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New Jersey and Stengart: Perfect Together?

So what is all the fuss about Stengart v. Loving Care Agency, Inc. et al.?  Why are eDiscovelebrities and employment lawyers alike watching the case so closely?  Why should YOU be watching? Privacy! (And eDiscovery, of course)

“It” (Stengart, the fuss, the Supreme Court of New Jersey, this post, all this blog attention) all boils down to whether this employee had a reasonable expectation of privacy in emails between the employee and her lawyer sent and received (during work hours) using the employer’s computer and IT systems.

According to the trial court, Stengart did not have a reasonable expectation of privacy and the emails were properly retrieved and used by the employer and its lawyers in defense of the lawsuit.  According to the appeals court, not only did she (have a reasonable expectation of privacy), but also the appeals court took issue with the way the company lawyers handled the situation and queried whether the lawyers acted inappropriately when they retrieved and used these emails – and whether they should be sanctioned and/or thrown off the case.  Ouch!

This case is serious stuff, my friends, for lawyers, employees, and employers alike.  For those new to the case, here are some key elements of the Stengart line of cases for you to consider as the whole world (and blogosphere) awaits a ruling by the Supreme Court of New Jersey on the issues both the trial and appeals courts addressed and ruled upon.

The Facts (in a nutshell)

Loving Care Agency (the defendant in the case) is in the business of providing home care services for children and adults. The plaintiff, Maria Stengart, was its Director of Nursing for all of Loving Care’s branches as well as the Branch Manager at Loving Care’s Fort Lee office. Ms. Stengart was also one of the first two employees when Loving Care first opened for business in 1994.

Loving Care maintains an employee handbook which is distributed to all employees and which is also available to employees electronically via Loving Care’s servers. During Ms. Stengart’s tenure as Director of Nursing and Branch Manager for Loving Care, she assisted in the creation and distribution of the employee handbook. Among other things, the handbook governs an employee’s use of Loving Care’s computers and other technology resources. Under a section entitled “Electronic Communications,” the handbook provides, among other things:

  • Technology resources are considered company assets.
  • Email and voicemail messages, internet use and communication, and computer files are considered part of the company’s business and client records. Such communications are not to be considered private or personal to any individual employee.
  • The principal purpose of email is for company business communications. Occasional personal use is permitted; however, the system should not be used to solicit for outside business ventures.
  • Certain uses of the email system are specifically prohibited, including but not limited to job searches or other employment activities outside the scope of company business.

During her employment at Loving Care, Ms. Stengart was provided with a company-issued laptop computer and assigned a Loving Care email account for business use. She also maintained a personal email account through Yahoo. Ms. Stengart occasionally accessed her password-protected Yahoo account to write emails during work hours on her company-issued laptop.

In December 2007, Ms. Stengart resigned from Loving Care. Two months later, she filed a lawsuit against Loving Care alleging that the hostile work environment had led to her constructive discharge. In April 2008, Loving Care’s attorneys in the employment lawsuit caused to have made an image of Ms. Stengart’s company laptop computer hard drive. The image preserved the electronic information contained on her employer-issued laptop. The hard drive was then sent to a company that could restore and recover deleted information located on the hard drive.

The Legal Path

eDiscovery: In October 2008, Loving Care served plaintiff its Answers to Ms. Stengart’s first set of interrogatories. In response to an interrogatory, Loving Care stated that it had obtained information contained in “email correspondence from Ms. Stengart’s office computer on December 12, 2007 at 2:25 p.m.” between plaintiff and her lawyer. This email was uncovered by the company hired to restore and recover deleted information located on the hard drive of plaintiff’s employer-issued laptop. The email in question was sent from Ms. Stengart’s password protected Yahoo account to her lawyer.

Loving Care’s answer to this interrogatory prompted Ms. Stengart to demand that all emails between her and her lawyer held by Loving Care be returned or destroyed. She claimed that the attorney-client privilege protected all such emails. Loving Care refused to return or destroy the emails, claiming that the content of the emails was not protected by the attorney-client privilege because Ms. Stengart waived the privilege by using Loving Care’s computer and server during business hours to make the communication. Ms. Stengart thereafter filed an Order to Show Cause alleging Loving Care’s attorneys breached her attorney-client privilege when Loving Care recovered and retained email correspondence made between her and her lawyer.

The trial court: The court determined that Loving Care’s policy (as detailed above) placed plaintiff on notice that all of her internet-based communications are not to be considered private or personal. In addition, Loving Care’s policy put employees on notice that the technology resources made available to employees were to be used for work-related purposes, particularly during business hours. The court found that the company’s policy adequately warns employees that there is no reasonable expectation of privacy (not outright prohibition of use) with respect to any communication made on company issued laptop computers and servers, regardless of whether the email was sent from Ms. Stengart’s work email account or her personal web-based email account. It was with Loving Care’s technology resources, laptop computer, and company time that Ms. Stengart communicated with her lawyer.

Thus, the court found that when Ms. Stengart decided to use company time, equipment, and resources to communicate with her lawyer, she did so with knowledge that such use would not be personal or private to her. Ms. Stengart’s choice of using her employer’s resources to communicate with her lawyer was her voluntary choice; and the court held that it constitutes a waiver of her attorney-client privilege.

The appeals court: The appeals court reversed the trial court and remanded the case.  The appeals court held that employees have a reasonable expectation of privacy in personal communications on a company owned computer. In sum, it held that a policy purporting to transform all private communications into company property “merely because the company owned the computer used to make private communications“ furthers no legitimate business purpose.

The appeals court concluded reversal of the trial court by addressing the issue of attorney discipline for the company’s law firm that uncovered and kept the emails. The appeals court determined that the law firm violated New Jersey Rule of Professional Conduct 4.4(b) because the lawyers failed to cease reading and examining the emails upon discovery and failed to notify plaintiff’s lawyer promptly of their discovery. The appeals court ultimately determined that whether the company’s attorneys should be disqualified is a matter for resolution upon remand to the trial court.

Where The Case Stands, Today

On July 29, 2009, the Supreme Court of New Jersey granted a motion for leave to appeal the appellate division ruling.  See 200 N.J. 204 (2009).  On December 2, 2009, the Court heard oral argument on the case.  You may view the oral argument webcast at:   http://njlegallib.rutgers.edu/supct/args/A_16_09.php (click on Video Feed )

A decision is expected any day.  Click here for immediate notification of the Supreme Court of New Jersey’s decision and other eDiscovery posts.

eLessons Learned has been following the Stengart case closely since its inception.  Read our past blog posts and coverage of this important case here.

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