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Posts Tagged ‘E-mail

Free Pass for Attorneys when it comes to “Monumental” E-Discovery Violations?

The E-Discovery Team (courtesy of Mr. Losey) reported that the Qualcomm Order concerning whether six attorneys would be personally sanctioned for discovery misconduct relating to their defense of their corporate client came down (click here for Mr. Losey’s post). Here is a link to the April 2, 2010 Order. If you’re short on time, read the image that accompanies this post – it reaches the same conclusion.

For those that have not followed or forgotten about this e-discovery saga, it arose out of an order sanctioning Qualcomm and a number of its outside attorneys for failing to produce tens of thousands of relevant and responsive documents during its patent suit against Broadcom.

These documents also consisted of emails and documents that undercut Qualcomm’s position at trial (I hate it when the facts get in the way). Taking a page from the Watergate playbook, Qualcomm then attempted to cover up these documents after they emerged at a critical point in the trial. But at the end of the day, Qualcomm was ordered to pay Broadcom $8,568,633.24 and found that six attorneys personally contributed to what the Court described as a “monumental discovery violation.” See Qualcomm Inc. v. Broadcom Corp. 2008 WL 66932, 13 (S.D.Cal. 2008).

Around March 2008, the case was remanded to the Magistrate Judge for additional consideration and, specifically, to provide the sanctioned attorneys an opportunity to defend their actions. With the benefit of this second-go-around, the finding that these attorneys contributed to a “monumental discovery violation” might have been a little harsh. Or in the words of the Court’s Order declining to hold those six attorneys responsible:

There still is no doubt in this Court’s mind that this massive discovery failure resulted from significant mistakes, oversights, and miscommunication on the part of both outside counsel and Qualcomm employees. The new facts and evidence presented to this Court during the remand proceedings revealed ineffective and problematic interactions between Qualcomm employees and most of the Responding Attorneys during the pretrial litigation, including the commission of a number of critical errors. However, it also revealed that the Responding Attorneys made significant efforts to comply with their discovery obligations. After considering all of the new facts, the Court declines to sanction any of the Responding Attorneys.

While the Qualcomm attorneys were eventually exonerated (although, this may be a quintessential Pyrrhic victory for the attorneys and law firm involved – see this article) it is likely that this case will continue to be the equivalent of “Kaiser Soze” for the legal community, i.e.,  “a spooky story” told as a reminder of what could happen to an attorneys who doesn’t comply with his or her ethical and legal obligations. Right … what could happen ….

In any event, the “major errors”highlighted by the magistrate’s April Order are instructive for both in-house and outside counsel. The first “fundamental problem” was “an incredible breakdown in communication,” which “contributed to all of the other failures.” Other specific failures recognized by the court included a failure to present evidence establishing that any attorney (in-house or outside counsel) explained the legal issues to the appropriate employees or discussed collection procedures; the failure to obtain sufficient information to understand the relevant computer systems; and the failure of any attorney to take on a supervisory responsibility for verifying that the necessary discovery was conducted.


Written by Jason Shinn

April 6, 2010 at 4:47 pm

Will Your Company E-mail Policy Eliminate Litigation?

iStock_000003283183XSmallA recent federal court decision provides a text book example of how company e-mail policies when drafted and implemented properly can reduce or otherwise eliminate litigation.

Factual Background:

The plaintiff, Kevin Sporer contended that his former employer, United Air Lines invaded his privacy by viewing a pornographic video attached to an e-mail that Sporer sent from his work account to his personal account. Sporer also contended that United wrongfully terminated his employment. Sporer was a supervisor at the time of the discharge.

Sporer received an e-mail entitled “Amazing oral talent!!!!!!!!!!” on his work e-mail account from a friend. Sporer then sent this e-mail from his work computer, over United’s server, to his personal e-mail account. The trial court noted that the e-mail “contained a pornographic movie of a woman orally copulating a man in various acrobatic positions.” (Imagine if you were the judge explaining to your significant other: “Honestly, honey, I have to watch this for work.”).

A few minutes after transmitting the email to his personal e-mail account, Sporer emailed his friend that sent the e-mail: “Thank you for the spiritual lift. However, I need you to use my home E-mail address…. Apparently United Air Lines, Inc. has a strict computer security policy and these babies will get me fired.”

During a routine audit (yes, employers actually do this), United’s Information Security department came across the pornographic e-mail Sporer sent to his personal e-mail account, which eventually resulted in Sporer’s discharge for violating United’s e-mail policy.

The E-mail Policy:

UAL’s e-mail policy provided, in relevant part:

Message content must always be professional. It is strictly prohibited to transmit or store any messages or data that compromises or embarrasses the Company, contains explicit or implicit threats, obscene, derogatory, profane or otherwise offensive language or graphics, defames, abuses, harasses, or violates the legal rights of others.

United’s Information Security Policy also prohibited the transmission of obscene, derogatory, profane or otherwise offensive language or graphics. United’s information security policies are established to: “(1) protect the company’s investment in its human and financial resources expended to create its systems; (2) safeguard its information; (3) reduce business and legal risk; and (4) maintain public trust and the reputation of the company.” Under the heading “Privacy and Monitoring,” United’s Electronic Communications Standards provides:

The company reserves the right to monitor all e-mail on the company e-mail system-In other words, as an employee you should assume no right of privacy on e-mail transmitted on the company system. In addition, and messages sent or received, for business or personal reasons, may be disclosed to law enforcement officials or third parties without your prior consent.

Sporer admitted to having received reminders about United’s e-mail policy and that he understood that the content of his emails should not be less than professional. In fact, to turn on and use his work computer, Sporer had to click “OK” to clear the Warning Notice, informing him that the computer system is monitored.

Plaintiff’s Arguments Against Discharge

Sporer argued that his termination was wrongful because it was in violation of his right to privacy and in violation of a federal statute (18 U.S.C. § 2511, et seq.), which prohibits the interception and disclosure of wire, oral (Amazing or otherwise), or electronic communications. An invasion of privacy claim under California law requires a plaintiff to demonstrate: “(1) a legally protected privacy interest; (2) a reasonable expectation of privacy in the circumstances; and (3) conduct by defendant constituting a serious invasion of privacy.” Hill v. National Collegiate Athletic Assn., 7 Cal.4th 1, 39-40, 26 Cal.Rptr.2d 834, 865 P.2d 633 (1994). The Court quickly dismissed Sporer’s invasion of privacy claim noting that in 2001, “more than three-quarters of this country’s major firms monitor, record, and review employee communications and activities on the job, including their telephone calls, e-mails, Internet connections, and computer files.” Id. at 451, 117 Cal.Rptr.2d 155. The court further noted that there can be serious consequences for employers who do not monitor their employee’s communications and activities on the job. Id. at 452 n. 7, 117 Cal.Rptr.2d 155. Further, the advance notice that United monitored computer use for compliance with its policies, including a prohibition against use for “obscene or other inappropriate purposes,” and Sporer having an opportunity to consent to such monitoring, further undercut any reasonable expectation of privacy. Additionally, and this is a key point for employers, United had a policy of monitoring its employee’s computer use, warned employees that they had no expectation of privacy on e-mail transmitted on the company system, and provided its employees with a daily opportunity to consent to such monitoring. In light of these facts, the Court found that Sporer had no reasonable expectation of privacy in the use of his work email.

Sporer’s contention that United violated the federal statute (18 U.S.C. § 2511) by monitoring his work e-mail also failed. The statute excludes surveillance of communications where there is consent. The Court construed “consent” to express and implicit consent and that implied consent may be inferred “from surrounding circumstances indicating that the [party] knowingly agreed to the surveillance.” Id at 116-117. Circumstances showing consent will ordinarily include “language or acts which tend to prove … that a party knows of, or assents to, encroachments on the routine expectation that conversations are private.” Id. at 117. In regard to Sporer, he had been repeatedly informed that United monitored use of its computers, including emails and he had to click “OK” to clear the Warning Notice informing him that the computer system is monitored. Sporer also knew from past experience that United monitors work e-mail accounts. In fact, he was previously disciplined for sending an e-mail with a sexual video from his work account to his personal account. And the e-mail Sporer wrote to his friend minutes after he received the inappropriate email made clear that Sporer was aware of United’s strict computer policy and that United monitored work email accounts. The Court, therefore, found that because Sporer knew his work e-mail account was not private and was being monitored by United his consent to such monitoring may be implied. Accordingly, United did not violate 18 U.S.C. § 2511 by monitoring Sporer’s work e-mail account.

The Take-Away:

While monitoring employer provided e-mail accounts is (or should be) the norm, courts can reach conflicting decisions as to when and under what circumstances such monitoring is permissible. See How Far Can Employers Go in Reading Employee E-mail? For this reason, it is important for employers to reduce the risk that a Court will “second guess” such monitoring. The Sporer/United decision provides a text book roadmap for “getting it right” when it comes to employer e-mail policies and employee monitoring. In that regard, a few “take-aways” are as follows:

  1. Have a written policy: Employers must have a written e-mail policy that explains how company e-mail should be used. The overall theme of this policy should be that e-mail must be used for business purposes. Ideally, this e-mail policy will be part of an overall technology policy that establishes a road map with respect to the intended use of IT resources and what is prohibited. For example, limitations for accessing certain Websites and restrictions for loading unauthorized software into the company IT environment. See “How High Can Damages go for Unlicensed Software Use.
  2. Writing the Email Policy: Your e-mail policy will depend upon your organizational needs. Generally it makes sense to get input from upper management in drafting a policy that supports the company’s overall mission. IT professionals can make recommendations as to what is technologically possible. And human Resource professionals should also be consulted because the policy will affect every employee. Equally important are recommendations from legal counsel. Aside from selfish job security motivations, legal counsel will provide valuable insight as to what is permitted, what is not permitted, and overall compliance recommendations. While not required, getting input from employees increase the chances of the policy ultimately being followed by employees.
  3. Communicate and Explain the Policy: Employers must communicate the policy to all stakeholders, including employees. It is also a good practice to document the employee has read and understands the policy by obtaining signed acknowledgment forms.
  4. Communicating the Policy is not a One Time Event: While it is not necessary, periodically communicating the existence of the policy is a good practice. First, it is a reminder to employees of what is expected in regard to e-mail/technology use and what is prohibited. Second, if your company ever needs to rely upon it in litigation, it just “looks better” if an employee was “reminded” about the policy. For example, United’s log-in procedure required employees to click a button (“OK”) to clear the notice that the employee’s email may be monitored. In other instances, employers have actually displayed random provisions of their overall employee policy at the log in screen, which also had to be cleared through clicking a button similar to “OK.” This random display also directed the employee to a link for the full policy for more information.
  5. Providing an Employee Out: It is a fact of Internet life that unsolicited e-mail is a given (I’m always amazed at how many women are waiting to hear from me or the number of Nigerian businessmen that need my assistance). And a lot of this unsolicited email is along the lines of the “Amazing” video of the pseudo-acrobat. Accordingly, chances are an employee will receive an e-mail that violates the company’s e-mail use policy. In that event, make sure employees understand what is expected, e.g., deleting it, contacting a supervisor., contacting IT, or whatever reporting requirements that are determined to be appropriate. Applying this to Mr. Sporer’s situation, his mistake was not in receiving the email, but rather forwarding it on to his personal email account and then deleting it. Presumably had he just deleted the email he would not have violated the policy. This goes back to effectively communicating what is expected of employees.

For more information on comprehensive technology policies or specific questions about e-mail policies, please feel free to contact me.

How Far Can Employers Go in Reading Employee E-mail?

Employers routinely face situations where they must investigate an employee suspected of misconduct. Such investigations increasingly – if not always – involve email. But do employers become guilty of misconduct or otherwise risk liability if they access an employee’s email account? Does it matter if the company has a policy regarding email privacy? What if the policy is inconsistent or not enforced? Does it matter if the the email account is a company provided account or accessed using company computers/Internet connections? While the answers to these questions will, unfortunately, depend upon the circumstances, a great overview of issues employers should consider prior to investigating employee email is found at Investigating Personal Web-Based E-Mail.Email Watch

When it comes to investigating employees and email, employers will often feel as if they are shooting at a moving target in the dark when it comes to “getting it right.” That is because court opinions addressing employee email investigation often become very fact specific and reach conflicting results.

For example, in Stengart v Loving Care Agency, Inc. (New Jersey 2009), the employer provided plaintiff with a laptop computer and a work email address. Prior to plaintiff’s resignation, she communicated with her attorneys about her anticipated suit against her employer. These email communications were sent from plaintiff’s work-issued laptop but through her personal, web-based, password-protected Yahoo email account. After plaintiff filed suit, the company created a forensic image of the hard drive from plaintiff’s computer. In reviewing plaintiff’s Internet browsing history, the employer’s attorney discovered and read numerous communications between plaintiff and her attorney.

The trial judge found  in favor of the employer noting that the company’s policy put employees on sufficient notice that electronic communications, “whether made from her company E-mail address or an Internet based E-mail address would be subject to review as company property.”In reaching this conclusion, the judge stated that the company policy “specifically place[d] plaintiff on notice that all of her Internet based communications [we]re not to be considered private or personal” and that the policy “put employees on notice that the technology resources made available to employees were to be used for work related purposes, particularly during business hours.

The Court of Appeals, however, reversed this decision noting that “there is much about the language of the policy that would convey to an objective reader that personal emails, such as those in question, do not become company property when sent on a company computer, and little to suggest that an employee would not retain an expectation of privacy in such emails.” The Court further based its decision on the “important societal considerations that undergird the attorney-client privilege.” This opinion is available here and is worth reviewing for its interesting discussion of the competing interests between employers’ interest in maintaining its business operations and employee privacy against the backdrop of digital communication (yes, I’ve been told I’m a dork for finding this stuff interesting).

In contrast to Stengart, the court in Scott v. Beth Israel Med. Center Inc., (N.Y. Sup. Ct. 2007) sided in favor of the employer and decided that email communications between plaintiff and his attorney exchanged over the employer’s email system was not protected by attorney-client privilege or work product doctrine. The emails in question were were all sent over the employer’s email server. And the employer’s email policy stated, among other things, that the electronic mail systems were the property of the employer and should be used for business purposes only, that employees “have no personal privacy right in any material created, received, saved or sent using [employer’s] communication or computer systems,” and that the employer reserved the right to access and disclose such material at any time without prior notice.

The take away for employers is that it takes planning to bench the judicial-Monday-morning quarterback scrutinizing your investigation decisions. This planning starts with a well-written policy clearly advising employees of how company computers, Internet resources, and  email will be treated. An employer should obtain the employee’s signed acknowledgement that the policy was received and understood. And, the policy must be enforced. See  Privacy in the Digital Workplace – Oxymoron? Maybe Not, where an employer had such a policy in place, but represented it would not be enforced, which – under the facts of that case – created an “expectation of privacy” for the plaintiff employee.

Mishandling Investigations of Employee Misconduct – That’s What She Said

YellowSign 002Steve Carell stars in The Office. His character, Michael Scott, generally delivers laughs as he bungles his way through managing Dunder Mifflin. But in real life, his management “approach” is exactly the sort of thing that can turn into big and increasingly expensive headaches for employers. In fact, according to the Manpower Employment Blog (citing to a 2008 study from Jury Verdict Research) employment discrimination verdicts rose 70%, from $147,500 in 2006 to $252,000 in 2007. Then there are attorneys’ fees. A reasonable estimate puts such fees in the ballpark of $95,000 for a single plaintiff lawsuit that settles just short of trial.

But it is not just the money that employers need to consider: There is also the time and aggravation spent involved in litigation, which includes the time to respond to written discovery requests, gather responsive documents, prepare for depositions, etc. And this business interruption generally falls upon owners and management, who already are working 25 hours/day, 8 days a week trying to “do more with less.” These costs and business interruption will continue to grow as litigation increasingly takes place in the context of digital “documents,” i.e., e-mail, backup tapes, databases, and the like. Such information must be specifically addressed under federal and state court rules, including the 2009 Amendments to the Michigan Court Rules. By way of illustration as to costs, in a 2007 employment related lawsuit, the cost for retrieving and reviewing a sampling of e-mails for seven former employees and two managers totaled $42,892.42 in an employment claim. See Henry v Quicken Loans, Inc, Case No. 4:04-cv-40346-PVG-SDP, Dkt. No. 384 (ED Mich Feb 20, 2007). I’m told that the e-discovery costs just for this sampling more than doubled when all was said and done.

Fortunately, most employers do not have a Michael Scott on their payroll, or if they do, they also have a counterbalancing voice of reason like The Office’s HR character “Toby” to properly address employment matters. And when it comes to these matters, employers and HR are generally well-prepared to respond to the “usual suspects,” i.e., sexual harassment, discrimination, and disabilities under state and federal law. But it is also important for employers to exercise caution in responding to these claims in the investigation phase. Otherwise, employers may inadvertently expand the litigation buffet  a plaintiff’s’ attorneys may choose from in filing litigation.

Take for example, defamation. Under Michigan law, a defamation claim requires a showing of (1) a false and defamatory statement concerning the plaintiff, (2) an unprivileged publication to a third party, (3) fault amounting to at least negligence on the part of the publisher, and (4) either actionability of the statements irrespective of special harm, or the existence of special harm caused by the publication. Hawkins v. Mercy Health Services, Inc, (1998). It is true that a Michigan employer has a qualified privilege regarding employee defamation when it comes to making statements to other employees whose duties interest them in the subject matter. Patillo v. Equitable Life Assurance Society of the United States (1993). A plaintiff, however, may overcome this qualified privilege by showing that the statement was made with actual malice, i.e., with knowledge of its falsity or reckless disregard of the truth. Gonyea v. Motor Parts Federal Credit Union, (1991). An employer may also lose the privilege.

For example, in Sias v. General Motors Corp., the Michigan Supreme Court held that no privilege extended to the defendant corporation when it called in fellow employees to explain the circumstances of the plaintiff’s separation. A corporate representative explained to employees that the plaintiff had been released for misappropriation of company property. These individuals, however, were not supervisors, personnel department representatives, or company officials, but employees in identical work. The Court even noted that, the employer was motivated by the seemingly legitimate business concern of restoring morale and quieting rumors. But despite this legitimate motivation, the Court still ruled against the employer.

While the  standards for overcoming an employer’s qualified privilege are high, it does create another hurdle that an employer must jump over in defending against litigation. And there is always the risk that a court may second guess an employer or find a question of fact as to whether the statements extended beyond those with an interest in the subject matter of the investigation.

In regard to investigating employee misconduct, there are no hard and fast rules for how to conduct an investigation, with the exception of doing it right the first time. In this regard, the following, while certainly not an exhaustive list, should be considered in consultation with counsel:

  • If you haven’t already done so, develop a written policy outlining what steps will be taken in response to allegations of employee misconduct. This investigation policy should also be a component of a company’s overall policy for reporting workplace misconduct. Make sure, however, your company is committed to follow the investigation steps outlined in your  policy. Thus, do not commit to more than your company is willing to do in investigating matters;
  • The question most often asked is whether the investigation should be conducted by an attorney. As a general rule, an attorney should conduct or — at a minimum — supervise the investigation. Aside from the author’s concern for job security, an attorney will likely be more independent and objective in assessing the facts. Further, the attorney-client privilege will be available to protect communications critical to the investigation and the attorney work-product doctrine will protect materials generated through the investigation;
  • If counsel will not be used, it is especially critical for employers to give careful consideration in organizing and planning the investigation. This assessment includes determining who will conduct it, the likely key witnesses to interview, and how the investigation will be supervised; and
  • Part of the investigation should include identifying likely sources of relevant documents and digital information. This point needs to be carefully considered because a party has an obligation to suspend any automatic deletion procedures and to otherwise preserve information once litigation is commenced or a party reasonably anticipates litigation, i.e.,  possibly investigating misconduct. In this regard and out of an abundance of caution, immediately enlist your IT professionals to make sure such information is preserved. If an employee’s company e-mail will be monitored, make sure it is done consistent with your company’s policy and applicable law.

Certainly navigating state and federal employment law is the first line of defense in avoiding employment litigation. But if when an employer must investigate an alleged violation under these laws, (or any misconduct for that matter) it is important to respond in a well-reasoned manner because an investigation is not risk free. Accordingly, employers need to look long and hard (in tribute to Michael Scott, “that’s what she said“) when it comes to investigating such matters because of the need to get the facts right, to minimizing any stigma that could follow an employee accused of misconduct, and – adding injury to insult – no employer wants to investigate one potential lawsuit only to create another.