Sibbie Deal and Calvin Lucas brought a civil action for damages under the federal wiretapping statute against Deal's former employers, Newell and Juanita Spears, doing business as the White Oaks Package Store, for the intentional interception and disclosure of their telephone conversations. The district court awarded statutory damages to Deal and Lucas in the amount of $40,000 and granted their request for attorney fees. Newell and Juanita Spears appealed.

Deal and Lucas cross-appealed the court's refusal to award punitive damages.] BOWMAN, C. J.... Newell and Juanita Spears have owned and operated the White Oaks Package Store near Camden, Arkansas, for about twenty years. The Spearses live in a mobile home adjacent to the store. The telephone in the store has an extension in the home, and is the only phone line into either location. The same phone line thus is used for both the residential and the business phones. Sibbie Deal was an employee at the store from December 1988 until she was fired in August 1990. The store was burglarized in April 1990 and approximately $16,000 was stolen.

The Spearses believed that it was an inside job and suspected that Deal was involved. Hoping to catch the suspect in an unguarded admission, Newell Spears purchased and installed a recording device on the extension phone in the mobile home. When turned on, the machine would automatically record all conversations made or received on either phone, with no indication to the parties using the phone that their conversation was being recorded. Before purchasing the recorder, Newell Spears told a sheriff's department investigator that he was considering this surreptitious monitoring and the investigator told Spears that he did not "see anything wrong with that." Calls were taped from June 27, 1990, through August 13, 1990.

During that period, Sibbie Deal, who was married to Mike Deal at the time, was having an extramarital affair with Calvin Lucas, then married to Pam Lucas. Deal and Lucas spoke on the telephone at the store frequently and for long periods of time while Deal was at work. (Lucas was on 100% disability so he was at home all day.) Based on the trial testimony, the District Court concluded that much of the conversation between the two was "sexually provocative."

Deal also made or received numerous other personal telephone calls during her workday. Even before Newell Spears purchased the recorder, Deal was asked by her employers to cut down on her use of the phone for personal calls, and the Spearses told her they might resort to monitoring calls or installing a pay phone in order to curtail the abuse. Newell Spears listened to virtually all twenty-two hours of the tapes he recorded, regardless of the nature of the calls or the content of the conversations, and Juanita Spears listened to some of them.

Although there was nothing in the record to indicate that they learned anything about the burglary, they did learn, among other things, that Deal sold Lucas a keg of beer at cost, in violation of store policy. On August 13, 1990, when Deal came in to work the evening shift, Newell Spears played a few seconds of the incriminating tape for Deal and then fired her. Deal and Lucas filed this action on August 29, 1990, and the tapes and recorder were seized by a United States deputy marshal pursuant to court order on September 3, 1990....

The Spearses challenge the court's finding of liability. They admit the taping but contend that the facts here bring their actions under two statutory exceptions to civil liability.... The elements of a violation of the wire and electronic communications interception provisions (Title III) of the Omnibus Crime Control and Safe Streets Act of 1968 are set forth in the section that makes such interceptions a criminal offense. 18 U.S.C. § 2511 (1988). Under the relevant provisions of the statute, criminal liability attaches and a federal civil cause of action arises when a person intentionally intercepts a wire or electronic communication or intentionally discloses the contents of the interception. Id. §§ 2511(1)(a), (c), 2520(a).

The successful civil plaintiff may recover actual damages plus any profits made by the violator. If statutory damages will result in a larger recovery than actual damages, the violator must pay the plaintiff "the greater of $100 a day for each day of violation or $10,000." Id. § 2520(c)(2)(B) (1988). Further, punitive damages, attorney fees, and "other litigation costs reasonably incurred" are allowed. Id. § 2520(b)(2), (3) (1988). The Spearses first claim they are exempt from civil liability because Sibbie Deal consented to the interception of calls that she made from and received at the store. Under the statute, it is not unlawful "to intercept a wire, oral, or electronic communication ...

where one of the parties to the communication has given prior consent to such interception," 18 U.S.C. § 2511(2)(d), and thus no civil liability is incurred. The Spearses contend that Deal's consent may be implied because Newell Spears had mentioned that he might be forced to monitor calls or restrict telephone privileges if abuse of the store's telephone for personal calls continued. They further argue that the extension in their home gave actual notice to Deal that her calls could be overheard, and that this notice resulted in her implied consent to interception. We find these arguments unpersuasive.

There is no evidence of express consent here. Although constructive consent is inadequate, actual consent may be implied from the circumstances. See Griggs-Ryan v. Smith, 904 F.2d 112, 116 (1st Cir. 1990). Nevertheless, "[c]onsent under Title III is not to be cavalierly implied.... [K]nowledge of the capability of monitoring alone cannot be considered implied consent." Watkins v. L. M. Berry & Co., 704 F.2d 577, 581 (11th Cir. 1983) (citations omitted). We do not believe that Deal's consent may be implied from the circumstances relied upon in the Spearses' arguments.

The Spearses did not inform Deal that they were monitoring the phone, but only told her they might do so in order to cut down on personal calls. Moreover, it seems clear that the couple anticipated Deal would not suspect that they were intercepting her calls, since they hoped to catch her making an admission about the burglary, an outcome they would not expect if she knew her calls were being recorded. As for listening in via the extension, Deal testified that she knew when someone picked up the extension in the residence while she was on the store phone, as there was an audible "click" on the line. Given these circumstances, we hold as a matter of law that the Spearses have failed to show Deal's consent to the interception and recording of her conversations. The Spearses also argue that they are immune from liability under what has become known as an exemption for business use of a telephone extension....

We do not quarrel with the contention that the Spearses had a legitimate business reason for listening in: they suspected Deal's involvement in a burglary of the store and hoped she would incriminate herself in a conversation on the phone. Moreover, Deal was abusing her privileges by using the phone for numerous personal calls even, by her own admission, when there were customers in the store. The Spearses might legitimately have monitored Deal's calls to the extent necessary to determine that the calls were personal and made or received in violation of store policy. But the Spearses recorded twenty-two hours of calls, and Newell Spears listened to all of them without regard to their relation to his business interests.

Granted, Deal might have mentioned the burglary at any time during the conversations, but we do not believe that the Spearses' suspicions justified the extent of the intrusion. See Watkins, 704 F.2d at 583 ("We hold that a personal call may not be intercepted in the ordinary course of business under the exemption in section 2510(5)(a)(i), except to the extent necessary to guard against unauthorized use of the telephone or to determine whether a call is personal or not."); Briggs v. American Air Filter Co., 630 F.2d 414, 420 n. 9 (5th Cir. 1980) ("A general practice of surreptitious monitoring would be more intrusive on employees' privacy than monitoring limited to specific occasions.").

We conclude that the scope of the interception in this case takes us well beyond the boundaries of the ordinary course of business. For the reasons we have indicated, the Spearses cannot avail themselves of the telephone extension/ business use exemption of Title III.... We agree with the District Court that defendants' conduct does not warrant the imposition of punitive damages. The judgment of the District Court is affirmed in all respects.

Case Questions

1. It is not unlawful to monitor the telephone conversation of an employee if the employee has given prior consent. Did Deal give her employer consent in this case?

2. Because of the recent burglary of the store, did the employer have a legitimate business reason to record and review the employee's phone calls made or received while at work?

3. Under the Watkins precedent, what is the extent to which an employer can monitor personal phone calls to employees within the ordinary course of business exemption of the federal wiretapping law?