In a case that addresses a current hot-button topic dealing with discovery of electronic communications, the Appellate Division, First Department, of the New York State Supreme Court recently held that an employee did not have a reasonable expectation of privacy in his employer-owned email account and, therefore, the relevant emails were not subject to attorney-client privilege.

In Peerenboom v. Marvel Entertainment, LLC, 2017 NY Slip Op 01981 (1st Dep’t March 16, 2017), nonparty Isaac Perlmutter, the CEO of Marvel Entertainment Inc. (“Marvel”), sought review of the trial court’s order which found that Perlmutter had waived attorney-client and work product privilege as to emails sent through his Marvel email account. The New York action arose after Plaintiff Harold Peerenboom sued Perlmutter, his co-member at an elite tennis club, in Circuit Court in Palm Beach County, Florida, alleging, among other things, that Perlmutter had defamed him in anonymous mailings which asserted that Peerenboom had engaged in murder and pedophilia. Peerenboom issued subpoenas to Marvel in the Florida action seeking to obtain communications sent by Perlmutter or his wife through Marvel’s servers which referred to Peerenboom. When Marvel refused to comply, Peerenboom sought to enforce the subpoenas through the New York action. Perlmutter submitted motions to the trial court for a protective order as a non-party to the New York action, asserting that the communications were protected from disclosure by, among other things, attorney-client and work product privilege. The trial court found that Perlmutter had waived the attorney-client privilege by sending emails through Marvel’s servers, where Marvel’s policies stated that all emails were subject to being monitored.

The Appellate Division affirmed the trial court with regard to the issue of attorney-client privilege, noting that Perlmutter “lacked any reasonable expectation of privacy in his personal use of the email system of Marvel, his employer, and correspondingly lacked the reasonable assurance of confidentiality that is an essential element of the attorney-client privilege.” In its ruling, the Appellate Division noted that while Marvel’s email policies permitted the use of its email for personal purposes as a courtesy, Marvel’s policies nevertheless indicated that Marvel “owned” all emails on its system and that all emails were subject to Marvel’s rules, policies and conduct statements. As a result, Marvel reserved the right to “audit networks and systems on a periodic basis” to ensure employee compliance with Marvel’s policies and “access, review, copy and delate any messages or contents,” and to “disclose such messages to any party (inside or outside the Company).” The Appellate Division found that even if Perlmutter was not actually aware of the policy, his status as CEO of Marvel put him on constructive notice of the policy. Therefore, where Perlmutter’s personal emails on his employer’s server were subject to review as per Marvel’s policies and Perlmutter was on notice of same, Perlmutter lacked any reasonable expectation of privacy in his personal use of the email system at Marvel and the attorney-client privilege did not apply. It should be noted, however, that the Court declined to find an automatic waiver of work product privilege protections under such circumstances, “[g]iven the lack of evidence that Marvel viewed any of Perlmutter's personal emails, and the lack of evidence of any other actual disclosure to a third party.” The Court instead remanded the case for an in camera review as to the work product issue.

The takeaway is that, at least in New York, an employee likely waives the attorney-client privilege when using his or her employer’s server and where the relevant personal emails have the potential to be monitored. Based on the facts of this case, the parties involved and the holding, further appeal is anticipated.