Can employer read private e-mail w/o notice?

I was recently terminated by my employer for disclosing "confidential" information. The confidential information was a resignation letter that a former employee copied to me (I forwarded it to two other former employees), as well as other office gossip. He discovered these e-mails by searching my personal e-mail (hotmail) account, not the one provided by the firm. This was done without providing any notice to employees that e-mails were subject to monitoring. The employer only recently provided employees with an office e-mail account(employees had to use their own e-mail accounts before this). Can he get away with that? I feel so violated by the invasion.

There is much more to this story ... including unpaid overtime. He's trying to get me to sign a 7 page release in exchange for severance pay. I think he's nervous.

Help!