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“You’ve got mail” isn’t always a welcome phrase for companies that may have a disgruntled ex-employee, a dissatisfied customer or an antagonistic competitor seeking to inflict harm. Despite the damage that a barrage of hostile e-mails can cause to a company’s productivity, reputation or even its computer server, California law provides only a narrow set of legal tools for fending off such attacks. Less than a year ago, the California Supreme Court held in Intel Corp. v. Hamidi, 30 Cal.4th 1342, that a former employee who sent unsolicited e-mails to thousands of his former colleagues at Intel was not liable under a trespass to chattels claim. The California Supreme Court suggested, however, that other causes of action, including “defamation, publication of private facts or other speech-based torts,” and interference with contract, could address hostile e-mails. Earlier this month the 4th District Court of Appeal addressed, and ultimately rejected, the alternative claims suggested by the California Supreme Court. In Franklin v. Dynamic Details, Inc., 04 C.D.O.S. 1850, the court held that e-mails accusing a company and its principal of flouting intellectual property rights did not support defamation claims or claims for interference with contractual or prospective relationships. After Intel was decided, and before Franklin was handed down, the U.S. Congress and the California Legislature enacted legislation restricting unsolicited e-mail. Those laws, however, only apply to “commercial” e-mail. Hostile e-mails of the type that were the subject of Intel and Franklin are exempt from these statutes. Do the holdings in Intel and Franklin mean that California law is a dead-end for companies injured by hostile e-mails from former employees or other dissidents? Has California law failed to keep up with electronic communications? Is there any way for a company to stop hostile electronic communications that can’t be classified as unsolicited commercial e-mail? The California Supreme Court concluded in Intel v. Hamidi that trespass to chattels “does not encompass, and should not be extended to encompass, an electronic communication that neither damages the recipient computer system nor impairs its functioning.” The court concluded that the alleged harm to employee morale and the drain on company resources were caused by the content of the e-mails, not their effect on Intel’s computer system. While admitting that large quantities of unsolicited bulk e-mail might impair computer servers operated by Internet service providers, the court concluded that the injury caused by hostile e-mails is “entirely separate from the possession or value of personal property.” In Franklin, the court of appeal rejected libel and interference claims that the California Supreme Court endorsed in Intel as alternatives to trespass to chattels. The hostile e-mails in Franklin accused plaintiffs of misuse of copyrighted materials, violation of non-disclosure agreements and misrepresentation. Plaintiffs argued that the e-mails destroyed their relationship with key suppliers, yet the court denied their claims. It would be tempting to argue, as the dissent in Intel warned, that California law provides no remedy for injuries caused by hostile e-mails. But this would ignore the painstaking analysis in Franklin. Franklin did not reject plaintiffs’ claims as a matter of law, but instead concluded that the facts did not support their claims. The e-mails in Franklin accused the plaintiffs of violating U.S. copyright laws, plagiarizing proprietary information, breaching non-disclosure agreements and not respecting intellectual property rights. The key question was whether the e-mails were libelous because they contained false statements of fact that were not privileged under California Civil Code � 47(c). The 4th District concluded that two of the e-mails sent by the defendants were protected opinions based on fully disclosed (as opposed to implied, undisclosed) facts. The third e-mail, which stated that the plaintiffs were “intolerant of intellectual properties, copyrights and trade secrets,” was found to be “too vague to be actionable” as libel. Because all three e-mails were held not to be libelous, the 4th District did not decide the issue of whether the e-mails were privileged. Franklin also rejected claims based on interference with contract and interference with prospective economic advantage. Plaintiffs argued that they suffered harm after the e-mails were sent because a supplier stopped doing business with them. The testimony of the supplier’s principal, however, explained that the defendants’ e-mails had nothing to do with the supplier’s decision to sever its relationship with plaintiffs. Plaintiffs offered no competent evidence refuting the supplier’s statement. The court thus concluded that despite plaintiffs’ lost sales, plaintiffs had failed to prove causation. Therefore, while Franklin rejected the very claims the California Supreme Court suggested could address hostile e-mails, it supports the notion in Intel that e-mail transmitted through the Internet does not enjoy “unique immunity.” The court in Franklin assessed the e-mails in exactly the same manner as it would any other communications that are alleged to be libelous or alleged to have interfered with an existing relationship. For this reason, Franklin supports the Supreme Court’s conclusion that while trespass to chattels cannot be used to stop hostile e-mails, injuries caused by hostile e-mails can be addressed through other causes of action. Tom Kuhnle is a partner at Bingham McCutchen’s Palo Alto office (www.bingham.com). Todd Hardy is an associate in the same office. Both are litigators who focus on intellectual property matters. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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