Wednesday, November 02, 2011

Keylogging, Wiretapping and Employers

This post examines an opinion a federal district court judge recently issued in a civil case involving a former employee’s suit against the company that terminated her employment.

The case is Rene v. G.F. Fishers, Inc., __ F.Supp.2d __, 2011 WL 4349473 (U.S. District Court for the Southern District of Indiana 2011), and this, according to the judge’s opinion, is how it arose:

Lisa M. Rene began working for Defendants G.F. Fishers, Inc. and G.F. Oregon, Inc. at their Southport store in Indianapolis . . . in January 2009. The relationship of Defendants Daniel S. Austad, Rebecca Susan Austad, and Dean Austad to G.F. Fischers, Inc. and G.F. Oregon, Inc., is unclear but irrelevant to the [issues before the court in this instance].

Rene's employment duties included use of the store's personal computer. Before [her] employment, the Defendants installed keylogger software on this computer. This keylogger software recorded all keystrokes made on the store's computer keyboard. It then periodically emailed that information to Dean Austad and other Defendants.

While personal use of the store's computer generally was prohibited, Rebecca and Daniel Austad authorized Rene to access her personal checking account and her personal email account from this computer. After Rene had used the computer to access her email and personal checking accounts, the Defendants informed Rene that they had installed keylogger software on the store's computer.

Using this software, the Defendants acquired Rene's email password and her personal checking account password. The Defendants used these passwords to access and view Rene's email and personal checking accounts, and the Defendants viewed, forwarded, and discussed among themselves some of Rene's email messages. It is unclear whether these messages had been previously read by Rene. The Defendants also viewed and discussed the contents of her personal checking account.

In late May 2009, Rene discovered the Defendants were accessing her email and personal checking accounts. Rene confronted Daniel Austad about this access on June 4, 2009. After this confrontation, Daniel Austad falsely documented poor performance by Rene for the purpose of terminating her employment. As a result of Rene's discovery, the Defendants terminated Rene's employment on June 22, 2009.

Rene v. G.F. Fishers, Inc., supra.

Rene filed a federal lawsuit in which she claimed that “the Defendants' actions violated the Federal Wiretap Act, the Indiana Wiretap Act, and the Stored Communications Act.” Rene v. G.F. Fishers, Inc., supra. The defendants responded by filing a motion to dismiss Rene’s lawsuit pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, which lets a judge dismiss a case if the complaint fails to state a viable cause of action.

The judge began by analyzing the viability of Rene’s claim under the Federal Wiretap Act (FWA) which “criminalizes the interception of electronic communications, 18 U.S. Code § 2511(1)(a), and provides for the recovery of civil damages for an interception, 18 U.S. Code § 2520(a).” Rene v. G.F. Fishers, Inc., supra. Rene claimed the defendants “violated the FWA by intercepting the transmission of her keystrokes as she typed her passwords into the store's personal computer” but they argued that “the capture of keystrokes does not constitute an `interception” as defined in the” FWA. Rene v. G.F. Fishers, Inc., supra.

In analyzing these arguments, the judge noted that the FWA “defines `intercept’ as `the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device.’” Rene v. G.F. Fishers, Inc., supra (quoting 18 U.S. Code § 2510(4)). He also pointed out that, “[i]n addition, interception must occur contemporaneously with the communication.” Rene v. G.F. Fishers, Inc., supra.

Rene argued that “when the keylogger software catches the transmission of a keystroke as it travels from keyboard to computer, a contemporaneous interception has been made” but the judge found that “[w]hile capture and transmission may indeed occur simultaneously, this is not enough.” Rene v. G.F. Fishers, Inc., supra. The defendants claimed that “there was no interception because keystrokes do not constitute `electronic communication,’ defined as `any transfer of signs, signals, writings, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a . . . system that affects interstate or foreign commerce.’” Rene v. G.F. Fishers, Inc., supra (quoting 18 U.S. Code § 2510(12)).

In ruling on these arguments, the judge relied on the 11th Circuit Court of Appeals’ decision in U.S. v. Barrington, (648 F.3d 1178 2011), some of the issues in which I examined in an earlier post. Like other courts, the Barrington court held that to constitute “interception” in violation of the FWA, the interception of communications must occur simultaneously with their transmission, but went further by holding that “`use of a keylogger will not violate the Wiretap Act if the signal or information captured from the keystrokes is not at that time being transmitted beyond the computer on which the keylogger is installed (or being otherwise transmitted by a system that affects interstate commerce).’” Rene v. G.F. Fishers, Inc., supra (quoting U.S. v. Barrington).

This federal judge then explained why Rene’s FWA claim failed under the Barrington court’s reasoning:

The key to the Barrington decision lies in the fact that the transmission of keystrokes exists internally on a computer. The relevant `interception’ acted on a system that operated solely between the keyboard and the local computer, and captured a transmission that required no connection with interstate or foreign commerce to reach its destination. Because the keylogger software in Barrington had not been shown to capture transmissions occurring on a system affecting interstate commerce, [it] did not satisfy the requirements of the FWA. . . .

[W]hile the Defendants' keylogger software may have captured transmissions in transit, the system through which these signals traveled did not affect interstate or foreign commerce. As a result, the intercepted keystrokes are not `electronic communications’ under the FWA. Because the[y] . . . were not electronic communications, they could not be `intercepted’ as that term is defined in the FWA. . . . [T]he Court accordingly holds that the Defendants' keylogger software did not intercept an electronic communication as a matter of law, and Rene's claim for interception must fail.

Rene v. G.F. Fishers, Inc., supra.

The judge then considered the defendants’ challenge to Rene’s claim under Indiana’s version of the FWA: the Indiana Wiretap Act (IWA). Rene v. G.F. Fishers, Inc., supra. The IWA creates a civil cause of action for someone whose “communications are intercepted, disclosed, or used” in violation of the statute. Indiana Code § 35-33.5-5-4.

Rene argued that “by accessing, viewing, and forwarding her email messages and other information obtained by the keylogger software, the Defendants have violated the IWA.” Rene v. G.F. Fishers, Inc., supra. The Defendants claimed that because Rene's FWA claim failed, “her claim under the IWA must also fail, because, they assert, the definition of interception under the IWA is `nearly identical’” to the FWA’s definition of interception.” Rene v. G.F. Fishers, Inc., supra. The judge did not agree.

He noted that the IWA defines interception differently than the FWA. The Indiana statute defines it as ““the intentional recording or acquisition of the contents of an electronic communication by a person other than a sender or receiver of that communication, without the consent of the sender or receiver, by means of any instrument, device, or equipment under this article”, a definition that does not include the requirement that the communication be transmitted by a system “affecting interstate or foreign commerce.” Rene v. G.F. Fishers, Inc., supra (quoting Indiana Code § 35-33.5-1-5 & 18 U.S. Code § 2510(12)). He found this distinction was critical with regard to the viability of Rene’s IWA claim:

Absent this phrase, the transmitting system at issue -- the cord between keyboard and computer -- may satisfy the. . . . requirements for `electronic communication’ under the IWA. . . . While the FWA requires that the interception occur contemporaneously with transmission by a system affecting interstate commerce, the IWA appears to merely require that the interception occur contemporaneously with transmission by a system. For this reason, even if, as the Defendants' claim, interpretation of the IWA follows federal case law as far as the text allows, Rene's IWA claim survives.

Rene v. G.F. Fishers, Inc., supra.

Finally, the judge addressed the defendants’ challenge to Rene’s claim under the Stored Communications Act (SCA), 18 U.S. Code §§2701 – 2712. Rene v. G.F. Fishers, Inc., supra. He began his analysis by noting that the SCA (i) “prohibits `intentionally accessing without authorization a facility through which an electronic communication service is provided,’ and thereby obtaining access to an “electronic communication while it is in electronic storage’” and (ii) “provides for the recovery of civil damages by a person aggrieved by a violation of the statute.” Rene v. G.F. Fishers, Inc., supra (quoting 18 U.S. Code § 2701(a) and citing 18 U.S. Code § 2707(a)).

Rene argued that the defendants “violated the SCA when they accessed her email messages” but they claimed that “any email messages viewed by them were not in `electronic storage,’ and, as a result, do not fall within the protections of the statute.” Rene v. G.F. Fishers, Inc., supra. The judge explained that the SCA defines electronic storage as “`any temporary, intermediate storage of a[n] . . . electronic communication incidental to the electronic transmission thereof’” and “`any storage of such communication by an electronic communication service for purposes of backup protection of such communication’”. Rene v. G.F. Fishers, Inc., supra (quoting 18 U.S. Code § 2510(17)(A)-(B)).

The defendants argued that “whether opened or unopened, email messages are not in electronic storage.” Rene v. G.F. Fishers, Inc., supra. And the judge agreed that, under current federal case law, it is

unclear whether opened email messages are in electronic storage. . . . However, the Court need not resolve this issue now, for, consistent with numerous other courts, the Court determines that at a minimum email messages that have reached the addressee's inbox, but which have yet to be opened by the addressee, are in `temporary, intermediate storage.’ . . . [Crispin v. Christian Audigier, 717 F.Supp.2d 965 (U.S. District Court for the Central District of California 2010)]. . . .

As a footnote in Crispin explains, the distinction critical to these courts' holdings is rooted in the state of technology when the SCA was enacted. . . . Passed in 1986, the SCA reflects a time when `multiple service providers [stored] communications briefly before forwarding them on to their next destination or while awaiting download by the recipient.’ Id. . . .

Insofar as an email message waiting to be downloaded had yet to travel the channel between server and local computer, it remained in temporary, intermediate storage incident to transmission. Similarly, inasmuch as an email waiting in an inbox has yet to be accessed by the addressee, even though it may be kept after viewing only on the regional server, it too has yet to travel to its ultimate destination.

Rene v. G.F. Fishers, Inc., supra.

The judge explained that while “Rene's complaint does not state whether the email messages accessed by the Defendants had already been opened by her,” she is not “required to allege such details at this stage. By alleging that the Defendants made unauthorized access to her email, Rene has satisfied her burden of asserting a violation of the SCA.” Rene v. G.F. Fishers, Inc., supra. He therefore granted the defendants’ motion to dismiss the FWA claim but denied it as to the IWA and SCA claims. Rene v. G.F. Fishers, Inc., supra.

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