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Another Reason to Exercise Care With E-Mail

Dojang from KoreaAn appellate court in New York recently decided a case that serves as yet another reminder to be careful when sending an email.  In Forcelli v. Gelco Corp., 109 A.D.3d 244 (2d Dep’t 2013), the Appellate Division, Second Department, held that an email message satisfied the statutory criteria for a binding and enforceable stipulation of settlement.  While it is not surprising that parties can form a contract by email, it is somewhat surprising that the court here held that, under the facts of this case, an email constituted a stipulation of settlement in the absence of a handwritten signature.

In Forcelli, a personal injury action arising out of a multi-party automobile accident, the plaintiff’s attorney and the insurance adjuster reached an agreement regarding settlement following an unsuccessful mediation involving all the parties.  After agreeing on the amount of the settlement, the adjuster sent an email to plaintiff’s attorney, confirming that the plaintiff’s attorney accepted the adjuster’s offer of $230,000 during their telephone conversation, and further noting that the parties agreed that the plaintiff’s attorney would have his client sign the medicaid form and a general release and stipulation of discontinuance.

The next day, the plaintiff signed the release, but before it was forwarded to the insurance adjuster, the trial court granted the defendants’ motion for summary judgment, which resulted in the dismissal of the plaintiff’s complaint.  When the defense attorney learned that the settlement papers had been received by the insurance adjuster, the defense attorney sent a letter to the plaintiff’s attorney rejecting the settlement papers, claiming that there was no settlement consummated between the parties in accordance with the statutory requirements for stipulations of settlement.  Thereafter, the plaintiff’s attorney filed a motion, seeking to vacate the summary judgment order of dismissal.  That motion was granted, resulting in this appeal.

Where a settlement is not made in open court, the civil practice law and rules provide that a settlement agreement will not be binding “unless it is in a writing subscribed by [the party] or his attorney.”  Also, since settlement agreements are subject to the principles of contract law, all material terms must be set forth and there must be a manifestation of mutual assent in order for the agreement to be enforceable.

After noting that courts have “long recognized that traditional correspondence can qualify as an enforceable stipulation of settlement”, the Appellate Division discussed the issue of whether an email could be “subscribed” because it cannot be “signed in the traditional sense.”  In analyzing this issue, the court first noted that two other departments have held that emails could constitute signed writings satisfying the requirements of a stipulation of settlement.  The court then observed that “given the now widespread use of email as a form of written communication in both personal and business affairs, it would be unreasonable to conclude that email messages are incapable of conforming to the criteria of [the civil practice law and rules] simply because they cannot be physically signed in a traditional fashion.”  Finally, after noting that this conclusion is buttressed by reference to the New York State Technology Law, the court held:

[W]here, as here, an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within he meaning of [the civil practice law and rules] so as to constitute an enforceable agreement.

However, one factor that the court considered here was the fact that the insurance adjuster ended with the expression “Thanks,” followed by the insurance adjuster’s full type-written name.  The court noted that, “This indicates that the author purposefully added her name to this particular email message, rather than a situation where the sender’s email software has been programmed to automatically generate the name of the email sender, along with other identifying information, every time an email message is sent.”  Thus, whether or not there is a subscribed writing in a future case may very well depend on whether the author actually typed his or her name, or simply used an automatically-generated email “signature.”

As I read about this case, I couldn’t help but wonder how far we’ve come from the days of wax seals.  Now, you do not even need an actual hand-written signature for a subscribed writing.  But, I still like the custom-made dojang that my wife brought me back from her trip to Korea last summer.  These are “seals” often affixed to official documents in Korea.  If you look closely in the picture above, you can see my name carved in the seal, along with what I believe to be my name written in Hangul.  Too bad I won’t need it to confirm any stipulations of settlement.


Do You Have Reasonable Expectation of Privacy When Using Work E-mail?


Maybe not.  Unfortunately for a former Aeropostale executive, the United States District Court for the Eastern District of New York recently held that he did not have any reasonable expectation of privacy in an e-mail he received from his private attorney at his work address.  The case of United States v. Finazzo highlights the risks inherent in using your employer’s e-mail for personal communications–especially when those communications would otherwise be privileged.  In this case, the e-mail at issue ultimately lead to the employee’s termination, and subsequent prosecution.

Mr. Finazzo–a former executive at clothing retailer Aeropostale–was charged with a fraudulent scheme in which he allegedly received kickbacks from certain transactions between Aeropostale and South Bay Apparel, Inc., a clothing vendor controlled by another individual (Douglas Dey).  Although the indictment alleges that the scheme began in 1996, Aeropostale apparently did not discover it until 2006, while undertaking an unrelated forensic investigation.

During the investigation, an e-mail from Mr. Finazzo’s personal attorney was discovered in his work e-mail account.  In the e-mail, Mr. Finazzo’s attorney asked him to review an attached asset list, and confirm the values of various assets for the purposes of creating a will.  Among the assets listed were several companies co-owned with Mr. Dey, including South Bay Apparrel, a  company that served as a primary vendor of Aeropostale merchandise.  Upon learning that Mr. Finazzo had undisclosed ownership interests in companies owned by one of Aeorpostale’s primary vendors, Aeorpostale decided to terminate Mr. Finazzo for cause.

This case came to be decided because Mr. Finazzo was asking the court for an order precluding the government from introducing the e-mail (and anything derived from the email) at trial.  Ultimately, the court denied Mr. Finazzo’s motion.  The court’s decision turned on whether Mr. Finazzo had a reasonable expectation of privacy in his work e-mail account.  Under the facts of this case, the court held that he did not.

In rendering its decision, the court noted that it had before it several versions of Aeropostale’s policies governing its employees’ use of company e-mail dating back as early as 1999.  Although each policy had slight variations, and in some cases even permitted incidental personal use, they all stated that the employee “should have no expectation of privacy when using Company Systems.”  The policies also reserved a right by the company to monitor, access, delete or disclose employees’ e-mails at any time without further permission. Additionally, in each case, Mr. Finazzo also signed receipts, acknowledging that he had read and understood the policies.

At first blush one aspect of this case seems unfair to Mr. Finazzo.  How could the court hold that he waived his privilege with respect to the contents of this communication from his attorney when he was the recipient of the e-mail, not the sender?  This is because Mr. Finazzo has not–indeed he could not–allege that his attorney looked up his Aeropostale e-mail address and unilaterally sent him confidential information.  “Rather, Finazzo chose to communicate with his lawyer through a medium in which he had no expectation of privacy, thus inviting responses via that same medium.”

Mr. Finazzo also did not simply delete the allegedly confidential e-mail.  He admitted that after he received it, he forwarded it to his personal, non-Aeropostale e-mail account before he deleted it.  Thus, after he received the e-mail and recognized it as confidential, “he then turned around and sent it back through Aeropostale’s e-mail servers to another account. ”  In so doing, he allowed Aeropostale another opportunity to see the e-mail.  Thus, according to the court, “even if Finazzo were correct that his ‘mere receipt’ creates some legally cognizable distinction, such would be unsupported by his own record.”  Mr. Finazzo both sent and received the privileged e-mail.

This is not the first time a court has held that an otherwise privileged e-mail communication loses its protection because it was sent from a work e-mail account.  But, it serves as an important reminder.  Every day, many of use our work e-mail accounts to send and receive personal messages.  While workplaces have become increasingly willing to permit some incidental personal use, one must always be mindful of the nature of the communication.  If the communication conveys confidential or other information that should not be widely disclosed, think twice before hitting “send.”

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