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An employer’s decision to dig through an employee’s e-mails in computer storage does not violate any provisions of the Electronic Communications Privacy Act (ECPA) since the law bans an “interception” only if it occurs at the time of transmission and exempts the owner of an e-mail system from any claim alleging an illegal “seizure” of stored e-mails, a federal appeals court has ruled. In Fraser v. Nationwide Mutual Insurance Co., the U.S. Court of Appeals for the 3rd Circuit ruled that since Richard Fraser’s e-mails were stored on the Nationwide Insurance Co.’s system, any search by the company was authorized by an express exemption in the ECPA for e-mail service providers. The unanimous three-judge panel also rejected Fraser’s claim that he was wrongfully discharged in September 1998 in retaliation for his lodging complaints against Nationwide with state authorities and his efforts to get legislation passed that would have protected agents like himself from being fired for anything less than just cause. The court held that whistleblower laws protect only public employees and that Fraser’s case did not fall into any of the narrow public policy exceptions to the at-will employment doctrine recognized by the Pennsylvania courts. Significantly, the court held that the First Amendment cannot be cited in a wrongful discharge claim by private-sector workers as the grounds for a public policy exception. But Fraser didn’t suffer a total loss � the court revived one of his claims in which he is seeking more than $200,000 in deferred compensation he said he was denied after he started working for another insurer. In the suit, Fraser claimed Nationwide terminated him because he filed complaints with the Pennsylvania attorney general’s office regarding Nationwide’s allegedly illegal conduct, including its discriminatory refusal to write car insurance for unmarried and new drivers. (As a result of Fraser’s efforts, Nationwide was required to pay fines and enter into a consent order, and the Pennsylvania attorney general’s office wrote Fraser a thank-you letter, 3rd Circuit Judge Thomas Ambro noted.) He also claimed that he was terminated for criticizing Nationwide while acting as an officer of the Nationwide Insurance Independent Contractors Association and for attempting to obtain the passage of legislation in Pennsylvania to ensure that independent insurance agents could be terminated only for “just cause.” But Nationwide argued that it terminated Fraser because he was disloyal, noting that he drafted a letter to two competitors expressing the NIICA’s dissatisfaction with Nationwide and seeking to determine whether they would be interested in acquiring the policyholders of the dissatisfied agents. Fraser claims that the letters were drafted only to get Nationwide’s attention and were not sent. But Nationwide said that when it learned of the letters, it became concerned that Fraser might also be revealing company secrets to its competitors and decided to search its main file server � on which all of Fraser’s e-mail was lodged � for any e-mail to or from Fraser that showed similar improper behavior. In March 2001, Judge Anita Brody of the U.S. District Court for the Eastern District of Pennsylvania dismissed Fraser’s suit after concluding that none of his claims over the e-mail search were valid and that his wrongful discharge claim failed because he didn’t qualify for any exception to the at-will employment doctrine. Now the 3rd Circuit has upheld most of Brody’s rulings. On the claim relating to the search of his e-mails, Judge Ambro found that Brody was correct in holding that Title I of the ECPA prohibits only those “intercepts” that occur at the time of transmission. “Every circuit court to have considered the matter has held that an ‘intercept’ under the ECPA must occur contemporaneously with transmission,” Ambro wrote in an opinion joined by 3rd Circuit Judges Dolores Sloviter and Edward Becker. Ambro found that Title II prohibits “seizures” of stored e-mails, but includes an exception for seizures authorized “by the person or entity providing a wire or electronic communications service.” Although no federal appellate court has yet interpreted the exception, Ambro found that a judge in the District of Nevada held in Bohach v. City of Reno that the Reno Police Department could, without violating Title II, retrieve pager text messages stored on the police department’s computer system because the department “is the provider of the service” and “service providers [may] do as they wish when it comes to accessing communications in electronic storage.” Adopting the Bohach court’s reasoning, Ambro found that “because Fraser’s e-mail was stored on Nationwide’s system (which Nationwide administered), its search of that e-mail falls within Section 2701(c)’s exception to Title II.” Turning to Fraser’s wrongful discharge claim, Ambro found that Pennsylvania courts have recognized only three limited circumstances in which public policy will trump employment at-will. Under the Pennsylvania Superior Court’s 1988 decision in Hennessy v. Santiago, an employer cannot require an employee to commit a crime and fire the employee for refusing to do so; cannot prevent an employee from complying with a statutorily imposed duty; and cannot discharge an employee when specifically prohibited from doing so by statute. Fraser’s lawyer, James Wiles, argued that his case fits within Hennessy‘s first two exceptions because Nationwide fired him for refusing to commit a crime and for his attempt to comply with a statutorily imposed duty. Ambro disagreed, saying there was no evidence that Nationwide directed him to commit any crime and that Fraser could not point to any statutory duty to report Nationwide’s violations of the law. Wiles also cited the 3rd Circuit’s 1983 decision in Novosel v. Nationwide Insurance Co., in which the court held that firing an employee for his refusal to participate in a political lobbying effort contravened public policy and therefore was impermissible. Under Novosel, Wiles argued, the First Amendment limits an employer’s discretion to fire at-will employees. But Ambro found that the 3rd Circuit has already rejected that argument and predicted that the Pennsylvania Supreme Court “would not look to the First Amendment as a source of public policy when there is no state action.” “We have essentially limited Novosel to its facts � a firing based on forced political speech,” Ambro wrote. But Ambro found that Brody may have erred when she dismissed Fraser’s claim for deferred compensation. Fraser’s agent’s agreement contained a “forfeiture for competition” provision that provided that an agent forfeits deferred compensation by becoming associated with another insurance business in a 25-mile radius within one year of cancellation of the agreement. Fraser claimed that, because of financial hardship, he was forced to seek work with another insurance company and, as a result, forfeited several hundred thousand dollars in deferred compensation. Brody held that the provision was enforceable, but Fraser argued on appeal that it was void because his termination was involuntary and inequitable and because forfeiture is disfavored in Pennsylvania. Ambro found that, at the time of Brody’s ruling, she did not have the benefit of the Pennsylvania Supreme Court’s recent opinion in Hess v. Gebhard & Co. Inc., in which the justices held a forfeiture-for-competition provision invalid as applied. “While Hess involved a quite different situation � an insurance company that had sold its business was attempting to enforce a restrictive covenant not to compete even though it had no ongoing operating interest in the insurance business � the decision was written in broad terms,” Ambro wrote. “Because the District Court did not have the benefit of Hess, we remand Fraser’s forfeiture-for-competition claim to it to apply the Hess analysis. On remand, the court will need to balance the interests Nationwide seeks to protect (if any) against the harm to Fraser,” Ambro wrote. Shannon P. Duffy is the federal courts reporter at The Legal Intelligencer, the American Lawyer Media newspaper in Philadelphia, where this article first appeared.

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