In re Toft, No. 11-11049 (ALG), 2011 WL 3023544 (Bankr. S.D.N.Y. July 22, 2011)
In this case, a foreign applicant, Dr. Martin Prager, sought recognition and enforcement of a German court’s “Mail Interception Order” which authorized Prager, as insolvency administrator, to intercept the debtor’s postal and electronic mail. The court, following its determination that there was a sufficient basis to exercise jurisdiction, denied the application upon finding that the relief requested was manifestly contrary to U.S. public policy.
In the course of proceedings before the Munich District Insolvency Court, a “Mail Interception Order” was issued which authorized Prager, as administrator of the German estate, to intercept the debtor’s postal and electronic mail. Prior to application for recognition of the order in the United States, Prager applied for and was granted recognition and enforcement of the order by the English High Court of Justice. Because two of the debtor’s email accounts were stored on servers of ISP providers located in the U.S., Prager then initiated action in the Southern District of New York asking the court to “‘grant comity’ to the orders of the German and English Courts and enter an order . . . compelling the ISPs . . . to disclose to Prager all of the Debtor’s emails currently stored on their servers and to deliver to Prager copies of all e-mails received by the debtor in future.” (Emphasis added.) Further, Prager requested that the order be enforced without notice to the debtor.
Upon determining that there was a sufficient basis to exercise jurisdiction, the court turned to the question of whether the requested relief could be granted. To summarize broadly, the principal issue was whether the requested relief was “manifestly contrary” to U.S. public policy—an admittedly high and sparingly applied standard. Following an extensive analysis, the court held that it was, and denied Prager’s application for recognition and enforcement of the foreign orders. Specifically, citing the Wiretap Act and portions of the Electronic Communications Privacy Act, the court concluded that the requested relief was “banned under U.S. law and would seemingly lead to criminal liability . . . for those who carried it out.” The court further indicated that “[t]he relief sought would directly compromise privacy rights subject to a comprehensive scheme of statutory protection, available to aliens, built on constitutional safeguards incorporated in the Fourth Amendment as well as the constitutions of many States.” “Moreover,” the court continued, the powers sought “go far beyond the powers that have traditionally been afforded to U.S. estate representatives.” As the court explained, a U.S. Trustee is not entitled to a search warrant or to conduct a criminal investigation, nor would a civil subpoena serve to compel an ISP to produce a subscriber’s emails under U.S. law.
The court also took issue with request that the interception of the emails at issue be kept secret from the debtor as this, too, is contrary to U.S. law.
The court concluded that “this is one of the rare cases in which an order of recognition on the terms requested would be manifestly contrary to U.S. public policy, reflected in rights that are based on fundamental principles of protecting the secrecy of electronic communications, limiting the powers of an estate representative, and providing notice to parties whose rights are affected by a court order.”
A copy of the full opinion is available here.