Stored Communications Act Trumps the Bankruptcy Code

Published: Nov. 14, 2016

Updated: Oct. 05, 2020

A Delaware bankruptcy court held that the Stored Communications Act forbids the disclosure of a subscriber’s email content to the representatives of a bankruptcy estate where the subscriber has not given consent. The case, In re Irish Bank Resolution Corp. Ltd. (13-12159), relates to the foreign litigation over the liquidation of Anglo Irish Bank Corporation Limited and Irish Nationwide Building Society. The Foreign Representatives of the IBRC (the successor to those banks) sought email communications from a Yahoo! subscriber who was not a party to the bankruptcy proceedings. That subscriber failed to comply with discovery orders, resulting in the court entering an order deeming the Foreign Representatives to be the “subscribers” of the Yahoo! account, capable of giving consent under the SCA. The Foreign Representatives then moved for an order requiring Yahoo! to turn over the email content, asserting that their consent to disclosure was sufficient. Yahoo objected to the order and forced judicial review.

The bankruptcy court sided with Yahoo!. The court explained that the SCA generally prohibits services from disclosing the content of email communications, unless certain exceptions apply. One such exception is the consent of the user or subscriber to the disclosure. Relying on previous cases that held that the SCA does not include an exception for civil litigation discovery, the court found that people other than the subscriber or user cannot give consent to the disclosure of email content on the subscriber’s behalf.

The bankruptcy court found that it lacked the authority to “deem” the Foreign Representatives to be the subscriber for purposes of the SCA. In other words, even when faced with an intransigent user who has flouted court orders, a court cannot substitute the consent of another party for the user’s actual consent. Accordingly, the court determined that it could not force a service provider to divulge the contents of a private email account solely based on a third-party’s request, noting that the court’s own authority under the Bankruptcy Code cannot override the SCA. Based on the court’s reasoning, a similar conclusion should be reached in all cases where third parties attempt to use the Probate Code, the Rules of Civil Procedure, or other background rules to overcome the SCA.

This opinion continues to underscore the SCA’s strong prohibition against the disclosure of content and the narrow interpretation of the SCA’s exceptions, particularly in the context of ordinary civil litigation.

Disclaimer: ZwillGen represents Yahoo in this matter