It is possible that the 'Litigation Hold' policy is applied to the maileater mailbox. This has the effect of the recoverable items folder filling up to the point where it exceeds it's quota and the mailbox is restricted from deleting any further emails. This is the reason the EXPUNGE command fails.
CA Service Desk 17.1 CA Service Desk 17.0 CA Service Desk 14.1 Microsoft Office365 Exchange Online
Have the MS Exchange administrator remove the Litigation Hold policy from the mailbox. This can be done using the MS Exchange Management Shell command: