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A recent decision by a federal appellate court provides a stark reminder that liability can extend to directors and officers of both for-profit and non-profit entities for failing to observe fiduciary duties. In Official Comm. Of Unsecured Creditors ex rel. Lemington Home for the Aged v. Baldwin (In re Lemington), No. 13-2707, 2015 WL 305505 (3rd Cir. 2015), the Third Circuit Court of Appeal found directors and officers individually responsible for mismanagement that rose to the level of a breach of fiduciary duties that were owed to the creditors when the organization became insolvent. This article briefly reviews the opinion and provides key action items for directors and officers to consider as they walk into their next meeting.
In today’s technologically advanced world, employees are often logging on to check personal email and social media at work. While this does not seem to pose a major problem in and of itself, issues can arise when (1) the content of those social media posts or personal emails affect the employer, or (2) when the employer seeks to obtain or use those posts or emails in litigation.
The Federal Stored Communications Act (SCA) generally protects an individual’s personal emails from discovery in a lawsuit. It provides that an Internet Service Provider (like Yahoo, Gmail, or AOL) need not respond to a civil subpoena for an individual’s personal emails. 18 U.S.C. § 2702(a)(1). Courts have held that the protections afforded by the SCA, or at least portions thereof, extend to social media posts in certain circumstances.
For example, a federal district court in New Jersey recently held that non-public Facebook posts are covered by the SCA. In Ehling v. Monmouth-Ocean Hosp. Serv. Corp., 961 F.Supp.2d 659 (D.N.J. 2013), the plaintiff was a registered nurse and paramedic. She maintained a Facebook account, and her privacy settings enabled only her “friends” to view her wall posts. These “friends” included some of her co-workers, but no managers. One co-worker, on his own initiative, began to take screenshots of the plaintiff’s wall posts and send them to the plaintiff’s employer.
The plaintiff posted a Facebook comment about a shooting at the D.C. Holocaust Museum. She was later suspended as a result of that comment. The plaintiff sued her employer under the SCA. Although the court found for the employer because the post was legally accessed by one of her “friends,” the court did conclude that the non-public Facebook post was covered by the FCA. Ehling and similar causes reveal that courts are willing to protect such posts in the right circumstances.
To address the SCA and cases like Ehling, we recommend that employers require their employees to specifically consent to the employer’s use of such Internet content in a narrow set of circumstances. The SCA contains an exception that allows an Internet Service Provider to divulge the contents of a private email “with the lawful consent of the originator or an addressee or intended recipient of such communication.” 18 U.S.C. § 2702(b)(3). Accordingly, we recommend that all employers consider outlining, in policies, that the employer may (1) use social media posts for employment decisions, and/or (2) access an employee’s posts or personal emails in the event of litigation, if those posts or emails are about the subject of the litigation. Employees should consent to these policies in writing. While such policies will not guarantee an employer’s broad access to such emails or posts, and will not guarantee an employer is insulated from liability in all cases where it accesses such information, these policies will go a long way toward removing the expectation of privacy an employee may have in such posts or emails.
Please feel free to contact us if you have any questions or would like assistance in drafting such policies.