e-Discovery Team ®

I sat on a three-lawyer panel last month to judge the contestants for America’s greatest e-discovery cases of 2010. Yes, we’ve turned the tables and are judging the judges and their opinions. (Actually, this was a FIOS interview devoted to current case-law, but I’ve been watching too many TV talent shows.) Joining me on the panel was one of my best Jackson Lewis partners in e-discovery, Brett Anders. The third judge was FIOS‘ own tech-law guru, Mary Mack, author of the Sound Evidence blog. We had such a good time judging e-discovery talent this year that we only got half-way through the list of  contestants. FIOS was forced to bring us back for another show to finish the judging. This blog represents the shortened, edited version of Americas Got e-Discovery Talent, Part One. Go here for the full Webinar with all its audio glory. It’s free, but you have to register.

Here is the tail end of the introduction of the three-judge panel:

Both Ralph and Brett are working in the employment area. That’s where the rubber meets the road for many of these 2010 cases. It’s where we see the emerging e-discovery trends that we are trying to get our legal-arms around, in the social networking space and those types of things. So what we’re gonna start out with is the first case that came down from the Supreme Court, Quon.

The presentation begins with Brett Anders, and from here on it’s all transcript of webinar highlights (except for my occasional added comments in parenthesis).

Brett Anders on City of Ontario, Calif. v. Quon,

Brett:

Thank you Mary. The Quon case is a much awaited decision from the Supreme Court on the issue of the privacy of text messages using an employer-provided text messaging system. The decision came down less than a month ago on June 17, 2010. In short, this case involved Jeffrey Quon, a Police Sergeant whose employer had provided him with a text messaging system. He sued his employer after he was disciplined when it was found out that he was sending hundreds of personal text messages of a personal nature to both his spouse and girlfriend. (Yikes. Sexting his wife and girl friend at the same time? That defies gravity, which in turn reminds me of this great America’s Got Talent Act by a bunch of frat boys.)

The City had a written electronic communications policy that restricted an employee’s use of the City owned computers, technology, and resources, such as e-mail.  The policy said that employees had no expectation of privacy in their network activity and that the City reserved the right to monitor employees’ on-line activity. It also prohibited using the City’s systems for inappropriate, obscene, or any type of harassing communication. Although the policy itself didn’t specifically apply to the text messaging systems, the City had verbally advised its employees that it would, and later followed that up with a memo.

The City had a contract with Arch Wireless. Arch was the company that actually provided the text messaging service and the City was billed on a character-count basis. They had a monthly plan that provided a certain character limit.  If the limit was exceeded, the City incurred some additional charges.  The employees were generally told if you go over your limit, we’ll tell you how much you owe us and we’re not going to audit or review your messages.

Not surprisingly, Quon went over his limit and he went over his limit repeatedly. He paid each time for that overage. Ultimately his supervisor got tired of basically being a bill collector and decided to audit the messages get a sense of whether the overages were a result of the company buying too small a plan for what the people needed for their work, or whether it was a result of excessive personal usage. The audit was done for just a few month period and it was limited to those text messages that were sent during work hours. So, they had redacted out messages that were sent off work hours. They found that Quon was sending an excessive amount of communications, not only excessive on a personal nature, but inappropriate in the content. You know, there was special content. (Speaking of special content, I can’t help but think of another of the acts that made it to the top 48 of America’s Got Talent, those crazy talented belly dancers.)

(Back to Brett.) Now, after being disciplined, Quon filed an action in the Central District of California. He essentially alleged that his constitutional rights were violated, the right under the Fourth Amendment of privacy. He also brought a claim under the Stored Communications Act, which essentially protects electronically stored communications.

The District Court, the lower court, found in favor of Arch, the wireless provider, granted its Motion for Summary Judgment. But it denied the City’s motion on the Fourth Amendment claim and a trial was conducted. The jury returned a verdict for the City finding that it acted without violating any of Quon’s constitutional rights.

On appeal the Ninth Circuit reversed.  It found that the search of Quon’s pager was an unreasonable search. It suggested that there were numerous other ways the City could have done the search without violating Quon’s privacy. This included giving Quon a warning or asking Quon himself to review his messages and redact out those which were personal.

The court also held, the Ninth Circuit, that Arch Wireless violated the Stored Communications Act by disclosing those messages to the City.  Both the City and Arch filed Petitions for the Supreme Court to review. The City’s Petition was granted but Arch Wireless’s Petition was denied. So at least as of now, the Ninth Circuit’s finding as against Arch still stands.

As it relates to the City, the Supreme Court found that the City’s search of Quon’s text messages did not violate the Fourth Amendment. It found that the search was reasonable and that it had a legitimate work purpose to determine whether the plan that the City bought for its employees was of the right size; to determine if it was large enough for them to do their jobs. Second, it found that the search was not excessive in its scope. The court found it important that the review was limited to a two month period and that it was also limited to those messages that were sent during work hours.

What is interesting about the case is one of the issues that I think a lot of people were waiting to hear about – the expectation of privacy. We’re gonna talk about a New Jersey case, Stengart, later that deals with the expectation of privacy and communications using the work systems. Here the court assumed that there was a reasonable expectation of privacy, privacy in these communications.

The take away for employers in Quon is that there was a lot of cautionary language in the court’s decision about the scope. The court held that it must proceed with care when considering the whole concept of privacy expectations made out of electronic equipment, that we’re going to have to wait and see how this technology evolves.

I think that what can be taken away from this case is that it’s very important for employers to have policies in place that are as broad as possible and give employees as much notice as possible as to what level of monitoring will take place. The purpose of the policy is really to diminish the expectation of privacy in these types of devices. But I think even more important than that, as we’ve seen in this case, the managers have to enforce the policy. Here the issue was the fact that although the City had the policy, the manager is telling employees: well as long as you, you pay for the overage, we’re not going to review them.

It’s really important for there to be consistency between what the policy says the company will do and what actually happens.  I think it’s important for the City or companies to actually audit and make sure that their policies are being complied with.

So, I know Ralph, I think you had said you wanted to comment on the dissent in this case and also the failure of the court or the decision by the court not to accept Arch’s Petition.

Quon, Arch Wireless, and How To Get Social Media

Ralph:

Yes, I did. Thanks Brett.

I think it’s important to underscore the fact that Arch Wireless also petitioned the Supreme Court for certiorari and the petition was denied. They had asked for review of the decision against them enforcing the Stored Communications Act. They asked the Supreme Court to at least take a look at that. I think it’s important to note that the Supreme Court refused. So, that stands as the law in the Ninth Circuit, and I think this is now a couple of Circuits have looked at this, and found the same way that the subscriber has to be the one to consent to the release of that on-line stored communication or on-line information.

Even though the employer here got cert and basically got a reversal and got off, if you will, the poor little wireless company did not. The judgment stands against them. So as a practical matter, the employer isn’t gonna be able to do this again. They’re not gonna be able to say, hey come on, send us the text messages. The wireless company in the future is gonna say, heck no, we can’t. That’s a violation. You’re gonna have to get it from the employee.

And that’s an important practice pointer to come up with and I know we’re going go into this later on, but just the whole fact that you can’t just be subpoenaing Facebook and expect that they’re gonna say Oh sure, here’s all their information. So that’s an important thing that comes out what the Supreme Court did not say.

Mary:

Ralph and Brett, do you think this applies as well to things like G-mail and Yahoo mail, the third-party e-mail? Do you subpoena to get those records.

Ralph:

I think they’ve all taken the position, and I don’t fault them for this, that they want the consent of the individual subscribers. They will not honor a subpoena which is just a lawyer signing his name under a clerk issued process. They say that is not good enough and never mind whatever case law you may have in your state that says a subpoena is equivalent to a court order, they’re not buying that in California. They’ve got the case law to support this. They want an actual court order. Basically they want consent. because they don’t want to be sued like Arch Wireless was. So unless you’re the government, and you’ve got some sort of terrorist investigation or something else, you’re gonna have to go through the court and get a proper oder. You’re not gonna be able to just sign your name to a subpoena and expect Facebook to say, oh yea, here’s all their private messages that you can’t see that they’ve hidden.  Facebook and all the others are uniformly taking that position now.

Brett:

Yea, I agree with Ralph and I think the two approaches that you’re gonna see at least in litigation, is either directly getting an order from the court authorizing the release or filing a motion to compel the Plaintiff to sign an authorization.

Mary:

So do you two see a distinction between e-mail hosted at the employer’s site, on the employer’s equipment by, run by the employers IT department and then third party e-mail, perhaps in the cloud or hosted elsewhere? By the employer?

Ralph:

Oh yes. I mean there’s a huge distinction. Definitely the Stored Communications Act applies and nobody’s interpreting that to include an employer’s own equipment. So that’s just frivolous, So there’s no question about the distinction there. Although I guess there’s no such thing as a frivolous tech argument when you have our Supreme Court saying whoa, this is too complicated for us. We don’t want to really grapple with this, which is the other point I wanted to make about Quon. I found myself agreeing with Judge Scalia, who chastised the majority for this in his dissenting opinion. He said the majority opinion really doesn’t say much. It doesn’t give us much guidance and puts a lot of burden back on the employers, back on the district court judges, state court judges, the magistrates.

We’re all gonna be having to figure this out on a case by case basis. We’re not gonna be getting any kind of broad policy guideline from our head court, from the Supreme Court, even though that’s their job basically . That is what Judge Scalia chided them for with that famous line, where he quotes Bob Dylan and says: “The times they are a changing. It’s a feeble excuse for disregard of duty.” So he was chastising the majority for not really grappling with the privacy issues here because the majority said, gee, this is such a rapidly changing area. Obviously from the oral argument, there apparently isn’t a single Supreme Court Justice that really understands technology today and, for some reason, they’re not being properly briefed. The attorneys that argued it before them in oral argument were also shockingly remiss in their ability to provide cogent answers. (To our supreme court all technology and social media talk seems to be just so much poppycock, which of course reminds me of Prince Poppycock on America’s Got Talent).

So the bottom line is, it’s gonna be a long time a coming before we have advice and guidance from the Appellate Courts. It’s up to us individual practitioners to figure it out. It is up to us to try and make sense to the District Court Judges that are going to be working on this for a long time.

So that’s all I had on that. Do you want to move on?

Pension Committee: Losey’s Favorite

Mary:

Pension Committee? Well, Ralph I want to give you kudos because you broke the news on the amended opinion.

Ralph:

Yes. And I’m a person that can’t stand it when the t.v. show says breaking news. Apparently I was the first person to publically announce her second amendment to the opinion. Let’s just say I have my ways, and people send me things. This  opinion amendment was published May 28, 2010, and I released it that day. I actually got the signed opinion. That’s an actual photograph of Judge Scheindlin’s signature below. It’s not a long opinion. It’s only a couple of sentences. Here it is in its entirety:

The Amended Opinion and Order filed January 15, 2010 is hereby corrected as follows:

At page 10, lines 7-10 replace <By contrast, the failure to obtain records from all employees (some of whom may have had only a passing encounter with the issues in the litigation), as opposed to key players, likely constitutes negligence as opposed to a higher degree of culpability.> with <By contrast, the failure to obtain records from all those employees who had any involvement with the issues raised in the litigation or anticipated litigation, as opposed to key players, could constitute negligence.>.

Judge Shira Scheindlin did something which, to my knowledge, has never been done before. Weeks after an opinion was issued, she sua sponte made a correction to it in response to being asked a question at a CLE event. Now who’s ever heard of a judge doing that?  I put this question to my students and all of the students were uniformly impressed by her willingness to do that, showing that she really seems to care about keeping the law straight. She has her ego under control and she’s willing to say, okay, I made a mistake here and correct it.

Insofar as to the mistake she was correcting, there were two things really. First of all, in her initial opinion, she talked about all employees, that the failure to obtain records from all employees, as opposed to key players, likely constitutes negligence. But she changed that, got rid of all employees, and said all those employees who have any involvement with the issues raised in the litigation. That was in direct response to a question asked at a CLE event where a person asked why did you say all employees. This is causing us problems. I think she never intended it to mean all employees.

I believe she always intended it to mean her correction, it’s the only way to make sense of it. She must have always intended it to mean all employees that have information, because obviously it can’t go around collecting everyone’s records even if they don’t have anything to do with the case. You know, that’s kind of absurd. So she corrected that.

The other thing is she corrected, which really wasn’t asked of her at this same CLE event, she changed the negligence reference and she made it read could constitute negligence. And so she changed that word to could, instead of the way it was, likely constitutes negligence. I think that was a little bit of back peddling when she reread the sentence. She said, well I don’t really mean could because it depends on all of the circumstances.

So she’s clarified the opinion a little bit and she’s made history here in this Pension Committee opinion now by changing it for the second time. She also made history in this opinion because I think it’s the first opinion that’s ever had written on the top of it that it’s a sequel to a another opinion, Zubulake. I mean this is one for the textbooks literally.

I have all of my students studying it and if there’s anybody that hasn’t already read at least the first thirty pages of Pension Committee, you definitely should do it. It’s going to be cited at you time and time again, and, the funny thing is, it’s gonna be cited by both sides on any issue.

Mary:

That’s a good point. I too thought it was extraordinary Ralph that Judge Scheindlin would amend her opinion. The first amendment she did was because it was being interpreted that you had to keep all the backup tapes. So she changed that to read you only have to save backup tapes when they are the only source of evidence. So that reduces costs. Then then this is another amendment that is sensitive to the costs issue.  I don’t thing we’ve seen the judges be sensitive to cost issues.

Ralph:

That’s right. I was glad to see this amendment. I don’t think we’ll likely see a third amendment, but she’s already made history and I for one am grateful about that.

Wilson v. Thorn Energy LLC

Mary:

Well she certainly sets the bar high because if we move to Wilson v. Thorn, 2010 WL 1712236 (S.D.N.Y., March 15, 2010) involving a flash drive that was set aside. The flash drive went bad and using Pension Committee the judge imposed sanctions for failure to preserve. I want to know what you guys think about this, given the state of current practice in most companies, just taking something and putting it on the shelf and preserving it and not making a copy of it, holding that that violated the duty to preserve. Do you think that standard is too high for current practice or do you think it’s the right standard?

Ralph:

No, I think that standard and that interpretation of Thorn is a mistake. I think you should be allowed to take something and put it aside and call that reasonable preservation. I don’t think you should have to make two copies, which in effect is what you’re saying, if you impose that standard.

Mary:

And I think it’s important to note that this particular decision was written before the amended opinion, which kind of backs off the negligence standard as well.

Ralph:

No, I mean if for instance you have 100 computers, lets say that you need to preserve the hard drive, I think it should be fine just to take those 100 hard drives and put them aside. I don’t think you have to also make a forensic copy of those 100 hard drives. I mean, then you have two copies. I don’t think you have to go to that extreme in view of the cost factor involved and just, what are the odds, that a drive is going to go bad just sitting on a shelf.

Mary:

But maybe after five or ten years, certainly. I know, I’m asking you guys as specialists in the employment area, one of our community’s big concerns is what do you do with departing employees when you’re under legal hold. Many companies do have that standard where they will put the machine or the hard drive aside for a period of time. Would you based on just this one opinion say lets revisit that protocol?

Ralph:

It’s all so fact based Mary. We can’t give a blanket answer on that. You need to understand the facts of your particular case and always remember the golden principle of federal-civil procedure which is Rule 26(b)(2)(c) in proportionality. That’s the king. Rimkus made that point and that focus on proportionality.

Mt. Hawley Ins. Co. v.  Felman Production, Inc.

Mary:

Let’s go then and move to Mt. Hawley Ins. Co. v. Felman Production, Inc., 2010 WL 1990555 (S.D. W. Va. May 18, 2010).

Ralph:

I wrote a blog on this, where I used the theme of that great Italian western, The Good, the Bad and the Ugly. I think first of all, a remarkable thing is, it’s an e-discovery case with some sophistication coming out of the State of West Virginia. I didn’t even know that they had e-discovery there and so that just goes to show, I don’t care where you are in the country, you could get hit with a dangerous e-discovery opinion or case. There is no safe jurisdiction anywhere, except maybe San Diego, but that’s another story. (Mary chuckles knowingly at my reference to Qualcomm. Speaking of ugly, I can’t help but think of another act that never should have made it to the top 48.)

Anyway, you have Mt. Hawley, and the good thing is, it does cite and give proper recognition to Victor Stanley v. Creative Pipe and it cites to Judge Grimm, who is a terrific Magistrate. But, aside from that, most of the case is more like in the Bad and the Ugly parts. I assume this will probably get reversed by the District Court Judge reviewing the Magistrate’s order because there’s some things with this case that give me, and a lot of other commentators, many reasons to be concerned.

This is a situation where the judge found waiver of the attorney-client privilege based upon a negligent review. And, okay that’s Victor Stanley v. Creative Pipe, we all know that. On the other hand, this is post Evidence Rule 502, and we thought this was going to be corrected under the Evidence Rule. Here it was not and the court looked at what a law firm did representing the Plaintiff.

This was a very sophisticated national law firm whose attorneys certainly know what they are doing.  It is astonishing to me that a judge could say their efforts were not reasonable. There’s a long list of things they did to review and try to do e-discovery right. But one mistake happened and the mistake wasn’t even an attorney mistake, it was a mistake in software, in the indexing of a database, one of several used. There were millions of files reviewed here. One of the review databases got corrupted.

Now, Mary, you’ve been in the computer biz as long as anybody.  You know that sometimes mistakes happen, right? (Speaking of mistakes, I cannot believe that America did not vote these incredibly talented dancers into the semi-finals? What is wrong with you America?)

Mary:

Exactly.

Ralph:

Well, so a mistake happened. And they were able to show it was a computer error. They gave testimony. The software company gave an affidavit. They said, okay, there’s a mistake here. We’re not sure why exactly, but they didn’t do anything wrong. It’s just that the search didn’t catch this e-mail because the indexing was corrupted. So the search should have caught it, but it didn’t.

The judge basically did not accept that. Instead what I think happened, and I think most people agree, is that it was a case of bad facts making bad law. In that one e-mail that they didn’t uncover, that they should have found and screened out, had the index not been corrupted, that one e-mail was a heck of a smoking gun.

The first thing I want to mention about the bad law here is ABA Model Rule 4.4(b), which most states in the country have adopted some version of, but apparently not the good state of West Virginia. (This Rules of ethics says: “A lawyer who receives a document relating to the representation of the lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender.”)

The Magistrate in Mt. Hawley Insurance Company v. Felman Production looked at the argument that this rule was broken, and said nope, that won’t apply here, because West Virginia didn’t adopt this ethics rule. So what the Defendant insurance company did here is when they saw this e-mail, it was so hot, that they did not notify the producing party, Felman Production.  The insurance company didn’t tell the Plaintiff. Instead, what they did is they attached it to a motion and they filed i. They made it a public record by filing it with the court, not under seal. Do you know why did they did that? They claimed the crime-fraud exception applied and boy they had a pretty strong argument on that too.

That’s why they were bold enough to do that. The basic defense the Plaintiff had to that argument is, well, okay, this e-mail shows we were considering a fraud on the court, but it doesn’t show that we actually did the fraud. We were just seeking advice about whether it would be okay to manufacture this kind of evidence or not.  It was the power of these bad facts that made this bad law.

Even though the judge here did not decide that the crime-fraud exception applied, she did allow the heat of this e-mail to impact the her legal analysis.  She wanted to look at the other 250 e-mails that this attorney apparently had with the Plaintiff, all pre-suit, apparently talking about fabrication of evidence.

That’s how the ABA Model Rule went out the window and caused the Plaintiff’s firm to learn for the first time that they screwed up their review in reading a motion. They learned they had produced not only a privileged e-mail, but they had produced what they must have known was a horrible and potentially damaging e-mail. And then later they discovered it happened because of a failure of software. (Wonder what kind of mea culpas that software vendor offered. Indemnity anyone?)

The bad law that really gets me in this is that the judge doesn’t do her metrics right.  She finds that there were several hundred privileged e-mails produced and then she compares that to the Victor Stanley v. Creative Pipe case. She says there’s more e-mails that were produced accidentally here in Felman than there were in Victor Stanley. Therefore, since Judge Grimm found that there was negligence in Victor Stanley, I should find it’s negligence too in Felman. Well, what’s wrong with that logic? The mistake is that it is not the number that’s produced accidentally that counts, it’s the percentage. The actual percentage out of the total production here, when you’re talking millions of e-mails, the production mistake of a couple hundred was far lower proportion. It was a very, very small fraction, you can get the details in my blog. I think it’s something like .0004%. I mean it’s a very small mistake.

You shouldn’t be looking at the total number, you should be looking at the percentage to determine how good your review was. Because the reality is, no matter how good you are, or how hard you try, if there is a complicated large production, mistakes will be made and that’s just not me saying it, that’s Judge Scheindlin saying the exact same thing in Pension Committee.  Anybody that has experience in e-discovery in large-scale production knows that perfection is impossible. Yet this unfortunate law firm that represented the Plaintiff here, they were held to a standard of perfection. Then based upon the fact that the numbers were bad, they were found to have been negligent in their review. As a penalty, they lost the attorney-client privilege and other sanctions are going to be entered for their allegedly negligent action here.

Mary:

So, Ralph, how important do you think it is for providers like us to give assurances of quality control and like, full life cycle development of software quality assurance and things like that, that level of diligence on the tools that are being used?

Ralph:

It is very important. (But will any vendor offer indemnity?) I mean, this was a major vendor too. It wasn’t just some small local West Virginia outfit. It was a national operation.

The thing that the judge focused on that they didn’t do, really the one thing that she found they didn’t do that Victor Stanley talked about you should do, and in fact of course, I agree with Victor Stanley and Judge Grimm on that, is you should have some random sampling. That’s the main thing they didn’t do here is random sampling. I’ve long been arguing that every vendor should have a random sample button in their software. So she focused in on that, the Magistrate, but as I point out in my critique, in this particular case, the error was so so small that a statistically random sample probably would not have caught it. It would have taken good luck to catch.

A good friend of both of ours, Craig Ball, critiques the plaintiff’s law firm and says they should have re-searched it. They should have searched it again and not just relied upon that one search. I don’t want to go that far. That creates a heck of a burden. On the other hand, if you know that there’s this one terrible smoking gun e-mail, why don’t you take some additional steps to make sure that don’t produce it?

Maybe there should be a final scan of the DVDs or the portable hard drives that you are about to make production on? That’s something I like to do, that apparently was not done here. That might have caught it. But it comes back to what I call the guiding principle again, proportionality.  Do the numbers involved really justify doing a second search, or does the importance of the documents involved justify it? I imagine now with 20/20 hindsight where everybody’s perfect, they would say yea, we should have searched the production CDs one last time before they went out. Would I do that in a zillion dollar case where I knew there was one terrible e-mail? I think now I sure would. That’s kind of the lesson here: we’re all going to have to continue to be paranoid.

Stengart v. Loving Care Agency, Inc.

Mary:

Well good. Lets move into Stengart because we promised we would talk about that. Brett, that’s you I believe.

Brett:

Yep, that’s mine. This decision by the New Jersey Supreme Court is causing a lot of consternation among attorneys.  The upshot here was that the attorneys involved were found to have violated the Rules of Professional Conduct.

Stengart was an employee who worked for the Loving Care Agency. She was given a computer to do her job. The company had an electronic communications policy where the company specifically reserved the right to review electronic communications and advised employees that anything on the company’s computer would be the company’s property. Now this employee resigned and filed a lawsuit alleging constructive discharge and a host of other claims. As part of the defense, the company, their counsel, imaged the computer and an associate started reviewing the computer to see if there was anything of value to the case on there. In going through the temporary internet files folder, the associate found screen shots of e-mails that the employee sent to her attorney.

She used this computer to access the Internet, but it was unclear whether she accessed the Internet through the work Internet connection or her home or somewhere else. But she used her password protected Yahoo account to communicate with her attorney. A copy of those emails resided on her computer.

The defense firm, which is a very well-respected, well-regarded firm in New Jersey, they reviewed the messages and came to the conclusion that the messages were not privileged. The analysis was that because the company had a policy that told employees they would monitor, and because the policy said anything on the system or on the computer is the company’s property, that either one: the privilege never attached in the first place because, the policy was if the employer was looking over the employee’s shoulder every time they did anything with the computer; or two, the privileged had been waved.

Once these e-mails were eventually turned over in discovery, which was a few months after they were located, the Plaintiff’s counsel filed an Order to Show Cause seeking the return of the e-mails. The trial court denied the motion and the appellate division reversed. The appellate division found that the employee did have a reasonable expectation of privacy. The one line that kept reappearing in the appellate division decision was that a unilateral employer policy is not sufficient to override the attorney-client privilege.

The New Jersey Supreme Court issued its decision a few months ago and the upshot of the decision was that the e-mails were privileged and that the privilege did attach and was not waived. The bulk of the opinion focused on the policy itself. There was an issue over whether or not the policy: one, was disseminated to this employee, there were multiple versions of the policy; or, two, whether it even applied to her. The court said look, assuming that the most expansive policy that’s been produced in discovery applied to this employee and that she it applied to her, still that policy was silent as to other e-mail accounts. The policy never referenced personal accounts. Another important issue was that the policy provided for limited personal use, and the policy never said whether during those times that an employee is using a computer for personal use, whether there would be monitoring.

What was interesting was that the court then said that a zero tolerant policy related to personal usage could be unwelcome and unworkable in today’s dynamic and mobile workforce. Now that line to me was very important because the court did not specifically prohibit it. There are some attorneys in New Jersey, particularly those who primarily do Plaintiff’s side work, who will argue that the intent of that type of language was to signal that a no personal use policy would not be permissible under New Jersey law.

The court seemed to be saying during most of the opinion that this is a policy driven issue, that if the company had a better policy, then possibly the result would have been different. This could be corrected through a more clearly written policy.  But the court debunked that theory later in the opinion. It wrote that even a clearly written policy that banned all personal use, and provided unambiguous notice that all communications, even personal password protected e-mails with counsel could be reviewed, the court would not permit the employer to delve into these personal e-mail messages with the attorney on a personal account.

The court found that in this situation the employee took reasonable steps to protect her e-mail. She used a private e-mail account that was password protected. The court also made note of the fact that her password was not saved anywhere on the computer. The court also focused on the fact that the e-mails in question did not relate to any illegal or inappropriate conduct. I think if it had. then the court might have said that would have fallen within the employer’s purview to search to make sure that it’s systems weren’t being used for an illegal purpose. (Speaking of reasonable steps and falling, here is the video of Ascendance, also pictured above.)

To me, though, as a practicing attorney, the bigger issue was the fact that the court upheld the finding that the attorneys violated the Rules of Professional Conduct by reviewing those messages. I can see why the attorneys made the decision that they did. There was a policy and they believed that under this policy there was no expectation or privacy, therefore no privilege. Well, now it turns out that their decision was wrong and incorrect, and now there’s going to be a rehearing over what level of sanctions are appropriate.

One question that I received a lot after the New Jersey Supreme Court decision came down was, should employers modify their electronic communication policies. Because after the Appellate division decision many employers started beefing up their electronic communication policies to make them broader, to make it clearer that the right to monitor would encompass anything that’s done on the computer, whether it’s on the Internet, on a personal e-mail account. The answer in my view is that the policies should not be dialed back in any way.

Although a broad policy, at least under Stengart, will not give you access to an employee’s attorney-client communications on their personal account, it still is helpful and beneficial to protect against invasion of privacy claim. I think the big question in New Jersey is what if this employee had used her company provided account. Would the decision be any different? One comment or line from the case was, the court did say that, you know, employers are still free to control the use of its equipment and property. In a situation like this, an employer could certainly discipline an employee for violating a company policy by using it for excessive personal use, but that they had no right and no business reviewing the privileged e-mails.

If the communications were with the company provided e-mail account, it’s a much stronger argument for the employer to say that there’s no reasonable expectation of privacy. That’s where I think the next line of cases is going to come up where somebody uses the e-mail, the company provided e-mail account to communicate with their attorney. How is the court going to view the reasonable expectation of privacy in those circumstances?

There are several other cases in other jurisdictions which address this and the case law is really split.  (Speaking of splits, have you seen the winners of this year’s Britains Got Talent?)

The cases go both ways as to whether or not a policy can negate an expectation of privacy. But certainly Stengart is really changing how attorneys act, causing them to look a lot more closely on how they practice when they come across arguably or possible privileged documents and communications.

Ralph:

I just want to make one brief comment on Stengart, and that is that’s only the New Jersey Supreme Court speaking. In other courts we may get different results. As New Jersey goes, maybe the rest of the country will go too, but for most of us, we have no guidance or contra guidance. I know of many contra cases where the courts have upheld allowing attorney-client privileged employee emails to be looked at by the employer when they are located in the Internet cache. The same facts, different results.

Mary:

I want to thank Ralph and Brett and it’s no surprise that we weren’t able to get through all this many cases and I look forward to part II and III.

This entry was posted on Sunday, August 8th, 2010 at 2:24 pm and is filed under Lawyers Duties, Metadata, New Rules, Search, Spoliation/Sanctions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.