What to know about e-mail privacy policies in case of employment litigation Featured

9:01pm EDT April 30, 2011
What to know about e-mail privacy policies in case of employment litigation

Fifteen years ago, just as e-mails were becoming common in the workplace, a client, who we’ll call Jim, called us in a panic. One of his employees, Jenny, was threatening to sue him for sexual harassment. We asked Jim for the real story, and we got the usual response. He may have been flirtatious, but so was she, and it didn’t go beyond that.

We told Jim that we needed all of Jenny’s e-mails immediately. Fortunately, the e-mails showed that there really was nothing more than flirtatious banter between Jim and Jenny. What we did not expect to find were e-mails from Jenny’s company computer, sent a week before her allegations, of her intent to organize her own competitive company and to solicit Jim’s customers to join her.

Instead of being on the defensive, we immediately filed a lawsuit against Jenny for unfair competition and related claims. The case quickly settled in Jim’s favor.

We wish that all e-mails were as helpful to our clients.

Often, however, e-mails written in frustration or anger can be harmful to a client’s position. On the other hand, employees such as our client’s “harassment” victim need to be careful about communications made with company property.

We now advise our clients based on the lesson an employee named Gina Holmes recently learned. Use of a work computer to engage in private conversations has been significantly curtailed in California in a way that we expect will surprise both management and employees.

In June 2004, Holmes began working as an executive assistant for Paul Petrovich at Petrovich Development Company. At that time, Holmes signed an employee handbook acknowledging the company’s policy regarding computers and e-mail accounts. Specifically, the handbook stated that (1) the company’s technological resources should only be used for business, (2) employees who maintain personal information on company computers have no right of privacy, and (3) the company maintains the right to inspect all files and messages at any time.

Shortly after she was hired, Holmes told Petrovich that she was pregnant. Petrovich and Holmes then engaged in a heated exchange of e-mails concerning Holmes’ maternity leave and its impact on the company. The exchange led Holmes to believe that she was a victim of pregnancy discrimination. Using the company’s computer, Holmes exchanged several e-mails with her attorney, Joanna Mendoza, about her concerns. Presumably realizing after the fact that Holmes was communicating on the company’s e-mail, Mendoza instructed Holmes to delete their communications from her work computer.

Holmes ultimately resigned and sued Petrovich Development. At trial, Petrovich Development sought to use Holmes’ e-mails to Mendoza (which had been electronically recovered), arguing that they showed that Holmes was not upset about Petrovich’s conduct, and that she had been “put up” to the lawsuit by Mendoza. Despite Holmes’ objections that the e-mails were privileged attorney-client communications, the trial court admitted them into evidence. The jury ultimately returned a verdict exonerating Petrovich Development.

On appeal, Holmes argued that her e-mails with Mendoza were protected by the attorney-client privilege. On January 13, 2011, a California appellate court disagreed.

The Court of Appeal was swayed by the evidence that Holmes had used the company computer to send the e-mails to her attorney even though she had been advised that (1) the company might inspect computer files and e-mails at any time; (2) employees using company computers for personal matters have no right to privacy with respect to such use, and (3) the company’s computers were to be used only for company business. The court noted that on those facts, Holmes’ use of the company computer to consult Mendoza was “akin to consulting her attorney in one of the defendants’ conference rooms, in a loud voice, with the door open, yet unreasonably expecting that the conversation overheard by Petrovich would be privileged.”

The court was not persuaded by the fact that Holmes’ work computer was password protected, finding her belief that the e-mails would remain private to be “unreasonable” because she was warned that the company would monitor e-mail use. Because the law protects as privileged only a “confidential communication between client and lawyer,” the court held that Holmes’ e-mails to Mendoza were not privileged because Holmes had no reasonable expectation they would remain confidential.

What does this mean to employers? We advise our clients to carefully review their computer and e-mail usage policies to ensure that they give clear notice to employees that workplace computers, e-mail and voice-mail accounts are not private, are to be used primarily for business purposes, and may be subject to monitoring by the company.

By putting in place a policy similar to the one in Holmes, an employer can greatly increase the likelihood of getting access to otherwise attorney-client communications in the event of litigation with an employee — a significant strategic advantage.

But we would also advise our clients that they need to modify what is now fairly common behavior of communicating with counsel using work e-mail, based on a more general issue raised in Holmes about when attorney-client communications are privileged. In Holmes, the employee was communicating with her attorney about a claim against her employer. But what if Holmes had been e-mailing her lawyer about a claim she had against her bank? Under the court’s reasoning, Holmes would have no expectation of privacy in those e-mails either. Arguably, in litigation between Holmes and her bank, the bank could subpoena the employer’s records to obtain Holmes’ e-mails with her lawyer about her dispute with her bank. While that specific issue was not decided in Holmes, it appears to be a very real risk that almost all clients need to know about.

In light of Holmes, a prudent lawyer would advise their clients to cease all communications with them using a work e-mail account or work computer, or risk waiving the attorney-client privilege that would otherwise exist.

Nancy Bertrando and Matt Falley are partners with Greenberg Glusker Fields Claman & Machtinger LLP. Nancy specializes in employment issues, and she can be reached at (310) 201-7483 or NBertrando@greenbergglusker.com. Matt is a litigator, and he can be reached at (310) 201-7442 or MFalley@greenbergglusker.com.