Pillai v. Charles Schwab & Co.

Background

Sarah Elizabeth Pillai, proceeding without a lawyer, sued Charles Schwab & Co., Inc., alleging, among other things, breach of contract and breach of fiduciary duty. Her claims are based on her assertion that she is the rightful beneficiary of her late father’s individual retirement account. The opinion does not resolve those underlying claims.

Pillai asked for a temporary restraining order and preliminary injunction—emergency court orders intended to provide temporary relief before the case is resolved. She sought to prevent Schwab from closing, liquidating, restricting, or interfering with her inherited individual retirement account ending in -3503. She also sought an order requiring Schwab to preserve records relating to three inherited accounts and her deceased father’s account, remove certain third-party notes, authorizations, and restrictions, and produce authorization and restriction records within five business days.

Pillai stated that Schwab had sent her a September 20, 2025 letter saying that it would begin closing the account if she did not fund it within 60 days. She also stated that Schwab had previously closed two inherited accounts in a similar manner. She feared that records connected to the accounts would be permanently destroyed. The court treated the facts in the complaint and motion as true for purposes of deciding the emergency request.

Arguments and legal standards

For a preliminary injunction, a party generally must show a likelihood of success on the merits, likely irreparable harm without the injunction, that the balance of equities favors the requested relief, and that the injunction serves the public interest. A temporary restraining order and preliminary injunction use the same standard in this court. The court emphasized that irreparable harm—the type of harm that cannot adequately be repaired later—is the most important requirement.

Schwab argued that Pillai’s claims were precluded or time-barred and that state-court orders had already denied the relief she again sought. Schwab also argued that this court lacked authority to enforce or impose contempt sanctions concerning state-court orders. The opinion did not decide those arguments because it denied the requested emergency relief on other grounds.

Court’s analysis

The court found that Pillai had not shown a likelihood of success on the merits. It noted Schwab’s arguments about preclusion and timing, and observed that Pillai’s emergency filings contained no legal analysis despite her having known Schwab’s arguments for nearly five months.

The court also found that Pillai had not established irreparable harm. She asserted that closing the account would permanently destroy related records, but the court noted that she did not claim Schwab had destroyed records from the two earlier accounts when they were closed; she claimed only that those records became inaccessible. The court also found that she did not explain why critical evidence would be permanently destroyed. It stated that both parties have a duty to preserve evidence when they know, or should know, that the evidence may be relevant to litigation, and that failing to preserve evidence can lead to sanctions.

The court further noted that Pillai waited nearly two months after Schwab’s letter before seeking emergency relief. The court said her delay, and the absence of any indication in her October communications that she asked Schwab to keep the account open or preserve electronic records, weighed against finding an imminent and irreparable injury. Because she had not sufficiently shown irreparable harm, the court said it did not need to address the other injunction requirements.

Disposition

Judge Jennifer H. Rearden’s order states: “Plaintiff’s motion, ECF No. 20, is DENIED without prejudice.” The motion included the requests for a temporary restraining order, preliminary injunction, and limited expedited discovery. The court separately directed all parties to preserve evidence that might be relevant to any claim or defense and directed the Clerk of Court to terminate the motion from the docket.

The order denied emergency and related ancillary relief; it did not decide whether Pillai’s contract, fiduciary-duty, or other underlying claims will ultimately succeed.