litigation and dispute resolution practice group.
