On April 17, 2018, the Supreme Court dismissed United States v. Microsoft, No. 17-12, 548 U.S. ___ (2018) (per curiam), deciding that recently enacted federal legislation had mooted the legal dispute in the case. The appeal raised the question whether a U.S. based e-mail service provider had to comply with a search warrant issued under Section 2703 of the Stored Communications Act, and disclose to the Government electronic communications that were stored abroad. As we previously reported, see Shearman & Sterling LLP, The Supreme Court Hears Oral Arguments in United States v. Microsoft, Need-to-Know Litigation Weekly, March, 6, 2018, https://www.lit-wc.shearman.com/the-supreme-court-hears-oral-arguments-in-united-v-microsoft, the Justices had appeared divided during oral argument and questioned whether they should issue a decision while Congress was considering pending legislation to clarify the issue. On March 23, 2018, Congress passed the Clarifying Lawful Overseas Use of Data Act (CLOUD Act) as part of the Consolidated Appropriations Act, 2018, Pub. L. 115–141. As expected, the Supreme Court thus dismissed the Microsoft appeal.
The case originated after a federal magistrate judge in New York granted the Government’s request to issue a warrant for certain data held by Microsoft overseas. Microsoft challenged the warrant, arguing that it could not be required to turn over the requested data (e-mails) because it was stored in Ireland. The District Court affirmed the magistrate judge’s ruling and, soon after, held Microsoft in civil contempt for refusing to comply with the warrant. The Court of Appeals for the Second Circuit reversed the District Court and vacated the civil contempt finding, holding that requiring Microsoft to disclose the electronic communications would be an unauthorized extraterritorial application of Section 2703 of the Stored Communications Act. In re Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corp., 829 F.3d 197, 204–05 (2d Cir. 2016).
The Supreme Court granted certiorari and heard oral arguments on February 27, 2018. However, on March 23, 2018, Congress passed the CLOUD Act, explicitly requiring email service providers to comply with U.S. warrants and to disclose emails within their “possession, custody, or control,” even when those emails are located outside the United States. In an acknowledgment of certain of the challenges that had been raised to the extraterritorial reach of search warrants, the CLOUD Act also now provides a mechanism for companies to challenge law enforcement data requests if the order causes international conflict of law issues. After the new law was passed, the Government withdrew the earlier warrant and obtained a new one, and both the Government and Microsoft submitted filings urging the Court to dismiss the case.
In a per curiam opinion, the Supreme Court declared that there was no longer a “live dispute.” The Court thus vacated the Second Circuit's judgment, and remanded the dispute with instructions to first vacate the District Court's procedural contempt finding and its denial of Microsoft's motion to quash, and then to direct the District Court to dismiss the case as moot.