• Employer Search Of Employee E-mail Upheld Under Electronic Communications Privacy Act
  • January 23, 2004 | Author: Andrew Klungness
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • The U.S. Court of Appeals for the Third Circuit recently ruled that an employer's search of employee e-mails stored on an office computer did not violate the Electronic Communications Privacy Act (the "ECPA").

    The dispute in Fraser v. Nationwide Mutual Ins. Co. arose from defendant Nationwide's termination of plaintiff Richard Fraser's insurance agent employment agreement. Fraser contended that he was terminated for filing complaints against Nationwide with the Pennsylvania Office of Attorney General and because, as an officer of the Nationwide Insurance Independent Contractors Association (the "Contractors Association"), he lobbied for legislation to ensure that independent insurance agents could be terminated only for "just cause."

    Nationwide argued that it terminated Fraser for disloyalty. Fraser had drafted letters to two of Nationwide's competitors, in which he expressed Contractors Association members' dissatisfaction with Nationwide and sought to determine whether the competitors wanted to acquire the members' policyholders. Fraser claimed that he drafted the letters only to get Nationwide's attention, but they were never sent. Upon learning of the letters, Nationwide became concerned that Fraser was sharing company secrets with competitors and searched its main file server, where Fraser's e-mails were stored, for any evidence of disloyalty. According to Nationwide, the search yielded further evidence of disloyalty. Fraser was then terminated.

    In response, Fraser filed suit alleging violations of the ECPA, among other things. The U.S. District Court for the Eastern District of Pennsylvania granted summary judgment for Nationwide on these claims.

    On appeal, Fraser argued that Nationwide's search of his e-mail violated the ECPA, which prohibits "intercepts" of e-mail and other electronic communications. The Third Circuit rejected this argument and held that Nationwide did not intercept Fraser's e-mail because an intercept can occur only contemporaneously with transmission, and Nationwide did not access Fraser's e-mail at the time of transmission.

    In so holding, the Third Circuit noted that every other federal appellate court that had interpreted the term "intercept" in this context held that an intercept could occur only contemporaneously with transmission. The Third Circuit also noted, however, that the U.S. Congress intended to afford electronic communications broad protection under the ECPA, but the statutory definition of "intercept" did not accord with this intent. Despite this apparent discrepancy, the Third Circuit agreed with the other federal circuit courts of appeals, allowing "Congress to cover the bases untouched."

    Fraser also argued that Nationwide's search violated the EPCA, which prohibits unauthorized access of a facility through which an electronic communication service (such as an e-mail service) is provided and also prohibits intentionally exceeding authorization and obtaining access to an electronic communication while it is in electronic storage in such a system. However, the ECPA expressly exempts from liability seizures authorized by the provider of the electronic communications service. The Third Circuit held that Nationwide was the provider of Fraser's e-mail service, and its search was therefore exempt from liability under the ECPA.

    As shown in Fraser, employers who search employee e-mails stored on company servers do not violate the ECPA. If Congress intended to afford protection to stored e-mail communications, as the Third Circuit believes, Congress may amend the ECPA to supercede this aspect of Fraser. Employers who search employee e-mail should therefore keep abreast of legislative developments in this area.