Supreme Court Hears Oral Argument in the Microsoft Ireland Case

by Alston & Bird

On Tuesday, February 27th, the U.S. Supreme Court heard oral argument in United States v. Microsoft Corp. on whether a warrant issued under the Stored Communications Act (SCA) can compel the production of data stored outside the United States. Where Microsoft argues that the emails stored outside the United States also lie outside the reach of the SCA, the government contends that the SCA focuses on “classically domestic content,” and that Microsoft can be compelled within the U.S. to turn over records it controls regardless of where the data sought is stored.

This case began in December 2013 when the federal government served Microsoft with a warrant to turn over data from an email account of interest in a drug trafficking investigation. Microsoft provided the transactional records held within the U.S., but refused to turn over the contents of the account’s emails because the data were physically stored in Ireland. On April 25, 2014, a federal magistrate judge sided with the government and reasoned that the SCA’s “hybrid” warrants are executed, not like “conventional warrants,” but like subpoenas in that they are served on the service provider in possession of the digital evidence sought and do not involve a physical seizure by federal law enforcement. On July 31, a District Court judge upheld the magistrate’s ruling. On appeal, the Second Circuit vacated the order and reversed the District Court’s denial of Microsoft’s motion to quash the warrant, writing that the SCA must be read consistent with the presumption against extraterritoriality, and that the physical location of the data in Ireland lies outside the warrant’s reach.

During oral argument, the Justices’ questions addressed four issues: whether resolution of this question is better suited to Congress or the Court; whether the conduct at issue is “classically domestic” or not; whether it is acceptable for companies to segregate data available to U.S. law enforcement under lawful process based on where the company chooses to store the data physically; and whether a compromise solution is available in this case.

Justices Ginsburg and Sotomayor suggested that the issue may be best left to Congress and the currently pending CLOUD Act, which would specify that orders issued under the SCA apply to all data in the “possession, custody, or control” of the service provider. Versions of the bill have currently been introduced in both the House and Senate and referred to their respective judiciary committees. If the CLOUD Act were to pass before the Court renders its opinion, the underlying question would be moot as the government’s warrant would be presumptively valid (though subject to a number of safeguards that do not exist under current law).

Justices Ginsburg and Gorsuch challenged the government’s assertion that Microsoft’s production of data would be purely domestic, despite needing to interact with servers in Ireland in order to access the data at issue. The Justices noted that, regardless of how much of Microsoft’s activity might take place on U.S. soil, if the data is stored in Ireland some action is required within Ireland to access and retrieve that data. Justice Gorsuch observed that, ultimately, the data must be transferred from Ireland to the U.S. before Microsoft can disclose it to the government.

In contrast, Chief Justice Roberts challenged Microsoft’s defense, concerned about the possibility that an email provider could keep its customers’ emails out of reach of the U.S. government by choosing to store them overseas. Justice Alito also expressed skepticism towards the argument that federal law enforcement could have probable cause to obtain the contents of a U.S. citizen’s emails as part of an investigation of a crime that occurred in the U.S., but would fail in the effort if those emails are stored in another country. Justice Alito noted that, under that reading, the government would be forced to rely on Mutual Legal Assistance, which can extend an investigation by months or years.

Finally, Justice Breyer suggested a compromise wherein a warrant under the SCA could, as a general rule, reach data that happens to be stored overseas, but that the target of the warrant would be permitted to raise possible conflicts with foreign law before a judge, who could weigh the potential conflict in its determination. Where Deputy Solicitor General Dreeben seemed open to Justice Breyer’s solution, Microsoft’s attorney Joshua Rosenkranz characterized such a position as the Court improperly “innovating and adopting its own standard” rather than interpreting the SCA.

The Court’s opinion is expected by the end of June, 2018. Whether the Court of the Congress will ultimately resolve the issue, however, remains to be seen. An audio recording of oral argument is available here, and a written transcript is available here.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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