Archive for July 2016

Second Circuit: Warrant may not Compel Production of Emails from Ireland

In re a Warrant to Search a Certain E-mail Account Controlled & Maintained by Microsoft Corp., No. 14-2985 (2d Cir. July 14, 2016)

In this case, Microsoft Corporation appealed orders from the United States District Court for the Southern District of New York denying its motion to quash a warrant issued under § 2703 of the Stored Communications Act and holding Microsoft in contempt for “refusing to execute the Warrant on the government’s behalf.”  The warrant directed Microsoft to “seize and produce the contents of an e-mail account that it maintains for a customer who uses the company’s electronic communications services.” Although Microsoft produced the relevant customer’s non-content information which was stored in the United States, it refused to access and import data that was stored and maintained in Ireland.

Ultimately, following substantial analysis of the issues before it, the Second Circuit Court concluded that “§ 2703 of the Stored Communications Act 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 servers.”  Summing up its opinion, the court concluded:

We conclude that Congress did not intend the SCA’s warrant provisions to apply extraterritorially. The focus of those provisions is protection of a user’s privacy interests.  Accordingly, the SCA does not authorize a U.S. court to issue and enforce an SCA warrant against a United States-based service provider for the contents of a customer’s electronic communications stored on servers located outside the United States. The SCA warrant in this case may not lawfully be used to compel Microsoft to produce to the government the contents of a customer’s e-mail account stored exclusively in Ireland.  Because Microsoft has otherwise complied with the Warrant, it has no remaining lawful obligation to produce materials to the government.

A full copy of the court’s opinion is available here.

“A litigant cannot keep its own system secret and then refuse to gather the information itself.”

Labrier v. State Farm Fire & Cas. Co., No. 2:15-cv-04093-NKL, 2016 WL 2689513 (W.D. Mo. May 9, 2016)

Upon Defendant’s refusal to provide Plaintiff with a list of data fields from two proprietary databases or to allow remote access, the Special Master ordered Defendant to respond to written interrogatories meant to provide the information sought by Plaintiff regarding putative class members and damages.  Addressing Defendant’s objection that the discovery (i.e., responding to written interrogatories) was not proportional to the case, the District Court determined that the Special Master had not abused his discretion, reasoning in part that “[a] litigant cannot keep its own system secret and then refuse to gather the information itself.”

Following six in-person and telephone hearings, a Special Master determined that the at-issue interrogatories sought relevant information and were proportional to the needs of the case and ordered Defendant to respond. Defendant objected, arguing that it could not do so without “complex inquiries in multiple databases” and evaluating estimates one at a time.  Notably, however, testimony of Defendant’s employee indicated that Defendant had utilized the at-issue systems to identify putative class members and estimate potential damages at the outset of litigation—a fact the District Court relied upon in reaching its conclusions.

Rejecting Defendant’s objections, the court concluded that the Special Master had not abused his discretion in deciding that the benefit of the requested discovery outweighed its burden or expense for a number of reasons, including:

  • that the need to undertake “computer programming” not “normally” required was justified where Defendant sought to keep its systems secret;
  • that the information at-issue was relevant to Defendant’s affirmative defenses and that by placing the burden on Defendant to provide information in support of those defenses, Defendant would be “judicious in identifying those affirmative defenses that are sufficiently viable to justify the cost of discovery;”
  • that Defendant largely failed to provide evidence “about the databases, describing and estimating the hours and costs of obtaining class-wide data reports needed to respond to the interrogatories, and detailing the manner in which they would be required to analyze the data” and that reliance on “an extrapolation of hours and costs based on materials filed in another case” was insufficient to establish the Special Master abused his discretion;
  • and that Defendant had been ordered to respond to interrogatories to protect alleged highly confidential and trade secret information and that “[a] litigant cannot keep its own system secret and then refuse to gather the information itself.”

The court also noted that Defendant’s “intransigent approach” to discovery, i.e., refusing all alternatives proposed by the Special Master, had created much of the burden it faced in responding to the court-ordered interrogatories.

Regarding the question of whether the discovery was proportional to the needs of the case, the court again determined that the Special Master had not abused his discretion where the “issues at stake [we]re at the very heart of this litigation,” where Plaintiff had no alternative way to access the information, where Plaintiff was “an individual” and Defendant a “corporation with a national presence” and “sophisticated access to data” and where, as discussed above, the benefit of the discovery outweighed the burden “particularly in light of [Defendant’s] refusal to permit an outsider to access its computer system or even provide complete lists of its data fields.”

A copy of the court’s full order is available here.