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The Point of Retrieval or the Point of Disclosure: Federal Magistrate Judge Rules Contrary to Second Circuit’s Microsoft Stored Communications Act Warrant Case

February 23, 2017

A February 3, 2017, decision injected uncertainty into the reach of the federal government to obtain emails stored outside of the United States when a magistrate judge in the U.S. District Court for the Eastern District of Pennsylvania held that warrants issued under the Stored Communications Act 18 U.S.C. §§2701 et seq., (the “SCA”) can reach data stored outside the U.S. The magistrate judge’s opinion diverged from the Second Circuit’s Microsoft opinion, which held that domestic companies are not required under the SCA to provide information stored in foreign jurisdictions.

In two consolidated cases, In re Search Warrant No. 16-960-M-01 to Google, Misc. No. 16-960-M-01 (E.D. Pa. Feb. 3, 2017) and In re Search Warrant No. 16-1061-M, to Google, Misc. No. 16-1061-M (E.D. Pa. Feb. 3, 2017), federal magistrate judge Thomas J. Rueter issued a warrant for all data connected to Google accounts held by individual suspects in federal criminal investigations. In both cases, the suspects and victims resided (or in the case of one victim, was incorporated) in the U.S., and the warrants were issued to Google, a domestic company. 

Google, relying heavily on the Microsoft opinion, argued that the SCA only requires disclosure of data that is stored domestically. Specifically, in Microsoft v. United States, 829 F.3d 197 (2d Cir. 2016), the Second Circuit held that the SCA did not rebut the presumption against applying domestic law extraterritorially absent clear Congressional intent, and, therefore, companies subject to warrants issued under the SCA are not required to produce documents stored outside the United States. (To learn more about this decision, please see our alert from July 19, 2016.)

Magistrate Judge Rueter, however, disagreed with the Microsoft Court’s “extraterritoriality” analysis. The extraterritoriality analysis involves two-steps: 1) determining whether the statute rebuts the presumption against extraterritorial application; and if it did not, then 2) determining whether the statute would require extraterritorial application, in light of the statute’s focus. In re Search Warrant No. 16-960-M-01 to Google, Misc. No. 16-960-M-01 at *12-14 (E.D. Pa. Feb. 3, 2017) and In re Search Warrant No. 16-1061-M, to Google, Misc. No. 16-1061-M at *12-14 (E.D. Pa. Feb. 3, 2017). Agreeing that the SCA did not rebut the presumption against extraterritorial application, and assuming ad arguendo that the focus of the SCA is privacy, as the Second Circuit decided it was, Judge Rueter found the “crux” of the issue is where the alleged invasions of privacy take place. Id. at 18.

Judge Rueter’s analysis under the second prong differed from the Microsoft court in two crucial ways. First, while the Microsoft Court found that electronically transferring data amounted to a “seizure,” Judge Rueter found this transfer was merely a “search,” as there would be no “meaningful interference with an individual’s possessory interest in the user data.” Id. at *20.  Second, while the Microsoft court found that the invasion of privacy would occur when information was retrieved from the foreign data server, Judge Rueter found the invasion of privacy would occur at the time of disclosure to the Government. Id. at 23. Because this disclosure would take place in the U.S., the warrants were a permissible domestic application of the SCA. Id.

Judge Rueter further explained that rationale for the presumption against extraterritorial application of U.S. laws, concerns of international comity, did not preclude application of the warrants beyond U.S. borders, because the searches would be conducted in the United States. Id. at *25-26. Judge Reuter further recognized that the difficulty of  ascertaining the physical location of data on electronic systems favored allowing the warrants to reach beyond the United States. Id. at *28-29. DOJ voiced many of the same practical concerns in its request to the Second Circuit to reconsider the Microsoft warrant decision. (To learn more about this request, please see our alert from October 31, 2016.)

With conflicting decisions about the scope of the application of the SCA, uncertainty regarding companies’ obligation to provide user data stored abroad is growing. Undoubtedly, this decision will increase pressure on Congress to amend and update the largely outdated SCA or leave the matter to potentially more conflicting judicial decisions.

For more information about this decision or for other questions, contact the authors of this alert, Jonathan Feld at jfeld@dykema.com, Jason Ross at jross@dykema.com, Christina Brunty at cbrunty@dykema.com, or your Dykema relationship attorney.

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