Could the US Rely on a Different Interpretation of the Law in Forcing Microsoft to Share Data?

3. Relevance of Law on “Subpoenas”

We reject the approach, urged by the government and endorsed by the District Court, that would treat the SCA warrant as equivalent to a subpoena.  The District Court characterized an SCA warrant as a “hybrid” between a traditional warrant and a subpoena because—generally unlike a warrant—it is executed by a service provider rather than a government law enforcement agent, and because it does not require the presence of an agent during its execution.  Id. at 471; 18 U.S.C. § 2703(a)‐(c), (g).  As flagged earlier, the subpoena‐warrant distinction is significant here because, unlike warrants, subpoenas may require the production of communications stored overseas. 15 F. Supp. 3d at 472 (citing Marc Rich, 707 F.2d at 667).

Warrants and subpoenas are, and have long been, distinct legal instruments.[24] Section 2703 of the SCA recognizes this distinction and, unsurprisingly, uses the “warrant” requirement to signal (and to provide) a greater level of protection to priority stored communications, and “subpoenas” to signal (and provide) a lesser level. 18 U.S.C. § 2703(a), (b)(1)(A). Section 2703 does not use the terms interchangeably. Id. Nor does it use the word “hybrid” to describe an SCA warrant.  Indeed, § 2703 places priority stored communications entirely outside the reach of an SCA subpoena, absent compliance with the notice provisions. Id. The term “subpoena,” therefore, stands separately in the statute, as in ordinary usage, from the term “warrant.” We see no reasonable basis in the statute from which to infer that Congress used “warrant” to mean “subpoena.”

Furthermore, contrary to the Government’s assertion, the law of warrants has long contemplated that a private party may be required to participate in the lawful search or seizure of items belonging to the target of an investigation. When the government compels a private party to assist it in conducting a search or seizure, the private party becomes an agent of the government, and the Fourth Amendment’s warrant clause applies in full force to the private party’s actions.  See Coolidge v. New Hampshire, 403 U.S. 443, 487 (1971); Gambino v. United States, 275 U.S. 310, 316–17 (1927); see also Cassidy v. Chertoff, 471 F.3d 67, 74 (2d Cir. 2006). The SCA’s warrant provisions fit comfortably within this scheme by requiring a warrant for the content of stored communications even when the warrant commands a service provider, rather than a law enforcement officer, to access the communications.  18 U.S.C. § 2703(a), (b)(1)(A), (g).  Use of this mechanism does not signal that, notwithstanding its use of the term “warrant,” Congress intended the SCA warrant procedure to function like a traditional subpoena.  We see no reason to believe that Congress intended to jettison the centuries of law requiring the issuance and performance of warrants in specified, domestic locations, or to replace the traditional warrant with a novel instrument of international application.

The government nonetheless urges that the law of subpoenas relied on by the magistrate judge requires a subpoena’s recipient to produce documents no matter where located, and that this aspect of subpoena law should be imported into the SCA’s warrant provisions.  The government argues that “subpoenas, orders, and warrants are equally empowered to obtain records . . . through a disclosure requirement directed at a service provider.”  Gov’t Br. at 18–19.  It further argues that disclosure in response to an SCA warrant should not be read to reach only U.S.‐located documents, but rather all records available to the recipient.  Id. at 26–27.

In this, the government rests on our 1983 decision in Marc Rich.  There, we permitted a grand jury subpoena issued in a tax evasion investigation to reach the overseas business records of a defendant Swiss commodities trading corporation.  The Marc Rich Court clarified that a defendant subject to the personal jurisdiction of a subpoena‐issuing grand jury could not “resist the production of [subpoenaed] documents on the ground that the documents are located abroad.”  707 F.2d at 667.  The federal court had subject‐matter jurisdiction over the foreign defendant’s actions pursuant to the “territorial principle,” which allows governments to punish an individual for acts outside their boundaries when those acts are “intended to produce and do produce detrimental effects within it.”  Id. at 666.  In investigating such a case, the Court concluded, the grand jury necessarily had authority to obtain evidence related to the foreign conduct, even when that evidence was located abroad.  Id. at 667.   For that reason, as long as the Swiss corporation was subject to the grand jury’s personal jurisdiction—which the Court concluded was the case—the corporation was bound by its subpoena.  Id.  Thus, in Marc Rich, a subpoena could reach documents located abroad when the subpoenaed foreign defendant was being compelled to turn over its own records regarding potential illegal conduct, the effects of which were felt in the United States.

Contrary to the government’s assertion, neither Marc Rich nor the statute gives any firm basis for importing law developed in the subpoena context into the SCA’s warrant provisions. Microsoft convincingly observes that our Court has never upheld the use of a subpoena to compel a recipient to produce an item under its control and located overseas when the recipient is merely a caretaker for another individual or entity and that individual, not the subpoena recipient, has a protectable privacy interest in the item.[25] Appellant’s Br. at 42–43.  The government does not identify, and our review of this Court’s precedent does not reveal, any such cases.

The government also cites, and the District Court relied on, a series of cases in which banks have been required to comply with subpoenas or discovery orders requiring disclosure of their overseas records, notwithstanding the possibility that compliance would conflict with their obligations under foreign law.[26] But the Supreme Court has held that bank depositors have no protectable privacy interests in a bank’s records regarding their accounts. See United States v. Miller, 425 U.S. 435, 440–41 (1976) (explaining that the records a bank creates from the transactions of its depositors are the bank’s “business records” and not its depositors’ “private papers”). Thus, our 1968 decision in United States v. First National City Bank poses no bar to Microsoft’s argument.   There, we held that a bank subject to the jurisdiction of a federal court was not absolutely entitled to withhold from a grand jury subpoena its banking records held in Frankfurt, Germany “relating to any transaction in the name of (or for the benefit of)” certain foreign customers solely because the bank faced the prospect of civil liability. 396 F.2d 897, 898, 901, 905 (2d Cir. 1968); cf. Linde v. Arab Bank, PLC, 706 F.3d 92, 101–02, 109 (2d Cir. 2013) (declining to issue writ of mandamus overturning district court’s imposition of sanctions on foreign bank, when bank was civil defendant and refused to comply with discovery orders seeking certain foreign banking records).

We therefore conclude that Congress did not intend the SCA’s warrant provisions to apply extraterritorially.

[24] A “subpoena” (from the Latin phrase meaning “under penalty,”) is “[a] writ or order commanding a person to appear before a court or other tribunal, subject to a penalty for failing to comply.” Subpoena, Black’s Law Dictionary. Relatedly, a “subpoena duces tecum” directs the person served to bring with him “specified documents, records, or things.” Subpoena duces tecum, Black’s Law Dictionary.  In contrast, a “warrant” is a “writ directing or authorizing someone to do an act [such as] one directing a law enforcer to make . . . a search, or a seizure.”  Warrant, Black’s Law Dictionary.  As to search warrants, the place is key: A search warrant is a “written order authorizing a law‐enforcement officer to conduct a search of a specified place.” Search Warrant, Black’s Law Dictionary.

[25] The government contends that Microsoft has waived the argument that the government cannot compel production of records that Microsoft holds on its customers’ behalf. Gov’t Br. at 36 & n.14. But in the District Court proceedings, Microsoft argued that there was a “difference between, on the one hand asking a company for its own documents . . . versus when you are going after someone else’s documents . . . that are entrusted to us on behalf of our clients.” Transcript of Oral Argument at 17, In re Warrant, 1:13‐mj‐02814, ECF No. 93. Although this was not the centerpiece of Microsoft’s argument before the District Court, it was sufficiently raised. And in any event, we are free to consider arguments made on appeal in the interests of justice even when they were not raised before the district court. See Gibeau v. Nellis, 18 F.3d 107, 109 (2d Cir. 1994). The government has had an ample opportunity to rebut Microsoft’s position, and we see no reason to treat this important argument as beyond our consideration.

[26] Thus, in addition to Marc Rich, the government refers us to other cases that it characterizes as ordering production despite potential or certain conflict with the laws of other nations:  In re Grand Jury Proceedings (Bank of Nova Scotia), 740 F.2d 817, 826–29 (11th Cir. 1984); United States v. Vetco Inc., 691 F.2d 1281, 1287–91 (9th Cir. 1981); In re Grand Jury Subpoena Dated August 9, 2000, 218 F. Supp. 2d 544, 547, 564 (S.D.N.Y. 2002) (Chin, J.); United States v. Chase Manhattan Bank, N.A., 584 F. Supp. 1080, 1086–87 (S.D.N.Y. 1984).  Gov’t Br. at 16–17.