In Miller v. Zara USA Inc., (2017 N.Y. Slip Op. 04407, 1st Department June 6th, 2017), the First Department held that where, as here, a company’s written employment guidelines clearly provide that employees have no reasonable expectation of privacy when using a company-issued computer for personal purposes, no claim of attorney-client privilege over personal documents on that computer can stand.
Ian Miller (“Miller”), was the general counsel for Zara USA (“Zara”). During his employment with Zara, Miller received and utilized a company-issued laptop (“Laptop”). Miller used the Laptop for business purposes. Miller also conducted personal business on the Laptop notwithstanding a company-issued handbook that provided, “[a]ny data collected, downloaded and/or created” on Zara’s electronic resources was “the exclusive property of Zara,” and “[e]mployees should expect that all information created, transmitted, downloaded, received or stored in Zara’s electronic communications resources may be accessed by Zara at any time, without prior notice,” and further added that employees “do not have an expectation of privacy or confidentiality in any information transmitted or stored in Zara’s electronic communication resources (whether or not such information is password-protected).”
In March 2015, Miller was terminated from his employment with Zara. Soon thereafter, he initiated a lawsuit against Zara alleging employment discrimination, hostile work environment, and wrongful termination. Pertinently, Miller continued to use the Laptop after his termination and did so to discuss with his personal attorney the impending litigation. In the employment discrimination lawsuit eventually filed by Miller, Zara sought access to the Laptop and to all files contained therein. Miller sought a protective order precluding Zara from accessing his personal documents on the Laptop, claiming the documents were protected by the attorney-client and work-product privileges. The Supreme Court issued the protective order, in part due to Zara’s inability to articulate any reason why Miller’s personal files created after his termination were relevant and because the personal files, mainly correspondence between Miller and his attorney, were privileged.
In its decision on appeal, the First Department rejected Miller’s privilege claim, finding that — based on the unequivocal provisions of the employee handbook (of which Miller had at least constructive notice) — Miller lacked any reasonable expectation of privacy in his personal use of the Laptop. Specifically, the Court accepted Zara’s argument that there was no reasonable expectation of privacy regarding the contents of the Laptop as a result of the provisions in the employee handbook pertaining to personal use of a company issued laptop. Zara argued that this was enough to remove any reasonable expectation of confidentiality, which is central to the formation of the attorney-client privilege, and the Court agreed.
The First Department, however, found that Miller’s storage of documents on the Laptop did not, by itself, waive the attorney work-product protection with respect to the documents. Because the Court noted the work product privilege “is waived upon disclosure to a third party only when there is a likelihood that the material will be revealed to an adversary, under conditions that are inconsistent with a desire to maintain confidentiality.” (Bluebird Partners, L.P. v. First Fid. Bank, N.A..) Zara never actually viewed any documents stored on the Laptop. Therefore, the First Department concluded that “[g]iven the lack of any actual disclosure to a third party, ‘[plaintiff’s] use of [Zara’s computer] for personal purposes does not, standing alone, constitute a waiver of attorney work product protections.’” (internal citations omitted). And so, the Appellate Division remanded the case to the Supreme Court for an in camera review of the documents Miller claimed to be attorney work product.
This case serves as an important reminder that in today’s workforce it is increasingly important to be mindful of, and understand completely, company policies pertaining to the use of company property. As far as the First Department is concerned, attorney client privilege will be subordinate to a clear policy regarding the use of company property; the decision further endangers any assertion of attorney work-product protection in the event the company executes the policy and disclosure occurs (i.e., the company seizes the company property containing the personal files and views as much). Likewise, it makes practical sense for companies who issue laptops, iPhones and other electronic devices to employees to be certain company employees understand whether the content of those devices belong to the Company thus precluding any expectation of privacy in the usage of or contents on the device.
*A special thanks to Farrell Fritz Summer law clerk Philip Merenda for his research and drafting assistance with Just When You thought It Was Safe To Use Your Company Computer. Philip is a student at Georgetown University Law and anticipates receiving his J.D. in 2018.