In re Irish Bank Resolution Corp. Ltd.

• Decision Date: 07 November 2016
• Docket Number: Case No.: 13-12159 (CSS)
• Citation: 559 B.R. 627
• Parties: In re: Irish Bank Resolution Corporation Limited (in Special Liquidation), Debtor in a foreign proceeding.
• Court: U.S. Bankruptcy Court — District of Delaware

559 B.R. 627

In re: Irish Bank Resolution Corporation Limited (in Special Liquidation), Debtor in a foreign proceeding.

Case No.: 13-12159 (CSS)

United States Bankruptcy Court, D. Delaware.

Signed November 7, 2016

COLE SCHOTZ P.C., David R. Hurst, 500 Delaware Avenue, Suite 1410, Wilmington, Delaware 19801, -and- David M. Bass, Daniel F.X. Geoghan, 1325 Avenue of the Americas, 19^thFloor, New York, New York 10019, Counsel for the Foreign, Representatives of Irish Bank, Resolution Corporation Limited

YOUNG CONAWAY STARGATT, & TAYLOR, LLP, Kathaleen S. McCormick, Patrick A. Jackson, Michael S. Neiburg, Rodney Square, 1000 North King Street, Wilmington, DE 19801, -and- ZWILLGEN PLLC, Robert F. Huff, 300 N. LaSalle Street, Suite 4925, Chicago, IL 60654, -and- Nury A. Siekkinen, 1900 M. Street, NW, Suite 250, Washington DC 20036, Counsel for Yahoo! Inc.

OPINION¹

Sontchi

, J.

INTRODUCTION

Pending before the Court is a motion filed by Kieran Wallace and Eamonn Richardson, the duly appointed and authorized Chapter 15 foreign representatives (the “Foreign Representatives”) of Irish Bank Resolution Corporation Limited (“IBRC” or the “Debtor”), for entry of an order pursuant to 11 U.S.C. sections 542

, 1521(a)(5) and 1521(a)(7) (the “Bankruptcy Code”), directing Yahoo! Inc. (“Yahoo”) to turn over to the Foreign Representatives all electronically stored information contained in the Yahoo Account (as defined below) (the “Turnover Motion”).² Yahoo objects to the relief sought by the Foreign Representatives.

The primary issue is whether the Court should order an email service provider to hand over contents contained in a private email account after the account user evaded the proceeding and failed to comply with several discovery orders. For the reasons set forth below, the Court will deny the Turnover Motion. The Court finds that the Foreign Representatives failed to present sufficient evidence that proves that the contents of the Yahoo Account are part of IBRC's property or relate to IBRC's property or financial affairs. Accordingly, the Court holds that the Foreign Representatives have not met their burden of proof under the turnover provisions of the Bankruptcy Code. The Court further holds that the Stored Communication Act³ (the “SCA”) prohibits, under the circumstances of this matter, the disclosure of information from a private email account without the actual user's consent. Specifically, the Court finds that the SCA and the case law interpreting it do not support the notion of compelling an email service provider to disclose electronically stored information based on a theory of imputed consent or by designating a third-party as the “subscriber.”

JURISDICTION AND VENUE

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157

and 1334. Venue is proper in this District pursuant to 28 U.S.C. § 1410. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (E), (O) and (P) and this Court has the judicial power to enter a final order.

STATEMENT OF FACTS

A. General Background

This motion is the last in a series of motions filed by the Foreign Representatives in an effort to obtain information contained in the email address abdrasim@yahoo.com (the “Yahoo Account”), which is allegedly maintained by one who goes by the name of “Abdullah Rasimov” (“Rasimov”). Generally, this matter is related to a large-scale litigation pending in Ireland (and other jurisdictions) involving the liquidation of IBRC, the successor to Anglo Irish Bank Corporation Limited and Irish Nationwide Building Society (the “Irish Proceeding”).⁴

More specifically, this motion is related to Seán Quinn and his five adult children's (collectively, the “Quinn Family”) efforts to evade repayments on approximately €2.8 billion in loans advanced by IBRC to companies owned or controlled by the Quinn Family. Around May 2011, IBRC attempted to enforce its security interests linked with the loans advanced to those companies. However, soon after, the Quinn Family initiated proceedings seeking to set aside the security interests held by IBRC as invalid and unenforceable on the ground that the underlying lending was illegal. Since then, the Irish Supreme Court has held that IBRC's entitlement to be repaid those challenged loans is enforceable. Furthermore, allegedly, courts in Ireland have found that the Quinn Family have engaged in a sophisticated scheme to evade repayment of the IBRC loans. Numerous orders have been entered against the Quinn Family and their agents in order to prevent the dissipation of IBRC assets. Notwithstanding those orders, IBRC has been unable to enforce its security interests or to recover assets which have been dissipated as part of the alleged scheme and has remain frustrated in its efforts to achieve repayment of the IBRC loans.

On February 21, 2014, after allegedly receiving information from informants about certain emails addresses that were being used in connection with the Quinn Family's scheme, the Foreign Representatives filed an ex parte application with the English High Court (the “English Application”) for discovery against certain respondents, including Yahoo! Inc. UK. Through the English Application, the Foreign Representatives sought to conduct discovery relating to the Quinn Family. On February 24, 2014, the English High Court granted the English Application and entered various orders pertaining to IBRC's requested relief. Among other things, the English High Court permitted a confidential investigation of various respondents, including Yahoo! Inc. UK.

The Foreign Representatives allege that through the information received from the informants and through the discovery permitted by the English High Court, they have discovered various email accounts believed to be connected to the Quinn Family's attempt to conceal assets. Several of those email accounts are maintained and supported by companies providing access to email services operating in the United States. Among those, and at the center of this motion, is a Yahoo email account.

B. Procedural History

i. The Chapter 15 Recognition Proceeding

The Foreign Representatives commenced a voluntary case under Chapter 15 of the Bankruptcy Code by filing a petition, seeking recognition of an insolvency legal proceeding in Ireland, with this Court on August 26, 2013.⁵ On December 18, 2013, the Court entered an Order Granting Recognition of Foreign Main Proceeding and Related Relief (the “Recognition Order”).⁶ Following that, on April 30, 2014, the Court issued an opinion setting forth the basis for the Recognition Order.⁷

ii. Discovery Orders Obtained from this Court

On March 12, 2014, the Foreign Representatives submitted an ex parte motion seeking discovery pursuant to Bankruptcy Rule 2004 from certain email service providers, including Yahoo (the “Discovery Motion”). The Foreign Representatives intended for the discovery to supplement the discovery already ordered by the English High Court. Thus, the Foreign Representatives requested a temporary order mandating that their investigation of Yahoo, among others, be maintained confidential and that the pleadings related to the investigation remain under seal for a period of four weeks, subject to extension for cause. On March 14, 2014, this Court held an ex parte hearing on the Discovery Motion and issued an order approving it (the “Discovery Order”). Following two extensions that were granted by the Court, IBRC filed all of the underlying pleadings, orders and notices of subpoenas on this Court's docket,⁸ and served copies of the same upon members of the Quinn Family and their counsel.

iii. The Yahoo Subpoenas

Following the Court's execution of the Discovery Order, on March 14, 2014, the Foreign Representatives served an initial subpoena upon Yahoo. The Foreign Representatives requested that Yahoo produce all documents concerning or relating to: (a) the subscriber details for the Yahoo Account; (b) the IP login history relating to the Yahoo Account; (c) the IP addresses of computers or devices used to access the Yahoo Account; and (d) other metadata regarding the Yahoo Account. In response, Yahoo produced certain documents and other materials.

On May 29, 2014, the Foreign Representatives served a subsequent subpoena upon Yahoo (the “Follow-up Yahoo Subpoena”). This time, the Foreign Representatives requested that Yahoo produce all electronically stored information contained in the Yahoo Account. While Yahoo made available additional documents in response to the Follow-up Yahoo Subpoena, Yahoo did not produce any emails or other content contained in the Yahoo Account. Yahoo asserted that it was barred from doing so under internal governing policies and the applicable statute (i.e. the SCA).

iv. The 2004 Application

On October 1, 2014, the Foreign Representatives submitted a Motion for an Order Compelling the Production of Documents Pursuant to Federal Rules of Bankruptcy Procedure 2004

(the “2004 Application”).⁹ Through the 2004 Application, the Foreign Representatives asked for of an order compelling Rasimov to provide the documents sought in the Follow-up Yahoo Subpoena. Since the whereabouts of Rasimov is unknown, the Foreign Representatives served the 2004 Application upon Rasimov via the email address associated with the Yahoo Account. The Foreign Representatives received no indication that the 2004 Application was not delivered successfully thereto.¹⁰ The 2004 Application was scheduled for hearing on October 17, 2014. However, no objections were received by any party. Accordingly, the Court cancelled the hearing and entered the proposed order granting the 2004 Application on October 15, 2014 (the “2004 Order”).¹¹ The 2004 Order specifically permitted the Foreign Representatives to serve Rasimov via the Yahoo Account.¹²

Following entry of the 2004 Order, counsel for the Foreign Representatives attempted to serve a copy of the 2004 Order upon Rasimov through the Yahoo Account.¹³ This time, however, the counsel received an automated...