In re Lightning Techs., Inc.

627 B.R. 349

IN RE: LIGHTNING TECHNOLOGIES, INC., Debtor.

Case No. 21-41019

United States Bankruptcy Court, E.D. Michigan, Southern Division.

Signed April 15, 2021

Dean R. Nelson, Jr., Erika D. Hart, Matthew L. Boyd, The Taunt Law Firm, Birmingham, Michigan, Attorneys for Fred J. Dery, Chapter 7 Trustee.

Steven A. Roach, Marc N. Swanson, Miller, Canfield, Paddock and Stone, P.L.C., Detroit, Michigan, Attorneys for Palltronics, Inc. and Solyco Advisors.

Thomas L. Beadle, Beadle Smith, PLC, Rochester Hills, Michigan, Attorney for Jeffrey Owen, Rosie Borowski, Randy Schmidt, and Roland Heiberger.

OPINION AND ORDER GRANTING THE CHAPTER 7 TRUSTEE'S MOTION FOR ORDER CONFIRMING THAT DEBTOR'S E-MAIL SYSTEM, AND ALL EMAILS AND OTHER INFORMATION CONTAINED WITHIN IT, ARE PROPERTY OF THE ESTATE AND MAY BE ACCESSED AND USED BY THE TRUSTEE AND HIS PROFESSIONALS

Thomas J. Tucker, United States Bankruptcy Judge

This case came before the Court for a telephonic hearing on April 14, 2021, on the Chapter 7 Trustee's motion entitled "Chapter 7 Trustee's Motion For Order Confirming That Debtor's E-mail System, And All Emails and Other Information Contained Within It, Are Property of the Estate and May Be Accessed And Used by the Trustee and His Professionals" (Docket # 169, the "Motion"). At the conclusion of the hearing, the Court took the Motion under advisement.

The Court has considered all of the written and oral arguments of the parties who appeared, through counsel, at the April 14, 2021 hearing. And the Court has considered all of the exhibits filed by the Trustee in support of the Motion, as well as the Declaration filed by the Trustee on April 15, 2021 (Docket # 188, the "Declaration").¹ The Court also has reviewed, briefly, the exhibits filed under seal by Solyco, LLC on April 14, 2021.² But the Court has not relied on any of those sealed exhibits in ruling on the Motion today.

For the reasons stated below, the Court will grant the Motion.

The Court finds, and there is no genuine dispute, that:

A. The Debtor, and the Debtor's predecessor, Lightning Technologies LLC, before the 2019 merger of Lightning Technologies, LLC into the Debtor (Lightning Technologies, Inc.)³ (collectively, the "Debtor"), at all relevant times had a policy regarding its e-mail system, including the Office 365 e-mail system (the "E-mail Policy"), as described in all versions of the "Lightning Technologies Employee Handbook," copies of which are attached as Exhibit 3 to the Motion and as Exhibits 1 and 2 to the Declaration. The material terms of that E-mail Policy were the same in all three versions of the Debtor's Employee Handbook.

B. At all relevant times, each of the four individuals who objected to the Motion, i.e. , Jeffrey Owen, Rosie Borowski, Randy Schmidt, and Roland Heiberger (the "Respondents") had actual knowledge and/or constructive notice of the E-Mail Policy, and of all the facts stated in Paragraphs C through F, below.

C. At all relevant times, under the E-Mail Policy, and also under the Debtor's "Microsoft Services Agreement," excerpts of which are attached as Exhibit 2 to the Motion, the Debtor alone owned the Office 365 e-mail system and all of the emails and other information within that system.

D. The E-Mail Policy permitted users, including each of the Respondents, "[i]ncidental and occasional personal use" of the Debtor's Office 365 e-mail system, and "limited use of [that] email system for personal business matters, so long as such use is kept to a minimum and does not interfere with [the user's] work."

E. At all relevant times, the Debtor's policy was, and the E-Mail Policy clearly stated, several times, that the Debtor's Office 365 e-mail system is property of the Debtor, by stating that it is "property of the Company" and "Company property."

F. At all relevant times, the Debtor's policy was, and the E-Mail Policy clearly stated, that the Debtor's Office 365 e-mail system is "subject to monitoring" and "subject at all times to monitoring" by the Debtor, and that the Debtor "may from time to time monitor, log ... employee Internet activity" and "may examine all individual connections and communications ." The E-Mail Policy also stated that "[a]ll emails are archived on the [Debtor's] server in accordance with [the Debtor's] records retention policy, and all emails are subject to review by the [Debtor] ." (Emphasis added).⁴

Based on the foregoing findings, the Court concludes as follows:

G. None of the Respondents could have had, at any time, an objectively reasonable expectation that any e-mail that they sent or received through the Debtor's Office 365 e-mail system, including any e-mails that were for personal use, were or would remain private or confidential. SeePeerenboom v. Marvel Ent. , LLC , 50 N.Y.S.3d 49, 148 A.D.3d 531 (2017) ; and the following cases cited in In re Asia Global Crossing, Ltd. , 322 B.R. 247, 257-58 (Bankr. S.D. N.Y. 2005) ( United States v. Simons , 206 F.3d 392 (4th Cir. 2000) ; Muick v. Glenayre Elec., 280 F.3d 741 (7th Cir. 2002) ; Thygeson v. U.S. Bancorp., 2004 WL 2066746 (D. Or. September 15, 2004) ; Kelleher v. City of Reading , 2002 WL 1067442 (E.D. Pa. May 29, 2002) ; and Garrity v. John Hancock Mutual Life Ins. Co., 2002 WL 974676 (D. Mass. May 7, 2002) ).

H. As a result, none of the Respondents can validly assert that any privilege, including any attorney-client privilege or any joint defense

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