## Facts

- Thrifty‑Tel, Inc., a long‑distance carrier, routed calls through a computerized switching network accessed using a confidential access code and a six‑digit authorization code.
- In November 1991, teenage brothers Ryan and Gerry Bezenek, with friends, used the Bezeneks’ home computer and modem to enter Thrifty‑Tel’s system using an obtained access code and then attempted random authorization codes.
- Over about three days, they made roughly 162 call attempts while searching for working codes.
- Thrifty‑Tel detected the activity quickly and identified the Bezeneks’ home as the source by late November 1991 but did not contact the family.
- After a hiatus, on February 18, 1992, the teens resumed with software that automated code searching, generating more than 1,300 calls and overloading the system, causing service disruption for some subscribers.
- Thrifty‑Tel did not notify the Bezeneks before filing suit on April 1, 1992.
- Thrifty‑Tel sued the parents for fraud, conversion, and the value of services, and at trial sought damages largely by applying an “unauthorized‑use” tariff in its PUC‑filed rate schedule.
- The trial court found for Thrifty‑Tel on fraud and conversion and awarded about $33,720 in damages plus nearly $14,000 in attorney’s fees.
- The parents appealed, challenging liability theories, the damages measure (including tariff use), mitigation, and the scope of parental liability under Civil Code § 1714.1.

## Issues

1. Whether unauthorized electronic intrusion into a carrier’s switching system and use of access/authorization codes can support tort liability for conversion or, alternatively, trespass to chattels.
2. Whether repeated use of access/authorization codes can constitute fraud through implied misrepresentation of authorization.
3. Whether Thrifty‑Tel’s failure to notify the family after detecting the November intrusion precluded or reduced recovery for later losses under mitigation principles.
4. Whether a PUC‑approved unauthorized‑use tariff can, without independent proof, supply the measure of actual damages or operate as enforceable liquidated damages rather than an unenforceable penalty.
5. Whether Civil Code § 1714.1 limits the parents’ liability for their minor children’s willful misconduct and excludes liability for acts of unrelated minors.

## Decision

- The Court of Appeal concluded that unauthorized electronic intrusions that impair or disrupt a computer system may support liability under trespass to chattels (and that fraud may be viable based on implied misrepresentation through unauthorized use).
- The court held the judgment could not stand as entered because Thrifty‑Tel did not adequately prove compensatory damages and could not rely on the unauthorized‑use tariff, standing alone, as a substitute for actual-damage proof.
- The court treated the tariff, as applied to impose a large award untethered to demonstrated loss, as punitive rather than compensatory and thus improper as liquidated damages.
- The court considered Thrifty‑Tel’s delay in notifying the Bezeneks after detection relevant to mitigation and avoidable loss, undermining recovery for later events to the extent damages could have been prevented.
- The court recognized that parental liability under Civil Code § 1714.1 applies only to the willful misconduct of the parents’ own minor children, is subject to a statutory cap, and does not extend to unrelated minors.

## Legal Principles

- Trespass to chattels may apply to unauthorized computer access when the intrusion materially interferes with the functioning, capacity, or availability of the system.
- Fraud may be based on conduct that implies a false representation; using access mechanisms in a manner that implies authorization can satisfy misrepresentation and intent elements when done knowingly to obtain services without payment.
- A plaintiff must take reasonable steps to mitigate damages; failure to act after learning of ongoing misconduct may reduce or bar recovery for later avoidable harm.
- A regulatory tariff governing service terms and rates does not automatically establish tort damages; compensatory damages generally require proof of actual loss.
- A tariff-based charge cannot function as liquidated damages if it lacks a reasonable relationship to anticipated or actual harm and operates as a penalty.
- Civil Code § 1714.1 imposes limited parental liability for willful misconduct of a parent’s minor child, subject to a statutory cap, and does not impose liability for acts of unrelated minors.

## Conclusion

The court recognized that computer and network intrusions can support trespass-to-chattels and fraud theories, but it rejected a damages award based largely on an unauthorized-use tariff without proof of compensatory loss, emphasized mitigation limits where the carrier delayed preventive action, and applied statutory constraints on parental liability for minors’ willful misconduct.


Thrifty-Tel, Inc. v. Bezenek, 46 Cal. App. 4th 1559 (Cal. Ct. App. 1996)