United States: Supreme Court To Rule On Application Of Stored Communications Act To Data Stored Overseas

On Oct. 16, 2017, the United States Supreme Court granted the government's petition for certiorari in an important case concerning law enforcement and privacy in the digital age. In the case, now captioned United States v. Microsoft Corporation, the Supreme Court will consider whether the government may compel an electronic communications service provider, like Microsoft, to comply with a warrant issued under the Stored Communications Act, requiring disclosure of electronic communications that are within the provider's control but are stored overseas. The Court's decision should offer a significant contribution to a string of recent case law contending with the reach of American law in an increasingly interconnected world.

Case History

As explained in a prior Kramer Levin Alert, the case began in December 2013, when the government applied for and obtained a warrant under Title II of the Electronic Communications Privacy Act (ECPA), also known as the Stored Communications Act (SCA), codified at 18 U.S.C. § 2701 et seq. The warrant required Microsoft to disclose e-mails from a Microsoft customer's account that the government had shown probable cause to believe was associated with illegal drug trafficking. In response to the warrant, Microsoft provided the government with non-content account information that was stored in the United States, but declined to produce the content of the emails, which it had chosen to store at one of its overseas datacenters in Dublin, Ireland. Microsoft moved to quash the warrant to the extent that it required production of data stored overseas, arguing that compelling disclosure of this data constituted an impermissible extraterritorial application of the SCA. The magistrate judge who issued the warrant denied Microsoft's motion to quash, reasoning that while the SCA warrants described in 18 U.S.C. § 2703 must be issued pursuant to the federal rule of criminal procedure concerning warrants, these instruments are functionally equivalent to subpoenas in their manner of execution. Recipients of subpoenas are generally required to produce information in their custody or control regardless of its location. In any case, the magistrate judge also found that compliance with the SCA warrant would involve no governmental searches or seizures overseas and would require only domestic conduct on the part of Microsoft to remotely access the records and provide them to the government. As a result, there was no impermissible extraterritorial application of the statute, and Microsoft was obliged to disclose the information.

A district court judge affirmed the magistrate's ruling, but a panel of the Second Circuit Court of Appeals reversed. The three-judge panel rejected the lower courts' construction of an SCA warrant as part-subpoena and held that execution of the warrant abroad would in fact qualify as an impermissible international application of a federal statute under the line of recent Supreme Court decisions construing extraterritorial application of U.S. law in RJR Nabisco, Inc. v. European Community, 136 S. Ct. 2090 (2016); Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013); and Morrison v. National Australian Bank, Ltd., 561 U.S. 247 (2010). These cases direct that, absent some expression of contrary congressional intent, federal laws are presumed to apply only within the territory of the United States. Here, it was uncontested that the SCA contained no such expression. The Second Circuit thus moved to the second step of the analysis — an examination of whether the conduct relevant to the focus of the statute occurred abroad or in the United States. The panel determined the focus of the SCA and the broader ECPA was customer privacy, and found that the privacy interest was implicated in Ireland, where Microsoft, acting as an agent of the government, would have seized the e-mails covered by the warrant. As a result, the Second Circuit concluded that execution of the warrant in this case qualified as an impermissible extraterritorial application of the statute, and refused to enforce the warrant.

Petition for Certiorari

As recounted in another Kramer Levin Alert, on Jan. 24, 2017, the Second Circuit denied the government's petition for an en banc rehearing of the case in a divided 4 – 4 vote, leaving intact the panel's ruling. This in turn led the government to seek Supreme Court review.

The government's certiorari petition argued that the Second Circuit's extraterritoriality analysis was flawed, and that the ruling, if allowed to stand, would pose a significant threat to public safety. Citing Second Circuit judges who dissented from the denial of rehearing en banc, the government stated that, even assuming privacy to be the focus of the statute, the conduct relevant to that focus is the disclosure of the information, not the moment of access. Because that disclosure would occur within U.S. territory, compliance with the warrant would involve no extraterritorial application of U.S. law. The government also took issue with the panel's understanding of the term "warrant," arguing that Congress used this term because, under the process described in the statute, the government must make a showing of probable cause before a neutral judicial officer, as it must do when obtaining normal warrants. But, as the judges who dissented from the rehearing denial had noted, in its execution, an 18 U.S.C. § 2703 warrant operates as a subpoena. Under the relevant case law concerning subpoenas, the government asserted, recipients are required to produce materials under their control regardless of the location of those materials.

The government also highlighted the "immediate, grave, and ongoing harm to public safety, national security, and the enforcement of our laws" effected by the Second Circuit's decision. Echoing a statement made by Judge Cabranes in his dissent from the decision on the petition for rehearing, the government noted that criminals "need do nothing more than falsely state a location outside the United States when signing up for an account" to put their communications beyond the reach of American law enforcement. The government also claimed that electronic communications service providers across the country were reducing their cooperation with law enforcement in response to the ruling, further hampering legitimate and necessary law enforcement activities. The government countered Microsoft's argument that a Mutual Legal Assistance Treaty would allow the government to achieve the same ends by noting that the United States does not have an MLAT with most countries, and that the process for obtaining information through these treaties is slow and uncertain. The government also rejected the idea that privacy interests were advanced by the ruling, pointing out that the warrant was issued after a finding of probable cause by a neutral magistrate, and noting that the alleged privacy interest of the customer turned entirely on a discretionary business decision made by the service provider.

In opposing the government's petition for certiorari, Microsoft argued that the Second Circuit had properly found that the focus of the Stored Communications Act and the broader Electronic Communications Privacy Act was on protecting the privacy of stored communications. According to Microsoft, the government's argument that "disclosure" was the focus of the statute was only tenable if one were to ignore §§ 2701 and 2702, which protect customer privacy by restricting access to electronic communications. Microsoft argued that the Second Circuit was also correct in identifying the relevant conduct as the seizure of electronic communications where they are stored. Microsoft underscored that Congress used the term "warrant" in the statute. Cases cited by the government concerning subpoenas issued to corporations demanding their own records — as opposed to requesting information a customer entrusted to an electronic communications service provider — were therefore inapposite.

Microsoft conceded that "everyone agrees that there is a clear need" to update the SCA, now more than 30 years old. However, Microsoft argued that Congress, not the court, is the proper body to address the law's shortcomings. The company noted that members of Congress have already taken up the issue in the "International Communications Privacy Act," introduced by Senators Orrin Hatch (R-UT) and Christopher Coons (D-DE). Microsoft claimed that such legislation would yield "precisely the sort of balanced solution that litigation cannot achieve." Congress was particularly qualified, and the courts ill-equipped, to balance the sometimes competing public interests in play, including promoting international comity and avoiding conflicts of laws, providing the necessary tools to American law enforcement agencies, protecting consumer privacy, and avoiding unnecessary adverse effects on U.S. technology companies.

Without comment on the merit of these arguments, the Supreme Court granted certiorari on Oct. 13, 2017.

Conclusion

The parties to this litigation, legal commentators, and members of Congress agree that the existing statutory framework for regulating the government's access to electronic communications is out of step with the realities of modern digital communication and commerce. But absent quick action by the other two branches of the federal government rendering the case moot, the Supreme Court will have to evaluate the construction and application of the SCA as it stands. In doing so, it will have the chance to offer answers to the questions raised in the litigation that may serve to clarify the operation of territoriality analysis in the context of the SCA and beyond. Is privacy the focus of the statute? Or is the focus the disclosure that the government may require of electronic communications service providers under certain conditions? Does the conduct that is the focus of the statute occur domestically or overseas? Are the "warrants" discussed in 18 U.S.C. § 2703 in effect subpoenas? Even in the event that Congress enacts new legislation in this area, the answers to these questions are likely to have continued relevance for the interpretation of the laws of the United States and their application beyond its borders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions