Recent New Jersey Supreme Court Decision Affirms Limits on Employers’ Right to Review or Use Employee E-Mails Sent on Company Computers

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Title:
Recent New Jersey Supreme Court Decision Affirms Limits on Employers’ Right to Review or Use Employee E-Mails Sent on Company Computers
Date:
April 13, 2010
Publication:
Riker Danzig's April 2010 Employment Update
Author(s):
Daniel W. Zappo, Stephanie R. Wolfe
Area(s) of Practice:
Labor & Employment Law

Attention Employers: If you assume your company's policies permit you to review or use all of your employees' electronic communications, it is time to think again.

On March 30, 2010, the New Jersey Supreme Court unanimously held in Stengart v. Loving Care Agency, Inc., __ N.J. __, __ A.2d __, 2010 WL 1189458 (2010), that company policies do not convert an employee's e-mails with her attorney - sent through the employee's personal, password-protected, web-based e-mail account, but via her employer's computer - into the employer's property. Like the Appellate Division's decision, on which we reported in September 2009, 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 and use. As a result, employers should carefully review and, if necessary, revise their electronic communications policies to ensure that such policies clearly describe permitted and prohibited use of company equipment and provide adequate notice of the company's methods of retaining records of employees' use of such equipment.

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 had used a laptop computer provided by Loving Care to send e-mails to her attorneys via her personal, web-based, password-protected Yahoo e-mail 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 several e-mails 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 e-mails. In turn, Stengart requested the immediate identification of all such e-mails, 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 e-mails would be viewed as Company property and, therefore, were not protected by the attorney-client privilege. Stengart appealed. The Appellate Division reversed and held that the e-mails were not Company property and that Loving Care's counsel had acted improperly by reading and using the privileged documents.

The Supreme Court's Decision

The Supreme Court held that "under the circumstances, Stengart could reasonably expect that e-mail communications with her lawyer through her personal account would remain private, and that sending and receiving them via the Company's laptop did not eliminate the attorney-client privilege that protected them." As a result, the Company should not have reviewed the communications between the employee and her attorney even though the e-mails originated from a Company computer. In addition, the Court agreed that Loving Care's counsel had breached the Rules of Professional Conduct by reading arguably privileged e-mails and failing to notify Stengart promptly about them.

In determining that Stengart had a reasonable expectation of privacy, the Court examined (1) the adequacy of the notice in the Company's electronic communications policy and (2) the public policy concerns underlying the attorney-client privilege.

Certain facts in particular appear to have influenced the Court's analysis that Stengart had a reasonable expectation that her communications with her attorneys would remain private. For example, the Court pointed out that Stengart chose to use a personal, password-protected, web-based account rather than the Company's e-mail system. Moreover, she never saved her Yahoo ID or password on the Company laptop. In addition, the e-mails sent by Stengart's attorney included a warning that the information contained in the e-mails was "intended only for the personal and confidential use of the designated recipient."

Like the Appellate Division, the Supreme Court also found that the Company policy's statement that "occasional personal use [of e-mail] is permitted" contradicted a statement elsewhere in the policy that such "communications [as e-mail voice mail messages, internet use and communication and computer files] are not to be considered private or personal to any individual employee." Nevertheless, the Supreme Court made clear that no policy, even a clearly written one, can pierce the attorney-client privilege regarding private e-mails with counsel via a personal, password-protected e-mail account on a company's computer system. The Court cited the important public policy concerns underlying the attorney-client privilege. It also determined that employers "have no need or basis to read the specific contents of personal, privileged, attorney-client communications in order to enforce corporate policy."

Lessons To Be Learned

  • This decision is further encouragement from New Jersey's highest court to employers to implement clear, unambiguous electronic communications policies that are tailored to promote legitimate business policies. Although recent decisions have held that employees do not have a reasonable expectation of privacy when they use company computers, the Stengart decision weakens this authority.
  • Employers should formulate and express a policy addressing the use of personal, web-based e-mail accounts accessed through company equipment.
  • Employers should warn employees that the contents of e-mails sent via personal accounts can, like e-mails sent via company accounts, be forensically retrieved and reviewed by the company.
  • Even a policy that attempts in unambiguous terms to permit the employer's retrieval and review of privileged communications between an employee and her attorney through her personal, password- protected e-mail account will be void under Stengart. However, in so holding, the Supreme Court dealt only with the facts before it and did not answer whether an employee's attempt to communicate with her attorney via a company e-mail account would be entitled to the same protection as one via a personal account. Employers should refrain from reviewing such communications without consulting an attorney, because Stengart leaves this and other questions unanswered.
  • Employers should address and prohibit communications that could potentially harm the company. For example, employees should not be permitted to reveal confidential, proprietary, or trade secret information, including through web-based or other personal e-mail accounts.
  • Companies should not only draft and disseminate unambiguous policies, but they should also enforce them in a consistent manner.

This decision has wide-ranging consequences for how employers should draft their electronic communications policies, what changes should be made to existing policies, and how counsel conducts discovery in disputes involving employees. If you have any questions about how this decision may affect your business or personal situation, please contact Michael Furey, Daniel Zappo, or Stephanie Wolfe of Riker Danzig's Labor & Employment Group. For more information about this article, contact mfurey@riker.com, dzappo@riker.com, or swolfe@riker.com.