Van Alstyne v. Elec. Scriptorium, Ltd., _F.3d_, 2009 U.S. App. LEXIS 5548 (4th Cir. Mar. 18, 2009)

Take Away: Conduct discovery of email stored in the personal email accounts of others in an above board fashion. The Stored Communications Act (SCA) creates criminal and civil liability for unauthorized access of personal email accounts. The Fourth Circuit’s recent ruling confirms that even absent proof of actual damages, punitive damages and attorney’s fees may be awarded as a civil remedy under the SCA. The SCA’s statutory damages, however, require proof of at least nominal actual damages.  

The Fourth Circuit’s Van Alstyne decision gives privacy advocates something to both cheer and jeer. On the one hand, the Court of Appeals interprets the language of the Stored Communications Act (SCA), 18 U.S.C.A. § 2701 et seq, to allow for recovery of punitive damages and attorney’s fees even without the usual requirement of proof of underlying actual damages. Given the difficulty of establishing actual damages in most cases, this is a BIG victory for the aggrieved parties, especially coming as it does from a court of appeals. On the other hand, and counter to several district court opinions, the Fourth Circuit finds that actual damages are a prerequisite to the SCA’s minimum statutory damages of $1,000 per violation.

It’s easy to see how the facts of Van Alstyne could come up in many employer/employee disputes, or for that matter, any dispute where one or both of the parties may have access to the confidential information of the other. The Van Alstyne case involves a sexual harassment suit brought by a terminated employee, Ms. Van Alstyne, and a counter suit by the former employer, ESL, for various business torts. The person accused of harassment, a Mr. Leonard, took discovery into his own hands. Using Van Alstyne’s log-in and password (we are not told how he obtained the password), he logged into her AOL email account, downloaded some helpful emails, and supplied them to his lawyer. The court summarizes the ensuing chicanery:

During a deposition in February 2006, ESL’s counsel used several emails from Van Alstyne as exhibits. Van Alstyne believed that these exhibits were actually taken from her AOL account and not her company account. With her suspicions aroused, Van Alstyne began pursuing the possibility that Leonard and ESL had broken into that private account. Sure enough, during a June 2006 deposition, Leonard admitted that he accessed Van Alstyne’s AOL account after she left the company. He further testified that the emails produced during the deposition represented the only occasions on which he had accessed her account.

These statements were not entirely true. Indeed, Leonard ultimately admitted to accessing Van Alstyne’s AOL account at all hours of the day, from home and internet cafes, and from locales as diverse as London, Paris, and Hong Kong. During discovery, Leonard produced copies of 258 different emails he had taken from Van Alstyne’s AOL account.

There is no question that Mr. Leonard’s activity violated the SCA, despite the fact that Ms. Van Alstyne used her AOL account occasionally for work purposes. As noted by the Court:

Section 2701 of the SCA creates a criminal offense for whoever “intentionally accesses without authorization a facility through which an electronic communication service is provided” or “intentionally exceeds an authorization to access that facility,” and by doing so “obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system.” 18 U.S.C.A. § 2701(a)(1-2).

Section 2707 provides a private cause of action for “any . . . other person aggrieved” by a violation of § 2701. 18 U.S.C.A. § 2707(a).

The only real question is, how bad is it going to be for Mr. Leonard and ESL? The Court reviewed the plain language of the civil remedies available under the statute (emphasis added):

Under § 2707, a district court may award equitable or declaratory relief, a reasonable attorney’s fee and other costs, and “damages under subsection (c).” 18 U.S.C.A. § 2707(b).

Subsection (c) provides: The court may assess as damages in a civil action under this section the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation, but in no case shall a person entitled to recover receive less than the sum of $ 1,000. If the violation is willful or intentional, the court may assess punitive damages. In the case of a successful action to enforce liability under this section, the court may assess the costs of the action, together with reasonable attorney fees determined by the court. Id. § 2707(c).

In this case, Van Alstyne either had no actual damages or chose not to subject herself to the invasive discovery that would likely be required under a claim of emotional distress, for example. Aside from situations involving identity theft or stolen trade secrets, actual damages can be difficult to prove in the run of the mill electronic eavesdropping case.

Several district courts, including the District of Hawaii, the District of Connecticut, and the Northern District of Illinois have interpreted this section to require the award of the statutory damages in lieu of proof of actual damages. These cases distinguish Doe vs. Chao (U.S. 2004), wherein the Supreme Court interpreted nearly identical language in the Privacy Act, 5 U.S.C.A. § 552a(g)(4)(A), to require proof of actual damages before statutory damages to a person “entitled to recover” are triggered.

The Fourth Circuit, declines to adopt the holdings of these lower courts and instead finds that Doe’s precedent conclusively establishes the correct interpretation. Notably, Doe itself originated from the Fourth Circuit. Therefore, the $150,000 award of statutory damages was vacated.

While this was no doubt disappointing to Van Alstyne, the Court of Appeals did uphold her right to obtain punitive damages and attorney’s fees. On this score, however, the Fourth Circuit vacates the lower court’s award of $75,000 in punitive damages, $124,763 in attorney’s fees, and $10,960 in court costs and remands for further consideration. The Court finds that remand is required in this case because the degree of plaintiff’s success has been changed by the denial of statutory damages on appeal. The Court of Appeals relies upon Farrar v. Hobby (U.S. 1992), a civil rights case, for the proposition that: “the degree of the plaintiff’s overall success goes to the reasonableness of a fee award.”

At the end of the day, ESL is still likely to pay a stiff penalty for the activities of Mr. Leonard. In addition to the money, this kind of stunt can completely change the complexion of a case and destroy the offending party’s credibility in the eyes of the court. As for Mr. Leonard and the lawyer who brought the email with him to the deposition, they have likely lost more than one night’s sleep, to say the least. This case should serve as a reminder to all parties to civil litigation, and their lawyers, that creative attempts to obtain extra judicial discovery should be done with a close eye on where the legal lines are drawn.

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