Use of Employer Systems for Personal Communications to Legal Counsel – How Should Employer Counsel Deal With “hot” E-Mails?

I made a half-baked comment in response to Omar’s April 4th post on the procedural issues in dealing with the communications that employees have with their legal counsel through employer e-mail systems. This is a post based on some “more baked” thoughts that I plan to incorporate into a book chapter under development.

The thoughts I’ve included are strictly on the procedure for dealing with these “hot” e-mails. I’ll leave the substantive issue about the legitimacy of an employee privilege claim to another day, but will set up the thoughts below by noting that the issue is highly uncertain in Canadian law. The early case law seems to demonstrate a privilege-protective approach. In my view, however, it is still open to an employer to attack an employee privilege claim based on proof of the domain it exercises over its computer system, and that the strongest basis for attack is one which challenges the confidentiality on which the privilege claim is founded rather than one which relies on the doctrine of waiver. Employers may very well choose to attack, but can’t do so without thinking through the important duties described below.

This is pretty law-heavy for here, but I figure that this issue is Slaw-worthy and might draw debate. I welcome your critique!

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While the existence of privilege in employee communications to and from employee legal counsel that are stored on employer systems may often be challenged, there are distinct rules for handling such e-mails that ought to be of critical concern to counsel.

Courts have a duty to protect a party’s ability to litigate free from fear that its privileged secrets will be used to its disadvantage by an opposing party. They will craft a remedy to address the improper receipt of secrets based on a presumption of prejudice that may be rebutted by the recipient of the secret based on “clear and convincing evidence.”

The ultimate remedy for improper receipt of solicitor-client communications is disqualification of the receiving counsel. Though a measure of last resort, disqualification may sometimes be necessary to protect the integrity of the administration of justice when the extent of receiving counsel’s knowledge is too great for confidence to be restored. In Celanese Canada Inc. v. Murray Demolition Corp., the Supreme Court of Canada laid out a list of factors to assess the appropriateness of a disqualification remedy, but made clear to counsel that two factors should be top of mind: “In these cases, counsel avoid disqualification by demonstrating both that they were blameless in receiving the material, and that they did the ‘right thing’ upon recognition that the material was potentially privileged.” The “right thing” is to stop reviewing potentially privileged communications, return or seal the communications and, if necessary, seek court guidance to resolve a dispute about the status of the communications.

The legal rules for dealing with inadvertently disclosed communications have been well-tested. Following Celanese, the rules for handing hard drives seized in the execution of an Anton Piller are also clear. To the contrary, disputes about how to handle employee communications to and from legal counsel that are stored on employer systems have not been the subject of significant judicial comment.

Though the parties in Daniel Potter [issued by the Nova Scotia Supreme Court in 2005] argued about whether a C.E.O.’s e-mail communications were privileged given they resided on his employer’s e-mail system, the party that had custody of the system and reviewed the C.E.O.’s communications was not the C.E.O.’s employer. Moreover, the Court was so shocked at the means by which that party had obtained the servers (from a third-party who had itself obtained the servers based on a promise to wipe their contents) that it indicated the receiving solicitors “attributed themselves more power than would have been granted even under the terms of an Anton Pillar [sic] order.”

A more common scenario was the subject of comment in Eisses v. CPL Systems Canada Inc., a 2009 case in which the Ontario Superior Court of Justice dismissed a motion to disqualify counsel who received allegedly privileged e-mails and used them to amend its pleadings. The plaintiff had communicated with his legal counsel by e-mail on his former employer’s system. The employer’s American counsel retrieved the e-mails and turned them over to its Canadian counsel, who produced twelve suspect e-mails to the plaintiff in September 2007 along with 135 other documents. The next day, the employer’s counsel wrote a one page letter to the plaintiff’s counsel to deal with a number of production issues and expressly took the position that privilege in the e-mails had been waived. The Court held that privilege had been waived largely based on the plaintiff’s near 20 month delay in objecting to the waiver claim and not the fact that the communications originated on her employer’s e-mail system. It did, however, make this comment on the process that led to the employer’s waiver claim:

I also find no “blame” in CPL going through Eisses and Fava’s emails at the outset. Even if the Emails are privileged, CPL’s counsel (Miller and Blakes) believed that the Emails were not privileged because they were the employer’s documents, and that as such, Eisses waived privilege. In any event, CPL and Blakes did the right thing by immediately and explicitly advising Colson, at the outset of the production process, that CPL had produced solicitor-client communications on which CPL claimed Eisses waived privilege.

Though this endorsement is very noteworthy, conducting a full review and producing potentially privileged e-mails along with a waiver claim is not the traditional process for handling records that are, on their face, subject to an opposing party’s solicitor-client privilege. Moreover, the traditional process is associated with duties that courts have stressed counsel should take very seriously. Justice Farley, formerly of the Ontario Superior Court of Justice, for example, has said [in Nova Growth v. Kepinski] that receiving counsel’s good intentions are not enough: “The passing grade is 100%, not 50.1% or best efforts.”

As discussed [in text that's not part of this post], most employers warn their employees in some terms that they ought not to expect privacy in communicating through the company e-mail system. In part, this is to ensure that system information can be processed in the course of business without impediment. Given the warnings, the routine and legitimate need to process information in the course of e-discovery, the recognized public interest in minimizing the costs of e-discovery and the inefficiency bound to be caused by rules that restrict the handling of potentially privileged employee communications, employers ought to be given significant latitude. However, barring either development in the substantive law on employee and business system privilege claims or a strong and repeated endorsement of the “Eisses process,” counsel should continue to be cautious in handling records on their own clients’ business systems.

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Comments

  1. I never considered it as even more power than Anton Piller orders, as an “Anton Pillar (sic) order is perhaps the most severe civil law power of search and seizure available to any party in civil litigation.”

    There does appear to be a distinction though. Obtaining the information from a 3rd party involves a far more minimal intrusion than the right to search and seize evidence from the defendant’s premises without prior notice. It also requires some proof that the evidence is at risk of being destroyed.

    It’s a rather complicated fact pattern from a quick once-over (“The facts of this case are unusual, perhaps unique”), but it does seem there was some risk of spoliation involved in Daniel Potter,

    [18] …According to Mr. Courtney those printed e-mails have since been destroyed. It would appear Mr Courtney knew full well what he was after when he bought the servers. He had already began the process of secretly looking through e-mail accounts. There was nothing about his contract with KHI that would have required or permitted that activity.

    [19] … Mr. Courtney had removed his e-mails from the server. It would also appear that he or someone who had the servers while they were in the possession of Courtney or Navigator removed some e-mails from other accounts as well. There is no clear explanation as to why that may have occurred. Unless Mr Courtney has a backup tape for those e-mails they are now lost.

    The promise to wipe the contents might lead to some claim of contractual breach against the 3rd part, but if the privilege issues are overcome from the outset I don’t see how shocking it could be.