Email Lawsuit Award

In a case stemming from an employer's theft of e-mails from the personal account of an employee who had sued him for sexual harassment, a panel of the 4th U.S. Circuit Court of Appeals recently became the first circuit to hold that plaintiffs must prove actual damages in order to be eligible for an award of statutory damages under the federal Stored Communications Act.

But the unanimous panel, led by Chief Judge Karen Williams, also ruled that a showing of actual damages is not required for awards of punitive damages or attorney fees. Van Alstyne v. Electronic Scriptorium Ltd., No. 07-1892.

The panel decision reversed a jury award of $150,000 against Bonnie Van Alstyne's employer, Edward Leonard, and $25,000 against Electronic Scriptorium Ltd., of which Leonard was president. The decision leaves intact a $75,000 punitive damages award against Leonard; a $25,000 punitive damages award against ESL; and an award of $135,723.56 in attorney fees and costs to Van Alstyne.

ESL is a small data conversion company owned and operated by Leonard and his wife in Leesburg, Va. ESL hired Van Alstyne, a friend of the Leonards, in January 2001 to serve as vice president of marketing. ESL assigned Van Alstyne a company e-mail account, but she also used her private password-protected e-mail account with America Online to conduct business from time to time.

According to Van Alstyne, in October 2001, Leonard sexually propositioned her, but she declined his advances. Shortly thereafter, in December, Van Alstyne and ESL agreed that Van Alstyne would be recategorized as an independent contractor with the company. In March 2002, ESL unilaterally terminated Van Alstyne.

Van Alstyne pursued sexual harassment charges; ESL sued her for business torts. During discovery in ESL's suit, Van Alstyne became suspicious that several e-mails presented by Leonard were from her personal account. In a deposition, he admitted he had accessed Van Alstyne's AOL account after she left the company, but only for these few e-mails.

In a footnote in the panel opinion, the court said, "These statements were not entirely true. Indeed, Leonard ultimately admitted to accessing Van Alstyne's AOL account at all hours of the day, from home and Internet cafes, and from locales as diverse as London, Paris and Hong Kong. During discovery, Leonard produced copies of 258 different emails he had taken from Van Alstyne's AOL account."

Van Alstyne sued Leonard and ESL for violations of the Stored Communications Act, part of the Electronic Communications Privacy Act, and a jury awarded her more than $400,000 in damages and costs.

On appeal, the circuit panel agreed with Leonard and ESL that the SCA does not provide statutory damages absent a showing that the plaintiff suffered actual damages.

Five district courts in five different circuits have reached the opposite conclusion, agree both appellate attorneys in the case: Christopher Alan Abel, a partner in the Norfolk, Va., office of Troutman Sanders, for Van Alstyne, and Nicholas Hantzes, a partner at Hantzes & Reiter in McLean, Va., for Leonard and ESL.

The panel relied heavily on Doe v. Chao, 540 U.S. 614 (2004), in which the U.S. Supreme Court reviewed the Privacy Act and violations by the government under a provision with language virtually identical to the relevant provision in the SCA.

"The Supreme Court has already interpreted language that is substantively identical to § 2707(c) to require proof of actual damages as a prerequisite to recovering statutory damages, and Congress has shown the ability to enact statutes that clearly award statutory damages absent proof of actual damages," the panel wrote.

"The biggest surprise is you had five district courts in five different circuits that had concluded the opposite," said Abel. "Some of those district courts had addressed precisely the same question of whether Doe v. Chao would carry over to the Stored Communications Act, and nobody until now concluded that it did. Obviously the 4th Circuit had its own way of looking at it."

There will be other filings in the case, noted Hantzes, because ESL is now in bankruptcy due to the Van Alstyne judgment.

"The judgment's been cut," he said. "Attorney fees were decided based on the success of the plaintiff, and the plaintiff was reversed on a very important part of that success. So we would expect attorney fees would be reduced. As for punitive damages -- it's an interesting issue, and we're thinking about it."

But Abel said, "While we're disappointed that $175,000 worth of statutory damages was taken away, there's some comfort in knowing she proved her case and proved it to the point that a jury felt punitive damages were justified both against her employer and Leonard."

Source: National Law Journal

Scott talks with attorney Chris Abel from Troutman Sanders in Norfolk Virginia.