2nd Circuit Holds That ISP Did Not Violate ECPA When It Acquired E-Mail of Customer With Terminated Account

January 25, 2005. The U.S. Court of Appeals (2ndCir) issued its opinion [13 pages in PDF] in Hall v. Earthlink Network, a dispute regarding an e-mail service provider's termination of service. The District Court granted judgment to Earthlink. The Court of Appeals affirmed.

The Appeals Court held that, for the purposes of the ECPA's prohibition of interception of electronic communications, ISPs do not intercept the e-mail messages of their customers, if they are acting within the ordinary course of their businesses. This might seem like an obvious conclusion. However, the language of the 1986 ECPA, if applied literally, suggests a different conclusion. The Court followed legislative intent, and the principle that absurd results are to be avoided, in applying the statute.

Peter Hall, the plaintiff in the District Court, and the appellant before the Court of Appeals, had an e-mail account with Earthlink. Hall also wrote and produced a minor movie. He used his e-mail account in an attempt to promote the movie. Earthlink terminated his service, at the time of a film festival, on the grounds that he was sending spam, in violation of its terms of service. Earthlink soon reversed itself, and offered to reinstate the account. It also acquired many messages sent to Hall's account, and then gave them to Hall.

Hall filed a complaint in U.S. District Court (SDNY) alleging violation of the Electronic Communications Privacy Act (ECPA), which is a federal claim, and several state law claims -- breach of contract, libel, breach of the covenant of good faith and fair dealing, negligent appropriation of electronic communication, intentional interference with electronic communication, and prima facie tort.

The District Court held that Earthlink's actions did not violate the ECPA. It also held that since Hall's claim for consequential damages was too tenuous to be recoverable, and since his actual damages were small, he failed to meet the minimum jurisdictional amount in controversy for diversity claims.

The Court of Appeals affirmed. It held that Earthlink did not violate the ECPA, which is codified at 18 U.S.C. § 2510, et seq. The basic prohibitions are found at 18 U.S.C. § 2511.

Earthlink acquired and held Hall's e-mail communications. § 2511 provides that anyone who "intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication ... shall be punished" under the statute.

Nevertheless, the Court of Appeals held that Earthlink's actions did not amount to interception. It noted that § 2510(4) provides that "intercept" means "the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device". Then, § 2510(5) excepts "any telephone or telegraph instrument, equipment or facility, or any component thereof ... being used by a provider of wire or electronic communication service in the ordinary course of its business ..."

The Court explained that "EarthLink acquired the contents of electronic communications but did so in the ordinary course of business and thus did not use ``any electronic, mechanical, or other device´´ as defined by the statute."

The Court rejected a literal interpretation of the statute, as urged by Hall, that the ordinary course of business exception does not apply to Earthlink because it did not use a "telephone or telegraph instrument" in acquiring Hall's e-mail.

The Court reasoned that "At the time ECPA was enacted in 1986, ISPs directed e-mail over telephone wires and were therefore included in the ordinary course of business exception." But, the technology has advanced since passage of the ECPA, and it was the intent of Congress to apply the exception to ISPs.

The Court also reasoned that "an interpretation that excludes ISPs from the ordinary course of business exception should be avoided because it would lead to an absurd result. ... If ISPs were not covered by the ordinary course of business exception, ISPs would constantly be intercepting communications under ECPA because their basic services involve the ``acquisition of the contents´´ of electronic communication."

This case is Peter Hall and Big Bad Productions, Inc. v. Earthlink Network, Inc., U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. Docket No. 04-0384-cv, an appeal from the U.S. District Court for the Southern District of New York, Judge Richard Owen presiding. Judge Pooler wrote the opinion of the Court of Appeals, in which Judges Straub and Wesley joined.