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Legal Report August 2009


PRIVACY. A federal appeals court has ruled that to recover compensatory damages under a law protecting stored electronic communications, plaintiffs must prove that they suffered actual harm. In the case, the court ruled that a plaintiff whose employer accessed her private email account cannot recover compensatory damages even though the employer violated the law.

In January 2001, Edward Leonard hired Bonnie Van Alstyne as vice president of marketing for his company, Electronic Scriptorium, Limited (ESL). While she worked for ESL, Van Alstyne used a company e-mail account. However, she sometimes used her personal AOL account to conduct business.

According to Van Alstyne, Leonard made sexual advances towards her in October 2001. After she rejected him, Van Alstyne’s job was recategorized as a contract position. Three months later, Van Alstyne was fired.

Van Alstyne filed several lawsuits against ESL for sexual harassment, failure to provide unemployment benefits, and failure to pay commissions. Meanwhile, ESL filed countersuits against Van Alstyne.

During the discovery process for these lawsuits, ESL presented evidence from Van Alstyne’s private e-mail account. At a deposition, Leonard admitted that he accessed Van Alstyne’s private account after she was fired from the company. Ultimately, Leonard produced copies of 258 different e-mails he had taken from Van Alstyne’s private account. Leonard had accessed the account from home and while travelling and at all hours of the day.

Van Alstyne filed another lawsuit against ESL under the Stored Communications Act (SCA)—part of the Electronic Communications Privacy Act of 1986—for accessing her private e-mail without her permission. The SCA makes it illegal for anyone to gain unauthorized access to stored electronic communications. A jury found in favor of Van Alstyne, awarding her more than $275,000 in compensatory and punitive damages.

ESL appealed the decision, claiming that Van Alstyne could not recover compensatory damages because she had not suffered actual harm. Under the law, those pursuing civil lawsuits may recover the “sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation.” The SCA provides that the amount recovered be no less than $1,000 per violation. ESL argued that because Van Alstyne had not suffered actual harm, she could not receive the $175,000 in compensatory damages.

The U.S. Court of Appeals for the Fourth Circuit ruled in favor of ESL. In interpreting the SCA, the court found that plaintiffs must show that they suffered actual harm before receiving compensatory damages. While punitive damages and attorney’s fees would still be applicable in the case, the court ruled that the lower court should reevaluate the awards in light of its ruling.

The decision is in direct conflict with district court rulings in Hawaii, Connecticut, and Illinois, all of which found that no actual harm is required to recover compensatory damages under the SCA. (Van Alstyne v. Electronic Scriptorium, U.S. Court of Appeals for the Fourth Circuit, No. 07-1892, 2009)

DRUG TESTING. In a recent decision, a federal appeals court has ruled that new regulations requiring that certain urine drug tests be performed under direct observation are justified and constitutional. The case concerns testing of those in safety-sensitive positions in the transportation industry.

Under U.S. Department of Transportation (DOT) regulations, employees in the aviation, rail, motor carrier, mass transit, maritime, and pipeline industries must pass a urine drug test to perform safety sensitive functions. Direct observation of the test to prevent cheating had been optional until the DOT made it mandatory under new regulations implemented in 2008. The requirement applies to employees being tested after completing a drug treatment program or after failing a previous drug test.

A railway company, along with several transportation unions, filed a lawsuit against the DOT, claiming that the new requirement was unjustified and violated the Fourth Amendment protections against unreasonable search and seizure. The U.S. Court of Appeals for the District of Columbia found in favor of the DOT on both points.

The court ruled that the new regulation was justified based on the variety and availability of products designed to help defeat drug tests. The DOT also cited a Government Accountability Office (GAO) report on drug testing protocols. The GAO found that existing procedures were inadequate to prevent cheating and that undercover investigators were able to provide adulterated samples under those procedures.

The DOT admitted that it could find no direct statistics on the false sample rate, but it argued that this evidence would be difficult to obtain, because false samples would simply be considered drug-free. The court also noted that the new regulations imposed the intrusive protocols only in situations where there was a high risk of cheating.

Second, in considering whether the new procedures violated the Fourth Amendment, the court ruled that the need to ensure transportation safety outweighs the privacy needs of individuals. The court noted that the U.S. Supreme Court has determined that drug testing is permissible in such situations.

In summing up its ruling, the court noted that “the department acted neither arbitrarily nor capriciously in concluding that the growth of an industry devoted to circumventing drug tests, coupled with returning employees’ higher rate of drug use and heightened motivation to cheat…justified the mandatory use of direct observation.” (BNSF Railway Company v. U.S. Department of Transportation, U.S. Court of Appeals for the District of Columbia, No. 08-1264, 2009)


NATIONAL SECURITY LETTERS. A bill (H.R. 1800) introduced by Rep. Jerrold Nadler (D-NY) would amend the Patriot Act to curtail the subpoena power provided to law enforcement via National Security Letters (NSLs). Currently, NSLs are issued in secrecy and do not require court approval. Under the Patriot Act, those who are issued NSLs are prevented by law from discussing them.

H.R. 1800 would require that the government meet certain criteria before issuing an NSL. For example, the government would have to prove that it had facts to suspect wrongdoing before issuing an NSL to a foreign power or agent of a foreign power. Similarly, the bill would prohibit the government from issuing an NSL in an investigation based solely on activities protected under the First Amendment to the U.S. Constitution. The bill would also allow recipients of NSLs to discuss the letter to obtain legal advice.

H.R. 1800 would allow those who are issued an NSL illegally to file a civil lawsuit and obtain damages of up to $50,000.

The bill has 18 cosponsors and has been referred to the House Judiciary Committee and the House Financial Services Committee.

SPRINKLER SYSTEMS. A bill (H.R. 1194) introduced by Rep. James Langevin (D-RI) would provide tax breaks for companies that install automatic fire sprinkler systems. Under the bill, the systems would be counted as five-year property for depreciation purposes. The measure would be retroactive, applying to systems put in place after April 11, 2003.

H.R. 1194 has 72 cosponsors and has been referred to the House Ways and Means Committee.

FOOD SAFETY. A series of bills aimed at improving food safety are currently pending in Congress. Two bills (H.R. 875 and H.R. 1332) introduced by Rep. Rosa DeLauro (D-CT) and Rep. Jim Costa (D-CA), respectively, are under consideration in the House Energy and Commerce Committee.

H.R. 875 would require that the government establish a national food safety program, require that food manufacturers adopt preventive process controls, enforce performance standards for food safety, establish an inspection program, and launch a national food-tracking system. Under the bill, imported food would be required to meet the same standards as food produced in the United States.

The bill would also strengthen foodborne-illness surveillance programs by maintaining a DNA matching system for food-borne illness identification, outbreaks, and containment. The measure would also establish a national public education program on food safety.

H.R. 1332 would allow the government to suspend the registration of a food production facility due to unsafe conditions and issue a recall of adulterated food. Under the bill, food manufacturing companies would pay fees for the inspection and recall programs.

The bill would also establish a food safety verification program for foreign suppliers and would provide for the inspection of foreign facilities registered to import food into the United Sates.

According to a statement made by House Energy and Commerce Committee Chairman Henry Waxman (D-CA), any measures adopted will be designed to work within the existing bureaucracy rather than creating a new agency. “Our first goal should be to address the problems that plague this program where it currently sits,” said Waxman in comments before a recent committee hearing on the issue. “After we finish that job, we can consider whether a reorganization is necessary and, if so, how to go about it.”

BACKGROUND SCREENING. A bill (H.R. 1939) introduced by Rep. Blaine Luetkemeyer (R-MO) would require that employees in the alarm monitoring and security system installation industry undergo criminal background checks. The background screening would include a federal criminal background check to uncover any felony or offense involving dishonesty, false statements, or use of force in the previous 10 years.

H.R. 1939 has two cosponsors and has been referred to the House Judiciary Committee.



BACKGROUND SCREENING. A new law (formerly H.B. 505) enacted in Iowa will require that all volunteers working in the state’s veterans homes who have direct contact with patients or residents undergo a background check. The checks will cover criminal history and claims of dependent adult abuse. Those with criminal records or histories of abuse will not be allowed to volunteer.


METAL THEFT. A new Utah law (formerly S.B. 90) amends existing law to help deter metal theft. Under the new law, any metal that has been burned is classified as “suspect metal” requiring the purchaser to keep records of the transaction, including the name, address, vehicle, and license plate number of the seller. (Burned metal often indicates that it was stolen and the insulation burned off prior to sale.)

Under the new law, anyone who causes damage in the theft or attempted theft of metal is liable for that damage and must make restitution to the property owner.

This column should not be construed as legal or legislative advice.