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Businesses operating in New York face a wide variety of employee-related Internet concerns for which the law is continuing — and in some instances, just beginning — to develop. These range from so-called cyberslacking, where employees surf the Web at work when they should be focusing on their duties, to blogging, where employees use on-site or home computers to post thoughts, opinions and perhaps even confidential corporate information to the potential legal detriment of their employers. Now, a recent New Jersey appellate court ruling has added another issue that companies must consider. In Doe v. XYC Corp., [FOOTNOTE 1] the court held that an employer that is on notice that one of its employees is using a workplace computer to access pornography, possibly child pornography, has a duty to investigate the employee’s activities and to take prompt and effective action to stop the unauthorized activity, lest it result in harm to innocent third parties. Although the decision directly applies only in New Jersey, employers elsewhere, including in New York, are advised to take heed. The court’s imposition of the duty on employers was based on strong public-policy considerations that courts in other jurisdictions may well find significant. Indeed, the Doe court even emphasized that, “[n]o privacy interest of the employee stands in the way of this duty on the part of the employer.” Doe involved a company headquartered in Somerset County, N.Y., that employed about 250 people, including at least one who was an accountant who worked in a small cubicle located along a wall that also contained the corner offices of the director of finance and controller. The cubicles had no doors and opened into a hallway. As the court explained, sometime in 1998 or 1999, the company’s Internet services manager informed the senior network administrator that he had noted, on reviewing computer log reports, that the accountant had been visiting pornographic sites. They told the accountant to stop the activity but did not inform any of their supervisors. In early 2000, the accountant’s immediate supervisor also told the senior network administrator that the accountant was visiting inappropriate sites. The accountant’s supervisor asked the administrator if he could track the accountant’s Internet usage and the administrator conducted a limited investigation by reviewing computer logs for a day or two and isolating those visited by the accountant. The administrator had the ability to open those sites but apparently did not do so, nor did he print out a list of the sites. Based on the site titles, however, he recognized them as pornographic. The administrator advised the accountant’s immediate supervisor and the director of network and PC services about the results of his investigation, but was admonished not to access any employee’s logs, including that of the accountant. Around December 2000, another accounting department employee told her manager that the accountant was acting strangely by shielding his computer screen and quickly minimizing it so others could not see what he was doing. This employee said she saw the accountant act in this manner two or three times a day. The following March, she discussed the accountant’s computer activities with the accountant’s supervisor, telling him that while walking past the accountant’s cubicle she had seen a picture of a woman in a bikini with “very large breasts” in a “sultry pose” on the accountant’s computer screen. That same month, the accountant’s supervisor went into the accountant’s cubicle during lunch when he was out, clicked on the “websites visited” on his computer, and discovered that the accountant had visited “various porn sites” and printed out what was displayed on the screen � including one that specifically spoke about children: “Teenflirts.org: The Original Non Nude Teen Index.” Thereafter, the supervisor met with the accountant and told him that there had been reports of inappropriate computer usage. He told the accountant to stop and the accountant said he would. The supervisor confirmed his conversation with the accountant in an e-mail. The accountant appeared to stop, but a short while later the supervisor noticed that he had started again. Nevertheless, he told no one and left on a business trip, not returning until after the accountant was arrested on child pornography charges. The accountant’s wife later brought suit against the company. Her complaint alleged that, for about five months prior to his arrest, the accountant had been secretly videotaping and photographing her 10-year-old daughter at their home in nude and semi-nude positions. The plaintiff also pointed out that the company’s supervisory personnel were aware that the accountant had a young step-daughter because the girl had been brought to work and had attended company outings. She argued that it had a duty to do more than it did with respect to her husband’s use of his office computer to access child pornography. The trial court granted summary judgment in favor of the defendant employer. It pointed out that there was no evidence that the company had been aware that the accountant was viewing child pornography and it stated that the company was under no duty to monitor the private communications of its employees. The trial court concluded that the employer had “not breached a duty, was not negligent, did not act in an unforeseeable fashion and did not actually or proximately in any way, cause the injuries” about which the plaintiff complained. The plaintiff appealed. APPELLATE RULING In its decision, the appellate court analyzed a number of issues. It first found that the employer had the ability to monitor the accountant’s use of the Internet on his office computer. The court noted that the company had conceded in response to an interrogatory that it “could have implemented software that would have permitted it to monitor employees’ activity on the Internet.” Moreover, it added, on at least two occasions the company had conducted a limited investigation of the accountant’s computer use via its network’s daily log system and while examining the computer’s “websites visited.” This demonstrated the company’s ability to monitor the accountant’s Internet activity, the appeals court declared. The court then analyzed whether the accountant’s privacy interest trumped his employer’s right to monitor his computer use at work, finding that it did not do so. It noted that the question in this case was whether the employer could monitor the accountant’s use of his workplace computer in the context of civil litigation brought by a third party claiming injury resulting from those activities. The court pointed out that the company had an e-mail policy that stated that “all messages composed, sent or received on the e-mail system are and remain the property of the [employer]. They are not the private property of any employee.” Further, the company reserved the “right to review, audit, access and disclose all messages created, received or sent over the e-mail system as deemed necessary by and at the sole discretion of [employer].” Concerning the Internet, the policy stated that employees were permitted to access sites that “are of a business nature only” and required that violations of the policy be reported to the company. Given these circumstances, the court ruled that the accountant had “no legitimate expectation of privacy that would prevent his employer from accessing his computer to determine if he was using it to view adult or child pornography.” In the court’s view, the next issue was whether the employer had reason to investigate the accountant’s use of his computer. It quickly resolved this question, pointing out that the employer, through its supervisory/management personnel, was on notice that the accountant was viewing pornography and, indeed, that this included child pornography. The appellate court added that based on the company’s policy, such use was certainly not “of a business nature” but was, rather, “for improper purposes.” Moreover, the court continued, it could “reasonably assume” that the requirement that violations be reported was not simply intended as an idle gesture but was intended to trigger an investigation so that it could be determined if, according to the policy, the offending employee needed to be disciplined. Thus, the court found, the employer was on notice of the accountant’s activities and was under a duty to investigate further. Such an investigation “would have readily uncovered the full scope of [the accountant's] activities,” the court declared. It therefore imputed to the company knowledge that the accountant was using his work computer to access pornography. QUESTION OF DUTY Having found that the company had actual or imputed knowledge that the accountant was viewing child pornography on his computer, the appeals court then analyzed whether the company was under a duty to act, either by terminating the accountant or reporting his activities to law enforcement, or both. It held that such an obligation exists. The court noted it is a crime to possess or view child pornography. [FOOTNOTE 2] Given the public policy against child pornography, and the fact that “public policy favors the exposure of crime,” the appellate court held that the employer “had a duty to report [the accountant's] activities to the proper authorities and to take effective internal action to stop those activities, whether by termination or some less drastic remedy.” In reaching this conclusion, the court noted that the Restatement (Second) of Torts �317 places upon an employer the duty to control an employee while the employee is acting outside the scope of his employment to prevent the employee from “intentionally harming others or from so conducting himself as to create an unreasonable risk of bodily harm to them.” In this case, the court explained, the company was under a duty to exercise reasonable care to stop the accountant’s activities, specifically his viewing of child pornography, which by its very nature has been deemed by the state and federal lawmakers to constitute a threat to “others”; those “others” being the children who are forced to engage in or are unwittingly made the subject of pornographic activities. The court rejected the company’s argument that a “special relation” had to exist between the employer and the person who is likely to be harmed. The court continued by observing that all of the requirements for liability under �317 were present: The accountant was “using a chattel” of the employer and the employer both knew or had reason to know that it had the ability to control the accountant and knew or should have known of the necessity and opportunity for exercising such control. Under these circumstances, it found that a risk of harm to others was “reasonably within the [employer's] range of apprehension.” Accordingly, the court rejected the trial court’s conclusion that the employer had no knowledge that the accountant had “engaged in any conduct that would cause a person to have reasonable cause to believe that [the plaintiff's daughter] had been subjected to child abuse or acts of child abuse.” On the contrary, it ruled, the record and reasonable inferences therefrom supported the conclusion that the employer “had knowledge that [the accountant] was engaging in activities that posed the threat of harm to others.” STEPS TO TAKE The strong decision by the New Jersey court suggests it would be prudent for businesses operating in New York to take appropriate steps to limit the liability they might face in the event employees mis-use office computers to view child pornography. As the ruling suggests, employers should consider taking the following actions: � Develop policies barring the use of computers for improper purposes and making clear that the employer owns the computer system; � Require reporting of improper computer usage; � Monitor Internet sites to determine whether employees are viewing or sending child pornography; � Understand reporting requirements under the law in the event an employee is discovered trafficking in child pornography. Shari Claire Lewis, a partner at Rivkin Radler, specializes in litigation in the areas of Internet, domain name and computer law as well as professional liability and medical device and product liability. ::::FOOTNOTES:::: FN1 2005 N.J. Super. Lexis 377 (N.J. App. Ct. Dec. 27, 2005). FN2 18 U.S.C.A. �2252, �2256(8)(B).

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