Commercial Litigation and Arbitration

Attorney-Client Privilege: Use of Corporate Email System to Communicate with Counsel = Waiver Where Employee on Notice That Company May Monitor Emails — Whether Employee Has Legitimate Expectation of Privacy Is Highly Fact-Dependent (Good Quote)

United States v. Finazzo, 2017 U.S. App. LEXIS 3972 (2d Cir. Mar. 7, 2017):


UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgments of the district court are AFFIRMED in part and VACATED and REMANDED in part.

Defendant Christopher Finazzo appeals his conviction and sentence of eight years' imprisonment and three years' supervised release. His sentence was imposed following a jury verdict of [*2]  guilty on: (1) one count of conspiracy to commit mail and wire fraud and to violate the Travel Act--in violation of 18 U.S.C. § 371; (2) fourteen counts of mail fraud--in violation of 18 U.S.C. § 1341; and (3) one count of wire fraud--in violation of 18 U.S.C. § 1343. In addition, Finazzo appeals the $25,790,822.94 forfeiture order, and Finazzo and Defendant Douglas Dey both appeal the district court's $13,690,822.94 restitution order imposed jointly and severally against them.

The charges arose from an alleged scheme in which Finazzo--a merchandising executive at Aéropostale, Inc.1--caused Aéropostale to use South Bay Apparel Inc. ("South Bay")--a company controlled by Dey--as a supplier of certain apparel for retail sale by Aéropostale, in exchange for secret payments to Finazzo of portions of South Bay's profits. On appeal, Finazzo argues that: ... United States v. Finazzo, 2017 U.S. App. LEXIS 3972 (2d Cir. Mar. 7, 2017):

... (9) the district court erred in concluding that Finazzo had waived his attorney-client privilege regarding an email that triggered Aéropostale's investigation of the alleged fraud....

1   Aéropostale is a retailer of casual apparel and accessories primarily targeting teenagers.


G. Attorney-Client Privilege

Finazzo contends that he is entitled to a new trial because "the [*21]  government knowingly used misappropriated attorney-client privileged information" when it used an email Finazzo's attorney sent to him at his Aéropostale email account regarding Finazzo's will, which listed his assets, including his interest in several South Bay entities. Finazzo Br. at 100. "The attorney-client privilege protects communications (1) between a client and his or her attorney (2) that are intended to be, and in fact were, kept confidential (3) for the purpose of obtaining or providing legal advice." United States v. Mejia, 655 F.3d 126, 132 (2d Cir. 2011). "Public, even extrajudicial, disclosures constitute a waiver of the privilege for the communications or portions of communications disclosed." United States v. Jacobs, 117 F.3d 82, 91 (2d Cir. 1997) (emphasis and internal quotation marks omitted), abrogated on other grounds by Loughrin v. United States, 134 S. Ct. 2384 (2014). Thus, "the question of whether the privilege applies . . . involve[s] a determination of whether the claimant asserting the privilege treated the communications in question in such a careless manner as to negate her or his intent to keep them confidential." Mejia, 655 F.3d at 132-33 (alterations and internal quotation marks omitted); see also United States v. DeFonte, 441 F.3d 92, 94-95 (2d Cir. 2006) (per curiam) (noting that attorney-client privilege would be waived if the claimant treated documents at issue "in such a careless manner as to [*22]  negate her intent to keep them confidential"). The burden of establishing the existence of an attorney-client privilege rests with the party asserting it. In re Grand Jury Proceedings, 219 F.3d 175, 182 (2d Cir. 2000). "It is firmly established in this circuit that we review a district court's finding of waiver of the attorney-client . . . privilege[] for abuse of discretion." Id.; see also Mejia, 655 F.3d at 131-32 (applying abuse of discretion review to a district court's finding of waiver of attorney-client privilege).

The district court did not abuse its discretion in finding that Finazzo waived the privilege as to the email. Although the record is unclear regarding whether Aéropostale's 2004 or 2007 policy governing employees' computer usage was in place in August 2006--the time of Finazzo's communication with his attorney Angela Siegel--both policies specifically state that employees "should have no expectation of privacy when using Company Systems." Gov't App'x at 208; Dist. Ct. Dkt. No. 103-4, at 24. In addition, both policies notify employees that Aéropostale may "monitor[], access[], delete[] or disclose[]" all use of Company Systems without permission. Id. Each policy defines "Company Systems" to include "internal and external email." Gov't App'x at 207; Dist. Ct. Dkt. No. 103-4, at 23. In both [*23]  2004 and 2005, Finazzo signed forms acknowledging that he had read the Employee Handbook containing these policies. Furthermore, between 2002 and 2006, Finazzo signed quarterly Representation Letters stating that he was "familiar with the contents of the Employee Handbook." Gov't App'x at 246-69.

Despite Finazzo's familiarity with Aéropostale's computer policies, he used his Aéropostale email address to send and receive emails with his attorney. Specifically, he sent and received emails regarding his will on his Aéropostale email address on June 7, 2006. Notably, when Siegel sent the August 24 email for which Finazzo asserts attorney-client privilege, Finazzo responded from his company email, instructing Siegel to correct the value of one of the assets listed in the email attachment. Other than a self-serving affidavit, there is no evidence that Finazzo made any effort to preserve the confidentiality of these communications. See In re Horowitz, 482 F.2d 72, 80-82 (2d Cir. 1973) (stating that, in a case where privileged information was transferred in a manner that gave another party access to it, "affirmative action to preserve confidentiality" was necessary to preserve the privilege). In these circumstances,5 it was not an abuse of discretion for the district [*24]  court to rule that Finazzo had not carried his burden to show that he had kept the August 24 email confidential. Cf. Mejia, 655 F.3d at 133 (ruling that an inmate's phone call was not protected by privilege because he was aware that his conversation was being recorded).

5   We note that measuring an individual's expectation of privacy in his or her corporate email is a highly fact-dependent inquiry. We need not, and do not, therefore, enumerate any particular dispositive factors.

* * *

We have considered the Appellants' remaining arguments and find them to be without merit. Accordingly, pursuant to this summary order and the opinion issued simultaneously with this order, we AFFIRM in part and VACATE and REMAND in part the judgments of the district court.

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