Tech Bankruptcy
July 16, 2007
A follow-up to Thryoff
A few weeks ago I posted about the recent New York Court of Appeals decision in Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283, 2007 WL 844860 (N.Y. 2007), which held that a plaintiff could sue for conversion based on a defendant's refusal to allow access to electronic information.
I recently discovered a California decision along the same lines. In American Federation of State, County and Municipal Employees, Local 2620 v. United Professionals, 2006 WL 4088322 (Cal. Sup. 2006), former union officers took information from a union membership database. The California Superior Court judge noted that it was well established under California law that a claim of conversion could be brought whenever a physical medium containing electronic information is taken. The taking of the physical medium (like a computer or a computer disk) allowed for a claim of conversion. The measure of damages would not be limited, however, to the value of the medium. The plaintiff would also be entitled to damages based on the value of the data contained in the physical medium.
In the instant case, it was not clear how the former union officers took the data. However, the Court did state that "the intangible interests are reflected in something tangible that was physically taken." The physical item could be diminimus, such as a computer disk, without effecting the outcome. Thus, the Court held the plaintiff was likely to prevail on its claim for conversion.
I recently discovered a California decision along the same lines. In American Federation of State, County and Municipal Employees, Local 2620 v. United Professionals, 2006 WL 4088322 (Cal. Sup. 2006), former union officers took information from a union membership database. The California Superior Court judge noted that it was well established under California law that a claim of conversion could be brought whenever a physical medium containing electronic information is taken. The taking of the physical medium (like a computer or a computer disk) allowed for a claim of conversion. The measure of damages would not be limited, however, to the value of the medium. The plaintiff would also be entitled to damages based on the value of the data contained in the physical medium.
In the instant case, it was not clear how the former union officers took the data. However, the Court did state that "the intangible interests are reflected in something tangible that was physically taken." The physical item could be diminimus, such as a computer disk, without effecting the outcome. Thus, the Court held the plaintiff was likely to prevail on its claim for conversion.
Labels: conversion, electronic records
¶ 2:53 PM 0 comments
June 10, 2007
A new tool for obtaining electronic records
As a chapter 7 bankruptcy trustee, I'm always looking for new ways to ensure debtors turn over their financial records. I now have a doozy, thanks to the New York Court of Appeals.
In Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283, 2007 WL 844860 (N.Y. 2007), the Court of Appeals of New York held that the tort of conversion applies when a defendant denies access to electronic computer information. Thyroff was an insurance agent. When Nationwide Mutual terminated its relationship with Thyroff, it allegedly denied Thyroff access to information he had maintained on Nationwide's computers. Thyroff sued Nationwide for conversion in Federal Court, which filed a motion to dismiss. When the case reached the Court of Appeals for the Second Circuit, it certified the following question to the Court of Appeals of New York: "is a claim for the conversion of electronic data cognizable under New York law?"
The state court said yes. Which means, for all practical purposes, that if a principal of a business debtor fails to turn over electronic records to a trustee, the trustee can sue him for damages - at least in New York.
In Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283, 2007 WL 844860 (N.Y. 2007), the Court of Appeals of New York held that the tort of conversion applies when a defendant denies access to electronic computer information. Thyroff was an insurance agent. When Nationwide Mutual terminated its relationship with Thyroff, it allegedly denied Thyroff access to information he had maintained on Nationwide's computers. Thyroff sued Nationwide for conversion in Federal Court, which filed a motion to dismiss. When the case reached the Court of Appeals for the Second Circuit, it certified the following question to the Court of Appeals of New York: "is a claim for the conversion of electronic data cognizable under New York law?"
The state court said yes. Which means, for all practical purposes, that if a principal of a business debtor fails to turn over electronic records to a trustee, the trustee can sue him for damages - at least in New York.
Labels: conversion, electronic records
¶ 8:32 PM 0 comments
