July 13, 2009

E-mail messages exchanged between an employee and her attorney through the employee’s personal e-mail account are protected by the attorney-client privilege, despite being sent through her employer’s computer and internet server, a New Jersey appeals court has ruled. Stengart v. Loving Care Agency, Inc. et al., No. A-3506-08T1 (June 26, 2009).  Reversing the trial court, the Appellate Division of the Superior Court of New Jersey held that the company’s electronic communications policy did not transform the employee’s private e-mails with her attorney into the company’s property.

In February 2008, after resigning, Marina Stengart sued her former employer, alleging discrimination based on a hostile work environment in violation of Title VII.  In order to preserve the information stored on Stengart’s employer-issued laptop computer, the company “imaged” the computer’s hard drive.  The forensic recovery process uncovered personal e-mail messages sent by Stengart to her attorney relating to her anticipated lawsuit against the company. 

The company’s employee handbook’s “Electronic Communication” policy governed employees’ use of company computers.  The policy stated, among other things, that “internet use and communication… are considered part of the company’s business” and “such communications are not to be considered private or personal to any individual employee.”  However, as noted by the appeals court, the policy also provided that “[o]ccasional personal use is permitted.”

Stengart sought a court order to compel the company to turn over the e-mail messages, asserting they were protected by the attorney-client privilege, and disqualify the company’s attorneys for reviewing the messages.  The company argued, however, that the plaintiff waived the attorney-client privilege when she used the company’s computer and internet server to communicate with her attorney. The trial court agreed, holding, “[T]he e-mails were not protected by the attorney-client privilege because the company’s electronic communications policy put plaintiff on sufficient notice that her e-mails would be viewed as company property.”

The appellate court reversed.   It concluded that the interests underlying the attorney-client privilege substantially outweighed the employer’s interest in enforcing its “unilateral” electronic communications policy. The court explained that the company’s ownership of the computer is not determinative as to whether an employee’s personal e-mails, sent using a web-based, personal, password-protected e-mail account, can become company property.

Analyzing the company’s electronic communication policy, the court found there were questions as to whether the policy ever actually was finalized, formally adopted or disseminated to employees at the time the plaintiff resigned from the company.  The court also found questions regarding the meaning and scope of the policy, specifically, whether it covered the circumstances in this case.

The court’s analysis hinged on whether an objective reader would conclude the policy applied here.  For example, the court noted that the policy, which contained the phrases “media systems and services” and “[o]ccasional personal use is permitted,” failed to appropriately define these terms.  Thus, the court determined that a reasonable employee could believe the policy applied only to the company’s work-based e-mails, not e-mails sent using a personal e-mail account.  In addition, even if the company had a more clearly defined policy, the court was loathe to sanction a policy for the monitoring and use of the employer’s computer systems that would override the protections afforded by the attorney-client privilege.

Accordingly, the court concluded that the employee’s interest in maintaining the attorney-client privilege outweighed the company’s interest in enforcing its electronic communications policy.  It reasoned that a policy transforming all private communications into company property furthers no legitimate business reason.  Moreover, it concluded, significant public policy considerations underlie the need to protect the attorney-client privilege.  The appellate court reversed the trial court and required the company to turn over all e-mails exchanged between the plaintiff and her attorney.  The court also sent the case back to the lower court to determine whether the company’s attorneys should be disqualified from further representing the company because they had reviewed the privileged e-mail messages.

Although it is unlikely to change the ultimate outcome of the underlying litigation, this decision emphasizes the importance of having a clearly-defined electronic communications policy covering all forms of communication that pass through a company’s systems and equipment.  While many employers opt in favor of permitting employees “limited personal use” of the company’s electronic communication systems, in part, because of the difficulties associated with consistently enforcing a “business use only” policy, this decision may cause employers to reevaluate their practice of permitting employees to use their electronic communication systems for personal reasons.  While both options present certain risks to employers, this decision certainly makes it more difficult for employers to access information residing on their systems and exposes them to liability if such information is later deemed to be “private” to the employee.  It also sends a strong message to attorneys regarding the risks of reviewing potentially privileged documents.  Finally, given the speed at which technology and this area of the law has been changing, companies need to continually review their policies to ensure that policies are consistent with their business needs as well as current law.

Jackson Lewis attorneys are available to answer your questions about this and other workplace law and privacy issues.

© 2007 Jackson Lewis LLP. Reprinted with permission. Originally published at www.jacksonlewis.com. Jackson Lewis LLP is a national workplace law firm with offices nationwide.