Appellate Court Holds the ECPA Does Not Prohibit Employer Search of E-mail Stored on Workplace E-mail System

E-Mail Monitoring

Workplace Privacy

The Third Circuit has became the first federal appellate court to hold that communications service providers, including employers that administer their own e-mail systems, are authorized under the Electronic Communications Privacy Act to access electronically-stored communications on their own systems. The authors say that the decision essentially removes barriers under the ECPA to workplace monitoring of employees' electronic communications, provided such monitoring is carried out on the employer's own electronic system and that it occurs after transmission.

A federal appellate court has rejected a claim to workplace privacy under the Electronic Communications Privacy Act ("ECPA"), 18 U.S.C. §2510 et seq.,¹ striking down an employee's challenge to his employer's search of e-mails stored on the employer's e-mail system. In Fraser v. Nationwide Mut. Ins. Co., No. 01-2921 (3d Cir. Dec. 10, 2003), the U.S. Court of Appeals for the Third Circuit held that interception of an electronic communication is prohibited only if it occurs during transmission. The court also became the first federal appellate court to hold that communications service providers, including employers that administer their own e-mail systems, are authorized under the ECPA to access electronically-stored communications on their own systems.

The ECPA rulings arose out of a wrongful termination suit in which plaintiff Richard Fraser alleged that he was fired by his employer, Nationwide Mutual Insurance Co., in retaliation for having complained to Pennsylvania state authorities about certain of the company's allegedly discriminatory insurance-writing policies, having lobbied for legislation to protect independent insurance agents, and having engaged in certain other, related activities. Nationwide claimed that it had instead terminated Fraser because, after learning that he had drafted letters to two other insurance companies criticizing Nationwide, it suspected he was disclosing the company's business secrets to competitors. This concern prompted Nationwide to search its electronic file server, on which all of Fraser's e-mail was stored, for any e-mails transmitted or received by Fraser that demonstrated he may have done so. A witness for Nationwide testified that the search had yielded evidence of Fraser's disloyalty, and Fraser was then terminated.

Nationwide's review of Fraser's e-mail formed the basis for Fraser's ECPA claims, as well as claims under parallel Pennsylvania state laws. Fraser argued that Nationwide's search of his e-mail without his express permission violated Title I of the ECPA, which prohibits intentional interceptions of electronic communications without the prior consent of a party to the communication. 18 U.S.C. §2511.² He also claimed that Nationwide had violated Title II of the ECPA, which forbids unlawful access to stored communications and prescribes civil penalties for seizure of communications stored in electronic communications facilities. Id. §2701(a).

In response to Fraser's first claim, Nationwide argued that its review of Fraser's e-mail did not constitute an "interception," because that review was not carried out at the time of transmission. A federal district court agreed, and also dismissed Fraser's Title II claim, finding that, while the e-mails in question were stored in what the court labeled "post-transmission storage," they were not stored on Nationwide's system in either "temporary, intermediate" storage or "backup" storage, as required to trigger the protections of Title II. See id. §2510(17). After the district court granted summary judgment for Nationwide, Fraser appealed to the Third Circuit. That court Dec. 10 upheld the lower court's decision in most respects, including its dismissal of Fraser's ECPA claims.

On appeal, the Third Circuit first rejected Fraser's claim for wrongful termination, and then turned to his ECPA claims. Addressing Fraser's claim under Title I, the court stated: "Every circuit court to have considered the matter has held that an 'intercept' under the ECPA must occur contemporaneously with transmission." Fraser, No. 01-2921, slip. op. at 9 (citing cases). The court then adopted the U.S. Court of Appeals for the Fifth Circuit case of Steve Jackson Games, Inc. v. U.S. Secret Serv., 36 F.3d 457 (5th Cir. 1994), observing that, because the ECPA's definition of an electronic communication does not include electronic storage, see 18 U.S.C. §2510(12), "'there can be no 'intercept' of an e-mail in storage, as an e-mail in storage is by definition not an 'electronic communication.'" Fraser, No. 01-2921, slip op. at 10 (quoting Steve Jackson Games, 36 F.3d at 461-62).

Since Nationwide's review of Fraser's e-mail occurred after transmission, it was not an "interception" under the ECPA, and Fraser's Title I claim could not stand. Though the court commented that the ECPA's exclusion of communications in electronic storage appeared inconsistent with Congress' intention to protect the privacy of electronic communications, the court left it for Congress to fill that gap. Notably, although the Third Circuit's analysis of Title I followed a long line of federal cases, Fraser appears to be the first federal appellate case to extend this interpretation of the ECPA to an employer's review of employee communications stored on the employer's e-mail system.³

With regard to Fraser's Title II claim, the Third Circuit avoided the somewhat contradictory approach taken by the district court, in which that court dismissed Fraser's first ECPA claim on the basis that Title I does not apply to stored e-mail and then rejected his second ECPA claim on the ground that Fraser's e-mail was not stored in a form cognizable under Title II. The Third Circuit instead assumed without deciding that the e-mails in question were in fact stored communications within the meaning of Title II. The court of appeals nonetheless reached the same result, offering a rationale that actually extends even broader protection to communications service providers, including employers who provide e-mail systems, than did the district court's analysis.

Rather than focusing on the definition of electronic storage as the district court had done, the Third Circuit looked to section 2701(c)(1) of the ECPA, which exempts from Title II any seizures of e-mail that are authorized "by the person or entity providing a wire or electronic communications service." No federal circuit court had yet interpreted this provision. The Fraser court therefore relied upon the reasoning of a Title II case decided by the U.S. District Court for the District of Nevada, in which that court had held that a police department could freely access and retrieve pager text messages stored on its computer system, because the department was the provider of the communications service. See Bohach v. City of Reno, 932 F. Supp. 1232 (D. Nev. 1996). Like that court, the Third Circuit decided to "read section 2701(c) literally to except from Title II's protection all searches by communications service providers." Fraser, No. 01-2921, slip op. at 11. Fraser's Title II claim was accordingly dismissed, as Nationwide's search of an e-mail system that it administered came within the exception set forth in section 2701(c).⁴

The Fraser decision essentially removes barriers under the ECPA to workplace monitoring of employees' electronic communications, provided such monitoring is carried out on the employer's own electronic system and that it occurs after transmission. It remains to be seen whether other federal courts will continue to widen the doorway to employee monitoring in the United States.