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In October 2009, Judge Jean Hamilton made a ruling on a case (Lasco Foods, Inc. v. Hall and Shaw Sales, Marketing and Consulting, LLC, E.D., Missouri). The case involved a former employee who accessed information using a laptop that was issued by his former company. This was done for purposes considered adverse to his former employer, who sought to hold him liable as per the federal SCA (Stored Communications Act). The ruling by Judge Hamilton suggested that existing employees may be held legally responsible as per the SCA, too, if they were to access data from company-issued devices for purposes that violate any company duty of loyalty.
This was a key ruling since the SCA issues criminal penalties – in addition to civil actions – directly against offenders. 18 USC 2701(b), 2707. Millions of American employees are givenlaptops owned by their employers, many of which download information on them for reasons unrelated to company interests. This may transpire while employees are with the company and/or after they leave it. As per the ruling made by Judge Hamilton, thousands of employees could potentially be in jeopardy and face federal prosecution.
Did Judge Hamilton make the right ruling, though? Another ruling made recently indicates the SCA can’t be applied to the situation. The precedent was set in a case from July 2009 (Thule Towing Systems, LLC V. McNallie, E.D. Mich., No. 2:09-cv-10905, Order). Other case laws indicate the SCA is applicable to employees who have access to communications – emails included – that are stored on devices that are company-owned only if they’ve been revoked with written consent.
The decision made by Judge Hamilton was influenced by SCA Section 2701, which states the following:
In this case, Lasco alleged that Hall and Shaw – the defendants – were sales executives that were with the company for quite some time. They were issued laptops to be used explicitly for company purposes. Hall and Shaw opted to launch a business of their own in 2008, one that would’ve competed directly with Lasco. When Lasco got wind of these plans, they accused the duo – who were still under the employ of the company – of accessing, printing, copying, and downloading a significant quantity of data via their laptops on Lasco’s network, and used that content to benefit a competing business. This case was known as Lasco Foods, Inc. v. Hall and Shaw Sales, Marketing and Consulting LLC, E.D. Missouri, No. 4:08-cv-01683, Third Amended Complaint (May 15, 2009).
Judge Hamilton’s reasoning was as follows, as per laws pertaining to principles of agency:
