Tale of the tape: Beware acting on recorded conversations

Employers are sometimes tempted to monitor and record employees’ communications and activities. That can backfire.

Fact is, there are limits on how employers can monitor employees. The 7th Circuit Court of Appeals recently addressed whether an employer may be liable for recording an employee’s private conversation in the workplace.

In McCann v. Iroquois Memorial Hospital (622 F.3d 745, 7th Cir., 2010), the court decided a lawsuit brought by an employee and former employee under the federal Wiretap Act (18 U.S.C. §§ 2511, 2520), which prohibits intentionally intercepting an oral conversation and intentionally disclosing or using the contents of such a conversation while knowing it was unlawfully intercepted.

Tape left running?

In February 2006, Valerie McCann went to Iroquois Memorial Hospital to visit Dr. Leslie Lindberg. McCann needed Lindberg to sign checks for the Independent Physicians Association, where they both worked.

McCann, formerly the director of physicians’ services at Iroquois Memorial, had been recently terminated in a staff reorganization ordered by the hospital’s new CEO Stephen Leurck. Lindberg worked at the hospital as a physician and provided radiology services.

McCann went to Lindberg’s office where Lindberg was reading a report into his dictation machine. During their conversation, McCann and Lindberg criticized Leurck and the trustees.

While they were talking, Susan Freed, a hospital employee, entered Lindberg’s office, picked up forms next to Lindberg’s dictation machine and left the office. Unbeknownst to McCann and Lindberg, the dictation machine was turned on in the middle of their conversation, recording their criticism of hospital administrators.

Lindberg’s dictated reports and the recorded conversation were sent to a transcriber, who alerted Freed to the conversation. Freed listened to the tape and told the transcriptionist to transcribe it. Then she told Leurck that Lindberg had accidentally left the machine running and suggested he listen to the recording.

After he did, Leurck told the trustees about the conversation. Soon, Lindberg’s physician privileges at the hospital were terminated and McCann was banned from entering the hospital.

The lawsuit’s allegations

Lindberg and McCann sued Freed, Leurck, the hospital, and the hospital’s Board of Trustees, arguing that they violated the Wiretap Act. They claimed the defendants violated the act when Freed intentionally intercepted their conversation and disclosed the recording to Leurck, who then disclosed it to the trustees. They also said it was a violation to use the recording’s contents to justify sanctioning Lindberg and McCann.

The plaintiffs alleged that the defendants knew or had reason to know that the recording of their private conversation was made unlawfully, which is a requirement to impose liability under the Wiretap Act. However, a district court issued a summary judgment in favor of the defendants.

The crucial question: intention

Lindberg and McCann appealed, arguing that a court still had to decide whether Freed intentionally recorded their conversation.

Freed denied doing so and said she believed that Lindberg forgot to turn off his dictation machine when McCann came to his office. The plaintiffs argued that when Freed picked up papers next to the machine, she intentionally turned it on.

The 7th Circuit held that plaintiffs’ testimony—in addition to the fact that the machine was turned on in the middle of their conversation, plus Freed’s known dislike of Lindberg’s work—provided circumstantial evidence that Freed intentionally turned on the machine.

Accordingly, the court vacated summary judgment for Freed and the hospital, holding that there was an issue of material fact as to whether Freed intentionally intercepted Lindberg and McCann’s conversation.

The court let Leurck and the trustees off the hook, because they could be liable under the Wiretap Act only if they knew or had reason to know the recording was made illegally and they used or disclosed the recording.

The court said Leurck wasn’t liable because it appeared that he had no reason to think the recording violated the law. The trustees weren’t liable because Lindberg and McCann identified only one trustee who they believe had reason to know the conversation was illegally recorded. However, that trustee didn’t use or disclose the transcript.

What employers should do