Month: May 2009

I recently spoke with Thao Tiedt, a labor and employment partner at Ryan Swanson & Cleveland, PLLC, a mid-sized full service Seattle law firm. (Full disclosure: I’ve benefited from her incisive advice a number of times when I was wearing the hat of corporate counsel.) Our conversation focused on eDiscovery from the perspective of consequences when individual employees use company computers in ways not approved by their employer.

Bruce: Thao, I first asked you this question some years ago, but I’ll ask again so you can catch me up and share this information with a wider audience. When employees of a company use a company computer, even for personal purposes, who does the information belong to after it winds up on the company’s computer?

Thao: In other words, do employees have an expectation of privacy? Yes and no. In the workplace the employer has the right to take that expectation away through a variety of policies and practices. This includes email and voice mail. With telephone conversations, an employer can’t listen without permission of both the employees and others on the line. States’ laws vary; some states require that at least one person on the conversation has to give you permission to record it. But permission can be obtained through fair warning – you don’t have to get explicit permission, it can be tacit, as when a message is played announcing that a conversation may be recorded – when someone hears that and doesn’t hang up permission is implicit. Employees may be given a policy manual or an explicit waiver to sign that states that privacy is waived. If an employee refuses to sign, they can’t stay employed.

Bruce: What happens when employees try to remove information from a company computer?

Thao: People think they’re smart and they can make information go away. Here’s a good example: one of my clients is a company that received a demand for arbitration over alleged sexual harassment. So I had the company put a hold on all of the computers involved, including both the employee’s and the accused manager’s – in their cases by physically picking the computers up. Upon technical evaluation it appeared that the claimant had been wiping hers. But she failed to realize that the company had backup tapes for disaster recovery purposes. Also, this particular company has multiple branches so it has central email servers. And after interviewing co-workers, a hint of impropriety appeared. I asked a one of claimant’s co-workers “anything else we should know?” The co-worker showed me a cellphone picture sent by the claimant, showing the claimant nude from waist up, with the caption “does this change your mind?” Apparently she had wanted the co-worker to date her and he had refused. When we looked at the company email accounts we found lots of these pictures, which we could tell from the background were taken in the company bathroom. It turns out she had been spending a lot of time on dating sites while at work and sending multiple men the pictures.

Later we learned that someone had asked her: don’t you think you should be careful? She had answered no, someone in IT told me how to double-delete computer files.

After all of this information came out in the open her cause of action went away. Given her behavior it was clear that if her accused manager had in fact asked her to expose herself, as she claimed, she would have gladly done so.

This just goes to show: no one should think they can make digital information go away.

There are huge number of cases where the smoking guns are emails. Somehow people don’t think of emails as documents, they think of them as chit-chat. Far from it. For example, when training attorneys in our firm we teach them that emails are no different from formal letters sent to clients and should be handled with the same care.

Bruce: What about accessing web sites using work computers?

Thao: Of course web use can get traced back to inappropriate sites, like pornography severs for example. I actually had to go home to view a site that had been accessed by an employee on one occassion, because our firm’s own web filters are set so high I couldn’t do it from work. For a while I couldn’t order my own underwear online from work.

Anyway, it turned out this person was running a business on work time– the business of being web master for a porn site.

However, as a general rule an employee can conduct their own business on their lunch hour, as long as that isn’t a conflict with their employer in some fashion.

Bruce: I’ve read about studies that suggest employee productivity actually goes up when they can do a certain amount of personal work – scheduling doctors appointments and what not, from their work computer during work hours – because that flexibility leads to less tardiness and absenteeism and so forth. So how does an employer who believes this is true handle personal use of work computers?

Thao: Here’s what we say in our own [Ryan Swanson & Cleveland] employee manual: employees’ may make limited, incidental, responsible personal use of company computers.

Having said that, an employer can still intercept and log employee use of company computers. In the harassment case I mentioned, for example, we examined how both parties had used their computers. The accused manager was very uncomfortable with having attorneys review his work materials, but we needed to see his responses to her emails to make the company’s case. What we found didn’t support her case, but did lead us to caution him to stop unrelated inappropriate use of his work computer.

Bruce: What about when employees use their personal email account, like Gmail, from a work computer?

Thao: Does accessing email on company computer waive privacy protection? Yes. There is no expectation of privacy for personal email stored on company computer.

Bruce: How about a password for a personal email account, once it has been typed into a company computer?

Thao: Yes, if it’s on the work computer then it’s information that belongs to the employer.

Bruce: But can the employer use that information? What if they use the password to access an employee’s personal email account, like an AOL or Gmail account?

Thao: No. The employer can possess the password if it’s on the company’s computer, but they can’t use it to log into the personal email account.

Bruce: What about Google Gears, which makes local copies of personal email and Google documents on the computer being used, which might be a work computer?

Thao: Then the company has a right to see that information. Anything on the company computer is the company’s – if the company policy reads that way.

California sometimes has different views concerning privacy – they have a state constitutional right to privacy. But as long as companies have been up front with employees by notifying them that if information goes through a work computer, that information can be accessed by the company, then employer access to that information is allowed in California as well.

Bruce: When a lawsuit is threatened you send out a scary letter to employees telling them to avoid destroying evidence?

Thao: We send out a “scary letter” right away [to leave no doubt what is expected of people].

It can be the case that having electronically stored information collected by an outside vendor creates insulation against tampering and a better evidentiary chain of custody, even with intellectual property secrecy issues. Outside vendors can make good selections about what fits an eDiscovery inquiry.

What you don’t want is for opposing counsel to see something secret [and not responsive to a discovery request] that may be useful to their client in some way. If that happens it creates a question for that attorney about what their duty is to their client – to reveal or not to reveal that information – and then there’s the fact that you can’t get it out of your head once you’ve seen it. It will absolutely color your strategy down the road.

Also, concerning attorney-client privilege: privilege is waived whenever a privileged email is copied to anyone outside of “speaking agents of the company.” This happens all the time, even when recipients of privileged emails are warned. Forwarding emails is a hard habit to break.

Bruce: Symantec recently commissioned a study which revealed that a very high percentage of laid-off employees copy company information and take it with them when they go. What, if any, recourse does a company have when employees leave with info?

Thao: Here’s an example. One of my clients is a regional auto dealer association. A common problem they have is that new vehicle salespersons typically view the customers they sell to as “my customers” who they can “keep” after they move to a different dealership. Wrong – they are the dealer’s customers, not the salesperson’s. In addition, customer information is considered private under federal law. If someone captures that information but not because of a business transaction, for some other purpose, it violates Federal privacy law.

Bruce: What remedies are available to an employer in this situation? What can an auto dealer do if a new vehicle salesperson takes a customer list with them?

Thao: The dealer can file for an injunction telling a dealer not to use information that came from other dealers. When dealers do receive such information it won’t be profitable because an injunction is very expensive for them to defend as well as scary and distracting.

And if the company whose information was taken can prove actual damages, then they can receive money damages from the new employer for tortious interference with private information. For example, I had a case where a person thought they were going to be terminated, so they copied specifications for a technical piece of equipment and emailed to themselves. Then they changed information in the company computers regarding that equipment, which was very expensive for that company to correct. A new employer could be held liable for damages by accepting that information from the former employee.

Bruce: What about non-competition agreements – do those work?

Thao: A non-compete protects employer information that’s already in an employee’s head. It’s limited but it works. For example, it can say a vehicle sales employee can’t work in a dealership selling the same type of car in the same county, but usually can’t keep someone from completely working in the car business, or for any company within that county. It works as long as you don’t prevent the employee from working anywhere in the same business.

Bruce: Did you read about the Motorola ex-CFO who quit, apparently under some kind of cloud, then returned his company laptop with files wiped? He then accused the company of retaliation, so the company accused him of spoliation. What can an employer do in this situation? Can the court award sanctions against an ex-employee for destroying evidence?

Thao: Yes, most people don’t understand that computer files must be preserved whenever there is even a smell of dispute in the air. Might the court award money sanctions? Possibly. Or, in some extremely serious situations the judge can order that the offending party can’t defend itself; or that a party can’t pursue it’s lawsuit – case dismissed. It’s a form of inconsistent pleading – a claimant can’t resist providing information and pursue a remedy simultaneously.

Bruce: From what you have said today it sounds like data backups of one sort or another are a critical element for eDiscovery, at least in your practice.

Thao: Disaster recovery backups just make sense as a litigation backup data source when dealing with employees. But you need historical backups that are locked down so that they can’t be erased for a period of time during which they might be needed.

Archiving is another thing you can do. For example, the Puget Sound Automobile Dealers Association maintains an electronic archive of participating dealers’ employee policy manuals over the years which can be used as evidence in an employee dispute.

Bruce: Which brings us to a final thought. There’s a lot of company data — confidential customer data — in the hands of non-attorneys who don’t have the same paranoia about casually exposing it that attorneys like you and I do….

Thao: Yes, you have to have confidence in IT people that they won’t be trolling confidential information, that they will keep it confidential.