Yesterday, the long-running dispute between Microsoft Corp. and the U.S. government regarding data stored abroad was resolved by the United States Supreme Court. As we’ve previously discussed, the case posed the question: must U.S. companies comply with warrants issued under the Stored Communications Act (“SCA”) that demand data stored in a foreign country? Yesterday, the Supreme Court concluded that newly enacted legislation had effectively ended the case, making the Court’s involvement unnecessary.
A quick recap. The Microsoft case started in 2013, when U.S. law enforcement officials served Microsoft with a warrant issued under the SCA. The warrant demanded that Microsoft turn over email data associated with an unnamed user’s msn.com account. Microsoft determined that the customer’s email data was stored entirely in Microsoft’s Dublin, Ireland datacenter. On that basis, Microsoft moved to quash the subpoena, arguing that in order to access the overseas data, the government should pursue traditional bilateral law enforcement and diplomatic channels such as Mutual Legal Assistance Treaties.
Although Microsoft lost before a magistrate judge and in the district court, it won on appeal to the U.S. Court of Appeals for the Second Circuit, which held that the government cannot use an SCA search warrant to compel disclosure of data residing outside of the U.S. The Supreme Court heard oral argument on the case in late February.
While the Supreme Court appeal was pending, Congress enacted the Clarifying Lawful Overseas Use of Data (“CLOUD”) Act. The CLOUD Act was included in an omnibus spending bill, which Congress passed and the President signed on March 23, 2018. The CLOUD Act amended the SCA by adding language that service providers’ disclosure obligations applied “regardless of whether [the data] is located within or outside the United States.”
After the CLOUD Act was passed, the U.S. government obtained and served Microsoft with a new warrant. As we’ve reported, both Microsoft and the government agreed that the initial dispute regarding the prior, pre-CLOUD Act warrant was now moot. Yesterday, the Supreme Court agreed. Because no “live dispute” remained between the parties, the Court, following its established practice in such cases, vacated the lower court opinions.
Microsoft has not yet decided whether to challenge the new warrant.