Case Law: In re Royce Homes, LP

Citing “Explicit” Company Policy, Court Finds E-Mails Sent Over Company Systems Not Privileged

In re Royce Homes, LP, 2011 WL 873428 (Bkrtcy. S.D. Tex. Mar. 11, 2011). In this bankruptcy litigation, the trustee sought production of documents that a key employee of the debtor company claimed as privileged. Despite using his work computer and company e-mail account for personal matters, the employee argued he did not waive attorney-client privilege and maintained only necessary third parties were privy to his communications. Rejecting this argument, the court focused on the debtor company’s Electronic Communications Policy, which stated that nothing contained on any company electronic system would be considered private and permitted limited personal communications “with the understanding that personal communications may be accessed, viewed, read or retrieved by a company manager or employee” but that “Employees are NOT to disseminate any confidential information over the company’s system.” Finding the policy explicitly and straightforwardly banned confidential communications, the court rendered evidence of actual enforcement irrelevant. Noting the policy was memorialized in the employee handbook, the court also determined actual or direct notification to employees was not required and that it was unreasonable for the employee to believe his e-mails would remain confidential. Finding insufficient evidence that privilege applied or was waived, the court ordered production of the communications listed in the employee’s privilege log.

Commentary

Company policies regarding employee use of technology are significantly important for corporations to possess and distribute. Case law over the past year has demonstrated the imperative nature of implementing and maintaining these policies, in addition to highlighting the differences among jurisdictions in terms of weight given to policies in relation to the attorney-client privilege.

For example, in June 2010, the United States Supreme Court issued its City of Ontario, California v. Quon decision in which it addressed the use of employer-issued technology in light of the reasonable expectation of privacy. The U.S. Supreme Court cited the creation and communication regarding the City’s network and technology use policy in upholding the City’s right to conduct searches of text messages sent by a police officer via his employer-issued pager.

Other conflicting opinions worth a read on this subject include: Stengart v. Loving Care Agency, Inc., Holmes v. Petrovich Dev. Co., LLC, Alamar Ranch, LLC v. County of Boise and Leor Exploration & Prod. LLC v. Aguiar. The issue of reasonable expectation of privacy in the workplace is one we have written extensively about, most recently in regard to the Holmes v. Petrovich Dev. Co., LLC case.