A few years ago, I came up with a business idea I thought would be a real hit.
Form a company offshore, say, in one of those countries with really stringent legal discovery rules, so that a U.S. lawyer would have a terrible time serving a subpoena there.
Then set up servers there and use it as a haven for companies to send their emails and other electronic documents, safely out of reach of U.S. courts. This could make millions!
At the time, though, the idea seemed farfetched. U.S. courts could surely compel a U.S. company to do what they could to get the documents back so they could be used as evidence.
It turns out, there is a company like that, and it makes a ton of money. Maybe you've even heard of the company.
It's called Microsoft.
And in a recent Second Circuit case, the appeals court ruled that Microsoft could not be required to retrieve documents that were stored on servers in Ireland.
In a case called, conveniently enough, In the Matter of a Subpoena to Search a Server Controlled and Maintained by Microsoft Corporation, the Second Circuit considered a subpoena that had been served on Microsoft.
Microsoft was not the defendant in the case. Instead, the defendant had sent emails out through Outlook. Those emails went through Microsoft servers, which then sent into "into the cloud."
In reality, the emails were sent to a data center in Dublin, Ireland, where they were stored. All the information on U.S. servers was then deleted.
In the case, lawyers for the plaintiff subpoenaed Microsoft for the emails that it had in storage. Microsoft turned over all the information it had on servers in the U.S. - which problably wasn't much. But for all the information stored in Dublin, Microsoft refused to do anything.
The Second Circuit had to decide whether the Stored Communications Act gave courts enough power to reach out of the country and impose its power on foreign shores.
And since there was little evidence that Congress intended the Stored Communications Act to go any further, the Second Circuit decided that - at least for a neutral third party such as Microsoft here - a subpoena's power ends at the water's edge.
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