ASSIGNMENT 3 – PRIVACY LAW
Paul Robinson is the Chief Compliance Officer for Lucid Marketing Company (Lucid), a prominent company that specializes in streamlining business operations with marketing strategies. Over the past year, Paul has made some questionable decisions at work; decisions that may now cost him his job. He comes to your law firm seeking counsel on what potential legal issues the company (or he) may face.
One year ago, the U.S. government passed a law called the “Do-Not-Email National Registry Act.” The Act was designed to prohibit commercial email solicitations to an individual unless the business was able to obtain express written consent from the individual to receive commercial email solicitations. The framework was originally designed by the FTC, which reasoned that user privacy rights were at issue and that “consumers needed protection from harassing business email solicitations.” The FTC briefly considered an approach similar to the National Do-Not-Call Registry, but it was quickly shot down when consumer advocate groups began protesting the FTC for “putting big business before the little guy.” The law will take effect one year from today.
Since Lucid’s primary area of business is offering total marketing solutions to its business clients, this law could potentially cripple the organization. Accordingly, Paul felt the need to hire outside counsel to challenge the law. Last month, outside counsel recently filed a complaint on Lucid’s behalf against the FTC. Legal bills already total $100,000 and the proceedings have just started. It is estimated that the total legal bill will be over $1 million dollars. Lucid’s Board of Directors is very concerned with Paul’s decision to challenge the law. They are not sure if Lucid will be successful. They wanted to sell the company while it still had value, but now they have no choice but to take their chances in litigation since Paul blew through a good portion of their liquid assets on the pending litigation.
One bright spot in Lucid’s operation is their affiliated company, Lucid News (LN). Over the years, Lucid has benefited greatly from having a sister relationship with LN. LN has managed to provide a good spin to Lucid’s otherwise disastrous past year. However, the State police authorities have been recently investigating LN for a variety of alleged illegal activity, including fraud, money laundering and drug trafficking. As Chief Compliance Officer for both operations, Paul was shocked when State police authorities stormed LN’s headquarters and ransacked it searching for evidence of criminal activity. Paul was caught off guard largely because the police supplied the search warrant five minutes before entering the premises. Paul expected that the police would have issued a subpoena for all the documents seized as part of the search. Paul argued that a subpoena would have been more appropriate for what the police wanted to obtain. Some of the evidence obtained indicated that LN had been collecting large sums of cash (over $800,000) and depositing it in a local bank over a period of time. The cash was deposited in ten even installments and left no paper trail.
Paul has also been dealing with Human Resources over the past few months Lucid’s recent implementation of a drug testing policy. One employee was discharged for refusing to submit to a drug test after the employee learned that Lucid tested for illegal drugs, legal prescription medication and diabetes. Paul had no choice but to release the employee since Lucid’s “Employee Handbook” specifically states that, “as a condition of employment, Lucid may test for illegal drugs, legal prescription medication and diabetes.” In addition to providing notice through the Employee Handbook, Lucid also sent out a company-wide email notifying all employees of the new drug testing program.
Another employee was discharged after Lucid’s information security team recorded an incoming call from a client to the employee. The first ten minutes of the conversation was spent discussing what types of services Lucid’s provides and obtaining general pricing information. However, during the last five minutes of the conversation, the caller began to flirt with the employee, even asking the employee out for a drink after work. The employee was flattered, and agreed to “skip out a few minutes early” so they could meet at a local pub. Lucid’s Employee Handbook states that, “as a condition of employment, all incoming and outgoing calls may be monitored.”
Your supervising attorney asks you to prepare a memo discussing all potential privacy-related issues in Paul’s case. You are to advise your supervising attorney on the likely outcome of each issue, citing appropriate authorities.
ASSIGNMENT 3 – PRIVACY LAW