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Second Circuit Holds that Telephone Monitoring in the Employer's "Ordinary Course of Business" Does Not Violate Federal Wiretapping Laws

February 1, 2000

On January 21, 2000, the U.S. Court of Appeals for the Second Circuit in New York affirmed summary judgment for an employer whose recording of employee telephone conversations had been challenged as a violation of federal wiretapping statutes. Arias v. Mutual Central Alarm Svcs., Inc., Docket No. 99-7240, 2000 WL 44053 (2d Cir. Jan. 21, 2000). The federal law at issue, Title III of the Omnibus Crime Control and Safe Streets Act of 1968 ("Title III"), generally prohibits the interception of wire, oral or electronic communications by means of any electronic, mechanical or other device. See 18 U.S.C. § 2511(1)(a) -(d). In Arias, however, the Second Circuit concluded that the employer's recording, or "interception", of employee's telephone calls did not violate Title III because the recording was conducted in the employer's "ordinary course of business."

Facts of the Case

The employer, Mutual Central Alarm Service, provides central station alarm services. When a customer's burglar or fire alarm is tripped, the Company contacts the police, fire department or other emergency service provider. Consistent with industry practice, the Company records (by means of a dictaphone connected to the Company's telephone lines) all telephone calls to and from the central station. On occasion, Company officials listen to employees' recorded telephone conversations. At no time relevant to the lawsuit were Company employees informed that their telephone calls were being recorded; in fact, plaintiffs alleged that they were specifically told that the Company did not record their calls.

Lower Court Decisions

The district court found that Mutual Central's blanket recording of employees' telephone conversations was lawful because it was conducted in the Company's ordinary course of business. The court explained that "an action is taken in the ordinary course of business if it is a routine activity of the business in furtherance of a legitimate business goal. … Here, the defendants' actions in recording … the telephone traffic into and out of their premises was amply justified by their legitimate interests in timely provision of emergency services, ensuring employee fidelity, and protecting themselves against unfounded claims. " Arias v. Mutual Central Alarm Svcs., Inc., 182 F.R.D. 407, 416-17 (S.D.N.Y. 1998). Notwithstanding this conclusion, the district court initially denied Mutual Central's motion for summary judgment on the grounds that Mutual Central may have listened to some recorded conversations outside the scope of the "ordinary course" exception to Title III.

Thereafter, Mutual Central renewed its motion for summary judgment, arguing that the only alleged "interception" on which plaintiffs based their claims was the Company's recording of their telephone conversations, not the Company's subsequent review of recorded calls. This time, the court granted Mutual Central's motion and dismissed the case based on its prior finding that the recording of employees' telephone calls fell within the "ordinary course" exception.

Appeal to the Second Circuit

On appeal, plaintiffs argued that Mutual Central's surreptitious, 24-hour recording of all telephone conversations -- including personal and private conversations -- does not fall within the "ordinary course of business" exception to Title III. The Second Circuit disagreed, opining that, because a separate exception to Title III exists for recording with the permission of one of the parties to the intercepted communication, such permission is not also a necessary prerequisite to reliance on the "ordinary course" exception.

The Court went on to find that Mutual Central's recording of telephone calls was supported by legitimate business reasons: "[c]entral station alarm companies are the repositories of extremely sensitive security information, including information that could facilitate access to their customers' premises. Further, because such companies are contracted to contact promptly the various authorities and emergency services, accurate recording of such calls may assist that company, its customers and the police and fire departments." 2000 WL 44053, at *7. According to the Court, these reasons justified both the 24-hour scope of the recording, and the alleged lack of notice to employees that their calls would be recorded.

Final Thoughts

While the Arias decision may provide some refuge for employers wishing to monitor employee telephone calls, we caution employers to recognize the limited applicability of this decision. Because Arias was decided on the basis of very specific underlying facts, employers should seek legal counsel before deciding that their own "legitimate business needs" would similarly justify surreptitious monitoring of employee communications. Employers must also recognize that applicable state law may impose additional restrictions on their ability to monitor employee communications. In Connecticut, for example, employers who engage in any type of electronic monitoring must give prior notice to employees, informing them of the types of monitoring that may occur. These employers are also required to conspicuously post notices describing the types of electronic monitoring they may engage in. See C.G.S.A. § 31-48d.