New Court of Appeal Decision Highlights Importance of Having Current Employee Handbook and Electronic Communications Policy

A new decision from the California Court of Appeal found that emails sent between an employee and her attorney were not confidential because the emails were sent from a company computer and the employee was informed, through an employee handbook, that emails were not private and could be monitored.

Executive Summary

In Holmes v. Petrovich Development Co., Inc., 2011 WL 117230 (Jan. 13, 2011), a former employee brought a lawsuit against her boss and her former employer for harassment, retaliation, wrongful termination, violation of the right to privacy, and intentional infliction of emotional distress. The defendants obtained a series of emails the employee had sent to her attorney about the dispute from her company computer. The employee argued that the emails were privileged and confidential communications with her attorney that could not be used by the defense in court. The trial court disagreed, allowing the emails to be shown to the jury at trial.

The California Court of Appeal agreed, finding that the emails between plaintiff and her attorney were not confidential communications between a client and her lawyer and thus properly admitted as evidence in court. Even though the emails would have been confidential if they had been sent from plaintiff’s home, she was aware of, and had agreed to, a company policy in the employee handbook stating that emails would be monitored and that there was no right to privacy in the information sent. According to the court, this was “akin to consulting her lawyer in one of defendant’s conference rooms, in a loud voice, with the door open,” yet expecting the conversation to be confidential. The court also affirmed the trial court’s decision to dismiss plaintiff’s claims for harassment, retaliation and wrongful termination based on pregnancy.

Practical Implications for Employers

Many employers shy away from keeping handbooks up-to-date or even having one. This case reinforces the importance of having a current employee handbook with clear policies regarding company property and electronic communications, coupled with an agreement from employees that they have read the handbook and agree to follow it. In this case, the handbook clearly advised plaintiff of company monitoring and lack of privacy, a policy to which plaintiff agreed, thus negating any expectation of privacy and making the emails between her and her attorney discoverable in court.

Detailed Summary of Holmes v. Petrovich Development Co., Inc.

Plaintiff employee worked as an executive assistant for Petrovich Development Company. When plaintiff began her employment, she read and signed the company’s employee handbook. The handbook contained several provisions relating to use of the company’s computers and email. Specifically, the handbook prohibited computer use for personal purposes, warned that the company would monitor computers, including that it might “inspect all files and messages . . . at any time,” and explicitly advised employees that they had no right to privacy with respect to information or messages created on company computers.

A month after she was hired, plaintiff told her boss that she was pregnant, and that she planned to continue to work until her due date, after which she would take maternity leave for six weeks. Plaintiff’s boss sent her an email regarding planning for her replacement during her maternity leave, which led to several emails between the two in which plaintiff defensively offered details of her pregnancy and suggested that she was being terminated. Her boss, fearing she was going to quit, forwarded the emails to three employees who handled personnel matters, as well as in-house counsel. The conversation ended a few days later on an amicable note, with both agreeing they wanted to continue to work together and put the matter behind them.

The same day, plaintiff learned that her boss had forwarded their email conversation to the three employees and in-house counsel. She then used the company computer to email an attorney, telling her that her boss was making work unbearable, that she was being treated differently due to her pregnancy, and that she was in a hostile environment. She also asserted that her boss had made her email to him “common reading material for employees,” and that she was made to feel like an outcast. The following day, after meeting with her attorney, plaintiff sent an email to her boss explaining that he left her no choice but to quit.

Plaintiff then brought a lawsuit against her boss and the company for sexual harassment, retaliation, constructive wrongful termination, violation of the right to privacy, and intentional infliction of emotional distress. The trial court granted defendants’ motion for summary adjudication on the discrimination, retaliation and wrongful termination claims. After a trial for the remaining claims of violation of privacy and intentional infliction of emotional distress, the jury found in favor of defendants. Plaintiff appealed, arguing that the trial court should not have granted summary adjudication in favor of defendants. She also argued that the jury verdict should be reversed because her emails to her attorney were privileged and therefore should not have been admitted in evidence.

The California Court of Appeal affirmed both the trial court’s grant of summary adjudication and the jury verdict. First, the emails between plaintiff and her attorney were not confidential communications between client and lawyer, and thus properly admitted as evidence in court. The communications were not protected by the Evidence Code—which states that there is no attorney client privilege if the client is aware that the communications are disclosed to a third party—because plaintiff was aware of the company policy that emails would be monitored and there was no right to privacy in the information sent. While plaintiff’s emails would have been protected had she sent them from her home computer, the electronic communications in this case were sent (1) using means belonging to the company, (2) after the company had advised plaintiff that the communications were not private, could be monitored and were for business purposes, and (3) with plaintiff’s knowledge and agreement to these terms. According to the court, this was “akin to consulting her lawyer in one of defendant’s conference rooms, in a loud voice, with the door open,” yet expecting the conversation to be confidential.

The court of appeal rejected several arguments made by plaintiff to show that she had a reasonable expectation of privacy in her emails, including (1) drawing parallels to cases involving Fourth Amendment searches and seizures, (2) the use of personal email at a company without clear computer policies, (3) asserting that she used a password to access her computer and personal email and deleted all sent emails, and (4) that she never knew of anyone inspecting her computer. Here, the company handbook clearly advised plaintiff of monitoring and lack of privacy, a policy to which plaintiff agreed, thus negating any expectation of privacy. Thus, plaintiff had no legitimate reason to believe that the company computer was a means by which to communicate any confidential information to her attorney.

For the same reasons, the court of appeal held that the trial court did not err in denying plaintiff’s motion for discovery sanctions because defense counsel had refused to return the emails to plaintiff. Furthermore, the trial court did not err in giving the jury a protective admonishment assuring that the emails were not privileged. The instruction did not, as plaintiff argued, undermine the invasion of privacy claim because her cause of action was not premised on the emails to her attorney, but rather on the emails forwarded from her boss to other employees.

Second, with regard to the summary adjudication, the court of appeal agreed that there was no evidence of a hostile work environment to support plaintiff’s claims for harassment and constructive discharge because her co-workers stopped asking about her pregnancy upon her request, and the emails from her boss only showed his concern about coordinating her maternity leave. None of the isolated incidents plaintiff described were sufficiently sever to alter the conditions of her employment. Summary adjudication was also appropriate for her retaliation claim, as there was no evidence of any adverse employment action by her boss; to the contrary, he assured her that she wasn’t being fired and that they would work things out. The court of appeal rejected plaintiff’s argument that her boss retaliated by forwarding her email, as there was no clear request in her email to keep the exchange private.