Close Only Counts in Horseshoes, Hand Grenades, and Federal Warrants – The Second Circuit Holds the Federal Government Cannot Obtain E-Mails Located Offshore Pursuant to the Stored Communications Act

July 18, 2016

Gathering e-mails in discovery is a critical step for any litigant, and last week, it became a little harder—that is to say, a little harder for the United States government.

In Microsoft Corporation v. United States of America, the United States Court of Appeals for the Second Circuit was asked to review the District Court’s decision denying Microsoft’s motion to quash a warrant issued under the Federal Stored Communications Act (the “SCA” or the “Act”).1 Specifically, the United States purportedly issued a warrant in an effort to obtain e-mail communications related to alleged drug trafficking. Upon investigation, Microsoft learned these e-mails were stored on a Microsoft server located in Dublin, Ireland. The District Court declined to quash the warrant, and in fact, held Microsoft in contempt for failing to comply. On appeal, the Second Circuit reversed, vacated, and remanded.

Nodding to the presumption against extraterritoriality discussed in June of this year by the U.S. Supreme Court in RJR Nabisco, Inc. v. European Cmty., the Second Circuit noted that “the legislation of Congress ‘is meant to apply only within the territorial jurisdiction of the United States,’ unless a contrary intent clearly appears.” As to the SCA, the Act permits the government to require service providers to produce the contents of certain communications “only pursuant to a warrant issued using the procedures described in the Federal Rules of Criminal Procedure (or in the case of State court, issued using State warrant procedures) by a court of competent jurisdiction.” In Microsoft, because the servers of interest were located in Ireland, the Second Circuit excused Microsoft from compliance with the warrant regardless of the e-mails’ responsiveness; thus, effectively making electronic servers located abroad the offshore bank accounts for suspect e-mails.

This ruling is another win for consumer electronic privacy. Typically, a discovery recipient is obligated to produce responsive, non-protected documents that are within the recipient’s care, custody, or control. As to warrants, there is a laundry list of requirements the government must meet to properly issue a warrant, and as to jurisdiction, while a federal magistrate judge can issue a warrant that may be executed outside the issuing district, the execution must be within another district of the United States. In Microsoft, the jurisdictional requirement was Microsoft’s production reprieve.

 


1Refresher: The SCA addresses the disclosure of “stored…electronic communications and transactional records” held by third-party internet service providers and essentially imposes general obligations of non-disclosure on those service providers. The SCA has non-disclosure exceptions for these providers, one of which is disclosure to the United States Government pursuant to a warrant.