The thing about this case is that they used Yahoo Messenger - a free service so the only thing that they owned was the resources (pc, net, his time).
He had a works account and a personal account - the personal account although accessed from work using their resources is not under their control and they should not have any authority to snoop into it's personal contents especially as much of it will\may have been sent to or from his personal account on his own time and own equipment etc.
Should they be able to take my phone off me and read the text and email messages on it just because I have received them while at work?
No they should not and even with this ruling - in the UK they cannot -this ruling does not affect the UK at all.
As mentioned, it all depends upon what is written in your contract, if that contract omits to mention an acceptable use or no use policy for the company resources then they would be on a sticky wicket.
I heard that there were other reasons why this guy was sacked, the internet use was just used to facilitate it.