Employers Beware: Recent New Jersey Appellate Division Decision Limits Employers’Right To Access Employee Emails Sent On Company Computers

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Employers Beware: Recent New Jersey Appellate Division Decision Limits Employers’Right To Access Employee Emails Sent On Company Computers
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From the August 2009 Riker Danzig Labor & Employment ALERT
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On June 26, 2009, the New Jersey Appellate Division held in Stengart v. Loving Care Agency, Inc., 408 N.J. Super. 54 (App. Div. 2009), that company policies do not convert an employee's emails with her attorney - sent through the employee's personal, password-protected, web-based email account, but via her employer's computer - into the employer's property. This decision limits the ability of employers to claim that an employee's personal communications conducted on or flowing from employer-owned property are no longer private and available for the company's review. The decision, however, appears to be limited to an employee's use of her personal email account to communicate with her attorney.

Background

Marina Stengart served as Executive Director of Nursing at Loving Care Agency, Inc. (the "company" or "Loving Care") until she resigned in January 2008. In February 2008, Stengart filed a lawsuit against the company, asserting various claims including violations of New Jersey's Law Against Discrimination. Prior to January 2008, Stengart used a laptop computer provided by the company to send emails to her attorneys via her personal, web-based, password-protected Yahoo email account.

After Stengart sued, Loving Care extracted and created a forensic image of that laptop's hard drive. As a result of this process, the company's attorneys were able to discover and review many emails between Stengart and her attorneys. It was only months later, after discovery commenced and Loving Care was required to respond to plaintiff's interrogatories, that the company informed Stengart and her counsel that it had reviewed these emails. In turn, Stengart requested the immediate identification of all such emails, the names of the individuals who collected them, and the return of the originals and all copies. The company refused, and Stengart applied for injunctive relief. The trial judge ultimately denied Stengart's motion, finding that Loving Care's electronic communications policy put Stengart on notice that her emails would be viewed as company property and, therefore, not protected by the attorney-client privilege. Stengart appealed.

The Appellate Division's Decision

The Appellate Division reversed and remanded the lower court's decision. First, the court recognized that certain factual issues existed regarding whether Loving Care had even finalized and distributed its electronic communications policy. Plaintiff also argued that the policy did not apply to executives. The Appellate Division found that the trial judge should have conducted a hearing to resolve these disputed issues of fact.

The Appellate Division reviewed various versions of Loving Care's electronic communications policy and found it problematic for the company. The court's chief complaint was that the company now asserted that Stengart's emails with her attorneys, even though sent via her personal web-based Yahoo email account, had been converted to company property when she used her company-provided laptop computer to send those emails. The lower court had interpreted Loving Care's policy to warn employees that there would be no reasonable expectation of privacy in any communications made using company laptops or servers regardless of whether the email was sent via a company email account or a personal web-based email account. The Appellate Division, however, pointed to language in the policy permitting some personal use and found that an objective reader of that language could have reasonably believed that personal emails with her attorney would be permitted.

Next, the Appellate Division briefly reviewed the way courts have historically viewed employer-issued workplace regulations and found that such regulations should concern the terms of employment and reasonably further the legitimate business interests of the employer. Though many aspects of Loving Care's policy were specific enough to aid the company in conducting its business, the Appellate Division found that Loving Care's interpretation of its electronic communications policy reached into the employee's personal life without a sufficient connection to the employer's legitimate business interests. The company's ownership of the computer that plaintiff used to send emails to her attorney alone was not enough to convert those emails into company property. A gray area, like that found in cases where an employee is accused of criminal wrongdoing, did not exist in this situation. An employer may discipline or terminate an employee who is engaging in business other than the company's business during work hours, but that right does not translate into a right to confiscate the employee's personal communications, the Appellate Division found.

Even assuming the broad scope of the electronic communications policy argued by Loving Care, the Appellate Division emphasized the importance of attorney-client privileged communications. It held that the societal considerations underlying the attorney-client privilege outweighed the company's electronic communications policy. Thus, the policy does not give an employer license to intrude upon the attorney-client relationship and confiscate privileged communications, as Loving Care and its counsel did here.

Finally, the Appellate Division remanded the case to the trial court in a related action to determine whether attorneys for Loving Care should be disqualified for having failed to raise the status of Stengart's emails with the court prior to reading and utilizing them. The Appellate Division concluded that the firm's actions were inconsistent with Rule 4.4(b) of the Rules of Professional Conduct, which requires a lawyer who receives a document and has reasonable cause to believe the document was inadvertently sent to notify the sender and return the document prior to reading the document or continuing to read it.

Lessons To Be Learned

1. Courts have enforced clear electronic communications policies and have often held that employees do not have a reasonable expectation of privacy when they use company computers. Recent decisions have applied this view to communications between an employee and his attorney. See, e.g., Kaufman v. Sungard Investigations Systems, Civ. No. 05-1236, 2006 WL 1307882, at *3 (D.N.J. May 10, 2006) (Linares, J.) (applying New Jersey law); Scott v. Beth Israel Medical Center Inc., 847 N.Y.S.2d 436, 441-44 (Sup. 2007) (Ramos, J.).

2. The Stengart decision chips away at this line of cases. How far courts will go is not clear but employers can expect challenges that rely on the Appellate Division's opinion.

3. New Jersey courts, in particular, may be more likely to protect attorney-client communications from employer review in light of the Stengart decision.

4. Even if a company has a seemingly unambiguous policy, we cannot predict with certainty whether a court would treat an employee's communications with his attorney on a company computer or company-owned electronic device as protected or as a waiver of the privilege. Given this uncertainty employers should not look at such communications without consulting with an attorney.

5. Employers should adopt electronic communications policies if they do not have them or review existing policies for inconsistencies and ambiguities. The Stengart court emphasized the need for clear policies if an employer wants to enforce them against its workforce.

Depending on whether Loving Care successfully appeals this decision to the New Jersey Supreme Court, this decision may have wide-ranging consequences for how employers should draft their electronic communications policies, what changes should be made to existing policies, and how their counsel conducts discovery in disputes involving employees.