In New York, if a company terminates an employee and prohibits that employee from accessing personal information on a company computer, the company may find itself being sued for conversion. A recent decision by the New York Court of Appeals raises the possibility that by prohibiting a former employee from recovering private or personal electronic data from a company computer, the company might be sued for the tort of conversion. In making its decision, the court essentially recognized that electronic data is just another form of personal property protected by the law. Thyroff v. Nationwide Mutual Insurance, 2007 WL 844860 (N.Y. 2007), involved a Nationwide insurance agent who was terminated. The agent kept personal data and customer information on a company computer system, and after his termination, Nationwide denied him access to that information.
The Court of Appeals expanded the tort of conversion to encompass electronic data, reasoning that what was truly valuable about a document is its contents, not the medium of storage. If Nationwide had kept the agent’s personal papers or effects without permission, there would have been no question that the agent could have sued for conversion. The court recognized that more and more information is being stored electronically. Indeed, the court’s own opinion was drafted and stored on a computer system and distributed to the justices by e-mail.
The court treated the electronic data stored on Nationwide’s computer system as if it were a physical item, seeing no “reason in law or logic why this process of virtual creation should be treated any differently from production by pen on paper or quill on parchment.” The court noted that it was not deciding whether all forms of virtual information would fall within the scope of a conversion claim, but it is difficult to imagine what types of stored data might not be subject to a claim for conversion. When terminating an employee in New York, it is critical to recognize that an employee’s privacy rights and property rights may be affected. To avoid the possibility of a claim for conversion when a company terminates an employee, it may be a wise precaution to allow that employee, under supervision, to retrieve personal information stored on a company computer system.