United States v. Microsoft Raises Significant Questions Regarding Application of the Stored Communications Act

By: Jay Shapiro and Sedgwick Jeanite

Justice Ginsburg: “In….1986, no one ever heard of clouds.”

On Tuesday, February 27, 2018, the US Supreme Court heard oral argument in connection with an ongoing dispute between the Department of Justice (DOJ) and Microsoft over data in the corporation’s datacenter in Ireland. At the core of the oral argument is the application of the Stored Communications Act (SCA), a law enacted in 1986 that regulates the US government’s ability to obtain emails and other communications from providers of electronic communication services or remote computing services. Microsoft has fought the government’s contention that a warrant obtained under the SCA can compel a US company to produce information under its control but stored outside the United States.

This case goes back years. In 2013, a federal judge in New York granted the DOJ’s application for a warrant under Section 2703 of the SCA to obtain email content and information from Microsoft about a suspected drug trafficker. Microsoft produced responsive metadata held in domestic data centers but declined to produce content data held in Ireland, arguing that the SCA lacks extraterritorial application and the warrant does not apply to data stored abroad. A federal judge in the Southern District of New York ruled against Microsoft and held the company in civil contempt. Microsoft appealed to the Second Circuit, which reversed the District Court’s denial of Microsoft’s motion to quash and lifted the contempt order in July 2016.

During the oral argument before the Supreme Court, the Deputy Solicitor General stressed the domestic linchpins of this matter: the government sought evidence pursuant to a warrant issued by a District Court, directed at a US service provider, for prosecution of conduct that occurred in the US. Still, that position was met with important questions from the Justices, including the following:

  • Would Congress be better suited to address this issue in light of the fact that Congress is considering a bill on this issue – the CLOUD Act?
  • Does the order involve extraterritorial conduct – does something happen abroad with computers in Ireland?
  • Could this issue raise foreign conflicts or conflict with foreign law?
  • How have other courts in the US ruled on this issue?

The attorney for Microsoft responded to the government by pointing out that Microsoft did not use cloud storage abroad until 2010, and that the 1986 law never anticipated the US Government’s reach into another country’s land and soil to get access to e-mails stored there. Although the Justices noted that Microsoft used to comply with these orders in the past, Microsoft acknowledged that after a careful review in the wake of the Snowden disclosures, Microsoft decide to stop complying.

Microsoft faced the following questions from the Justices:

  • Can Microsoft use jurisdictional hurdles to prevent US law enforcement from obtaining relevant information?
  • Why can’t the court interpret the SCA in a way that is reasonable in light of the modern world?
  • What physical affect would the order have in Ireland?
  • Could Microsoft purposefully evade US law enforcement?
  • Is Ireland really an interested party if the target in the case is not Irish?

The court is faced with a choice between two outcomes: (1) rule in favor of Microsoft and potentially impede the US Government’s ability to access the information it may need, or (2) rule in favor of the US Government and potentially harm the ability of US technology companies to compete globally, and create strains between US and foreign laws.

While there appeared to be a broad consensus from the Justices that it would be much better for Congress to resolve this issue, the Supreme Court will eventually choose between the two options when it issues a ruling in a few months.

What may be most significant will be the reaction abroad to the ruling. If the Supreme Court sides with the DOJ, then other countries, concerned with privacy rights of their residents, may very well look to take measures to more vigorously protect that information, which may make companies’ international operations more complex and costly.

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