TRAPPED BY THE INTERNET: A CONTINUING SERIES

YOU CAN'T BE LIABLE FOR INTERNET "CHATS" AMONG YOUR EMPLOYEES... CAN YOU?

Consider this...

You have an office staff of 50 employees. You have heard that most of them subscribe to AOL. You have also heard that for many months, they "talk" to each other about legitimate, work-related issues in an AOL chat room, on their own time, using their own computers. They seek work-related answers, they post work-related tips, they distribute work-related news, and so on. It seems to you to be a fine example of employee initiative, and another testament to the wonders of the Internet.

Last month, however, one of your employees tells you that he has seen postings in the chat room that say he is dishonest and incompetent. You don't like it, but you conclude that you have no right to regulate what employees do on their own time with their own computers, particularly when it comes to free speech. You take a hands-off approach, viewing any action as a no-win proposition.

Uh-oh... In respect to the Internet, the rules change almost daily, and that which was once "common wisdom" is becoming more and more dangerous.

Several years ago, a female pilot brought a sexual harassment complaint against her employer, Continental Airlines. While the suit was pending, several Continental pilots viciously defamed the plaintiff in an Internet chat room hosted by CompuServe, but routinely used by Continental pilots to access schedule and flight information. The plaintiff claimed that Continental should be liable for the defamation, along with the pilots. Continental countered that the pilots did what they did using private computers, on their own time, in a chat room that Continental did not own or control. If a Continental pilot got involved in an auto accident on his own time, was Continental liable for that? If a Continental pilot failed to pay a private debt, was that Continental's problem?

The case worked its way through the lower courts and, finally, reached the New Jersey Supreme Court. Last June, in a unanimous decision, that Court decided that Continental should be liable to the plaintiff, for hundreds of thousands of dollars in damages.

Here's what makes this decision important to you and, perhaps, a signal of much more to come. Most of us would not be shocked if Continental had been held liable in circumstance where the Continental pilots repeatedly defamed the plaintiff in the Continental lunch room or in a Continental cockpit during the Continental work day, and Continental executives knew about it and did nothing to stop it. But none of that happened here. Yet, in a nod to the way in which the Internet is changing our working habits and methods, the Court decided that a private Internet chat room regularly used by Continental employees on their own time for work-related purposes, was an extension of the Continental work place, and the functional equivalent of the lunch room or the cockpit. If Continental was on notice that the defamation was occurring in this new type of "work place" even though it was outside of the normal work day and the normal work premises, Continental had a duty to stop it. The more things change, the more they don't stay the same...

SUMMARY - We think this decision augurs a major change in the perspective business executives need to bring to their liability-avoidance efforts. Companies always knew that they could be liable for the "work-related" acts of their employees, but "work-related" normally meant that which was done on company premises, or on company time.

The Internet has changed all that, and will continue to do so in ways that are becoming increasingly difficult to predict. If Continental knows that a chat room is used by its employees for work-related communications, does it have an affirmative duty to monitor (some would say, spy on) what its employees are saying in chat rooms? It is becoming commonplace for individuals to create their own web sites - would Continental be liable failing to stop an employee who posted defamatory statements about the plaintiff on his private website? Or would the employee have a claim against Continental if he were fired for refusing to give us his right to express his views, however repugnant they might be? This is all uncharted territory. Until the rules become more clear, the involvement of counsel in these kinds of issues is unavoidable.

This much can be said: you need to work with counsel to design updated policies that comply with existing law; you need to design and consistently apply an enforcement method that works within your specific business; you need management training to minimize the likelihood of costly mistakes; you need a means to prove what you did in any given situation so you can protect yourself later; and you need to commit to stadia up to date while the law changes and evolves, as it inevitably will.

We will continue to monitor and report on these developments.

Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.

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