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National Instruments donates $400K in equipment, software to SUNY Poly
MARCY, N.Y. — A Texas company is providing the Marcy campus of SUNY Polytechnic Institute (SUNY Poly) with $400,000 worth of tools and software. The

Singlebrook sells CMS division to Minnesota firm
ITHACA — Singlebrook Technology on Aug. 12 sold the assets of its content-management system (CMS) division to Minneapolis–based Origin Eight, a digital-development and design agency. The sale included cash and an “earnout,” a contractual provision providing the seller additional compensation in the future if the business achieves certain financial goals. The financial terms of the
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ITHACA — Singlebrook Technology on Aug. 12 sold the assets of its content-management system (CMS) division to Minneapolis–based Origin Eight, a digital-development and design agency.
The sale included cash and an “earnout,” a contractual provision providing the seller additional compensation in the future if the business achieves certain financial goals. The financial terms of the deal, including price, were not disclosed.
Singlebrook continues to own and operate its custom web-applications business at the company’s downtown Ithaca office, where it employs a staff of six, plus part-time employees and outside contractors. Leon Miller-Out, the new company president in addition to being the CTO, runs the web-applications business. Origin Eight operates its new CMS division under the name O8SB, co-working both from the Minneapolis office and Singlebrook’s Ithaca office.
“I founded Singlebrook in 2006,” says Elisa Miller-Out, the company’s former CEO, “with the idea of assembling a team of web developers who are not only passionate about building great web sites and mobile apps but also about making a difference in the world. Our team works with many technologies and offers a variety of services, including custom web-application programming, apps, website design, database design and development, web security, and trouble-shooting.”
She continues, “Singlebrook’s clients, composed of Fortune 500 companies, nonprofits, and higher education, are all socially and environmentally conscious: The Sierra Club, Cornell University, the Environmental Defense Fund, Hitachi, Yale University, Peeled Snacks, RSF Social Finance, EarthColor, and the Social Venture Network, to name a few. They do innovative social and/or environmental projects, and we help them with our technology expertise.”
“I initiated the contact with Origin Eight, a firm that does work similar to Singlebrook’s and shares our commitment to a passion for great programming and design; craftsmanship and innovation; serving the community; close collaboration with clients; and creating happiness with clients, vendors, partners, staff, and the larger community … Negotiations lasted six to eight months,” Miller-Out says.
No broker was involved in the transaction.
Singlebrook is certified as a women-owned business and registered as a benefit corporation (B-corp.), which is a hybrid that bridges the legal gap separating for-profit companies from not-for-profit companies. New York State adopted the law in 2011 to allow a company’s board of directors to consider non-financial interests when making decisions. This protects the officers and directors against shareholder lawsuits focused only on maximizing profits.
“B-corp. status has its advantages,” intones Miller-Out. “First, the company can buy supplies from certain vendors at special prices only available to nonprofits. Second, we also have access to social-capital funds. And third, we are branding our image as a socially responsible company.”
Origin Eight
Origin Eight is a full-service, digital agency founded by Seth Viebrock in September 2010. The company is based in Minneapolis and has offices in Ithaca and the Hudson River Valley. Origin Eight specializes in web, application, and mobile development and design. It has CMS expertise, including Drupal and WordPress, and has experience with Magento, an open-source, e-commerce platform.
Origin Eight also offers support, audit services, web hosting, search-engine optimization, and marketing. The firm boasts a client list that includes the University of Minnesota, The Julliard School, Estée Lauder, Public Radio International, Cornell University, and the University of New England. Origin Eight’s website displays a staff of 13 employees.
Miller-Out graduated summa cum laude from Barnard College in 1997. Prior to founding Singlebrook, she worked in New York City for a number of industries and created two other companies. She was a co-founder of the Ithaca Venture Community, a strategic partner in CSRwire, and vice chair of the New York Society of Association Executives. In 2016, Miller-Out became an advisory-board member of StartFast Code, the managing director of the Finger Lakes Fund, and the COO of Women 2.0. In 2015, the serial entrepreneur co-founded CourseQ. She regularly serves as a mentor and judge for startup accelerators and competitions. Miller-Out lives in Ithaca with her husband Leon. The couple has two daughters.
Viebrock graduated from Macalester College in 2004 with a bachelor’s degree in economics. He spent the next two years at the University of Minnesota–Twin Cities, learning creative ways to approach technology with relation to cognition. His initial work experience included a stint as a data analyst/programmer, starting a book sales/reselling /buyback business on Amazon, selling IT equipment on eBay, and co-founding a web-design and hosting business at the start of the dot-com boom, while still a student in high school. In 2007, Viebrock worked for the Hursk Group as a programmer and network, security-data analyst and later joined other companies as a senior developer and CTO. His technology experience is balanced by a grounding in business and a passion for music and the arts. In addition to English, Viebrock speaks five languages: French, Portuguese, Japanese, Spanish, and Italian.
“My decision to sell the CMS division of Singlebrook and step back from daily operations was based on serving our clients better by providing more talent and new skills and on my recent involvement in three new ventures that explore women and technology,” explains Elisa Miller-Out. “In August of last year, I co-founded CourseQ, a for-profit, chatbot platform for higher education. It serves as a messaging platform and includes features such as polling communications and reminders. In August of this year, I joined Kate Brodock, the chief marketing officer at untapt and the president of Women 2.0, a for-profit company that works to bring women into the tech industry. I am serving as the COO, and Kate and I are working to initiate a new phase of action-based initiatives. The latest was relocating headquarters to New York to foster a closer connection to the New York City startup scene. We are also working on bringing more diversity to tech hiring. My third venture, which also began this August, is serving as the manager of the Finger Lakes Fund, an early stage, angel-investment, close-ended technology fund based here in Ithaca. Our initial goal is to attract $1 million for investing in local startup companies, before considering a wider geography for our investments.”
Contact Poltenson at npoltenson@cnybj.com
Organizers expect large turnout when Syracuse hosts 2017 World Canals Conference
SYRACUSE — Organizers expect hundreds of international delegates and thousands of local and regional residents at waterfront events when Syracuse hosts the 2017 World Canals Conference (WCC) next fall. The New York State Canal Corporation, Erie Canalway National Heritage Corridor, and Visit Syracuse will host the event next Sept. 24-Sept. 28 at the Marriott Syracuse
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SYRACUSE — Organizers expect hundreds of international delegates and thousands of local and regional residents at waterfront events when Syracuse hosts the 2017 World Canals Conference (WCC) next fall.
The New York State Canal Corporation, Erie Canalway National Heritage Corridor, and Visit Syracuse will host the event next Sept. 24-Sept. 28 at the Marriott Syracuse Downtown.
The event could generate a more than $2 million “indirect” economic impact for the city, according to a WCC news release.
I Love NY and National Grid (NYSE: NGG), along with many other businesses and foundations, will sponsor the WCC.
Syracuse will host the conference as the Erie Canal commemorates its bicentennial.
For more information on the event and to view a program schedule, visit wcc2017syracuse.com.
The region has “so much” to celebrate, David Holder, president of Visit Syracuse, said in the release.
“The World Canals Conference will not only allow us to show off our canal system and waterways, but also our museums, shops, restaurants and neighborhoods. I am proud of our region and am looking forward to celebrating with the entire community,” said Holder.
The Canal Corporation commissioned a recent study that found New York’s canal system supports $6.2 billion in non-tourism-related economic activity, in addition to its $380 million tourism-based economic impact, according to the WCC release.
In addition, the study also determined that the canals support 26,472 jobs; $1.6 billion in personal income; and $702 million in tax revenue, “both directly and indirectly.”
“We are thrilled to have the 2017 World Canals Conference take place right here in Central New York,” Brian Stratton, director of the New York State Canal Corporation, said in the news release. “I applaud Gov. Cuomo and New York State for their support in bringing this international spotlight to our storied Erie Canal in the bicentennial year of its groundbreaking.”
The Erie Canal broke ground in Rome on July 4, 1817, and opened on Oct. 26, 1825. It quickly became the most vital trade route in the young nation, and helped make New York City one of the world’s most important ports and commercial centers.
Cornelius B. (Neil) Murphy, Jr., honorary chair of the WCC, said he is “elated” to see the event come to Syracuse.
“The event will bring a new visibility to our canals, inland waterways and the Syracuse region as a whole,” said Murphy, who is also past president of the SUNY College of Environmental Science and Forestry in Syracuse.
Each year, the WCC brings hundreds of canal enthusiasts, professionals, and scholars from around the world together to discuss canals and inland waterways as a means to promote tourism, spur economic and community development, improve environmental quality, and exchange best practices on protection strategies for these historic sites.
“Our canals and waterways are essential to our region’s economic strength and the social well-being of our communities,” Melanie Littlejohn, executive director of National Grid Upstate New York, said. “For that reason, National Grid is proud to take part in the 2017 conference and help support the growth and sustainability of these sites.”
Inverness, Scotland hosted this year’s event in September, and Ghent, Belgium did the same in 2015, according to the website of the American Canal Society. Rochester hosted the World Canals Conference in 2010.
Contact Reinhardt at ereinhardt@cnybj.com

Lockheed to service $149M Navy contract to upgrade shipboard electronic-warfare system
SALINA — Employees at Lockheed Martin Corp.’s (NYSE: LMT) Salina plant will handle production of surface electronic-warfare improvement program (SEWIP) block 2 systems for the U.S. Navy. It awarded the Bethesda, Maryland–based defense contractor an initial contract of $148.9 million for its shipboard electronic-warfare system. The deal with the firm also includes four additional option
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SALINA — Employees at Lockheed Martin Corp.’s (NYSE: LMT) Salina plant will handle production of surface electronic-warfare improvement program (SEWIP) block 2 systems for the U.S. Navy.
It awarded the Bethesda, Maryland–based defense contractor an initial contract of $148.9 million for its shipboard electronic-warfare system.
The deal with the firm also includes four additional option years to upgrade the fleet’s electronic-warfare capabilities so ships can respond to “evolving threats,” Lockheed Martin said in a news release issued Oct. 6.
Under the “full-rate production” contract, Lockheed Martin will provide additional systems to upgrade the AN/SLQ-32 systems on U.S. aircraft carriers, cruisers, destroyers, and other warships with key capabilities.
The effort will help to determine if the electronic sensors of “potential foes” are tracking the ship, the defense contractor added.
“The SEWIP Block 2 System is critically important to the Navy’s operation, and we are proud to continue to provide this capability to the warfighter,” Joe Ottaviano, electronic warfare program director, said in the release. “Threats are becoming increasingly sophisticated. Our electronic-warfare systems give the warfighter information to enable a response before the adversary even knows we’re there.”
The system is the first sensor to be “fully compliant” with the Navy’s product-line architecture strategy, which “facilitates the rapid introduction” of new technology into the fleet, Lockheed Martin said.
Block 2 provides an upgraded antenna, receiver, and “improved interface” with existing ship-combat systems.
Lockheed Martin describes Block 2 as the “latest deployed improvement in an evolutionary succession of ‘blocks’ that the Navy is pursuing for its shipboard electronic-warfare system, which will incrementally add new defensive technologies and functional capabilities.”
The U.S. Navy awarded Lockheed Martin the design and development contract for this program in September 2009.
Since then, it’s awarded the defense contractor a low rate initial production (LRIP) contract for an additional 38 units, 22 of which have been delivered to the Navy “on schedule so far,” the company said.
Contact Reinhardt at ereinhardt@cnybj.com
NSF awards SUNY Poly professor grant funding for ongoing research
MARCY — A professor at SUNY Polytechnic Institute (SUNY Poly) will use a grant of more than $93,000 from the National Science Foundation (NSF) for ongoing research. The award is part of a larger NSF grant committing nearly $300,000 to the project “Machine Learning on Dynamical Systems via Topological Features” that has Firas Khasawneh working
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MARCY — A professor at SUNY Polytechnic Institute (SUNY Poly) will use a grant of more than $93,000 from the National Science Foundation (NSF) for ongoing research.
The award is part of a larger NSF grant committing nearly $300,000 to the project “Machine Learning on Dynamical Systems via Topological Features” that has Firas Khasawneh working with researchers at the University at Albany and Michigan State University, SUNY Poly said in a news release.
Khasawneh, recipient of the $93,000 award, is an assistant professor of mechanical engineering at SUNY Poly’s Marcy campus.
The NSF in April also awarded Khasawneh $196,000 for a separate research project on high-level mathematics in data analysis.
Khasawneh’s research seeks to “further the understanding, analysis and usefulness of complex 21st century datasets by developing the necessary, novel mathematical and computational tools at the intersection of topological data analysis, dynamical systems, and machine learning,” according to SUNY Poly.
The impact of the research would “enhance” methods for laser-based additive manufacturing and manufacturing of smart-drug delivery systems, as well as bioengineering, along with other applications, the school said.
“I am very grateful for winning two NSF awards in one year, and I am proud to see that the scholarship of my research group is receiving some of the highest recognition from my peers,” Khasawneh said in the release. “These two awards speak to the innovative research being done at SUNY Poly and I am looking forward to the challenging but exciting work ahead.”
Contact Reinhardt at ereinhardt@cnybj.com
How the Genius NY competition selection process will work
SYRACUSE — The selection process to determine the finalists in the Genius NY business competition will include about 20 people, says Jonathan Parry, director of Genius NY. Genius NY is a $2 million business accelerator based at the Syracuse Technology Garden. Genius NY stands for Growing ENtrepreneurs & Innovators in UpState New York. It’s an
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SYRACUSE — The selection process to determine the finalists in the Genius NY business competition will include about 20 people, says Jonathan Parry, director of Genius NY.
Genius NY is a $2 million business accelerator based at the Syracuse Technology Garden.
Genius NY stands for Growing ENtrepreneurs & Innovators in UpState New York. It’s an in-residence business competition accelerator at the Tech Garden that CenterState CEO operates.
Empire State Development, New York’s economic-development agency, funds the overall Genius NY program budget.
As of Oct. 11, just over 230 applicants had submitted material to compete for placement as competition finalists. Parry anticipates the program will have attracted more than 250 applicants by the Oct. 16 deadline for submission.
The selection group will include about 14 judges who aren’t affiliated with the Tech Garden.
“They’ll be third-party, nonbiased,” says Parry, who spoke with CNYBJ on Oct. 11.
Most of the judges are based in Central New York, he adds. The judges have technical expertise, investing expertise, and knowledge on the legal aspects for intellectual property.
“We tried to get a broad base of judges to review all the applications,” says Parry.
Neither Parry nor anyone working at the Tech Garden or CenterState CEO will be involved in the selection process, he notes.
Besides the judges, the group also includes five or six individuals handling tasks to make sure the applications have the required information.
The process will involve two rounds of judging, eventually reducing the field to six finalists to compete in the Genius NY competition.
The selection group will be looking at criteria that include the experience of the company employees and their technical background. Group members and judges will also look at the “scalability” of the technology developed by each startup applicant.
“We’re definitely leaning toward the technology that’s scalable to the broader market, globally,” says Parry.
The group will also consider if the company has plans to relocate to or establish a presence in Central New York and potentially work with local firms, such as SRC, Inc., Lockheed Martin Corp. (NYSE: LMT), or Saab.
The initial judging will continue into early November with a semifinalist round for 12 to 18 teams scheduled for Nov. 22, which will reduce the field to the group of six finalists.
“We will announce the finalists hopefully that week, Thanksgiving week,” says Parry.
The program will award six companies at least $250,000 for participating in the program, the Syracuse Technology Garden said. That’s up from $175,000 last year. The six companies will spend a year at the Tech Garden developing their business plan, their operations, and working with mentors.
The program will award grand prizes of $1 million, $600,000, and $400,000 to the top three competitors, with “additional opportunities for follow-on funding,” while the other three firms get the $250,000 minimum.
The finalists will begin competing in Genius NY on Jan. 2, 2017.
Contact Reinhardt at ereinhardt@cnybj.com

Fibonacci STEAM conference galvanizes student scholars
A dream you dream alone is only a dream. A dream you dream together is reality. —Yoko Ono ROME — “[The] STEAM conference was the icing on the cake.” “Talking about quantum physics at 3 in the morning with a group of complete strangers was the most fun I ever had.” “Now I’m back home wishing
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A dream you dream alone is only a dream. A dream you dream together is reality. —Yoko Ono
ROME — “[The] STEAM conference was the icing on the cake.”
“Talking about quantum physics at 3 in the morning with a group of complete strangers was the most fun I ever had.”
“Now I’m back home wishing that experience didn’t end.”
“The best week I’ve ever spent; I met so many amazing people.”
“Project Fibonacci was a major success! So grateful for all the memories and [for meeting] amazing people … this past week. Can’t wait to do it again next year.”
These are just some of the testimonials shared by the more than 110 student scholars and guest educators who attended the first Project Fibonacci conference held in Rome July 31-Aug. 6.
“It was a unique opportunity for these students to discover their passion, explore a career, and share their dreams together,” emphasizes Andrew Drozd, the program’s creator and catalyst. Drozd is the founder and chief scientist at ANDRO Computational Solutions, LLC, headquartered in Rome.
“Our country needs its students to be innovators in order to compete globally. Our current focus on STEM (science, technology, engineering, and math) is important, but we need to add the letter “A” for art in order to tie science and the arts together. The concept, which goes back to the Renaissance period, originated with Leonardo Bonacci (nicknamed Fibonacci, which means the son of Bonacci), who lived from 1170 to 1250. He was a mathematician who discovered a branch of mathematics that neatly describes emergent patterns in the realms of science, engineering, nature, art, and music.”
“The program’s student scholars spent an exciting week listening to and meeting with our keynote speakers, science and technology … [luminaries] such as Dr. Alex Filippenko, an astrophysicist and author; Dr. David Eagleman, an author and TV personality of ‘The Brain: The Story of You’; and Alan Bean artist and former astronaut,” says Daniel Kostelec, the Fibonacci outreach coordinator. “The program also included Alan Alda, actor, director, and author; Chris Hadfield, musician and former astronaut; and Dr. Brian Greene, author and TV personality who spoke on Beyond Einstein: Space, Time, and Reality. In addition to the keynote speakers, the scholars participated in workshops and panel discussions with titles such as ‘the science and art of constructing a geodesic dome,’ ‘Fibonacci (art and technology) in musical harmonics,’ and ‘The NASA Space Program.’ They also traveled to local facilities to get an appreciation of the … [economic vibrancy] and the many career opportunities available in our region.”
Drozd set ambitious goals for the conference. “We want to build community involvement; motivate and enlighten the next generation; create scholars, musicians, artists, and engineers; and make the Mohawk Valley and the greater Central New York/Upstate region an entrepreneurial hub built around STEAM,” he stresses. “I was pleased that we received 234 nominations from more than 75 schools and accepted 105. Our exit survey indicated that 92 percent of the participants would return for the 2017 conference, proof of how powerful the [2016] program was. Of the total registrants, the conference partially funded more than 50, with scholarships provided by schools, local companies, and private donations. Forty of the student attendees were high-school juniors, 30 were high-school seniors, and most of the remainder were college undergraduates, almost the exact distribution we had projected.”
Drozd continues, “We were pleasantly surprised to see that 55 percent of our scholars were male and 45 percent female, an indicator that this generation of women is more comfortable pursuing scientific and technical fields. “While the majority of the registrants was interested in science or technology careers, we did have about 20 scholars who were arts- and music-based students. Our geographic reach focused on the Mohawk Valley (69 registrants from Oneida County), but the conference did attract registrants from Downstate and even students from Maine, Florida, and the state of Washington. My greatest disappointment in meeting our 2016 benchmarks was the level of financial support from the community and the lack of interest from the media.”
“Our budget for the 2016 program was approximately $400,000,” notes Ed Talerico, who is serving as the 2017 conference chair and is the director of accounting at ANDRO. “Project Fibonacci raised about $75,000 from tuition, $140,000 from public and private supporters, with ANDRO making up any deficit. Our biggest expense was clearly the cost of … [booking] the keynote speakers. That line item alone was approximately $225,000, more than half of the budget.” Talerico projects the 2017 conference budget will be approximately $500,000. He says the 2017 conference will be set up again with a 501(c)(3) designation for supporters to receive a tax deduction for contributions. Drozd expects that the conference itself will become a 501(c)(3) corporation within the next year under the Project Fibonacci umbrella.
Plans for 2017 conference
“With what we learned from this year’s event, I know we can attract 250 to 300 student scholars to next year’s conference,” Kostelec predicts. “While we will retain the same, general conference format, we will make some changes to the program. For example, we may move the speaker series to the evening in order to attract a broader audience from the community and reorder the program flow by putting the arts and music portions closer to the beginning of the conference. We are also considering running a pre-conference speaker’s series to keep the idea in front of the public and prospective registrants all year. Project Fibonacci is currently in conversation with Mohawk Valley Community College and with SUNY Poly to explore issuing between one and three college credits for attending the conference. This year we had a three-day college fair to which, in 2017, we want to add workshops on résumé writing and enhancing interview skills. Finally, we are considering augmenting the program with bonus material and adding a few extra days as an option.
“In addition to tweaking the program,” Kostelec continues, “we are planning to do more outreach to promote the event, including more direct pitches to companies to become sponsors, placing more company representatives on the various conference committees, and leveraging social media, especially Facebook and Twitter. We are also ramping up our communication efforts, starting with the recent Fibonacci graduates. We now have more than 100 enthusiastic ambassadors to help spread the word, so we are creating the digital Fibonacci News to stay in touch. Initially, we are sharing videos of the conference which are also going up on You Tube. We are sending our nomination packages to the conference alumni to encourage boosting the number of applicants and including student representatives on our various committees to help plan the 2017 conference.”
Organizing the conference
The Project Fibanocci team learned quickly just how complicated it was to organize a one-week conference. “There were a number of moving parts to put this event together,” stresses Kostelec. “My title is outreach coordinator … [but it could just as well have been juggler.] The process required us to contract with six, recognized, keynote speakers; put together eight workshops with a number of panelists; contact scores of secondary schools and colleges to encourage nominations; review the applications, select the scholars, and provide scholarships; raise the funds; communicate with the community to explain the conference; and promote the event to a variety of audiences.
“We also had to deal with the logistics of feeding, housing, and transporting the STEAM scholars and with assisting the scores of speakers, supporters, and other interested parties who were in attendance. Fortunately, we held the conference at The Beeches, located just north of Rome on a 52-acre campus which contains 70 rooms, a conference center, and commercial-kitchen facilities. In addition to the accommodations, The Beeches provided 90 percent of the meals while addressing a variety of the attendees’ dietary concerns.”
The dream
Drozd’s creation of Project Fibonacci is just the first step of a much larger concept. “There’s no reason we can’t grow Fibonacci here in Rome to attract 700 registrants, and since there are typically 10 weeks in the summer, there’s no reason we can’t expand the program to other cities,” opines Drozd. “The STEAM conference, however, is just the first step in Project Fibonacci. My dream is to build a STEAM campus here in Rome containing a 500-room dormitory, a conference center, and an academic/research center. Orrie Destito (a principal at the Beeches) and I have discussed siting it here at the Beeches to attract kids from kindergarten to college. The curriculum would follow the MURI (multi-disciplinary university research initiatives) concept, which involves teams of researchers investigating topics and opportunities that intersect more than one technical discipline. We have a number of area colleges and universities who could collaborate, and there is a major role for local businesses to help finance the project and to create internships for the scholars. I am already talking with potential investors who see the value and reaching out beyond the Mohawk Valley for support. Frankly, the concept of STEAM is an easy sell.”
ANDRO
Drozd founded ANDRO in 1994 as a niche-oriented R&D company that did groundbreaking work in electromagnetic effects and spectrum management. The company now specializes in simulation tools to analyze co-site and spectrum co-existence issues, offering its customers the ability to perform interactive-computer modeling, simulation, and analysis to ensure that co-located communications don’t interfere with each other. ANDRO leases 25,000 square feet of office space on the Beeches campus and also has offices in Dayton, Ohio and in Syracuse. The company currently employs 45 and is focused on developing more private-sector business, specifically in the growing autonomous-systems sector. ANDRO has grown its revenue by more than 400 percent over the past five years. The Business Journal estimates its annual revenue tops $8 million.
Drozd, 60, was born in Belgium and immigrated to America when he was one-year old. He attended high school in Rome and graduated from Syracuse University, where he received a bachelor’s degree in physics and math, and, in 1982, a master’s degree in electrical engineering. His career includes stints at the Rome Air Development Center, IIT Research Institute, General Electric, and Kaman Sciences Corp. Drozd has also taught physics at Utica College.
“We need to appeal to a wider community,” posits Drozd, as he looks ahead to 2017. “For a first-time event, though, it went off for the most part without a hitch. Still, I think we have just scratched the surface … Fibonacci is no longer just a dream. With high-profile inspirational speakers; immersion of these student scholars in the STEAM concept; institutional collaboration; and wide, community support, this project is becoming reality. Fibonacci is opening new possibilities, new worlds so students can reach for the stars and realize their potential. Looking back, the student scholars were galvanized by the event and watching their bonding and collective dreaming was inspirational.”
Contact Poltenson at npoltenson@cnybj.com
Protect your business from creative data-breach plaintiffs’ attorneys
Awareness is half the battle As more companies become victims of data security breaches, plaintiffs in data-breach cases have devised new and creative arguments under a variety of legal theories in a constant attempt to expand the scope of liability for companies or business owners. Businesses should consult with counsel on ways to limit damages
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Awareness is half the battle
As more companies become victims of data security breaches, plaintiffs in data-breach cases have devised new and creative arguments under a variety of legal theories in a constant attempt to expand the scope of liability for companies or business owners. Businesses should consult with counsel on ways to limit damages in the event of a future data breach and proactively defend against the new causes of action arising from data-breach incidents. This article outlines the recent arguments plaintiffs have made against businesses in the event of a data breach and how courts have addressed them in light of companies’ actions and contracts they entered into with plaintiffs.
Although courts have taken different approaches when addressing certain arguments, some unifying themes are now starting to surface. Just recently, in Spokeo, Inc. v. Robins, the Supreme Court of the United States finally weighed in on one of the key issues in data-breach cases: standing to sue. The Supreme Court held that a plaintiff does not automatically meet the requirement to assert an injury-in-fact when a statute grants the plaintiff to sue to vindicate a statutory right. Article III standing requires a particularized and concrete injury even where a statute allows a person to sue for a statutory violation. The Supreme Court also clarified that this holding “does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.” Accordingly, although this ruling will limit the number of claims alleging abstract or no injuries, it possibly leaves room for plaintiffs to make general allegations of future or increased harm that many courts have found to be insufficient.
Breach of contract
In breach-of-contract claims, plaintiffs have generally alleged that a company owed a contractual obligation to protect personal information and failed to do so. In data-breach cases, courts have dismissed complaints where plaintiffs failed to identify any specific contractual obligations companies actually owed regarding the plaintiffs’ data.
In some instances, courts have upheld breach-of-contract claims, such as where employment contracts require employees to provide their personal information in exchange for employment. Employers should limit their liability by including a provision in their employment contracts that limits damages to direct harm. Further, courts have declined to treat corporate policies about data-security practices as enforceable contracts.
Data-breach plaintiffs also often face difficulty in alleging more than just consequential damages in a breach-of-contract claim, especially where the contract between the parties includes a provision limiting damages to direct harm. However, in cases where plaintiffs have alleged breach of an implied contract, their complaints have survived dismissal on the grounds that companies implicitly agreed to take reasonable steps to protect plaintiff’s information. Companies that do not enter into written contracts with plaintiffs to protect their information should still be cautious of verbally or implicitly agreeing to be responsible for plaintiffs’ information in the event of a data breach.
Negligence
In negligence claims, plaintiffs generally allege that businesses breached their duty to protect plaintiffs’ personal information by failing to provide adequate data security. To withstand dismissal, plaintiffs must adequately allege that companies owed them a duty and fell below a standard of care by failing to, for example, establish adequate practices on intrusion detection. The claim will fail in the absence of a duty that a company owed to plaintiff. For instance, courts have dismissed negligence claims against third parties where the third party retains the personal information that was improperly accessed, but did not have a direct relationship with the plaintiff.
Second, plaintiffs must overcome the economic-loss doctrine, which provides that there is no claim for negligence where the plaintiff only alleges economic damages unaccompanied by physical injury or property damage. Some courts have, however, applied a “special relationship” exception to the doctrine. A special relationship involves confidentiality or special trust. This exception generally involves one party taking advantage of or exercising undue influence over the other. To make such a showing, plaintiffs generally need to allege more than just a relationship created by contract. Accordingly, courts do not apply the special-relationship exception where plaintiffs can recover under a breach-of-contract claim.
The Fair Credit Reporting Act
Plaintiffs have also alleged violations of the Fair Credit Reporting Act (FCRA) in data -breach cases. To accomplish its purpose, the FCRA imposes obligations on consumer reporting agencies, users of consumer reports, and furnishers of information to consumer-reporting agencies.
In data-breach cases against consumer-reporting agencies, plaintiffs generally allege that companies willfully, recklessly, and/or negligently violated the FCRA by failing to implement measures to protect plaintiffs’ personal information. Companies have typically opposed these claims by arguing that plaintiffs do not have standing to bring a claim under the FCRA because they are relying on possible future injuries to support their claim and have not suffered any monetary loss. Again, the Supreme Court recently clarified that plaintiffs must still allege a concrete injury even where companies have violated statutory obligations. Merely stating that a company has violated the FCRA by providing incorrect information about the plaintiff will not satisfy the injury-in-fact requirement.
In addition, courts have dismissed FCRA claims where a company does not fit the definition of consumer-reporting agencies under the FCRA. The FCRA’s definition of “consumer reporting agency” has been limited to agencies that furnish consumer reports for consumer purposes. Accordingly, in data-breach cases where plaintiffs have not alleged that a company regularly compiles and distributes consumer reports, courts have granted dismissal.
Fraud
Courts often dismiss claims of fraud in data-breach cases because the plaintiffs are typically unable to meet the heightened pleading standard of Federal Rule of Civil Procedure (FRCP) 9(b). Second, such claims are often dismissed because the plaintiffs cannot sufficiently allege that a business engaged in fraudulent behavior, as the third party that compromised the company’s system is the actual culprit.
Other trends
Plaintiffs have also made claims of unjust enrichment in data-breach cases. However, many states do not provide for an independent unjust enrichment cause of action. In states, including New York, that allow an unjust-enrichment claim to be brought independently, such claims are dismissed where plaintiffs have adequate remedies at law or where there is an express contract between the plaintiffs and defendant. Courts also require plaintiffs to plead that a defendant knowingly received something of value which it should not have received.
In addition, plaintiffs have attempted to claim that companies breached the covenant of good faith and fair dealing by failing to protect plaintiffs’ information. Some states, including New York, do not provide for an independent claim for breach of good faith and fair dealing, and treat it as nothing more than a claim for breach of contract. Even in states that allow for such independent claims, the plaintiffs are rarely able to make the requisite showing that a company consciously tried to frustrate the common purpose of their contract by causing a data breach.
Conclusion
Although the law governing data breaches is still evolving, some unifying themes are emerging. Plaintiffs have been doggedly trying to expand the scope of liability using creative arguments under several legal theories, and the courts remain split on many key issues. Businesses and their attorneys should closely monitor developments in this nascent body of law.
Cliff Tsan is a member in the law firm of Bond, Schoeneck & King. He is co-chair of the firm’s cybersecurity and data privacy practice, as well as co-chair of the firm’s e-discovery and information management practice. Upnit Bhatti is an associate with Bond and focuses on litigation matters.
The Time for Transparency is Now
A number of years ago, when asked about an ethics overhaul of the state executive branch, Governor Andrew Cuomo responded that such an overhaul wasn’t necessary because the ethical problems were in the state legislature. At the time, one could say that was true. The legislature had been buffeted with scandal after scandal, which reached
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A number of years ago, when asked about an ethics overhaul of the state executive branch, Governor Andrew Cuomo responded that such an overhaul wasn’t necessary because the ethical problems were in the state legislature.
At the time, one could say that was true. The legislature had been buffeted with scandal after scandal, which reached its apex with the conviction of former Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos. Sadly, however, the governor’s claim regarding the executive branch’s immunity to ethical problems was blown apart with the recent arrest of nine people across the state, including two tops aides to the governor and a lobbyist who at one time worked for Cuomo and who had close ties to the executive branch.
The alleged crimes those men are facing are similar to the crimes that have ensnared several legislators over the last decade — that is, using state money and programs to indirectly enrich themselves. In the legislature, these crimes often involved legislators directing state money to nonprofits that they either directly or indirectly controlled and enriching themselves in the process by drawing large salaries from the not-for-profits for themselves, significant others, or relatives. In the recent cases involving the executive branch, it is alleged, among other things, that at least one of the governor’s close aides was accepting bribes in exchange for exerting influence on state contracts and another was rigging state bids for favored developers who also happened to be large campaign contributors to the governor.
There are no shortages of ideas on how to stop the corruption in Albany, ranging from making the state legislature full time to public financing of campaigns for all elected state offices. Unfortunately, many ideas on reform are being pushed by groups that have their own agendas and who believe that the enactment of the so-called reforms would help them enact their agendas. Sadly, the one reform that would most successfully combat corruption in Albany is the one that up until now has gotten the least amount of attention and that is, transparency.
In the legislature, legislative leaders have the ability to provide favored members large amounts of money to be used by those legislators for projects or programs in their districts. While in some cases, the money and the project is lined out in the state budget, in many cases money comes from various pots of money that even the most seasoned state budget analyst would have difficulty understanding or tracking. Further, there are no rules on how this money is distributed to legislators and few rules on how the money is spent. This, of course, is why so many legislators have been able to direct money to organizations that ultimately ended up personally enriching themselves. A common-sense reform would be to institute rules regarding how much each legislator receives for projects or programs in his/her district and how that money can be spent. In addition, all projects or programs that a legislator is advocating funding should be clearly delineated for public review — before the money is disbursed.
Transparency most likely also would have prevented the recent corruption that is being alleged involving the executive branch. These alleged crimes are largely surrounding the governor’s upstate revitalization plans — which essentially entails using huge amounts of public money for private development projects. For whatever reason, when providing this economic-development money — such as for the Buffalo Billion — to the executive branch for the upstate revitalization, the legislature attached few strings to the money. The oversight of the projects and the money that funds them has been run through two quasi-governmental entities that are subject to little oversight and no transparency. This allowed one high ranking aide to Gov. Cuomo and a lobbyist with strong ties to the governor to allegedly rig bids so favored developers won. This bid rigging appears to be so blatant that not only did the preferred developers win the projects, but they were also the only entities that could even bid on the projects because of the bidding criteria. The legislature in its upcoming session must reassert oversight on the state’s economic-development program and ensure that economic-development decisions are made in a fully transparent manner.
William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at barclaw@assembly.state.ny.us, or (315) 598-5185.
If you love Hillary Clinton, you might not like this. If you love government, you might not like this. It seems as clear as Saran wrap that we have been conned — over this Hillary email mess. Clearly, she set up a cockamamie system your nephew could hack. And maybe did. She did so to
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If you love Hillary Clinton, you might not like this. If you love government, you might not like this.
It seems as clear as Saran wrap that we have been conned — over this Hillary email mess.
Ah, but this kerfuffle is over nothing, you say? Yes, it involves the stench of the foundation. But what about the classified documents in her emails?
Why do you think we classify documents? Maybe to protect lives? Like those of men and women aboard our Navy ships? (Remember the USS Cole?) Like those of our ambassador and his aides in Benghazi, Libya? Like those of our agents around the world?
We classify documents to protect America and its people. That seems to have been overlooked. People might get blown up because of email leaks? Who cares?
Getting elected is far more important.
Pundits wonder why so many of us don’t trust our government. Well, what we see is a tiny fraction of what really goes on. But here is what we do see from top government people: They destroy crucial evidence. They dodge the Freedom of Information Act. They collude to deny you what you are entitled to know. They evade on a massive scale. They lie to you. They hide pay-for-play at the highest levels of government. It involves millions of bucks of influence-peddling. The IRS lies, deceives, obstructs, and destroys evidence. So does the VA — to keep us from knowing how badly it treats some poor vets.
All of this reminds me of the Nixon mess with Watergate. As the truth dribbled out, so many Americans asked if we could trust any politician, any government official.
Sadly, millions ask the same question today.
From Tom…as in Morgan.
Tom Morgan writes about political, financial and other subjects from his home near Oneonta. Several upstate radio stations carry his daily commentary, Tom Morgan’s Money Talk. Contact him at tomasinmorgan@yahoo.com
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