Microsoft Warrant Ruling

8/11/2019 Microsoft Warrant Ruling

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF

NEW

YORK

-----------------------------------X

IN THE MATTER

OF

A

WARRANT

TO

SEARCH A CERTAIN E-MAIL ACCOUNT

CONTROLLED

AND

MAINTAINED

BY

MICROSOFT CORPORATION

-----------------------------------X

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before

two cour t s a t

the

same t ime . ' Id. (quoting United

Sta tes v. Salerno,

868 F.2d

524, 540

(2d Cir . 1989)) .

Against

t h i s

background,

the

Court

of

Appeals

in

Rodgers

r e s i s t e d

the

supe r f i c i a l a t t r ac t iveness o f

a per se ru le

t ha t

f i l i n g of a

not i ce

of

appea l

au tomat ica l ly d ives t s the

d i s t r i c t cour t

o f

j u r i sd i c t i on

as

to matters covered by the no t ice [of appeal]

because such

a

ru le

i s

subjec t

to

abuse, and

[]

ap p l i ca t i o n

of

the d i v e s t i t u r e ru le

must

be fa i t h fu l to the pr inc ip le of

j ud ic ia l

economy

from

which

it

spr ings . Id .

Here,

Microsof t

f i l ed a not i ce

of

appeal seeking review

of

the

Ju ly 31 Order. But the f i l i n g of a premature no t ice

o f

appeal does

not

render a

d i s t r i c t

cour t

powerless

to

pres ide

over a

cr iminal case before

it

See

id .

a t

251-52 ( We f a i l to

see any e f f i c i en cy

in al lowing

a

par ty

to

h a l t d i s t r i c t cour t

proceedings

a rb i t r a r i l y by

f i l i n g

a

p l a i n l y

unauthor ized not i ce

of appeal

which

confers

on t h i s cour t

the

power to

do nothing

but

dismiss

the appea l . , ) . Thus,

the

Court

w i l l not end

i t s

ana lys i s

a t

Microsof t ' s no t i ce

of

appeal . It must look fu r th e r

to

determine whether i t s orde r i s indeed a f i na l , appea lab le

order .

B.

Standard

fo r

I s su ing

a Stay

Pending

Appeal

The four fac to rs to be

considered

in i s su ing

a

s t ay

pending

appea l

a re

well

known: ' (1) whether the

s t ay

app l i can t

has made

a s t rong showing

t ha t he

i s

l i k e l y

to succeed

on the

5

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mer i t s ; (2) whether the appl icant wil l be i r r ep a rab ly i n ju red

absent a

s t ay ; (3)

whether

i ssuance of

the

s t ay

wi l l

subs tan t i a l ly

i n ju re

the other

pa r t i e s in t e r e s t ed

in

the

proceeding;

and

(4) where

the

pub l ic i n t e r e s t l i e s . ' In re

World Trade Ctr .

Disas t e r

Si te Li t ig . , 503 F.3d 167, 169 (2d

Cir . 2007)

(quot ing

Hil ton

v.

Braunski l l ,

481 U.S. 770,

776

(1987))

In evalua t ing l i t i g a n t ' s

l i ke l ihood

o f

success

on

appeal , a d i s t r i c t cour t must cons ider the l i k e l i h o o d t ha t the

Court

of

Appeals has

j u r i sd i c t i on

over

the sub jec t case .

See,

United Sta tes

v.

Ste in ,

452 F.

Supp. 2d 281, 285-86

(S.D.N.Y. 2006);

In

r eAppl i ca t ion

of

Chevron Corp. , 709 F.

Supp.

2d

283, 300 (S.D.N.Y. 2010).

Accordingly,

the i n s t an t motion

requ i re s the

Court to

eva lua te whether

the Court of Appeals

has j u r i s d i c t i o n

over the

Ju ly

31

Order.

C Appel la te

Review

of the

Ju ly 31

Order

The Government

argues

t ha t the July 31 Order i s not a f ina l

order

sub jec t to appeal

a t

t h i s s tage in

the

l i t i g a t i o n .

Gov t

Ltr . a t 2.)

(See,

Fina l i ty

as a

condi t ion

of review i s

an

h i s t o r i c

cha rac t e r i s t i c

of fede ra l

appel la te

procedure .

Cobbledick v.

Sta tes ,

309

U.S. 323, 325

(1940).

Thus,

a pa r ty

i s

ord ina r i ly

en t i t l ed

to a s ing le appeal ,

to

be defer red u n t i l

f ina l judgment

has been entered,

in which cla ims o f d i s t r i c t

6

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court e r ro r a t

any

s tage

of

the

l i t i g a t i o n

may be ven t i l a t ed .

Corp.

v.

Desktop Direc t , Inc . , 511

U.S.

863, 868

(1994).

Following

from t h i s ,

8

U.S.C.

1291

gran ts

the cour ts

of

appeals j u r i s d i c t i o n

of

appeals from a l l f ina l decis ions of

the

d i s t r i c t cour ts

of

the United Sta tes

In t h i s c i r c u i t , an

order denying

a

motion

to

quash

a grand

j u ry

subpoena

i s not a

f ina l

dec i s ion and i s , therefo re , not

immediately appealable under 8 U.S.C. 1291. See,

e .g . ,

United

Sta t e s

v.

Punn,

737

F.3d

1,

5

(2d

Cir .

2013). This

genera l ru l e

app l i e s

whether the subpoena i s i s sued in

connect ion

wi th

c i v i l and cr iminal

ac t ions ,

o r

grand

ju ry

proceedings , and

whether

the person (or en t i ty ) seeking to

prevent

enforcement of the

subpoena i s a p a r ty

to the

l i t i g a t i o n

o r a non-par ty witness . In

re Aircrash a t

Bel l e

Harbor,

N.Y.

on

Nov.

12,

2001,

490

F.3d

99,

104

(2d

Cir .

2007)

( in te rna l

c i t a t i o n s

omit ted) . In such ins tances ,

[ t ]o

obta in appel la te

review, the subpoenaed person ord ina r i ly must defy the d i s t r i c t

c o u r t ' s enforcement order , be held

in

contempt,

and

then appeal

the contempt order , which

i s regarded as

f ina l

under

1291.

Id .

( in te rna l quota t ion marks

omit ted) .

The

dr iv ing force

behind

t h i s

ru l e

i s

s t ra igh t fo rward ,

as

the Supreme Court has

co n s i s t en t l y

held

t h a t

the

necess i ty fo r exped i t ion

in

the

admin i s t ra t ion of

the cr iminal

law

j u s t i f i e s

pu t t ing

one

who seeks to r e s i s t

the p roduc t ion o f

7

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des i red

informat ion

to a choice

between compliance

with a t r i a l

cour t ' s orde r

. p r i o r to

any

review

of t h a t

order ,

and

res i s tance to t ha t orde r with the

concomitant p o s s i b i l i t y

of

an ad jud ica t ion o f contempt

i f

hi s

claims

a re

re jec ted

on

appeal .

United Sta t e s

v .

Ryan, 402 U.S. 530, 533

(1971)

Indeed, a

contempt f inding

i s requ i red

so

t h a t the

chal lenge

becomes

so

severed from the main

proceeding

as

to

permi t an appeal .

Cobbledick, 309 U.S. a t 328.

Not

a l l

forms

of

compulsory process ,

however,

requ i re

a

contempt

f ind ing

as

a

p re req u i s i t e

to appeal .

A

d i s t r i c t

cour t

o rde r enforc ing a subpoena i s sued by a government agency in

connec t ion wi th

an

admin i s t ra t ive inves t iga t ion

may be

appea led

immediately

without

f i r s t

performing the r i t u a l o f obta in ing a

contempt order . United Sta tes

v. Constr .

Prod.

Research, Inc . ,

73 F.3d

464,

469

(2d Cir . 1996).

That i s because

such orde rs

a re se l f -con ta ined ,

so

f a r

as

the

j ud ic ia ry

i s

concerned .

Kemp v . Gay,

947 F.2d 1493,

1496

(D.C.

Cir .

1991)

(quot ing

Cobbledick,

309

U.S. a t

329-30) .

Here,

the Warrant was i s sued as p a r t o f an

ongoing

c r imina l i n v es t i g a t i o n

of narco t i c s

t r a f f i ck ing .

(Ltr . from

AUSAs J u s t i n Anderson & Ser r in

Turner to Hon.

Lore t t a A. Preska

(Aug.

20,

2014)

[dkt .

no.

88]

.)

The

Government,

l iken ing

the

Warrant

to a grand j u ry subpoena sub jec t to

the ru le

ou t l ined

above,

argues

t h a t the chal lenged aspect

of

the warrant

i s

the

func t iona l equ iva len t

o f

a subpoena .

(Gov' t Lt r . a t

2.)

8

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Thus,

the Government contends,

the

July 31 Order, which a f f i rmed

den ia l

of Microsof t ' s

motion

to

vacate ,

i s

a not

f ina l order .

See

id . )

In response, Microsof t

avers

t ha t

the

Warrant

should

be t r ea t ed l i ke an admin i s t ra t ive subpoena, render ing t he Ju ly

31 Order

sub jec t

to immediate

appe l l a t e

review.

a t 3.)

Microsof t Lt r .

Under

the law se t fo r th

above,

the Ju ly 31 Order

i s

not a

f ina l

order .

To view

the Warrant

as

an admin is t ra t ive subpoena,

as Microsof t

sugges ts ,

ignores

the

r a t iona le

behind

cases

l i ke

Ryan

as wel l as

c r i t i c a l

di f fe rences

between the i n s t a n t case

and an admin i s t ra t ive proceeding .

Fi r s t ,

because

the Warrant

i s

p a r t

of

an

ongoing

cr iminal

inves t iga t ion , t impl i ca t e s

the

necess i ty

fo r

exped i t ion in the admin i s t ra t ion

of

the c r imina l

law

Ryan,

402 U.S.

a t

533.

Second, and s im i l a r l y ,

the

Ju ly

31

Order

d i f f e r s from

an

orde r enforc ing

a

subpoena

i s sued

by

a

government agency in

connec t ion

wi th

an

admin is t ra t ive

inves t iga t ion because

t

i s not se l f -con ta ined from the

j ud i c i a ry ' s

perspec t ive .

Indeed, a c r imina l i nves t iga t ion

could

wel l

lead

to

fu r th e r

proceedings

before a grand ju ry , the

d i s t r i c t

cour t ,

o r both. Accordingly, the Ju ly 31 Order

i s

proper ly analogized to

an

orde r

denying

a

motion

to

quash

a

grand ju ry subpoena, which

i s not

a f ina l

dec i s ion

and

t he re fo re , not

immediately appealable

under 28 U.S.C. 1291.

!"#$ &'&()*+),-.&/)01 2345*$67 8, 9:;$< ,.=-8=&/ >"?$ 8 3@ &/


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Thus,

the

Court concludes

t ha t

Microsof t ' s appea l i s

defec t ive

a t t h i s

s t age .

D

That

The

Ju ly

31

Order

Be

Fina l

Microsoft

argues t h a t

because the Court

t r e a t e d

the

Ju ly 31

Order as

re so lv ing

a l l

i s sues

before

it

t ha t

orde r i s

f ina l

for

purposes

of appeal . (Microsoft

Lt r .

a t

2.}

As a l luded to

above, [w]hen a

judgment has

been so se t

fo r th and docketed,

the ques t ion

remains whether o r

not it

was

f ina l

within the

meaning

of 28

U.S.C.

1291.

El lender

v.

Schweiker, 781 F.2d 314, 317 (2d

Cir .

1986). The t each ing

of

the Supreme Court

i s

tha t the

determining f ac to r i s 'whether

the

d i s t r i c t cour t in tended

the

judgment t o r ep resen t t he f ina l

dec i s ion

in the case . ' Id. (quot ing Bankers Trust Co.

v.

Mall is , 435 U.S. 381, 385 n.6 (1978)) . The Court of

Appeals

has

i n s t ru c t ed

[ j ] u s t

as

a

not i ce

of appeal

from

a

f i na l

judgment

br ings up

fo r

review a l l

reviewable

ru l ings which produced

the

judgment, a

d i s p o s i t i v e order c lea r ly

in tended to end a

l i t i g a t i o n should

have a s im i l a r e f f e c t [ . )

SongByrd

Inc.

v.

Esta t e

of

Grossman, 206 F.3d

172, 178 (2d

Cir .

2000}

( in te rna l

c i t a t i ons

and

quota t ions omi t t ed) .

Here,

the

Court

i s sued the

Stay

Order based

on

t he

Government 's consent to

s tay enforcement o f

the Ju ly 31

Order.

(See Stay Order .)

Beyond t h i s ,

Microsof t

po in t s to the

Confirmat ion

Order

and

the

Clerk of Cour t ' s prompt forwarding

of

10

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the i n s t an t c a se s

record

to the

Court

of

Appeals to suppor t

i t s

as s e r t i o n t h a t the Court in tended

the

July 31

Order

to be the

f i n a l

dec i s ion

in

t h i s

case. (Microsoft

Lt r .

a t

2.)

Las t , the

Court notes t ha t it

never

d i rec ted the

Clerk

of Court to close

t h i s

case .

The orde rs

and f ac t s

marshaled by

Microsof t do not

show

tha t

the Court

in tended the Ju ly 31

Order

to be

f i na l and

appealable .

Fi r s t , while

the

Ju ly 31 Order

disposed of the

immediate

ques t ions of

law

in

t h i s

case,

it

did not ,

as

expla ined above,

dispose

of the

Cour t s cont inued

j u r i s d i c t i o n

over

the Warran t s enforcement . Second, the Stay Order merely

confirmed the

Government s

temporary

fo rbea r ing

of

i t s r igh t to

s tay enforcement

of the

orde r it secured.

That

i s why

the

Court

had

to

make

the

i n s t an t inqui ry in evalua t ing the Government s

app l ica t ion

to

li t

the

s tay .

Next,

the

Confirmat ion

Order

i s

a

fo rmal i ty i n tha t it was used

to

memorial ize the Co u r t s

Ju ly 31

Order

as a

readable docket

en t ry .

The

Clerk

o f Co u r t s

forwarding o f

the

case

record

i s

another

such admin i s t ra t ive

s tep .

F ina l ly , the

f ac t

the Court has

not c losed t h i s case

cuts

aga ins t M ic rosof t s argument. Cf. Vona

v .

Cnty.

of

Niagara ,

119

Even

i f ,

assuming

arguendo,

the Court did

t h i s fo r

the so le

purpose

of al lowing Microsof t to

docket

i t s no t ice of appeal ,

the

i n s t an t r e s u l t would not change. Aiding a l i t i g a n t in

complet ing a

f i l i n g

cannot be

equated

to an endorsement of the

meri t

o f such a f i l i ng .

!"#$ &'&()*+),-.&/)01 2345*$67 8, 9:;$< ,.=-8=&/ >"?$ && 3@ &/


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any cour t o rde r

determining

how

the

law

app l i e s

to a spec i f i c

case

can

be

viewed

as a dec la ra to ry

judgment

ac t i o n .

But 28

u s c

1291

and

much

case

law

makes

c lea r tha t

only

f ina l

orde rs are

appealable .

To accept t h i s

argument

would be

to

al low

pa r t i e s

to make

an

end

run

around

the

f i n a l i t y requirement

s t r e s s ed by

cases

l i k e Ryan and Punn. Accordingly, because the

i n s t an t case cannot be

repackaged

i n to a d ec l a ra to ry judgment

ac t ion ,

the

Ju ly

31 Order i s

not

f ina l

and

appea lab le

on t h i s

b as i s .

Microsof t a l so argues

t ha t the

Ju ly

31 Order

could be

viewed

as

a

d ec l a ra t i o n

pursuan t

to the Ad minis t ra t ive Procedure Act,

5

U.S.C.

702 2) C).

Microsoft

Lt r .

a t 4 .

But t f a i l s

to

exp la in

how

t h i s s t a t u t e

i s re l evan t to

the i n s t an t case ,

a

c r imina l

proceeding . Because the Court can

f ind no

reason ,

t h i s

argument i s a l so unpersuasive.

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I I I

ON LUSION

For

the foregoing reasons , the Government s mot ion [dkt .

no.

82) to

li t

the s t ay

in

execut ion

of

the

Co u r t s

Ju ly

31,

2014

orde r

i s

GRANTED

The pa r t i e s sha l l

confe r and

inform

the Court by

j o i n t

l e t t e r no l a t e r

than

September 5, 2014 as to how t hey propose to

proceed.

SO

ORDERED

Dated:

New York, New York

August 4 t

2014

LORETTA A PRESKA

Chief Uni ted Sta t e s

D i s t r i c t

Judge

14

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