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Although many large companies monitor the e-mail and Internet usage of their employees, there still tends to be a certain squeamishness on the part of employers in actually using the information. Employers often feel that, even though they have provided the computer, e-mail and Internet service, they are somehow breaking the law or violating the employee’s right to privacy by viewing what the employee may have (mistakenly) believed to be private communications. The 3rd U.S. Circuit Court of Appeals’ recent decision in Fraser v. Nationwide Mutual Ins. Co., 2003 U.S. App. LEXIS 24856 (3d Cir. Dec. 10, 2003) should disabuse employers of those fears. INDEPENDENT CONTRACTOR Richard Fraser was an independent insurance agent for Nationwide in the suburbs of Philadelphia. Although Fraser was an independent contractor, he had agreed to sell Nationwide’s products exclusively and he used Nationwide’s computer system for e-mail and other uses. Fraser was fired from selling Nationwide’s products in September, 1998. He claimed that his termination was caused by his criticism of the company in his capacity as an officer of the Nationwide Insurance Independent Contractor’s Association. He had also filed complaints against the company with the Pennsylvania Attorney General’s office and had worked to pass legislation that independent insurance agents could be terminated only for “just cause.” These activities, he argued, were protected by public policy and he claimed that he had been wrongfully discharged. This claim was unsuccessful under state law. E-MAIL SEARCH Nationwide explained Fraser’s discharge by relying on its discovery that he was undermining the company to its competitors and therefore, had been disloyal. Specifically, Nationwide learned that Fraser had drafted letters to two competing companies expressing dissatisfaction with Nationwide and seeking to determine whether the competitors would be interested in acquiring certain of his (and others) policies. The company became concerned that Fraser might also be revealing company secrets to its competitors. Nationwide’s associate general counsel then directed a systems expert to open Fraser’s e-mail in order to view the “to,” “from” and “re:” headers for relevant information. Nationwide’s general counsel testified during discovery that the e-mail search confirmed Fraser’s disloyalty. As such, his contract with the company was terminated. Fraser brought suit against Nationwide alleging various claims, including the aforementioned wrongful discharge action. He also claimed a violation of the Electronic Communications Privacy Act. He claimed that Nationwide’s actions in accessing his e-mail without his permission violated Title I of the ECPA, which prohibits “interceptions” of electronic communication such as e-mail. He also claimed that the company’s search of his e-mail violated Title II of the Act, which creates liability for accessing, without authorization, electronic communication while it is in “electronic storage.” ECPA VIOLATION? The primary issue in Fraser’s Title I claim was whether Nationwide had “intercepted” the e-mail when it accessed his e-mails in storage. The 3rd Circuit joined every other appellate court addressing the question in finding that there can be no “intercept” of an e-mail in storage, because the ECPA defines the term as requiring the interception be contemporaneous with the communication itself. As the 11th Circuit noted earlier this year is a case addressing similar issues, “There is only a narrow window during which an e-mail interception may occur — the seconds or mili-seconds before which a newly composed message is saved to any temporary location following a send commend. [Under these circumstances] interception of e-mail within the prohibition of [the ECPA] is virtually impossible.” United States v. Steiger, 318 F.3d 1039, 1050 (11th Cir. 2003). Fraser also alleged that Nationwide had violated Title II of the ECPA by reading his e-mail. Title II creates liability for a party that does not have authorization to access electronic communication in electronic storage or one that exceeds its authorization to do so. The district court granted summary judgment for Nationwide, finding that the e-mail system did not constitute “electronic storage” as defined by the statute. The 3rd Circuit affirmed on different grounds, passing on the question of whether the e-mail, which was saved on the server, was in “backup” storage (part of the definition of “electronic storage”). Instead, the court found that Nationwide was the “provider” of the “service” and “service providers may do as they wish when it comes to accessing communications in electronic storage.” This is an important decision for employers in affirming their legally unfettered access to the e-mail of employees who use the employer’s e-mail system. It is one of the few cases where an employer acknowledged reading e-mail and making the decision to terminate based on information found. Employees, on the other hand, need to understand that what they say on e-mail may as well be put in a memo and laid on the desk of their supervisor as the information can, and sometimes will, be used in making employment decisions. Sidney R. Steinberg is a shareholder in the business law and litigation department of Post & Schell, (www.postschell.com). He concentrates his national litigation and consulting practice in the field of employment and employee relations law and may be reached at [email protected].

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