ALBANY, N.Y., March 26 – The New York State Court of Appeals, in a unanimous opinion, held that Nationwide Mutual Insurance Company erred in taking possession of electronic records of one of its agents whose Agents Agreement had been terminated.

In Louis E. Thyroff v. Nationwide Mutual Insurance Company, et al, the United States Court of Appeals for the Second Circuit certified a question to the New York Court of Appeals asking whether the common-law cause of action of conversion applied to certain electronic computer records and data. The New York Court held in the affirmative.

As part of the agreement Nationwide had with its agent, Thyroff, the company provided a computer system on which Thyroff entered business records, personal e-mails, correspondence, and other data that pertained to his customers. After his termination, Nationwide repossessed the system and denied access to the computers and all electronic records and data. Thyroff brought an action against Nationwide in the U.S. District Court for the Western District of New York stating several causes of action, including conversion of his business and personal information stored on the computer hard drives. The district court held the complaint failed to state a cause of action for conversion.

In an appeal to the Appellate Division, Second Circuit, he sought reinstatement of his conversion cause, and Nationwide countered that a conversion claim cannot be based on the misappropriation of electronic records and data because New York does not recognize a cause of action for intangible property. The question was then brought to the New York Court of Appeals.

Judge Victoria A. Graffeo, in writing the opinion, said a variety of arguments have been made in support of expanding the scope of conversion. Some courts have decided that a theft of intangible property is a violation of the criminal law and should be civilly remediable. [T]hat virtual documents can be made tangible by the mere expedient of a printing key function; that a writing is a document whether it is read on a computer or printed on paperand that the expense of creating intangible, computerized information should be counterbalanced by the protection of an effective civil action.

She stated, It cannot be seriously disputed that societys reliance on computers and electronic data is substantial, if not essential. Computers and digital information are ubiquitous and pervade all aspects of business, financial, and personal communication activities. Indeed, this opinion was drafted in electronic form, stored in a computers memory, and disseminated to the judges of this court via e-mail. We cannot conceive of any reason in law or logic why this process of virtual creation should be treated any differently from production by pen on paper, or quill on parchment. A document stored on a computer hard drive has the same value as a paper document kept in a file cabinet.

It generally is not the physical nature of a document that determines its worth, it is the information in the document that has intrinsic value, she added. The information Thyroff allegedly stored on his leased computers in the form of electronic records of customer contacts and related data has value to him regardless of whether the format in which the information was stored was tangible or intangible. In the absence of a significant difference in the value of the information, the protections of the law should apply equally to both terms, physical and virtual.

In light of these considerations, we believe that the tort of conversion must keep pace with the contemporary realities of widespread computer use. We therefore answer in the affirmative and hold that the type of data that Nationwide allegedly took possession of " electronic records that were stored on a computer and were indistinguishable from printed documents " are subject to a claim of conversion in New York because this is the only type of intangible property at issue in this case. We do not consider whether any of the myriad other forms of virtual information should be protected by the tort.

Chief Judge Judith S. Kaye and judges Carmen Beuchamp Ciparik, Susan Phillips Read, Robert S. Smith, Eugene F. Pigott, and Theodore T. Jones concurred.