In the Matter of SK Foods

A bankruptcy court's order denying the removal of a trustee and return of records is not a final order, and the Court lacks jurisdiction to hear issues on appeal involving interlocutory orders.

Debtor SK Foods permitted Appellants to store "financial, business, estate planning, and other documents on its premises." In 2008, the Antitrust Division of the U.S. Department of Justice raided the premises of SK Foods, seized records and documents from computers, and charged "current and former employees of SK Foods with fraud, bribery and other offenses." Over a year later, SK Foods filed for Chapter 11 bankruptcy and Bradley Sharp was appointed as trustee. Sharp took possession of all records that were located on the SK Foods premises, which included electronic files that belonged to the Appellants. The Appellants brought suit arguing for the removal of the trustee and disqualification of the trustee's counsel on Fourth Amendment violations and requested the return of the documents. The trustee requested confirmation of "his authority to continue to possess and review the documents." The bankruptcy court denied the Appellants' motions and allowed the trustee to continue possessing the documents. On appeal, the district court affirmed the bankruptcy court on all issues. Appellants appealed again. The Ninth Circuit stated that it only had appellate jurisdiction over "final orders of the district courts reviewing bankruptcy court decisions." The Court held that (1) the bankruptcy court's denial of the trustee's removal was not final as Sharp could be removed at a later time; (2) the issue of trustee possession and use of the records could arise in a future proceeding; and (3) the denial of counsel disqualification was interlocutory and not final. DISMISSED.