Important NJ E-Mail Decision
Stengart v. Loving Care Agency, Inc. is a new decision from the NJ Appellate Division that will reverberate among employment and business practitioners for a long time. While primarily concerned with the confidentiality of employee communications made through a business-owned computer system, it also addresses the enforceability of business policies as published in employee handbooks and the attorney-client privilege. Note that the opinion has been approved for publication, which makes it binding precedent unless reversed by the NJ Supreme Court or overturned by legislation.
The plaintiff Stengart sued Loving Care, her former employer, for discrimination in employment. Stengart communicated with her attorneys about the case using a laptop computer that had been issued to her by Loving Care. The e-mails went through a personal, web-based, password-protected Yahoo account.
Loving Care accessed the e-mails, which should have been protected by the attorney-client privilege, through the laptop. For the attorneys reading this, you will want to study the procedural details of how this happened. For those of you in HR or other positions of management responsibility, it's enough for now that you just know what happened.
When Stengart's attorneys discovered that the e-mails had been accessed, they asked the trial court to order their return and prohibit their use in the litigation. The trial court refused, finding that a policy distributed to Loving Care's employees put Stengart on notice that all communications through company systems were subject to inspection.
The appeals court reversed, and in a fascinating opinion clarified important ground rules.
First, the court rejected Loving Care's reliance on its policy. It was, the court found, unclear and could have led employees to misunderstanding of what it did and did not prohibit:
In short, although the matter is not free from doubt, 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.
Second, since the NJ Supreme Court decided Wooley v. Hoffman-LaRoche in 1985, it has been an article of faith for most lawyers that the provisions of employee handbooks can be enforced in court. Here things get interesting. The Stengart court reviewed the precedents in detail and concluded that "an employer's rules and policies must be reasonable to be enforced."
Loving Care's policy overstepped the boundaries of business justification:
No rationale is offered to explain how one aspect of the policy creates the company's absolute right to retain, as its own property, all emails whether business-related or personal, with the provision that "[o]ccasional personal use is permitted."
Loving Care thought that didn't matter, contending that the fact that the messages were sent with its equipment was enough to justify its inspection of the e-mails. The court disagreed.
A policy imposed by an employer, purporting to transform all private communications into company property -- merely because the company owned the computer used to make private communications or used to access such private information during work hours -- furthers no legitimate business interest. . . . Although we recognize the considerable scope of an employer's right to govern conduct and communications in the workplace, the employer's interest in enforcing its unilateral regulations wanes when the employer attempts to reach into purely private matters that have no bearing on the employer's legitimate interests.
Third, the court found that the policy behind the attorney-client privilege trumped the company's policy. In fact, the court held that Loving Care's attorneys, from a prominent New Jersey law firm, should have stopped immediately when they came across what should have been recognized as privileged materials and notified Stengart's attorneys so they could seek review from a court. Instead, they continued with their review, relying upon Loving Care's policy to justify their actions. As a result, they are now at risk of disqualification as attorneys for Loving Care in the Stengart case, and perhaps of sanctions (and potentially ethical inquiry) as well.
Lessons abound here.
- For everyone: despite the ruling of this case, never use company-owned computer equipment for any personal communication that you wish to remain confidential. Just don't. Period.
- For companies: review your electronic communication policy right away. If there are ambiguities in it, clarify them. Courts are going to look not at your intent, but at the reasonable expectations of your employees based upon a variety of plausible readings of the policy.
- For companies again: to avoid the problem of varying interpretations of your policy, you may want to consider banning all personal use of business equipment for personal communications. While that may cause some employee grumbling, in this era of wireless e-mail access, it may not unduly inconvenience your employees .
- For lawyers: be smart. If you come across potentially privileged communications, do the right thing and disclose it.
It will be interesting to see whether Loving Care appeals this ruling, and equally how lawyers, courts and businesses will react to the Stengart decision in coming years.