When non-compete and trade secrets lawyers are advising an employee who is preparing to transition from one employer to another, ensuring that the client’s intentions remain confidential is paramount.  Often, the overriding concern is making sure that the individual’s present employer does not discover the employee’s intentions before he or she is ready to “jump.”  For this reason, many of us have admonished individual clients over the years to be sure they do not communicate with counsel from their present employer’s telephones or computers.  A recent Formal Opinion issued by the ABA Standing Committee on Ethics and Professional Responsibility offers yet another reason for non-compete lawyers to be sure they offer this advice to clients. 

Formal Opinion 11-459 outlines a lawyer’s duty to advise an individual client about the dangers of communicating with counsel from the individual’s workplace.  It focuses on the fact that communications from an employer’s computer or telephone may be readily discoverable by the employer (both by policy and by technological tools), which may lead to a finding that the client and counsel have not taken adequate steps to ensure the confidentiality of their communications for privilege purposes.  The Opinion’s opening paragraph summarizes the Committee’s conclusions:

“A lawyer sending or receiving substantive communications with a client via e-mail or other electronic means ordinarily must warn the client about the risk of sending or receiving electronic communications using a computer or other device, or e-mail account, where there is a significant risk that a third party may gain access. In the context of representing an employee, this obligation arises, at the very least, when the lawyer knows or reasonably should know that the client is likely to send or receive substantive client-lawyer communications via e-mail or other electronic means, using a business device or system under circumstances where there is a significant risk that the communications will be read by the employer or another third party”.

Formal Opinion 11-459 at p. 1. 

In light of this Opinion, non-compete lawyers may wish to review their intake procedures for such matters.  An effective approach might include making it a point to tell individual clients in an initial discussion that they should only communicate with counsel from their personal cell or home phone, and that they should not access their personal email from their work computers if they are going to be communicating with counsel via that personal email account.  To memorialize this conversation, counsel may also consider adding some new language into their engagement letter for this type of matter, to focus the client’s attention on the need to preserve confidentiality of communications in order to maintain the ability to assert the protections of the attorney/client privilege.  Here is a sample with some key language in bold:

“Communications between clients and attorneys are generally privileged and cannot be inquired into by third parties.  That privilege may be lost, however, if you disclose the contents of otherwise privileged communications with your counsel, or if you do not take reasonable steps to protect the confidentiality of our communications.  You should refrain from disclosing to third parties the contents of any of the communications you have with us.  This includes refraining from oral disclosures as well as not permitting others to view copies of our written correspondence.  If we communicate by email, you should never forward our emails to anyone else.  In addition, you should never communicate with us from your present employer’s telephones or computers or from any public computer such as a library or hotel business center computer.  These systems are not likely to be secure and confidential.  Even accessing your personal web-based email account (such as your gmail, yahoo or other personal internet service provider) from a company-owned computer may result in inadvertently leaving the substance of those communications on the computer in a manner that is recoverable by your present employer.  This could lead to a court finding that you have waived the confidentiality of our communications.  As a result, you should only communicate with us using your personal phones or computers.  For the same reasons, you should not access any documents from us (such as Word documents, Excel spreadsheets, or PDFs) on anything other than a personal device.  These and any other practical steps you can take to ensure that our attorney/client communications are not disclosed to third parties will be invaluable in protecting your right to claim the full protections of confidentiality under the attorney/client privilege.”

Attorneys representing individual employees in transition may want to incorporate something along these lines into their intake procedures when representing clients who are still working for their soon-to-be-former employer.

Christopher P. Stief is the chair of Fisher & Phillips' Employee Defection & Trade Secrets Practice Group.  To receive notice of future blog posts either follow Christopher P. Stief on Twitter or on LinkedIn or subscribe to this blog's RSS feed.

Distinguishing Stengart v. Loving Care Agency, a California Appellate Court Holds That An Employee's E-mails With Her Personal Attorney Sent Through The Employer’s Workplace Computer Are Not Protected By The Attorney-Client Privilege

In a widely discussed decision issued last year, Stengart v. Loving Care Agency, the New Jersey Supreme Court held that an employee had a reasonable expectation of privacy in her e-mail communications exchanged with her personal attorney through her web-based, password-protected, Yahoo! e-mail account using her employer's computer.  

Recently, in Holmes v. Petrovich Development Co., LLC, a California appellate court ruled that e-mails sent by an employee to her attorney from a company computer were not privileged.  According to the appellate court’s opinion, plaintiff Gina Holmes started working for Petrovich Development Company in June 2004.  Ms. Holmes later told her supervisor, Paul Petrovich, that she was pregnant.  Ms. Holmes' subsequent communications with Mr. Petrovich regarding her pregnancy left her feeling as though her position was in jeopardy.  Mr. Petrovich shared his communications with Ms. Holmes with his colleagues, and when Ms. Holmes learned this she felt as though her rights were violated.  

Ms. Holmes then e-mailed her personal attorney using her employer’s email system and computer.  After sending these emails, she deleted them from her work computer.  She then quit her job and sued the company, alleging claims for hostile work environment harassment, constructive discharge, violation of her privacy rights, retaliation and intentional infliction of emotional distress.  The trial court granted the company’s motion for summary adjudication against the claims for hostile work environment, retaliation and constructive discharge.

The trial addressed whether Petrovich invaded Ms. Holmes' privacy rights and constituted intentional infliction of emotional distress.  Petrovich offered the e-mails between Ms. Holmes and her attorney to show she had not suffered emotional distress and, instead, filed the lawsuit on her attorney’s advice. 

The jury returned a defense verdict, which was affirmed by the appellate court.  It rejected several arguments made by Ms. Holmes that the e-mails should not have been allowed into evidence because they were privileged communications.  First, Ms. Holmes argued that she believed that she protected her communications by deleting the e-mails after they were sent.  Second, even though Petrovich had policies stating that (1) company computers were for company business only, (2) the company would periodically monitor its computers to make sure users were complying with the policy; and (3) employees had “no right of privacy ” with respect to any personal use of company computers, Ms. Holmes argued that Petrovich did not access or audit employee use.

In rejecting these arguments, the appellate court held that Ms. Holmes’ “belief was unreasonable because she was warned that Petrovich would monitor e-mail to ensure employees were complying with Petrovich’s policies, which informed Ms. Holmes she had no expectation of privacy in any messages she sent through Petrovich’s computer.”  Distinguishing Stengart v. Loving Care, the appellate court held : 

When Holmes e-mailed her attorney, she did not use her home computer to which some unknown persons involved in the delivery, facilitation, or storage may have access. Had she done so, that would have been a privileged communication unless Holmes allowed others to have access to her e-mails and disclosed their content. Instead, she used defendants' computer, after being expressly advised this was a means that was not private and was accessible by Petrovich, the very person about whom Holmes contacted her lawyer and whom Holmes sued. This is akin to consulting her attorney in one of defendants' conference rooms, in a loud voice, with the door open, yet unreasonably expecting that the conversation overheard by Petrovich would be privileged. 

The conclusion in Holmes can be harmonized with Stengart, which is good news for employers.  The key difference between these two cases is that Stengart involved the employee’s personal, internet-based and password protected e-mail account.  In contrast, the e-mail account at issue here was the employer’s e-mail account and system.  Consequently, while there may arguably be a greater expectation of privacy in the use of a personal e-mail account, there is a lesser expectation of privacy where the employee uses the employer’s e-mail account.  

When employees resign to join competitors, it is not uncommon for employers to review the former employees' workplace computers to determine whether trade secrets have been taken, restrictive covenants have been breached, or whether statutes like the Computer Fraud & Abuse Act have been violated.  Although these issues were not squarely reviewed by the the California Appellate Court, the decision is notable with these issues in mind.

Brent Cossrow is a member of Fisher & Phillips' Employee Defection & Trade Secrets Practice Group.  Mr. Cossrow's practice focuses on e-discovery and other electronically stored information issues.  As always, please feel free to share your thoughts and questions in the comment space below.

When employees resign to join competitors, it is not uncommon for employers to review the former employees' workplace computers to determine whether trade secrets have been taken, restrictive covenants have been breached, or whether statutes like the Computer Fraud & Abuse Act have been violated.  Although these issues were not squarely reviewed by the New Jersey Supreme Court in Stengart v. Loving Care Agency, Inc., the decision was eagerly anticipated by many with these issues in mind.  The New Jersey Supreme Court's decision to affirm the lower appellate court's decision has been a widely noted workplace privacy case hailed by many to have national implications.  In a unanimous opinion, the Supreme Court held that an employee had a reasonable expectation of privacy in her e-mail communications exchanged with her personal attorney through her web-based, password-protected, Yahoo! e-mail account using her employer's computer.

This decision is significant because it was generally understood that an employer has unfettered access to, if it does not own, the data residing on computers it issues to its employees. In one of the first state supreme court decisions to address employee cyber-privacy rights, the justices held that the e-mail communications were protected by attorney-client privilege. In an employee-centric opinion, the New Jersey Supreme Court criticized the employer's electronic communications policy for its ambiguity and not stating that web-based, password-protected e-mail communications were subject to employer review. The Supreme Court also directed the trial court to hold hearings to determine the appropriate sanction for the failure of the employer's attorney to promptly notify the court or the employee's attorney when the nature of the e-mail communications became clear.

While the opinion bears the hallmarks of a landmark employee privacy rights decision, a closer look at the Supreme Court's opinion reveals a precedent that is not as threatening to employers as it might appear, for several reasons:

o The holding of Stengart v. Loving Care relied on the attorney-client privilege, Stengart’s lack of understanding of computer systems, and Loving Care’s unclear electronic communications policy. Of these three factors, the sanctity of the attorney-client privilege was paramount. And while the privilege confers powerful legal protection, most employers will never find evidence of privileged communications during an investigation of an employee’s use of a workplace computer.  It is a rare occurrence. The majority of personal uses of workplace computers by employees does not involve privileged communications, and these uses were not addressed by the Supreme Court, which limited its analysis to the privileged e-mail communications. As a precedent therefore, Stengart v. Loving Care is like a fig leaf, providing slight but important protection of something superlatively private – and leaving everything else exposed.

o Stengart v. Loving Care is one of the only state supreme court opinions to review and approve of the practice of creating and investigating a forensic image of a hard drive used by a departing employee.

o Highlighting the importance of Stengart’s misunderstanding of computer technology ultimately will benefit employers.  

Just what effect this decision will have and to what extent it will be followed and expanded in other states remains to be seen.