A California Court of Appeal has recently held that e-mails a California employee sent to her personal attorney on a company-issued computer were not “confidential” communications and thus were not protected by the attorney-client privilege. Holmes v. Petrovich Dev. Co., LLC, No. C059133, 2011 WL 117230 (Cal. App. Jan. 13, 2011).

Gina Holmes sued her employer, Petrovich Development Company, LLC (the “Company”) and her supervisor, alleging sexual harassment, retaliation, wrongful termination, invasion of privacy, and intentional infliction of emotional distress. Significantly, when the plaintiff was hired, she received, read, and signed the Company’s employee handbook. The handbook stated the Company’s policy that: (1) Company computers were to be used only for company business, (2) employees were prohibited from using Company computers to send or receive personal e-mail, and (3) the Company would monitor its computers for compliance with the policy and thus might “inspect all files and messages . . . at any time.” The policy explicitly stated that employees using company computers for personal information or messages had “no right of privacy with respect to that information or message.” Prior to the termination of her employment, Holmes used her company-issued computer to correspond via e-mail with her personal attorney regarding potential litigation against the Company.

The trial court granted the Company’s summary judgment motion as to Holmes’ claims for sexual harassment, retaliation, and wrongful termination, allowing her claims for invasion of privacy and intentional infliction of emotional distress to go to trial. At trial, the court allowed the introduction of e-mails between Holmes and her attorney, sent and received on the Company computer, as evidence reflecting her true emotional state. The jury ruled against Holmes on the remaining two counts of invasion of privacy and intentional infliction of emotional distress.

On appeal, Holmes argued that it was improper for the trial court to allow the Company to introduce her e-mails to and from her attorney because the communication was confidential and protected by attorney-client privilege. She argued that she had a reasonable expectation of privacy in the e-mails because she was required to input a secret password and because she deleted the e-mail correspondence from the computer before she quit. The Court of Appeal affirmed, finding the Company’s computer use policy in the employee handbook instructive. Holmes admitted that she had read and signed the employee handbook, which explicitly stated the Company policy that employees had “no right of privacy with respect to . . . information or message[s]” created or maintained using company computers, and that the Company could “inspect all files or messages . . . at any time for any reason at its discretion.” Thus, when Holmes used the Company’s computer to communicate with her attorney, she did not communicate “in confidence” and therefore the communications were not protected by attorney-client privilege.

The court distinguished Ontario v. Quon, 130 S.Ct. 2619 (2010), where an employee was found to have a privacy right in text messages that he sent from a company-issued text pager. In Quon, the employer had a “no-privacy” policy similar to the Company’s policy in Holmes; however, the Quon employer’s policy had been contradicted by the employee’s supervisor, who told the employee that he did have a right to privacy in his texts. In Holmes, the Court of Appeal found, there was no such conflicting instruction, and, therefore, no reasonable expectation of privacy.

The Holmes decision reinforces the benefit for employers to clearly and explicitly outline their privacy policy regarding electronic correspondence and use of company equipment (e.g., computers, cellular phones) to all employees. Furthermore, the decision emphasizes the need for employers to train their managers and supervisors properly in order to avoid providing employees with conflicting information regarding company policies.