There is often a tension between the needs of law enforcement and the companies that collect and store the electronic data of individuals. Law enforcement may seek this data from the companies through subpoenas, search warrants, and other court orders as part of its investigation and request that the companies did not disclose their interaction with authorities to maintain the confidentiality of the investigation. In contrast, companies may wish, or be obligated under the terms of their agreements or privacy policies, to disclose to their customers that they have produced the customers’ electronic data to law enforcement pursuant to legal process. To prevent the companies from doing so, federal law enforcement typically obtains a non-disclosure order pursuant to 18 U.S.C. § 2705(b) from a federal magistrate court. These gag orders have generally not had a definite expiration date. However, companies have recently begun to challenge the limits and scope of such orders. The recent case of Microsoft Corp. v. United States Dep’t of Justice, No. C16-0538 JLR, represents the most serious challenge to date.
Section 2703 of the Stored Communications Act (“SCA”) governs when a governmental entity may obtain the electronic communications or records of a customer from a service provider when the subscriber is the target of a government investigation. See 18 U.S.C. § 2703. Section 2705 of the SCA addresses when the government may withhold notice that is otherwise required under § 2703. See 18 U.S.C. § 2705. Section 2705(b) specifically provides that:
A governmental entity acting under § 2703 . . . may apply to a court for an order commanding a provider of electronic communications service or remote computing service to whom a warrant, subpoena, or court order is directed, for such period as the court deems appropriate, not to notify any other person of the existence of the subpoena, warrant, or court order. The court shall enter such an order if it determines that there is reason to believe that notification of the existence of the warrant, subpoena, or court order will result in –
- endangering the life or physical safety of an individual;
- flight from prosecution;
- destruction of or tampering with evidence;
- intimidation of potential witnesses; or
- otherwise seriously jeopardizing an investigation or unduly delaying a trial.
See 18 U.S.C. § 2705(b).
Federal magistrate courts have typically held that non-disclosure orders were effective “until further order of the court.” The practical impact of this holding was that most non-disclosure orders were in place indefinitely, even long after the criminal investigation had ended. The government had no incentive to move to lift the non-disclosure order; while, the companies bound by the order were unaware of the status of the investigation and did not know when to move to have the order lifted.
In recent years, a few federal magistrate courts have begun to place limitations on non-disclosure orders. In 2008, a federal magistrate court in In re Sealing and Non-Disclosure of Pen/Trap/2703(d) Orders, 562 F. Supp. 2d 876, 878 (S.D. Tex. 2008) modified sealing and non-disclosure orders for applications for a pen register and a trap/trace device to expire after 180-days, finding that an indefinite non-disclosure order would violate “the First Amendment prohibition against prior restraint of speech.” In 2014, in In the Matter of the Search Warrant for [Redacted]@Hotmail.com, 74 F. Supp. 3d 1184, 1185-86 (N.D. Cal. 2014), a federal magistrate court in the Northern District of California denied the government’s request for a 2705(b) non-disclosure order for an email search warrant because “[s]ection 2705(b) clearly requires the court to define some end,” and the order sought by the government was for “an infinite period.” A few months later in 2015, the same federal magistrate court denied a 2705(b) order for a grand subpoena in In the Matter of the Grand Jury Subpoena for [Redacted]Yahoo.com, 79 F. Supp. 3d 1091, 1092 (N.D. Cal. 2015), finding “an indefinite order would amount to an undue prior restraint of Yahoo’s First Amendment right to inform the public of its role in searching and seizing its information.”
One of the most serious challenges to the non-disclosure provisions of the SCA occurred recently. In 2016, rather than challenging a single non-disclosure order, Microsoft brought an action in the Western District of Washington seeking to have § 2705(b) declared unconstitutional under the First and Fourth Amendments and § 2703 declared unconstitutional under the Fourth Amendment to the extent that it absolved the government of the obligation of providing notice to a customer whose information was obtained by warrant without regard to the individual circumstances of the customer’s particular case. The United States Department of Justice (“DOJ”) moved to dismiss the action, raising several arguments including that Microsoft lacked standing to assert its constitutional claims and had failed to state a claim in its complaint.
Last week the federal district court denied the DOJ’s motion as to Microsoft’s First Amendment claims, but granted the DOJ’s motion as to its Fourth Amendment claims in Microsoft Corp. v. United States Dep’t of Justice, No. C16-0538 JLR (the “Microsoft Order”). As an initial matter, the district court found that Microsoft had standing to bring its First Amendment claims because “Microsoft had sufficiently alleged an injury-in-fact and a likelihood of future injury.” Microsoft Order, at 13. The district court concluded that “Section 2705(b) orders that indefinitely prevent Microsoft from speaking about government investigations implicate Microsoft’s First Amendment rights,” and Microsoft had pled a concrete and particularized injury as it alleged that it had “personally been subjected to thousands of [such] indefinite non-disclosure orders[.]” Id. at 14. In reaching this conclusion, the district court rejected the DOJ’s argument that Microsoft had no standing because the non-disclosure orders being challenged contained different terms and were issued in different contexts, holding that Microsoft had alleged a generalized grievance which is an “asserted harm” that is “shared in substantially equal measure by all or a large class of citizens.” Id. at 17. Moreover, given the likelihood that the DOJ would continue to seek indefinite non-disclosure orders without court intervention, the district court found that “Microsoft’s ‘fears’ of similar injuries in the future are not ‘merely speculative.’” Id. at 18.
Turning to Microsoft’s First Amendment allegations, the district court addressed the DOJ’s arguments that Microsoft had no absolute right to discuss the government’s requests for information or the substance of the non-disclosure orders and § 2705(b)’s procedural safeguards were sufficient to satisfy First Amendment concerns. The district court held that indefinite non-disclosure orders pursuant to 2705(b) – which the court characterized as “analogous to permanent injunctions preventing speech from taking place before it occurs” — constitute prior restraints on speech and Microsoft has alleged sufficient facts at the pleading stage to state a claim “that certain provisions of § 2705(b) fail strict scrutiny and violate the First Amendment.” Id. at 27, 30. In support of its holding, the district court noted that non-disclosure orders pursuant to § 2705(b) continued to restrain Microsoft from making any disclosure even after “secrecy is no longer required to satisfy” the government’s interest. Id. at 28. The court held further that “even if a lesser standard of review applies to Microsoft’s First Amendment claim, Microsoft’s allegations support the reasonable inference that indefinite nondisclosure orders impermissibly burden Microsoft’s First Amendment rights.” Id. at 30.
The district court was not as kind to Microsoft’s Fourth Amendment claims, finding that Fourth Amendment rights were personal rights and Microsoft could not assert the Fourth Amendment rights of its users. The court noted that “the Supreme Court and the Ninth Circuit have routinely held that in a variety of circumstances that a plaintiff may not assert the Fourth Amendment rights of another person,” and although there were “special circumstances” that might give rise to third-party standing, none of those exceptions were applicable to the case at hand. Id. at 39, 41-45. In dismissing Microsoft’s Fourth Amendment claims, the district court acknowledged that its ruling presented a difficult situation to Microsoft’s customers as they would likely never know about the government’s request for their information because of the non-disclosure and, therefore, would never be able to challenge the government’s actions.
The ultimate impact of the Microsoft Order is uncertain. Although the district court did rule in Microsoft’s favor on its First Amendment claims at the pleading stage, Microsoft must still provide evidentiary support for its claims at summary judgment and trial. How the factual record may develop cannot be predicted with a great degree of certitude. However, given how the district court ruled in the Microsoft Order and the universally acknowledged government interest in maintaining secrecy in ongoing investigations, the most probable outcome of Microsoft’s action against the DOJ is not the outright elimination of § 2705(b) non-disclosure orders, but rather the imposition of restrictions on such orders. Courts are likely to limit § 2705(b) non-disclosure orders to a set period of time, such as 60 or 90 days, with an opportunity for the government to apply for an extension of the order and the court to review the government’s application.
Originally published in IPWatchdog on February 18, 2017.