On July 14, 2016, the Second Circuit Court of Appeals ruled in the potentially groundbreaking Microsoft v. United States case that the federal government cannot compel companies to turn over emails stored on servers located outside the United States. In today’s border-shrinking digital world, the Second Circuit’s ruling raises a slew of questions (that will no doubt be litigated extensively in the coming years) and more than a few concerns.
In December 2013, the United States government sought to execute a search warrant pursuant to Section 2703(a) of the Stored Communications Act (“the “SCA”) to seize the contents of an email account of a suspected participant in a narcotics ring, which was stored on Microsoft’s servers in Ireland. Microsoft refused to turn over the extraterritorial emails, and was held in contempt for failing to comply with a search warrant.
Initially, the Southern District of New York ruled that Section 2703 of the SCA applies extraterritorially, and ordered Microsoft to release the sought-after emails. On appeal, however, the Second Circuit held that Section 2703 of the SCA “does not authorize courts to issue and enforce against U.S.‐based service providers warrants for the seizure of customer e‐mail content that is stored exclusively on foreign server.”
In reversing the district court, even after noting the presumption against extraterritoriality, the Second Circuit relied heavily upon the fact that the SCA, passed in 1986, was drafted when computers were in their infancy, foreign-communicating servers did not exist, and very few lawmakers were familiar with the concept of the Internet. The Second Circuit also found persuasive the fact that the SCA’s warrant provision that allows the government to require disclosure of electronically stored communications, like any other search warrant and unlike subpoenas, is restricted by the Fourth Amendment to domestic applications only.
In the concurrence to the Microsoft opinion, the Second Circuit acknowledges that the SCA does not protect emails and other information stored on domestic servers. In fact, the Court notes, nothing prevents private companies from transferring electronically stored communications stored on foreign servers to American-based servers with the click of a button, which would give the federal government the opportunity to execute a properly obtained search warrant lawfully.
At minimum, this case signals to Congress the urgent need to updated outdated statutes like the SCA that have been rendered obsolete by decades of warp-speed technological breakthroughs and advancement. In 1986, the concept of cloud storage, extraterrestrial servers and fast-speed internet was the stuff of science fiction novels. Today, such technology is used by virtually every business and by a large percentage of the world’s population. The Second Circuit has signaled to Congress that the time to weigh privacy interests against the government’s legitimate need for evidence is now.