U.S. Supreme Court Dismisses U.S. v. Microsoft as Moot After CLOUD Act Signed Into Law: Court Declares That There is No Longer a Live Controversy Over a Warrant Requiring Microsoft to Disclose Customer Data Stored Overseas.

Sullivan & Cromwell LLP - April 19, 2018

On April 17, 2018, the U.S. Supreme Court vacated the petition for certiorari in United States v. Microsoft, No. 17-2, vacated the judgment below, and remanded with instructions to dismiss the case as moot. The Microsoft case had presented the question whether Microsoft, a company subject to the jurisdiction of the United States, would have to disclose its customer’s email data stored abroad to the U.S. Department of Justice pursuant to a Stored Communications Act (“SCA”) warrant. After the Supreme Court heard oral argument on the case on February 27, 2018, President Trump signed into law the Clarifying Lawful Overseas Use of Data (“CLOUD”) Act, which amended the SCA and directly addresses the issues raised in Microsoft. The CLOUD Act provides that companies subject to the jurisdiction of the United States that are served with an SCA warrant would have to disclose all responsive electronic communications data in its possession, custody, or control, regardless of where that data is located. The Department of Justice replaced the old warrant at issue in Microsoft with a new SCA warrant issued under the recently enacted CLOUD Act provisions and successfully argued to the Supreme Court that the Microsoft case was therefore mooted. The CLOUD Act also provides for a new system of executive agreements between the United States and foreign countries if those countries satisfy certain requirement to become “foreign qualifying governments.” For companies subject to SCA warrants that might face inconsistent legal obligations with a qualified foreign government, the CLOUD Act allows these companies to move to quash or modify the subpoena and creates a statutory comity analysis for courts to follow when considering those motions. For companies that face inconsistent legal obligations with a country that is not a qualifying foreign government subject to an executive agreement with the United States, the CLOUD Act clarifies that these companies retain the right to challenge SCA warrants on common-law comity grounds. Thus, the CLOUD Act has major implications on how electronic communications data are disclosed in federal criminal investigations.