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Court Rules Communications with Attorney Using Work Computer are Protected as Privileged

Posted in CASE SUMMARIES

Stengart v. Loving Care Agency, Inc., 2010 WL 1189458 (N.J. Mar. 30, 2010)

In this employment litigation, the Supreme Court of New Jersey addressed whether employees have a reasonable expectation of privacy as to attorney-client privileged emails sent and received on a work computer.  The court held that under the circumstances presented, the employee/plaintiff did have a reasonable expectation of privacy as to emails with her attorney.  Additionally, the court remanded the case to the trial court to determine what, if any, sanctions should be imposed upon defense counsel for reading and utilizing the emails at issue, despite indications that they were protected as privileged.

Maria Stengart, plaintiff, utilized her employer-provided laptop to access a personal, web-based, password-protected email account through which she communicated with her attorney regarding her situation at work (which eventually resulted in filing a complaint).  Emails sent from her attorney indicated their privileged status.  Upon leaving her position and filing her complaint, Stengart’s former employer, Loving Care Agency (“Loving Care”), hired experts to create a forensic image of Stengart’s laptop.  The emails, which had been stored in the laptop’s temporary files, were recovered, passed on to counsel, and eventually utilized in the course of discovery.  Upon learning of defense counsel’s possession of the emails, Stengart’s counsel demanded their immediate return. Defense counsel refused, and the issue went before the court.  The superior court decided in favor of Loving Care and held that there was no breach of attorney-client privilege “because [Loving Care’s] policy placed Stengart on sufficient notice that her emails would be considered company property”.  The appellate court held that the policy upon which the trial court relied could allow an objective reader to conclude that not all personal emails were company property and reversed the trial court.  The issue was then appealed to the Supreme Court.

The Supreme Court found in favor of Stengart.  Beginning its analysis with an evaluation of the policy addressing an employee’s personal computer use, the Supreme Court determined that the scope of Loving Care’s written policy was “not entirely clear.”  The ambiguity resulted from the policy’s failure to specifically address personal emails, from the lack of warning that the contents of all emails were stored on the users’ computers and could be forensically retrieved and read later, and from the policy’s explicit statement that “occasional personal use [of email] is permitted.”  The court next considered the oft-cited policies underlying the attorney-client privilege, namely the benefit provided to the public by sound legal counsel “based on full, candid, and confidential exchanges.”

The court next examined the issue of an employee’s reasonable expectation of privacy in detail, noting that courts have considered a number of factors when making such a determination.  In In re Global Crossing, Ltd., the bankruptcy court developed a four-part test to “measure the employee’s expectation of privacy in his computer files and e-mail”:

(1) does the corporation maintain a policy banning personal or other objectionable use, (2) does the company monitor the use of the employee’s computer or e-mail, (3) do third parties have a right of access to the computer or e-mails, and (4) did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?

Other courts have considered factors including whether the email was communicated using an online service provider or the company email system, the existence of a “clear company policy banning personal emails”, and the location of the company’s computer, i.e., was the employee working from a home office at the time of the relevant communication?  “Applying the above considerations to the facts”, the court found that “Stengart had a reasonable expectation of privacy in the emails she exchanged with her attorney on Loving Care’s laptop.”  Specifically, the court noted that Stengart “took steps to protect the privacy of those emails” by using a personal, password-protected email account and by not saving the password on her computer.  “In other words, she had a subjective expectation of privacy in messages to and from her lawyer discussing the subject of the future lawsuit.”  The court also cited the ambiguity of the policy, as explained above, in support of her “objectively reasonable” expectation of privacy and also that noted the emails were neither illegal nor inappropriate and that the emails were marked as privileged.

Regarding the effect of their conclusion, the court stated:

Our conclusion that Stengart had an expectation of privacy in e-mails with her lawyer does not mean that employers cannot monitor or regulate the use of workplace computers.  Companies can adopt lawful policies relating to computer use to protect the assets, reputation, and productivity of a business and to ensure compliance with legitimate corporate policies.  And employers can enforce such policies.  They may discipline employees and, when appropriate, terminate them, for violating proper workplace rules that are not inconsistent with a clear mandate of public policy.  See Hennessey, supra, 129 N.J. at 99-100; Woolley v. Hoffman-LaRoche, Inc., 99 N.J. 284, 290-92 (1985); Pierce v. Ortho Pharm. Corp., 84 N.J. 58, 72-73 (1980). . . .  But employers have no need or basis to read the specific contents of personal, privileged, attorney-client communications in order to enforce corporate policy.  Because of the important public policy concerns underlying the attorney-client privilege, even a more clearly written company manual–that is, a policy that banned all personal computer use and provided unambiguous notice that an employer could retrieve and read an employee’s attorney-client communications, if accessed on a personal, password-protected e-mail account using the company’s computer system–would not be enforceable.

The court further determined that defense counsel erred in deciding not to set aside the emails upon determination of their potential privilege and notify plaintiff’s counsel of their possession of the emails before proceeding.  Accordingly, the issue was remanded to the trial court for a determination of an appropriate remedy.