November 03, 2005

posted by Daniel J. Solove

It seems to me that the best solution for this type of problem is just what the employee filed in (1) and (2). Cussing out your company on a messageboard is patently not a breach of fiduciary duty (anyone disagree?), and it is clear that the suit was used only as a tool to get the employee's information. Hence, the employer violated rule 11 or the state court equivalent, and earned itself abuse of process liability. If those tools were well-used, it would hopefully be enough to deter people from bringing bogus suits to get at the subpoena power. At the same time, the power to use the subpoena in non-bogus suits could be preserved.

I hope the plaintiff also filed a formal disciplinary complaint with the Penn. state bar association. There was a lawyer behind the frivolous lawsuit (and a lawsuit whose purpose is merely to seek discovery is frivolous), and that lawyer should be reprimanded.

Interesting case. I'm not as confident as you that if the subpoena had been challenged, the court would have been reluctant to enforce it. I think it depends, even under the Delaware test, whether the employer had evidence to support its claim of "breach of fiduciary duty and breach of duty of loyalty." I'm not sure where the fiduciary duty comes from, but (without doing any research) the breach of loyalty claim seems at least plausible, where an employee is publicly making statements about the workplace in contravention of the company's anti-harassment policy, even if they are posted while the employee is off-duty and even if they don't create a hostile work environment that the employer would be liable for. And if the employer had a prima facie valid claim, the fact that it chose not to pursue the claim after obtaining the employee's identity and instead dismissed him does not seem to me to give rise to any claims on the part of the employee. If the suit was non-frivolous, then why force the employer to use up court and party resources pursuing its claim when a much more efficient self-help remedy is at hand? I agree that First Amendment and privacy interests are potentially at stake, but that's why some courts have devised a balancing test. If the employer can meet that test, then those interests have been overcome and I don't think it matters why in its heart of hearts the employer brought the suit to begin with.

Bruce: in all the states I'm aware of, a breach of duty of loyalty claim arises only when employee puts his own financial interests above the employers w/in the scope of the relationship (significantly parallel to a fiduciary duty claim) because he takes employer's business opportunities, does business with a competitor, takes kickbacks, does insider trading, cooks the books, etc. It's basically a conflict of interest cause of action. It isn't a "violation of workplace rules" cause of action. NFW could an employer sue an employer for violating the workplace harassment policy under that theory, unless a competitor or someone bribed him to do so...

"If the suit was non-frivolous, then why force the employer to use up court and party resources pursuing its claim when a much more efficient self-help remedy is at hand?"

As a judicial conservative, I don't think that court resources should be used where, as here, a lawsuit was filed (allegedly) not with the intent to recover damages for legally cognizable harms, but rather, merely to obtain information. Indeed, I consider such a lawsuit frivolous by definition. The judicial process answers legal questions and resolves actual cases. It's not to be used a private investigatory firm.

Paul, I don't think the duty of loyalty is quite so restricted. Pennsylvania (where the employer's suit was filed, although the employee was based in W.V.) appears to follow the Second Restatement of Agency, and Section 387 provides: "Unless otherwise agreed, an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency." Comment b elaborates:

b. Scope of duty. The agent's duty is not only to act solely for the benefit of the principal in matters entrusted to him (see §§ 388-392), but also to take no unfair advantage of his position in the use of information or things acquired by him because of his position as agent or because of the opportunities which his position affords. See §§ 393-398. The agent is also under a duty not to act or speak disloyally in matters which are connected with his employment except in the protection of his own interests or those of others. He is not, however, necessarily prevented from acting in good faith outside his employment in a manner which injuriously affects his principal's business. His duties of loyalty to the interests of his principal are the same as those of a trustee to his beneficiaries. See the Restatement of Trusts, § 170.

Mike, I don't think a lawsuit pleading valid claims supported by evidence filed in order to obtain discovery of someone's identity is "by definition" frivolous, at least not if the definition is Rule 11(b). I don't think discovery is an improper purpose if the claim is otherwise valid, and there is no other part of Rule 11 that is even remotely implicated. After all, discovery is explicitly permitted by the rules, unlike the two examples provided in Rule 11(b)(1) (harassment and causing unnecessary delay or expense). It's no different than filing a well-founded lawsuit you have no resources to litigate all the way through, in the expectation that the defendant will settle rather than litigate.

Bruce, so you're saying that if the sole purpose of the lawsuit is to obtain information for use outside a court (i.e., in the employment context), and not to pursue legal remedies, then that lawsuit is neither frivolous nor morally blameworthy?

Yes, I'm saying that where a valid claim exists that is supported by evidence, the fact that discovery may enable you to pursue non-judicial remedies does not make the lawsuit ipso facto frivolous. And in this particular case, it doesn't seem blameworthy to me either.

Bruce, thanks for the candor. I guess we operate from different first premises. I think it's an abuse of the court system to use it as a publicly-subsidized private investigation firm. I don't think one should file lawsuits unless he actually intends to pursue them in court. If someone has to drop a lawsuit for other reasons, then of course, that's fine. But when someone pulls the trigger knowing that he never intends to seek legal rememdies, but merely to dig up information, I'm disturbed.

Bruce: if you read that rule to bar out-of-work criticism of the employer (even nasty, racist criticism), then it would also bar a whole host of other things, including union organizing (except where federally preempted), whistleblowing (ditto), and simple griping. Without doing the research, I find it highly unlikely that saying "wow, my boss is a jerk" at the bar after work gives rise to a cause of action.

A less dangerous interpretation would say that the employee's "duty not to act or speak disloyally" applies for a definition of "loyalty" narrowly limited to those acts that constitute an actual betrayal of the employer, i.e. to competitors or to conflicted self interest, rather than mere misbehavior.

There's also the question of damages. Would you agree that there are not likely to be economic damages to a major corporate employer from the racist rant of one anonymous employee on an internet message board? ("Bigcorp stock plunges on revelation that someone claiming to be an employee of theirs is a racist! Executives leap to their deaths!") So unless there was a plausible claim for injunctive relief (against an internet cussing?), the suit might be frivolous on that basis.

Interesting comments. Mike mentions "if you read that rule to bar out-of-work criticism of the employer (even nasty, racist criticism), then it would also bar a whole host of other things, including union organizing (except where federally preempted), whistleblowing (ditto), and simple griping. Without doing the research, I find it highly unlikely that saying "wow, my boss is a jerk" at the bar after work gives rise to a cause of action."

My case, now being appealed before 2nd circuit court of appeals by my former employer, involves the example given above. I was fired for 'misconduct' and 'disparaging the company' when I made comments on a public forum. The comments were essentially a reply to a message left there by an anti-union writer. I used my real identity for the purpose of credibility as a union organizer. My remarks were within the bounds of "Protected Activity" and the Admin. Law Judge agreed with me, as did the NLRB to the first appeal by the company. As I said earlier, the company appealed again, to the 2nd circuit court.
I posted my original comments at 6:00pm, after working hours, from my home, on my own computer.
The comments I made were primarily reasons that I believed, the employees needed a union. I did make some comments that were ruled as inappropriate by the ALJ, but nonetheless protected activity.
I think that at a civil level, the case you are discussing is still a 1st ammendment issue; and even though the comments were racist and abhorrent, they are protected by free speech rights. My case was NOT about free speech.
Rick White
Alliance@IBM
CWA Local 1701

Nothing in the posting suggests that the employee was a blogger. He was a poster on a message board but there is no reference to any blog.

Duncan -- yes, you're right. The suit was against a poster to an online message board, not a blogger. The issues can obviously extend to bloggers, so the difference isn't too material. But I apologize for the inaccurate description -- and the using the word "online message board poster" is much more clunky than just using the term "blogger."