If you have ever fired an employee and confiscated the company-issued laptop, this issue may be of interest.
Background
Louis Thyroff was an insurance agent for Nationwide Insurance. Nationwide terminated his employment and confiscated the laptop that had been issued to him by Nationwide. Thyroff had stored certain personal documents on the laptop and was not allowed to access those records. Some of these records pertained to “his” customers. Thyroff sued Nationwide claiming, among other things, that Nationwide had converted his personal files by not allowing access to them. “Conversion” is the tort that is the counterpart to “theft” in criminal law.
The suit was brought in federal court in New York. Nationwide asserted that a claim of conversion could not exist under New York law for the conversion of intangible property. The trial court ruled against Thyroff, and he appealed. The Second Circuit Court of Appeals determined that New York courts hadn’t ruled on this issue. When sticky questions of state law arise in Federal court, Federal courts may “certify” questions to state courts to get the answer. The Second Circuit asked the New York Court of Appeals “is a claim for the conversion of electronic data cognizable under New York law?”
Result
The New York court held that a claim for conversion was available. Accordingly, the conversion claim was reinstated.
Lessons
This should give any employer pause when confiscating a laptop of an employee who is fired or otherwise terminates his/her employment. Denying any access to information on a laptop, even if it was bought and paid for by the employer, should be carefully considered. In the right circumstances, there are some actions that a company can do to prevent these kinds of claims.
- Don’t deny all access to the files on a confiscated laptop under all circumstances.
- Place restrictions on the placement of personal information on company computers. These can either be stated in personnel policies or enforced electronically, or both.
- Carefully delineate what is the company’s and what is the employee’s. Having a personnel policy that is agreed by the employee that records of a customer are the company’s and not the employee’s can be helpful here.
