To borrow a classic line from the movie “Cool Hand Luke”: What we’ve got here is a failure to communicate. When the city of Ontario, Calif., failed to write an airtight, unequivocal policy addressing text messaging and employee privacy, it stepped into a quagmire that has the potential to ensnare many employers in an age of exploding electronic communications.

In June, the 9th Circuit ruled in Quon v. Arch Wireless that under the Fourth Amendment employees have a reasonable expectation of privacy in the content of text messages they send using equipment and service their employers provide. The court also held that Arch Wireless violated the Stored Communications Act (SCA) when it disclosed to the city the contents of text messages without the permission of the users, including Ontario Police Sgt. Jeff Quon. Quon had sued both the city and the wireless company over disclosure of his personal text messages.

“Quon is a wake-up call for employers to consider that technology is changing rapidly,” says Mary Ellen Callahan, a partner in Hogan & Hartson.

The case also illustrates how electronic communications law is just past its infancy and undergoing significant growing pains.

“The challenge for employers is that technology is changing so fast, while the laws regulating monitoring have not been amended since 1994 when most of today’s commonplace technology was exotic, if it existed at all,” says Philip Gordon, chair of Littler Mendelson’s privacy and data protection practice group.

Gordon notes that by the time court decisions are published, the technology at issue often is outdated. “The Quon case,” he says, “is a perfect example. How many people do you know who use a two-way pager with text-messaging capability in today’s world?”

Unreasonable Searches
But in October 2001, when Arch Wireless contracted to provide wireless text- messaging services for Ontario, the technology was cutting edge. The city received two-way alphanumeric pagers, which it distributed to its employees. Ontario had no official policy addressing text messaging but did have a general “Computer Usage, Internet and E-mail Policy,” which stated that the city reserved the right to monitor all network activity “with or without notice” and that “users should have no expectation of privacy or confidentiality when using these resources.”

Although the city had no official policy governing use of pagers, it did have an informal verbal policy. Employees were told that if they exceeded a limit of 25,000 characters per month for texting, they could pay the overage charge. If they chose not to pay, their messages could be audited to determine whether the overage had been used for personal matters.

Quon paid for overage for several months and no further inquiries had been made. But when he exceeded the limit in August 2002, Ontario’s police chief asked a subordinate to determine whether the messages were exclusively work-related or personal. At the city’s request, Arch Wireless provided transcripts of Quon’s messages, and the supervisor read the messages without Quon’s knowledge or consent. The transcripts revealed that many of Quon’s messages were personal and some were sexually explicit. Quon sued Arch Wireless in the Federal District Court for the Central District of California in May 2003 for violating the SCA and the city for violating the Fourth Amendment. The court ruled against Quon, who then appealed to the 9th Circuit.

The plaintiff argued that reading a person’s text message “is like somebody trying to eavesdrop on your phone conversations,” says Dieter C. Dammeier, a partner at Lackie & Dammeier, which represented Quon. “Nowadays people text message. It’s a new wave of communication. Hopefully, this decision is going to be the trend that keeps them more private.”

The U.S. Supreme Court set the stage for the Quon decision in O’Connor v. Ortega (1987) when it held that public employees can have a Fourth Amendment expectation of privacy in their desk or other work-related areas. The court said that “if less intrusive methods were feasible, or if the depth of the inquiry or extent of the seizure exceeded that necessary for the government’s legitimate purposes … the search would be unreasonable.”

The 9th Circuit agreed. “There were a host of simple ways to verify the efficacy of the 25,000-character limit [if that, indeed, was the intended purpose] without intruding … on Fourth Amendment rights,” Judge Kim McLane Wardlaw wrote.

Policy Conundrums
Ultimately, the root of the city’s problem was failure to communicate on multiple levels.

“The lesson from this case is make sure you update your policies so that they take into account the modern conveniences and the reality of what your employees do,” says Francoise Gilbert, CEO of the IT Law Group in Palo Alto, Calif. “You cannot expect your personnel to read between the lines. If you want a policy to be applicable, in all fairness it should be clear.”

That includes ensuring that all policies are consistent. “First, Ontario got in trouble because it has this very specific electronics communications policy, and second because it has this informal policy,” Callahan says. “The 9th Circuit said employees didn’t know which to rely on, the informal policy or the written policy that didn’t address text messages.

According to Gordon, the city could have avoided the privacy problem by requiring Quon to sign a consent form permitting the wireless company to disclose his text messages as a condition for receiving the pager. In addition, the city should have amended its e-mail policy to apply to text messages.

Gilbert agrees. “Look at your policies; make sure they’re clear, precise and that they address the reality of today’s electronic communications,” she says.