Individual Clients Using Employer E-Mail for Personal Communications May Waive Important Privileges Otherwise Protecting Those Communications

As a result of a recent decision from the Supreme Court of the State of New York, New York County, in the Matter of Peerenboom v Marvel Entertainment, LLC, 2016 NY Slip Op 31957(U) (Sept. 30, 2016) counsel and their individual clients should reconsider their use of business e-mail accounts for the purpose of attorney-client or other protected communications.

Harold Peerenboom (“Peerenboom”) commenced an action in the Circuit Court of Palm Beach County, Florida, alleging that the CEO of Marvel Entertainment, LLC (“Marvel”), Isaac Perlmutter and his wife, Laura Perlmutter, defamed Peerenboom by sending anonymous defamatory letters to persons living or working at the Palm Beach condominium development where they all reside.

Peerenboom served subpoenas on Marvel related to the Florida action to obtain communications sent by Mr. Perlmutter and his wife through Marvel’s e-mail server that concerned a dispute between Peerenboom and others over the management of the tennis club at the condominium.  Since Marvel maintains it place of business in New York, Peereneboom commenced an action in New York to enforce the subpoenas.

Mr. Perlmutter filed three separate motions seeking a protective order barring Marvel from producing copies of certain e-mail messages alleged to be privileged.  Marvel took no position with respect to the asserted privileges.

The Court granted only those branches of the motions seeking to invoke the marital privilege as to nine items listed by Mr. Perlmutter in a privilege log he submitted and required those items to be submitted by Marvel for in camera inspection by the Court. The Court otherwise denied Mr. Perlmutter’s motions in concluding that the Perlmutters did not reasonably maintain an expectation that the communications made through Marvel’s server were private and confidential.

As stated in the decision,

The court agrees with Peerenboom that use of a proprietary e-mail system, subject to an employer’s computer usage policy such as the one adopted by Marvel, constitutes a waiver of any privilege that can otherwise be unilaterally asserted by a declarant or the intended audience of an otherwise confidential communication.

* * * as to electronic communications sent and received on Marvel’s server, Perlmutter waived his attorney-client privilege and work-product privilege.

The Court outlined four considerations to determine if e-mail exchanges over an employer’s e-mail system remain privileged when there is a company policy in place providing otherwise, namely:

(1) the employer maintains a policy banning personal or other objectionable use; (2) the employer monitors the use of the employee’s computer or e-mail; (2) third parties have a right of access to the computer or e-mails; and (4) the employer notified the employee, or the employee was aware, of the use and monitoring policies.

The Court concluded that (a) Disney’s compute usage policy, applicable to Marvel as a wholly owned subsidiary, prohibited personal and objectionable use of Marvel’s server and e-mail system, (b) the employer had the right to monitor employee computer use, (c) third parties have a right of access to the computer, the employer expressly asserted a possessory interest in the e-mails sent and received on its serves, and (d) that Mr. Perlmutted, as CEO of Marvel, knew or should have known of his employer’s implementation of Disney’s use and monitoring policies.  It comes as no surprise that many employer office manuals outline similar policies governing the use of employer servers and e-mail systems.

The decision does not suggest that actual monitoring by the employer is necessary, but that the right to monitor is sufficient.

As a result, the Perlmutters waived the attorney-client and work-product privileges in connection with any communications that may have been sent or received through Marvel’s server.  By extension, any privileges applicable to communications relayed through an intermediary of the Perlmutters were also waived.

The Court also rejected Mr. Perlmutter’s reliance on any common-interest or accountant-client privilege.

In light of this decision, counsel should consider advising individual clients to utilize a personal e-mail account, rather an e-mail systems, for the purpose of any communication that is intended to be subject to any applicable privilege to avoid the waiver of those privileges.  Doing so seems much more prudent than analyzing the factors identified by the Court to determine if privileges may be waived through the use of the employer’s e-mail system.

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