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Monday, January 31, 2011
CA Court Decides Attorney-Client Confidentiality Not Available For Employee E-mails Sent On Company Computer

Client Alert

Employers should never underestimate the importance of having a clear policy about the use of company computer and e-mail systems.  A California Court of Appeal recently concluded in Holmes v. Petrovich Development Company, LLC, 2011 WL 117230 (Jan. 13, 2011) that an employee's personal e-mails to her attorney were not privileged, and therefore subject to employer review, because the employee had no reasonable expectation of privacy when using her employer's computer for personal matters not related to company business.  The Holmes case illustrates that having a comprehensive policy concerning the use of company technology resources (e.g., computers, e-mail systems, PDAs, etc.) can be the difference in winning or losing litigation brought by a former employee. 

In Holmes, the plaintiff Gina Holmes was hired as an executive assistant to Paul Petrovich, the owner of Petrovich Development Company.  At the time of her hiring, Holmes received an employee handbook, which she admitted to reading and signing.  Among other things, the employee handbook contained provisions that clearly spelled out company policy concerning the use of company-owned technology resources.  Holmes was specifically warned that (1) company technology resources should only be used for company business; (2) employees were prohibited from either sending or receiving personal e-mails; (3) employees who use the company's technology resources to create or maintain personal information or messages have no right of privacy with respect to that information or message; (4) e-mail is not private, and should be thought of as "a post card rather than a sealed letter"; and, (5) the company had the right to inspect all files or messages at any time for any reason at its discretion.

Within weeks of being hired, Holmes informed Petrovich that she was pregnant.  Holmes and Petrovich exchanged a series of e-mails concerning Holmes' maternity leave.  After Petrovich became concerned that Holmes was going to resign, he forwarded their e-mails to the company's human resources managers and in-house counsel.  After further discussion, Petrovich and Holmes appeared to have resolved the maternity leave issue.   Later that day, however, Holmes took the advice of her doctor and decided to consult an attorney.  Using her company computer and e-mail account, Holmes sent a series of personal e-mails to an employment attorney explaining that she believed she was "officially working in a hostile environment" and wanted to find out what rights, if any, she had under the law.

Shortly thereafter Holmes resigned and sued Petrovich and his company alleging harassment, retaliation, wrongful termination, invasion of privacy and intentional infliction of emotional distress.  The defendants succeeded in getting all of Holmes' claims dismissed except for her claims of invasion of privacy and intentional infliction of emotional distress.  At trial, Holmes lost on both of her claims.  On appeal, Holmes argued that the trial court should not have allowed the defendants to use her e-mails to her attorney as evidence, arguing that those e-mails were privileged attorney-client communications.  Holmes argued that she thought her personal e-mail would be private because she had used a private password on her company computer, and because she had deleted the e-mails after she sent them.

The Court of Appeal rejected Holmes' arguments, concluding that the e-mails were not private.  The Court found that it was unreasonable for Holmes to believe otherwise, given the clear warnings she had received that the company would monitor e-mails to ensure compliance with company policy, and because she had been expressly warned that she had no expectation of privacy in personal information or messages created or maintained on company technology resources.  The Court analogized Holmes' use of her employer's computer and e-mail account to communicate with her attorney as being "akin to consulting with her attorney in one of [her employer's] conference rooms, in a loud voice, with the door open, yet unreasonably expecting that the conversation overhead by Petrovich would be privileged."  In other words, because Holmes had no reasonable expectation of privacy in her e-mails, her communications to her attorney could not be deemed privileged.  As a result of the company's detailed policy, Petrovich and his company were able to use Holmes' e-mails against her and ultimately prevail in the case.  

Significantly, the Court also rejected Holmes' reliance on Stengart v. Loving Care Agency, 990 A.2d 650 (N.J. 2010), in which the New Jersey Supreme Court found that an employee did have a reasonable expectation of privacy in her e-mail communications to her attorney because her use of a personal web-based e-mail account (e.g., Hotmail, Yahoo) from her employer's computer was not clearly covered by her company's policy, and because her e-mails contained a standard warning that the communications were personal, confidential, attorney-client communications.  The Holmes Court concluded that the Stengart decision was distinguishable, and therefore inapplicable, based on the unique facts of that particular case.

The Holmes decision should serve as a wake-up call to employers.  Simply having a general policy in an employee handbook concerning the use of company computers is not enough.  Employers need to have a clear and detailed policy concerning the use of all company-owned technology resources, including computers, e-mail systems, facsimile machines, cell phones, and PDAs.  Employee handbooks should detail exactly what is - and what is not - acceptable with respect to the use of company-owned technology resources.  Employees should be expressly told: (1) not to use company-owned computers for personal matters; (2)  that they do not have expectation of privacy in the information or messages that they create or maintain on company-owned technology resources, including web-based e-mail accounts; (3) all information and messages are stored on hard drives that can be retrieved by the company; and (4) the company reserves the right to monitor and read information or messages created by its employees. 

In this Digital Age, it is critical that employers create, maintain and administer a comprehensive policy concerning the use of company-owned technology resources.        

For more information, please contact Terrence M. Schwab, Esq. at 617-218-2047.  

A copy of the Holmes v. Petrovich Development Company, LLC decision can be accessed at http://www.courtinfo.ca.gov/opinions/documents/C059133.PDF)

 

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