Digging Through Old E-Mails Not Wiretap Violation, Federal Judge Rules

March 29, 2001

An employer's decision to dig through an employee's e-mails in computer storage does not violate any federal or state wiretap laws — not even the "Stored Communications Act" — since all of the laws are triggered only when the interception occurs "in the course of transmission," a federal judge has ruled.

In her 44-page opinion in Fraser v. Nationwide Mutual Insurance Co., U.S. District Judge Anita B. Brody found that wiretap laws do not cover retrieval of a person's e-mail from "post-transmission storage."

"The strong expectation of privacy with respect to communication in the course of transmission significantly diminishes once transmission is complete," Brody wrote.

"Nationwide's retrieval of Fraser's e-mail from the Nationwide file server may in fact be ethically 'questionable' ... but it is not legally actionable under the ECPA [Electronic Communications Privacy Act of 1986]," she wrote.

Wiretap laws are violated, Brody said, only when an e-mail is intercepted from "intermediate storage" or "back-up protection storage" — both of which automatically occur during the course of transmission — or if the e-mail is viewed before the intended recipient has a chance to open it.

But once an e-mail has been viewed by the recipient, Brody found that none of the laws apply to subsequent viewings — whether authorized or not — by a third party accessing it from some form of computer storage.

Congress and the state legislatures, she said, "may in the future delineate the extent of an employer's authorization to access e-mail stored for a period of time after transmission is complete." But for now, Brody found, "employers will continue to have the legal right to monitor and read workers' e-mail communications."

Brody said Richard Fraser's suit against Nationwide was "one of the few cases that has required a court to interpret the wiretapping acts in the context of recent electronic communication technology."

In the suit, Fraser claimed that he was illegally fired from his post as a Nationwide sales agent in September 1998 in retaliation for his lodging complaints against the company with state authorities and his efforts to get legislation passed that would have protected agents like himself from being fired for anything less than just cause.

Fraser, who had worked for Nationwide since 1986, said he was also being punished for helping form a Pennsylvania chapter of the Nationwide Insurance Independent Contractors Association, or NIICA -- a group that had previously been in existence for some years in other states and that Nationwide steadfastly refused to officially acknowledge.

At the second meeting of the Pennsylvania chapter of NIICA, Fraser was elected to an office of the chapter. He was also asked to create and write a chapter newsletter, which became known as "The Pennsylvania View."

One of NIICA's overarching goals was to preserve and defend the status of the Nationwide exclusive career agents as independent contractors. Members of NIICA sought increased state regulation of the insurance industry to protect their independence and maintain control over their work.

In late 1996, Fraser contacted Nationwide's Office of Ethics and raised concerns about some of the company's business practices that he believed to be illegal.

Later, Fraser filed a complaint about the practices with the Pennsylvania Insurance Department and the Pennsylvania legislature.

NIICA's efforts to report the practices resulted in media publicity, and Nationwide was aware that Fraser and other NIICA members were reporting business practices to state authorities.

In April 1998, Nationwide entered into a series of consent orders with the Pennsylvania Insurance Department in which the company paid a fine and agreed to cease the business practices Fraser had complained about. The NIICA newsletter publicized the company's concessions under the consent order.

Nationwide was also aware of NIICA's ongoing lobbying efforts to obtain "just cause" legislation.

In January 1998, Nationwide's vice president of government relations described the situation with NIICA in an interoffice memo as "significantly accelerating and deteriorating."

In July 1998, the Pennsylvania Insurance Department expressed an official opinion against the proposed just-cause legislation, and the bill ultimately failed in the state legislature.

In August 1998, Nationwide drafted — but never sent — a warning memo headed "Inappropriate Communication" to Fraser. The memo stated that Nationwide was aware of Fraser's communications with the Pennsylvania Insurance Department and the state attorney general.

Citing examples of such communications, the memo asserted that many of these communications included "false statements or unsupported allegations that Nationwide has or intends to violate the law," and that they "have had a damaging effect on the business operations and reputation of Nationwide and its agents."

But the company did send Fraser and all other agents a more general warning letter about "inappropriate communications" with state insurance departments, the media and legislatures.

By late July 1998, the Pennsylvania chapter of NIICA decided to make Nationwide's management in Columbus, Ohio, aware of the agents' opposition to the company's plans to revamp its marketing practices.

NIICA members asked Fraser to prepare a letter to competitors of Nationwide to solicit interest in acquiring the policyholders of the approximately 200 NIICA members in Pennsylvania.

Fraser said the draft of the letter was not intended to suggest that the agents were actually separating from Nationwide, but instead to send a warning that they would leave if Nationwide did not cease the objectionable policies.

But the letter was ultimately sent to at least one competitor.

A copy of the letter ultimately reached Richard Crabtree, a top-ranking executive of Nationwide, and the company began an investigation of Fraser and others to determine if it had been sent to any competing insurance companies.

On Aug. 27, 1998, Nationwide's director of electronic communications in Columbus, Gregory Ricker, in the presence of Nationwide's assistant general counsel, Randall Orr, searched Nationwide's electronic file server for e-mail communication indicating whether or not the letter had been sent.

Ricker opened the stored e-mail of Fraser and other agents. Ricker ultimately found an exchange of e-mails between Fraser and Lon McAllister, an agent of Nationwide at the time, indicating that the letter had been sent to at least one competitor.

Significantly, the messages retrieved from Nationwide's storage site had already been sent by Fraser and received by McAllister.

On Sept. 2, 1998, Nationwide canceled Fraser's agent's agreement.

In his lawsuit, Fraser's lawyer, Anita F. Alberts, argued that Nationwide illegally intercepted his e-mail in violation of the Federal Wiretap Act and the Pennsylvania Wiretap Act as well as the federal and state Stored Communications Acts.

But Nationwide's lawyer, Curtis P. Cheyney of Swartz Campbell & Detweiler, argued that none of the laws were violated since the retrieval occurred long after the transmission was complete.

Brody found that the federal Wiretap Act and Stored Communications Act are "derivatives of the original wiretap law enacted in 1968," and that both of the newer laws were enacted as part of the Electronic Communications Privacy Act of 1986.

ECPA, she said, added "electronic communication" both to the definition of the wiretap offense and to the definition of "intercept" so that the law now protects against unauthorized interception of electronic communications.

But the law is not a model of clarity, Brody said, and "courts and scholars have struggled to determine the precise boundaries of and also the intended relationship between the Wiretap Act and the Stored Communications Act by looking to the language of the statute, legislative history, and a basic understanding of communication technology."

Due to the obvious meaning of the term "interception," Brody found there is no violation of the laws where the accessing of an e-mail occurs after it has been received by the intended recipient.

"Interception of a communication occurs when transmission is interrupted, or in other words when the message is acquired after it has been sent by the sender, but before it is received by the recipient," she wrote.

E-mail, she said, compares perfectly with voice mail, and courts have held that accessing a voice mail violates wiretap laws only when it occurs prior to the recipient's having a chance to listen to it for a first time, but not when it is simply retrieved from storage.

"If a third party obtains access to the recipient's personal mailbox and retrieves a saved message after the recipient has heard the message, there is no interception," she wrote.

"The only relevant difference between a voice-mail system and an e-mail system is that e-mail is stored in two different types of storage during the course of transmission — intermediate storage and back-up protection storage. Retrieval of an e-mail message from either intermediate or back-up protection storage is interception; retrieval of an e-mail message from post-transmission storage, where the message remains after transmission is complete, is not interception."

NO WRONGFUL DISCHARGE

Brody also rejected Fraser's claim of wrongful discharge, saying he failed to meet the test for establishing a public policy exception to the at-will employment doctrine.

Fraser claimed Nationwide terminated him because of his reports to state authorities of the company's alleged unlawful practices, his leadership role in NIICA and his responsibility for drafting the letter to Nationwide's competitors.

But Brody found that "freedom of expression is not an absolute right in the employment context and is frequently balanced against interests of the employer. Thus, even if Nationwide terminated Fraser solely for the purpose of discouraging these particular First Amendment activities, the courts will not second-guess Nationwide's decision to exercise its right under the at-will employment doctrine to terminate its relationship with Fraser."

Similarly, Brody rejected Fraser's claim that Nationwide violated his free speech rights under the Pennsylvania constitution.

"Although there still may be instances where the Pennsylvania Constitution reaches private conduct, this case is not one," Brody wrote.

"Nationwide is a private corporation and a private actor under the law ... . Therefore, Nationwide's decision to terminate Fraser's Agent's Agreement is not subject to constitutional requirements," she wrote.