Shockwaves from New Jersey

The Supreme Court of New Jersey issued a decision on March 30, 2010, that is sending shock waves through the EDD community and corporate counsel, as well. The case is Stengart v. Loving Care Agency, Inc., an employment discrimination lawsuit.

The defendant Corporation had an explicit written policy declaring that all use of the company's computer systems subject to inspection and review and that employees had no expectation of privacy in their use of company computers. Notwithstanding that policy, Employee used the company's computers to access her Yahoo email account and to exchange privileged email communications with her attorneys. After litigation was commenced, counsel for Corporation conducted a forensic examination of Employee's computer and recovered a record of those privileged email messages on the hard drive. Relying on the company policy, the attorneys deemed the privilege waived and took no steps to return those email messages or notify opposing counsel of the existence until well after they were discovered. The court ordered a lower court review of possible sanctions on defense counsel for violation of a duty to refrain from examining the email.

The New Jersey court has in essence ruled that:

(1) The sanctity of the attorney client privilege trumps the employer's right to impose limits on the use of its own computer system and, despite an explicit written policy to the contrary, the employee is entitled to expect a right of privacy with respect to privileged email.

(2) Attorneys who conduct examination of computers used by employees do so at risk of sanctions if they find privileged communications and fail to take immediate steps to remove those communications from the review process and notify opposing counsel of same.

The first holding goes against a well established school of thought among corporate and computer lawyers that a company has the right to protect itself against improper use of company computers by employees by adopting a well drafted policy declaring the absence of an expectation of privacy. Countless corporations are probably calling counsel right now to review their written policies and practices which now have been called into question in New Jersey.

The court in this case was influenced by the fact that the emails were sent over the Yahoo system, and not over the company owned computer system. One has to wonder whether the result would have been different if the company policy explicitly forbid use of internet based email systems from company computers.

The second holding is a warning to all counsel to be wary in conducting reviews of employee computer records when there is any possibility of discovering material that should not be viewed.

Time will tell whether this New Jersey decision has implications elsewhere.