Delaware Bankruptcy Court Declines to Compel Turnover of Email ESI by Yahoo
In re Irish Bank Resolution Corporation Limited, Case No. 13-12159 (Bankr. D. Delaware, Nov. 7, 2016), an Irish company involved in a “large-scale litigation” in Ireland filed Chapter 15 bankruptcy in the U.S. Part of the U.S. bankruptcy concerned loans made to businesses owned or controlled by a man named Sean Quinn and his adult children and the Quinns’ subsequent evasion of repayment on those loans. The Irish courts found that the Debtor company had the right to enforce its right to be repaid on those loans and entered numerous orders against the Quinns, finding that they “engaged in a sophisticated scheme to evade repayment.”
Debtor, however, could not enforce the loans or recover any assets. Debtor determined that the Quinns had used certain email addresses in their scheme, and the English High Court entered an order permitting Debtor to conduct a confidential investigation of multiple entities, including Yahoo UK. Debtor also discovered that the Quinns may have had email addresses serviced by American email service companies, including Yahoo. In the Chapter 15 case, Debtor subpoenaed Yahoo for all ESI related to an email address maintained by a person called Rasimov. Yahoo refused to produce the requested records, citing the Stored Communications Act (“SCA”). Debtor attempted multiple methods to obtain the information from Rasimov directly; Debtor eventually filed a Motion for Turnover against Yahoo.
The court determined that turnover under Section 541 of the Bankruptcy Code was improper, as that section only applied to property of the bankruptcy estate, and the Yahoo email address was not estate property. The court also held that the SCA, which regulates the disclosure of email and other electronic communications by provides to third parties, prevented Yahoo from turning over the email ESI. The court could not find that the request fell under any exception to the SCA. Therefore, the court denied the motion.