Need to send a personal e-mail? Keep it at home.

As a general matter, employees of corporations are aware that e-mails sent in the course of business may be read by IT support technicians for the company.  But did you know that personal e-mails sent on the job could come back to bite you in a grand jury investigation?  Henry Nicholas wasn’t – at least not until recently.  Nicholas, the billionaire co-founder and ex-CEO of Broadcom, is painfully aware that not even the marital privilege can protect incriminating e-mails sent from a work e-mail account. 

In 2002, Dr. Nicholas sent an e-mail from his Broadcom account to his estranged wife. The e-mail contained admissions of  drug use, various misrepresentations in his capacity as CEO of Broadcom, and other misconduct.  During the grand jury investigation, nearly five years after Dr. Nicholas sent the e-mail, the government became aware of the e-mail and the stock option granting practices at Broadcom when an IT technician at Broadcom discovered the e-mail, leaked it to the press, and turned it over to the government.  After Dr. Nicholas learned that the government had a copy of the e-mail, he demanded that the government return it, arguing that it was protected by the marital privilege. The government refused, and the parties requested that the district court resolve the dispute. The district court held that the e-mail was not privileged because Dr. Nicholas had no reasonable expectation of privacy in the e-mail and because he failed to take reasonable steps to secure its confidentiality. In re Grand Jury Investigation, Order at 2 (C.D. Cal. Sept. 25, 2007). Dr. Nicholas appealed the ruling to the Ninth Circuit Court of Appeals.

The Ninth Circuit vacated the district court's order, and held that the e-mail was protected by the marital privilege, but did not require that the government return the document to Dr. Nicholas. The Ninth Circuit's order only precluded disclosure of the e-mail in the "context of the grand jury proceedings to the full extent of the marital privilege." In re Grand Jury Investigation, Order at 2, (C.D. Cal. May 20, 2008).  On June 4, 2008, the grand jury returned an indictment against Dr. Nicholas and his co-defendant for an alleged conspiracy related to stock option granting practices at Broadcom. Shortly after the indictment, the e-mail was leaked to the Orange County Register by an IT technician at Broadcom. The newspaper ran a story with damaging excerpts from the e-mail. 

In U.S. v. Nicholas, __F.Supp.2d__, 2008 WL 5546721 (C.D.Cal. Dec. 29, 2008), Dr. Nicholas moved to preclude the government from disclosing the contents of the email to his co-defendant and from using the privileged email for cross-examination or impeachment of Dr. Nicholas should he testify at trial. The district court denied his motion, and held that the email (1) may be used at trial; (2) must be disclosed to the co-defendant; and (3) may be used for cross-examination and impeachment purposes at trial.  

The message? Work e-mail accounts should be used for work purposes. Personal e-mails – even those that are protected by a privilege - can have serious implications down the road.

No One Escapes E-Discovery Obligations

Two e-discovery articles this week highlight a theme to remember:  no one escapes document retention and e-discovery obligations.

You think you can't lose.  The facts are on your side.  The law is on your side.  You have a slam-dunk motion for summary judgment.  Or three slam-dunk motions.  You can coast through until you prevail on the merits, right?  WRONG  Leonard Deutchman in the Pennsylvania Law Weekly looks at two of the more-famous e-discovery cases from 2008 - Qualcomm, Inc. v. Broadcom Corp. and Keithley v. The Homestore.com, Inc. - both of which demonstrate that even when you prevail on the merits, only a fool disregards her document retention and e-discovery obligations. 

In Qualcomm, the appellate court reversed an adverse judgment on the merits in the underlying patent infringement case, but  upheld the lower court's findings and rulings as to spoliation and other e-discovery violations, including sanctions imposed on counsel.  In Keithley, although the court ruled for the defendants on the merits, it adopted the magistrate judge's sanctions recommendations for spoliation of evidence and late production of discovery.  The only bright spot for defendants on the e-discovery front was that the court denied the plaintiffs' motions for adverse inference instructions, solely on the grounds that defendants' victory on the merits mooted that issue. 

Even the leader of the free world isn't exempt from document retention and e-discovery obligations.  As this Associated Press article on findlaw.com reports, on January 15, Magistrate Judge John Facciola "tore into" the Bush White House, finding that the administration had failed to meet its obligations to preserve ESI, including millions of missing e-mails.  And Judge Facciola isn't the only one hitting the White House hard over its document retention obligations; just the day before, U.S. District Judge Henry Kennedy issued an order requiring the White House to search for emails created between March 2003 and October 2005.

Lessons learned?  No matter who you are - from the most powerful person in the world to the owner of a small company - and no matter how good your case, you ignore your document preservation and e-discovery obligations at your own peril.