On April 17th, the U.S. Supreme Court dismissed the highly anticipated U.S. v. Microsoft, ruling that recently enacted legislation rendered the case moot. Microsoft Corp. had been in litigation with the U.S. Department of Justice (DOJ) for several years over the issue of whether Microsoft must comply with a U.S. search warrant for access to customer’s emails and other personal data within its “possession, custody or control”, regardless of whether such data is stored within the U.S. or abroad. The Supreme Court’s ruling has been anticipated since March, when President Trump signed into law the Clarifying Law Overseas Use of Data Act (CLOUD Act), H.R. 4943, which amends a provision of the Electronic Communications Privacy Act of 1986 (ECPA), clarifying the federal government’s authority to access U.S. individuals’ data and communications stored abroad.

The dispute between Microsoft and the DOJ arose in 2013, when prosecutors served Microsoft with a warrant issued under the Stored Communications Act of 1986 (SCA), a provision of the ECPA, demanding that the company turn over personal emails and data of a user account associated with a criminal drug trafficking investigation. Microsoft complied with the warrant to the extent that such data was stored on servers in the U.S. However, a portion of the requested data was stored on a server in Ireland that Microsoft refused to turn over.

The Supreme Court agreed to hear the dispute in October 2017, after the U.S. Court of Appeals for the 2nd Circuit, in July 2016, quashed the warrant issued by the DOJ, holding in favor of Microsoft, which the DOJ appealed. In oral arguments before the Supreme Court in February, the DOJ and federal law enforcement argued that technology companies are disrupting criminal investigations in their refusal to turn over cloud data stored on servers abroad. It should not matter where data is stored if it can be accessed “domestically with a click of a computer mouse”, the DOJ argued. Conversely, Microsoft argued that the SCA, the basis for the DOJ’s warrant, was not equipped to address new technologies and usage.

The CLOUD Act, enacted on March 22nd, clarifies the federal government’s authority to compel data stored abroad and creates new procedures for issuing such warrants. The new legislation also affords a company the opportunity to move to quash a warrant on the basis that there is a “material risk” that the demand would violate foreign law.

Following passage of the CLOUD Act, the DOJ filed a motion to dismiss the case on grounds that the new legislation rendered the dispute moot, and stated that it would withdraw the original warrant and reissue a new one under the procedural requirements of the CLOUD Act, to which Microsoft, in a subsequent motion, agreed. “There is no reason for this court to resolve a legal issue that is now of only historical interest,” Microsoft stated in its motion.

The CLOUD Act has been broadly supported by both law enforcement and the technology sector, both in agreement that the 30-year-old SCA was in need of significant updates. Full implications of the new legislation will take time to become evident.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.