Stephen M. ByersJeffrey L. PostonEvan D. WolffKate M. GrowleyJustin Kingsolver

The Second Circuit today issued a much-anticipated ruling holding that U.S. firms are not required to turn over user data stored overseas, even in the face of a government warrant.  This decision arose from Microsoft’s December 2014 appeal of a civil contempt ruling against the tech giant for refusing to turn over the personal data of an MSN email user, data that Microsoft stored in Ireland.

This decision overturns a July 2014 decision by Judge Loretta Preska of the Southern District of New York holding Microsoft in civil contempt for its refusal to turn over the foreign data.  To secure that 2014 contempt citation, the government argued that § 2703 of the Stored Communications Act, the provision requiring service providers to disclose the contents of stored communications in the face of a valid warrant, applied overseas.  In its appeal, Microsoft emphasized the “presumption against extraterritoriality” the Supreme Court enunciated in its 2010 decision in Morrison v. National Australian Bank.  For a federal statute to apply to conduct in foreign nations, Microsoft claimed, Congress must clearly articulate its intention for the statute to do so.  The Second Circuit agreed.  Finding that “[n]either explicitly nor implicitly does the statute envision the application of its warrant provisions overseas,” the panel held that government could not use § 2703 to force companies to hand over data stored overseas.

This ruling will certainly be heralded as a significant victory for American tech firms.   Dozens of the most prominent American media, telecommunications, and technology companies, as well as issue-advocacy organizations across the ideological spectrum, filed amicus curiae briefs supporting Microsoft’s appeal.