A federal appellate court ruled last week that an Internet company was not liable for disclosing subscriber information pursuant to an invalid grand jury subpoena that appeared valid on its face.

In December 2008, Yahoo! received two grand jury subpoenas from a Georgia state prosecutor, seeking the name, address, and other identifying information associated with a user account.  The subpoenas were signed by a Georgia state court judge and court clerk.  Yahoo! complied with the subpoenas before the production deadline.

The Yahoo! account holder, Fayelynn Sams, filed a putative class action lawsuit.  Sams claimed that the subpoenas failed to comply with Georgia law, and therefore violated the Stored Communications Act.  The federal district court granted Yahoo!’s motion to dismiss, concluding that Yahoo! was statutorily immune from lawsuit.

On appeal, the Ninth Circuit affirmed the district court.  The Stored Communications Act states that “good faith reliance on . . . a grand jury subpoena” is a “complete defense” to a civil action under the SCA.  Writing for a unanimous three-judge panel, Judge Milan D. Smith, Jr. wrote that this defense is available when the defendant complies with a subpoena or other process “that appears valid on its face, in the absence of any indication of irregularity sufficient to put the defendant on notice that the subpoena may be invalid or contrary to applicable law.”  The defense is not available, the court wrote, “if the defendant actually knew that the subpoena (or other process) was invalid under the applicable law.”

Applying this legal standard to Sams’s lawsuit, the Ninth Circuit concluded that Yahoo! is immune because Sams pled no facts to lead to a plausible inference that Yahoo! knew that the subpoenas were invalid.  Moreover, the Court held that the subpoenas were objectively reasonable because “they bore all of the indicia of lawful authority.”