Privilege Not Necessarily Waived Where Email Between Employee and Personal Attorney Maintained on Corporate Email System
In re Asia Global Crossing, Ltd., 322 B.R. 247 (S.D.N.Y. 2005)
Asia Global Crossing, Ltd. and Asia Global Crossing Development Co. (collectively “Asia Global”) were pan-Asian telecommunication carriers which filed for bankruptcy under Chapter 11 on November 17, 2002. Asia Global had five principal corporate officers (“the Insiders”). The bankruptcy was converted to Chapter 7 on June 10, 2003 and Robert Geltzer was appointed trustee.
In July 2003, the Insiders’ counsel learned that allegedly privileged email had been left behind when Geltzer ordered the premises vacated (John Scanlon, the CEO, received the order while out-of-town and hastily complied.) The Insiders’ counsel asked Geltzer’s counsel to keep this email confidential. Allegedly privileged hard copy was later found to have also been left behind. It was segregated and held with the email.
In 2004, Geltzer obtained orders pursuant to Federal Rule of Bankruptcy Procedure 2004 in connection with an investigation relating to certain transactions. He caused subpoenas duces tecum to be served on the Insiders and Janet Troxell (a former employee and consultant) calling for the production of the following:
[A]ll documents that relate to the Debtor’s acts, conduct, property, liabilities and/or financial condition of the Debtors and/or any other matters which may affect the administration of the Debtors’ estates, including, without limitation, all correspondence, memoranda, and all other documents, electronic records, and other media.
The Insiders failed to produce the allegedly privileged email. Troxell withheld 20 pages on grounds of privilege.
A second set of subpoenas were issued specifically requesting any electronic documents generated or received on Asia Global computer systems and any hard copy located at the company when the bankruptcy was converted to Chapter 7. The Insiders again failed to produce the documents, claiming attorney-client, work product, and joint defense privileges. Geltzer then moved to compel production, claiming that use of the corporate email system waived any privileges with regard to the Insiders’ email and that Troxell is a third party such that materials sent to her could not be privileged.
Federal common law controls the privilege issues since they arose in the context of Rule 2004 orders and corresponding subpoenas.
The Attorney-client Privilege
The Court could not find prior decisions discussing confidentiality of an employee’s email in connection with the attorney-client privilege (whether keeping personal attorney-client email on an employer’s email system would constitute waiver via release of the information to the employer.) So, it examined the question of an employee’s expectation of privacy in his computer and office email system. The court held found that the following four factors should be taken into consideration in that analysis:
(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 emails, and (4) did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?
Assuming that the Insiders’ email was otherwise privileged and that the Insiders subjectively intended it to be confidential, the Court reasoned as follows:
…the question of privilege comes down to whether the intent to communicate in confidence was objectively reasonable. There is a close correlation between the objectively reasonable expectation of privacy and the objective reasonableness of the intent that a communication between a lawyer and client was given in confidence. Accordingly, the objective reasonableness of that intent will depend on the company’s e-mail policies regarding use and monitoring, its access to the e-mail system, and the notice provided to the employees.
In this case, the company’s email policies regarding use and monitoring are unclear. The Insiders submitted declarations claiming that there was no policy stating that email held on the servers belonged to the company. They claimed that personal use of the email system was permitted. The trustee submitted documents describing an email policy that bans personal use and authorizes access and monitoring. However, these documents were not clearly adopted as Asia Global’s policy.
The company clearly had access to its own servers, otherwise the trustee could not have acquired the email that the Insiders are trying to protect. This is different from hard copy files or machines sitting on desks. Sending a message through the corporate email system “was like placing a copy in the company files.”
Insiders claim that they knew of no email policy and did not tell anyone in the company that there was any such policy. However, they could have been on notice regardless (for example, there might have been warning screens shown at log-on regarding the personal use of email and the potential for monitoring.)
Given these circumstances, the Court does not conclude as a matter of law that the attorney-client privilege potentially attaching to the email in question was waived.
Trustee argues that the hard copy documents were abandoned and also may have been on Asia Global computers. It is unclear whether these documents were on Asia Global computers – this is mere speculation. Also, since offices were abandoned hastily, documents may have been inadvertently left behind rather than intentionally abandoned. Thus, as a matter of law, any existing attorney-client privilege attaching to the Hard Copy documents is also not found to have been waived.
The Troxell documents, however, are not subject to the attorney-client privilege. Copies of the principal messages were sent to an Asia Global attorney, and the remainder does not reflect any substantive response or information. Also, each entire chain was sent to Troxell, an Asia Global employee. The chains are not privileged, or in the alternative, waiver was effected via disclosure to third parties.
The Work Product Privilege
The work product privilege does not depend an “expectation or intent that the communication will remain confidential.” It is, however, waived via voluntary disclosure although the attorney can contest a client’s disclosure of opinion work product. The court could not decide as a matter of law that the work product privilege was waived in connection with Insiders’ email or hard copy because the record is insufficient to analyze inadvertence of disclosure and there is no information regarding whether opinion work product is at issue. The privilege was waived, however, with regards to the Troxell documents based on what is clearly voluntary disclosure to the adversary and its consultant.
Common Interest Privilege
The Insiders refer to the common interest privilege, but do not identify which other parties share the privilege or the facts in support of the privilege. The trustee does not respond to the assertion. Assuming it applies, the trustee has not established as a matter of law that it has been waived.
We just did an entry on a case that used this test in NY, and also comment on application in Canadian jurisdictions.