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| Message Mines |
March 16, 2004 |
By Jim Middlemiss
E-MAIL IS FAST, CONVENIENT AND UBIQUITOUS.
IT’S ALSO A GOLD MINE FOR ANYONE WHO WANTS TO INVESTIGATE YOUR PAST.
Corporate employees who believed e-mail was secure and private got a nasty kick in the pants in January, as a $10-million legal dust up between the Canadian Imperial Bank of Commerce and former employees blew up on Bay St.
By January, about 20 erstwhile employees had jumped the CIBC ship and moved over to upstart investment bank Genuity Capital Markets. Believing that their people and intellectual assets had been cannibalized, their former bosses started to comb through e-mail messages banked on the company’s computers.
They found a lot of interesting messages, and the resulting story highlights the dangers that lurk in e-mail.
In early January, CIBC filed its version of War and Peace, a 655-page legal door stopper that quickly grabbed the attention of Bay Streeters with its disclosures regarding high-profile players, including David Kassie, a former vice-chairman at CIBC who once ran its investment bank, CIBC World Markets, before he was fired and started Genuity. The lawsuit came after 18 CIBC World Market employees joined the upstart Genuity.
The lawsuit contains a number of allegations, including that the original gang of six defectors improperly recruited employees from CIBC World Markets. To support its case, CIBC filed scores of e-mail and BlackBerry exchanges swapped among parties involved in the lawsuit and CIBC employees. It includes one message from CIBC World Markets’ former head trader, who boasts to a CIBC colleague that his move to Genuity means “tons of fun and moula.”
Another e-mail contained a list of names of people who planned to join Genuity, the amount they would earn and the nits they would hold in Genuity Financial Group.
Once the legal brief hit the courts, e-mail quickly became fodder for national newspaper columnists and nightly newscasts.
This pushed to the forefront an issue that really everyone should have already understood: e-mails are not private and they can have far-ranging consequences.
ELECTRONIC FOOTPRINTS
The use of e-mails in legal skirmishes is growing, and electronic records provided the smoking gun in a few high-profile cases.
For example, a recent crackdown by the New York Attorney General on Wall Street investment banks and analysts led to millions of dollars in fines after it was found analysts were touting stocks to the public, yet privately dissing them in e-mails.
Microsoft founder Bill Gates, the doyen of personal computing, was front and centre in an antitrust case in which his e-mails were tendered as evidence by the U.S. government to bolster its case against the computing giant. The parties later settled.
E-mails are a “gold mine” of confidential information, said Jim Orr, a commercial litigator at Affleck Greene Orr LLP in Toronto. “What happens is that people just fly these unformed and not fully considered thoughts back and forth across cyber space.
“A lot of e-mails are really internal conversations, which in the past there would be no record of. They can indicate very clearly the thinking of the company or members of the company.”
Bradley J. Freedman, a lawyer in the technology group at the Vancouver offices of Borden Ladner Gervais LLP, said when it comes to e-mails and instant messages people lose their inhibitions and “say stuff they would never say face-to-face in public, or in more formal type of communications, such as a memorandum or letter. I’m not sure why.”
POISON WORKPLACES
But it’s not just in commercial litigation or regulatory action where e-mails can rear their ugly head; they can also poison internal employee relations.
Cyber stalking, the swapping of off-colour or racist jokes or pornographic images, can result in everything from criminal charges against the perpetrator to harassment lawsuits or complaints under human rights legislation against employers.
Mark Stone, a management-side employment lawyer at Toronto’s Filion Wakely Thorup Angeletti LLP, said most employers have rules in place prohibiting the posting of sexual or offensive content, meaning no naughty photos in the lunch room, for example. “Distributing offensive e-mails is the same.”
That means employers must take steps to protect themselves from the threat of litigation, and bulletproof their e-mail systems.
They need to put proper policies in place and watch how their online systems are used.
Courts take the position that e-mails are similar to business records and documents and are clearly part of the discovery process, the stage before the trial where the warring parties must disclose and exchange relevant information.
HAND OVER YOUR DATA
As part of that, Orr said, court orders “obtaining hard drive are becoming more frequent.” That gives the court access to both current e-mail and those that users deleted. “You get all this stuff that people really don’t think about.”
But that’s just the beginning of the headache. Litigators like looking for needles in haystacks and they believe that somewhere deep in the corporate bowels lay incriminating pieces of information.
So they seek orders demanding firms retrieve and restore e-mails from storage systems.
That is costly. Take the U.S. case involving financial services giant UBS Warburg LLC and a trader who claims she was a victim of gender discrimination. To prove her US$19-million claim, she sought access to e-mails that UBS archived on tape.
UBS objected because of the US$300,000 it would incur restoring them. Tough, the courts said, and ordered UBS to foot the bill.
Overall, electronic document retrieval is a pricey proposition, said Alan Gahtan, a Toronto information technology lawyer.
“The cost of complying with one of those orders can be extremely expensive,” he said.
GET A POLICY
So what should businesses do? Wendy Gross, a lawyer in the technology group at Torys LLP in Toronto, said “we recommend a firm has a policy that deals with communication.”
What won’t work is a prohibition preventing employers from sending personal e-mails. “That’s just not practical. People send e-mails...in their spare time.”
Rather, the policy needs to govern content. She said employees need to “think before they write. Treat every e-mail communication as if it is a formal communication where you are representing the company. “Freedman said employers need to stress there’s no guarantee of privacy, so “don’t put it in an e-mail unless you would like it on the front pages of the national newspapers.”
Or, Gross said, “think about how it would look if it was produced in court.”
Stone said, from an employment-law standpoint, the policy should be in writing and include the firm’s e-mail and Internet resources. “The policy should clearly state employees are not allowed to send or receive e-mail with pornographic or other offensive content. That means both internally and externally.
“Similarly, the policy should clearly state the employer’s Internet resources may not be used for the purposes of accessing Web sites that might contain that type of content.”
The written policy should require employees who receive offensive e-mails to immediately delete them.
FIGURE OUT RETRIEVAL
Gross said “companies also need to develop a policy about how they are going to manage the storage of communication.” Most companies lack sophistication when it comes to tracking or backing up electronic documentation in a way that is easily retrievable.
That’s important, because while e-mails might indicate culpability, they can also indicate innocence and shoot down unfounded allegations. Gross added that such a system should be part of a broader records-management system. “Most companies have not really changed their practices in an electronic world.” They’re used to sticking paper in boxes and sending them to a warehouse.
Freedman said execs need to sit down with the corporate techies and discuss records management procedures, such as the length of time records will be kept, when to dispose of them and how data is physically archived. Many firms use tapes to store data but tapes can erode over time and, in any case, ebuilding the data from tape is expensive, “especially if you’ve got a bunch of high-priced lawyers doing the work for you.”
USING THE STICK
But a policy is only half the equation, Stone said. “Many employers have a policy but don’t bother to enforce it.” Make sure each employee provides you with a written acknowledgment that they have read and understood the policy. They should also be advised a breach of the policy can lead to discipline sanctions and they may be fired.
For Freedman, employee education is the key. “Everyone should know the risks associated with using the technology made available to them.” The biggest risk, he said, lies in e-mail’s staying power: deleting an incriminatory e-mail doesn’t mean it’s gone. “Messages are very difficult to permanently delete. Therefore, they are available in the future to be seen by unintended recipients. Let people know that e-mails last forever.”
As well, companies should monitor the traffic over their e-mail systems. Some industries, like brokerages, are heavily regulated and some firms monitor e-mails and red-flag sensitive exchanges, such as when the phrase “insider trading” appears.
This raises issues of privacy but ultimately, as the Genuity Capital CIBC fall-out shows, there’s already no privacy in e-mails.
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