Unanimous U.S. Supreme Court Ruling in “Quon” Highlights Importance of Employer Technology-Usage and Privacy Policies

June 18, 2010

On June 17, 2010, the United States Supreme Court unanimously decided City of Ontario v. Quon, No. 08-1332, 560 U.S. ___ (2010), holding that the city’s review of an employee’s text messages on an employer-issued device was a reasonable search under the Fourth Amendment.  The opinion, authored by Justice Kennedy (with two concurring opinions written by Justice Stevens and Justice Scalia), failed to resolve a much anticipated issue: whether an employee has a reasonable expectation of privacy in text messages sent on an employer-issued device.  The Court expressed an unwillingness to determine privacy issues relating to emerging technologies and left open important questions related to employee privacy in electronic communications. 

For more on the factual background of the case and analysis of the potential issues before the Court, see Gibson Dunn’s previous alert issued in March 2010 (‘Quon‘ Could Have Consequences for E-Discovery).  

Employee communications on employer-provided technology often provide critical evidence in trade secret, non-compete, harassment and other employment and commercial litigation.  Although the decision failed to offer hoped-for new guidance on key areas of technology and information management, Quon highlights the importance of employer technology-usage and privacy policies.  In dicta, the Court noted that "employer policies concerning communications will of course shape the reasonable expectations of their employees, especially to the extent that such policies are clearly communicated."  Quon, No. 08-1332, slip op. 11.  Therefore, a prudent employer will likely wish to expressly include all forms of electronic communications in written technology-usage and privacy policies, and to ensure that these policies are clearly communicated and consistently applied.  In addition, the Supreme Court has left the door open for other courts to continue to address the waiver of attorney-client privilege in the context of employee communications.  See, e.g., Stengart v. Loving Care Agency, Inc., 990 A.2d 650 (N.J. 2010) (affording heightened protection to personal and attorney-client privileged communications made by employees on employer-provided devices and systems).

Quon involved a SWAT-team member who used his city-issued, text-messaging pager for personal communications.  There was no official city policy governing use of the pagers in particular, but the city’s general technology-usage policy specified that e-mail and Internet usage would be monitored.  The formal policy, however, was accompanied by an informal policy that supervisors would not audit employees’ text messages as long as the employees paid any overage fees.  After a supervisor requested transcripts of Quon’s text messages, and he was allegedly disciplined for personal use during working hours, Quon sued for violations of the Stored Communications Act and the Fourth Amendment, among other claims.  On appeal, the Ninth Circuit held that users of text messages have a reasonable expectation of privacy in the content of their messages in the circumstances presented.  In particular, the Ninth Circuit held that the "operational realities" of the employer–which had given employees reason to believe that their text messages would not be reviewed by the employer as long as they paid any overage fees–created a reasonable expectation of privacy for the employee, despite the employee’s assent to a contrary formal policy.  Quon v. Arch Wireless Operating Co., 529 F.3d 892, 907 (9th Cir. 2008) (citing O’Connor v. Ortega, 480 U.S. 709, 717 (1987)).  Finally, the Ninth Circuit held that the city’s search of Quon’s messages was not reasonable in scope and violated the Fourth Amendment.  Quon, 529 F.3d at 908. 

The Supreme Court unanimously reversed the Ninth Circuit, holding that the city’s review of the text messages was a reasonable search under the Fourth Amendment.  The Court, however, declined to more broadly address the privacy expectations of employees when using employer-provided communications devices.   

The Court intentionally sought to keep its holding narrow.  In limiting the holding to the facts of the case, the Court warned that "[p]rudence counsels caution before the facts in the instant case are used to establish far-reaching premises that define the existence, and extent, of privacy expectations enjoyed by employees when using employer-provided communication devices."  Quon, No. 08-1332, slip op. 10.  Fearing that a "broad holding concerning employees’ privacy expectations vis-à-vis employer-provided technological equipment might have implications for future cases that cannot be predicted," the Court decided the case on narrower grounds by assuming that Quon had a reasonable expectation of privacy in his text messages before finding the city’s search to be reasonable.  Id. at 12.  The Court stated that it "must proceed with care when considering the whole concept of privacy expectations in communications made on electronic equipment owned by a government employer.  The judiciary risks error by elaborating too fully on the Fourth Amendment implications of emerging technology before its role in society has become clear."  Id. at 10.   

The rapidly evolving nature of technology was a major factor in the Court’s reticence to address the broader issue of privacy in the workplace.  Observing that "some states have recently passed statutes requiring employers to notify employees when monitoring their electronic communications," Justice Kennedy explained that "[r]apid changes in the dynamics of communication and information transmission are evident not just in the technology itself but in what society accepts as proper behavior . . .  At present, it is uncertain how workplace norms, and the law’s treatment of them, will evolve."  Id. at 11.  On one hand, the Court recognized that "[c]ell phone and text message communications are so pervasive that some persons may consider them to be essential means or necessary instruments for self-expression, even self identification.  That might strengthen the case for an expectation of privacy."  Id.  On the other hand, the Court noted that "the ubiquity of those devices has made them generally affordable, so one could counter that employees who need cell phones or similar devices for personal matters can purchase and pay for their own."  Id.    

In his concurrence, Justice Scalia challenged the Court’s unwillingness to tackle the privacy issue: "Applying the Fourth Amendment to new technologies may sometimes be difficult, but when it is necessary to decide a case we have no choice. The Court’s implication . . . that where electronic privacy is concerned we should decide less than we otherwise would (that is, less than the principle of law necessary to resolve the case and guide private action)–or that we should hedge our bets by concocting case-specific standards or issuing opaque opinions–is in my view indefensible.  The-times-they-are-a-changin’ is a feeble excuse for disregard of duty."  Id. at 2 (Scalia, J. concurring).   

While Quon‘s narrow holding leaves both employers and employees with little new legal clarity on the privacy rights that attach to employee communications in the workplace, the opinion does place the ball firmly back into the hands of lower federal and state courts to resolve these issues in the near future.  In addition, the dicta in the Quon opinion reaffirms the importance of well-drafted and clearly communicated workplace policies in managing privacy expectations.  Although Quon involved a government employer, the importance of employment policies clearly eliminating expectations of privacy in communications made on employer-owned devices or systems is equally applicable to private-sector employers.  

Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding the issues discussed in this alert.  Please contact the Gibson Dunn attorney with whom you work, or any of the following lawyers. 

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