Third Circuit disposition — 193124p2-pdf

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________

No. 19-3124
________________

IN THE MATTER OF THE APPLICATION OF
SUBPOENA 2018R00776

ABC Corporation,

Appellant

Appeal from the United States District Court

Argued on December 10, 2019

Before: RESTREPO, ROTH and FISHER, Circuit Judges

(Opinion filed January 10, 2020)

________________

OPINION
________________

2

ROTH, Circuit Judge

This case requires us to determine whether the First
Amendment permits a court, acting pursuant to the Stored
Communications Act (SCA),
1
to restrain a grand jury witness
from disclosing its receipt of service to a third party. A grand
jury issued a subpoena to ABC Corp.,
2
an electronic service
provider, for the data of one of its customer’s employees who
was under criminal investigation. A search warrant later
demanded additional data regarding the same subscriber.
These requests were accompanied by nondisclosure orders
(NDOs) prohibiting ABC Corp. from notifying anyone of the
existence of the data requests. ABC Corp. complied with both
requests but challenges the constitutionality of the NDOs,
arguing that they infringe upon its freedom of speech. ABC
Corp. asks to amend the NDOs to permit disclosure to an
individual who, it argues, poses no risk to the grand jury
investigation. We must determine whether the First
Amendment tolerates such a restraint on speech.

Our conclusion, which we explain below, is that the
governmental interest in maintaining grand jury secrecy is
sufficiently strong for the NDOs to withstand strict scrutiny.
Disclosure to anyone outside of the grand jury process would
undermine the proper functioning of our criminal justice
system. We will affirm the District Court’s denial of ABC
Corp.’s motion to amend the NDOs.

1
18 U.S.C. § 2701, et seq.
2
To maintain the secrecy of the investigation, we will refer to
the facts in general terms and will use for the corporation the
fictitious name of “ABC Corp.”

3

I. Background
A. Statutory Background
The Stored Communications Act of 1986 (SCA) is
“designed to protect legitimate law enforcement needs while
minimizing intrusions on the privacy of system users as well
as the business needs of electronic communications system
providers.”
3
The SCA authorizes the government to compel
an electronic service provider to produce a subscriber’s
information stored on remote servers, often referred to as “the
cloud.”
4
The advent of cloud computing has altered how the
government obtains information during criminal
investigations.
5
Where information was previously sought by
directly approaching the target of the investigation or his
employer, the SCA permits prosecutors to obtain the data from
electronic service providers.
6

Section 2703 of the SCA allows the government to
obtain search warrants, court orders, or subpoenas for a
subscriber’s data. These requests may be for non-content-
specific data,
7
such as name, address, and product-usage
information, or content-specific data,
8
including the contents
of all communications, search histories, and saved files. A

3
132 Cong. Rec. 27633 (1986) (statement of Sen. Leahy).
4
U.S. Dep’t of Justice, Seeking Enterprise Customer Data
Held by Cloud Service Providers, at 1 (Dec. 2017).
5
Id.
6
Id.
7
18 U.S.C. § 2703(c).
8
Id. § 2703(a), (b).

4

service provider who turns over this information in response to
a grand jury subpoena, as is the case here, is a grand jury
witness and is not subject to the general secrecy obligation
imposed by the Federal Rule of Criminal Procedure 6(e)(2).
9

However, the SCA authorizes courts to prohibit a service
provider from notifying anyone of its receipt of legal process
in appropriate circumstances.
10

We have not had the opportunity to analyze the SCA’s
nondisclosure provision.
11
Section 2705(b) governs those
occasions when the government may request that a court issue
an NDO to service providers. That provision, in relevant part,
states:

Preclusion of notice to subject of
governmental access. A
governmental entity acting under
section 2703, when it is not
required to notify the subscriber or
customer under section
2703(b)(1), or to the extent that it
may delay such notice pursuant to
subsection (a) of this section, may

9
Notes of Advisory Committee, Note to Subdivision (e)(2);
see also United States v. Sells Eng’g, Inc., 463 U.S. 418, 425
(1983) (“[Grand jury w]itnesses are not under the prohibition
unless they also happen to fit into one of the enumerated
classes [listed in the Federal Rule of Criminal Procedure
6(e)(2)].”).
10
18 U.S.C. § 2705(b).
11
We thank the parties for their additional late-hour briefing
on this issue.

5

apply to a court for an order
commanding a provider of
electronic communications service
or remote computing service to
whom a warrant, subpoena, or
court order is directed, for such
period as the court deems
appropriate, not to notify any other
person of the existence of the
warrant, subpoena, or court
order.
12

The SCA thus permits the government to apply for an NDO
when it seeks content or non-content data pursuant to § 2703
unless the government itself is required to notify the subscriber
of the request.
13
Even when the government must notify the
subscriber, it may still obtain an NDO if it may delay
notification pursuant to § 2705(a). A court shall issue an NDO
if it finds reason to believe that disclosure will result in “(1)
endangering the life or physical safety of an individual; (2)
flight from prosecution; (3) destruction of or tampering with
evidence; (4) intimidation of potential witnesses; or (5)
otherwise seriously jeopardizing an investigation or unduly
delaying a trial.”
14
When these risks are present, an NDO
prohibits an electronic service provider from disclosing the
government’s request for data for up to one year.
15

12
18 U.S.C. § 2705(b).
13
See, e.g., 18 U.S.C. § 2703(b)(1)(B).
14
Id. § 2705(b).
15
Id.; see U.S. Dep’t of Justice, Policy Regarding Applications
for Protective Orders Pursuant to 18 U.S.C. § 2705(b), at 2
(Oct. 19, 2017).

6

B. Factual and Procedural Background
ABC Corp. is an electronic service provider that stores
its subscribers’ content and non-content data on the cloud. In
January 2019, ABC Corp. received a grand jury subpoena
issued pursuant to 18 U.S.C. 2703(c)(2), ordering it to produce
the data of one of its subscribers, concerning an employee of
the subscriber. This employee is the target of an ongoing
criminal investigation. The subpoena sought non-content-
specific information, including, inter alia, records of names,
physical addresses, billing information, and IP addresses
associated with the employee’s account. The subpoena was
accompanied by an NDO, prohibiting for one year ABC Corp.
from notifying any person, except ABC Corp.’s own lawyers,
of the existence of the subpoena. Two months later, a
Magistrate Judge issued a search warrant directing ABC Corp.
to produce content-specific data for the same account. The
warrant sought all evidence found in the employee’s remotely
stored data pertaining to several enumerated offenses being
investigated by the government. The search warrant was
accompanied by a second NDO, virtually identical to the first.
ABC Corp. complied with both the subpoena and search
warrant. The subscriber subsequently filed for bankruptcy, and
a trustee has been appointed.

ABC Corp. moved before the District Court to modify
the NDOs to permit it to notify the bankruptcy trustee of the
existence of the subpoena and warrant, arguing that the NDOs
are content-based restrictions and prior restraints that infringe

7

upon its First Amendment rights.
16
ABC Corp. asserted that it
was proposing a less restrictive alternative to the content-based
restriction. ABC Corp. argued that the trustee is a disinterested
party, who had stepped into the shoes of the debtor and had
been vetted and approved under Department of Justice
guidelines. Further, ABC Corp. claimed that the trustee
controlled the debtor’s assertion of attorney-client privilege,
had authority to respond to the government’s demands, and had
a duty to uncover and assert causes of action against the
debtor’s officers and directors. ABC Corp. proposed two
alternatives, both involving disclosure of the grand jury
investigation to the bankruptcy trustee with varying levels of
specificity.

The District Court denied the motion to amend the
NDOs. It found that § 2705(b) implicates the First
Amendment rights of service providers and, without
determining whether strict scrutiny applies, held that such an
NDO passes strict scrutiny regardless. In its analysis, the court
found that the NDOs serve the compelling governmental
interest of “maintain[ing] the secrecy of the ongoing grand jury
investigation and meet[ing] several of the requirements under

16
The Government argues that ABC Corp. never moved to
modify the search warrant NDO. However, ABC Corp. plainly
raised the issue in its memorandum in support of its motion to
modify and raised it again to this Court. Moreover, the
Government argued against modification to both NDOs before
the District Court, and the District Court referenced ABC
Corp.’s request for relief from the search warrant NDO in its
memorandum opinion. We will consider ABC Corp.’s
challenge to both NDOs.

8

§ 2705(b).”
17
Next, the court determined that the NDOs are
narrowly tailored because the restriction on ABC Corp.’s
speech is time-limited to one year. Moreover, ABC Corp. had
failed to establish that the trustee had “any particularized need
to the grand jury subpoena or any additional information
regarding same.”
18
Finally, the court held that the NDOs are
the least restrictive means for advancing the government’s
interest. It rejected ABC Corp.’s proposed alternatives
because they were impractical, less effective than the NDO,
and risked further disclosure to third parties.

II. Discussion
A. Jurisdiction and Standard of Review
The District Court exercised jurisdiction pursuant to 18
U.S.C. § 3231. Although both parties argue in favor of our
exercising jurisdiction, we have “an independent duty to satisfy
ourselves of our appellate jurisdiction regardless of the parties’
positions.”
19
Our jurisdiction flows from the collateral order
exception to 28 U.S.C. § 1291.
20
Under the collateral order
doctrine, an otherwise non-final order is appealable if it “[1]
finally and conclusively determines the disputed question, [2]
resolves an important issue separate from the underlying
merits, and [3] is effectively unreviewable after final
judgment.”
21
Here, the District Court’s order finally and

17
JA9.
18
JA6.
19
Bedrosian v. U.S. Dep’t of Treasury, IRS, 912 F.3d 144, 149
(3d Cir. 2018).
20
United States v. Scarfo, 263 F.3d 80, 87-88 (3d Cir. 2001).
21
Id. at 87.

9

conclusively rejected ABC Corp.’s First Amendment
challenge to the NDO. Second, the order resolved an important
issue: balancing a burden on speech against a court’s power to
manage grand jury proceedings. The order is also entirely
divorced from the merits of the grand jury proceeding and
concerns ABC Corp.’s rights, not the rights of the grand jury
target.
22
Third, the NDOs will be effectively unreviewable if
or when the target is prosecuted. Because all three criteria of
the collateral order doctrine are met, we have appellate
jurisdiction.

We exercise plenary review over questions of law.
23

Although normal deference to a district court’s factual findings
would necessitate clear error review, “in the First Amendment
context we have an ‘obligation independently to examine the
whole record to ensure that the judgment does not constitute a
forbidden intrusion on the field of free expression.’”
24

22
See United States v. Mitchell, 652 F.3d 387, 398 (3d Cir.
2011).
23
United States v. Marcavage, 609 F.3d 264, 271 (3d Cir.
2010).
24
Id. (quoting Scarfo, 263 F.3d at 91).

10

B. Content-Based Restrictions and Prior Restraint
Nondisclosure orders implicate First Amendment rights
because they restrict a service provider’s speech.
25
Courts
apply varying levels of scrutiny to incursions on speech
depending on whether the restriction is content based or
content neutral.
26
Content-based laws are presumptively
unconstitutional and subject to strict scrutiny.
27
In contrast,
intermediate scrutiny applies to content-neutral restrictions.
28

Government regulation of speech is content based if it “applies
to particular speech because of the topic discussed or the idea
or message expressed.”
29
The NDOs in this case are content
based because they prohibit ABC Corp. from conveying
information about a grand jury investigation, thus “draw[ing]
distinctions based on the message.”
30

The government’s use of NDOs also constitutes prior
restraint, a characterization typically used to describe “judicial
orders forbidding certain communications when issued in
advance of the time that such communications are to occur.”
31

Indeed, the NDOs forbid ABC Corp. from speaking about its
participation as a grand jury witness. “[P]rior restraints on
speech . . . are the most serious and the least tolerable

25
See Scarfo, 263 F.3d at 92.
26
Bruni v. City of Pittsburgh, 941 F.3d 73, 84 (3d Cir. 2019).
27
Reed v. Town of Gilbert, 135 S. Ct. 2218, 2227 (2015).
28
Bruni v. City of Pittsburgh, 824 F.3d 353, 363-64 (3d Cir.
2016).
29
Reed, 135 S. Ct. at 2227.
30
Id.
31
See Alexander v. United States, 509 U.S. 544, 550 (1993)
(emphasis omitted).

11

infringement on First Amendment rights.”
32
While prior
restraints “are not unconstitutional per se,”
33
they are
presumptively unconstitutional
34
and subject to strict
scrutiny.
35

The government asks us to apply intermediate scrutiny,
essentially carving out a new area for prior restraints involving
speech about non-public proceedings. Relying on Seattle
Times Co. v. Rhinehart,
36
the government argues that the
restraint on ABC Corp.’s speech is not the kind of classic prior
restraint that requires exacting First Amendment scrutiny. In
Seattle Times, the Supreme Court declined to apply heightened
scrutiny to a protective order limiting a civil litigant’s ability
to disseminate for its own benefit embarrassing information
discovered in advance of trial.
37
But ABC Corp. is in quite a
different position as a grand jury witness, and it harbors no
abusive motives. ABC Corp. insists that it only wishes to
disclose its receipt of service to alert an individual who can
assert its subscriber’s rights. Moreover, the Seattle Times
language on which the government relies is derived from
Justice Powell’s concurring opinion in Gannett Co. v.

32
Neb. Press Ass’n v. Stuart, 427 U.S. 539, 559 (1976).
33
Se. Promotions, Ltd. v. Conrad, 420 U.S. 546, 558 (1975).
34
First Amendment Coal. v. Judicial Inquiry & Review Bd.,
784 F.2d 467, 477 (3d Cir. 1986).
35
Stilp v. Contino, 613 F.3d 405, 415 (3d Cir. 2010)
(“[P]rohibit[ing] public disclosure of the fact that an Ethics Act
complaint was filed, does not survive strict scrutiny and cannot
be enforced.”).
36
467 U.S. 20, 33 (1984).
37
Id. at 34.

12

DePasquale, a right of access case.
38
The right of access does
not enjoy the broad protections offered to the right of free
speech.
39
In fact, Justice Powell’s concurrence contrasted the
right of access with a gag order, describing the latter as “a
classic prior restraint” and “one of the most extraordinary
remedies known to our jurisprudence.”
40
We do not find
Seattle Times instructive under these circumstances.

We thus reject the government’s invitation to apply a
lesser degree of scrutiny. Because the NDOs are content-based
restrictions and presumptively unconstitutional prior restraints,
we apply strict scrutiny to determine whether they are
constitutionally infirm.

C. Strict Scrutiny
The government has the burden to establish that the
NDOs survive strict scrutiny.
41
Strict scrutiny requires the
government to demonstrate that the restriction on speech “(1)
serve[s] a compelling governmental interest; (2) [is] narrowly
tailored to achieve that interest; and (3) [is] the least restrictive
means of advancing that interest.”
42
“The purpose of the [strict
scrutiny] test is to ensure that speech is restricted no further

38
Id. at 33-34 (citing Gannett Co. v. DePasquale, 443 U.S.
368, 399 (1979) (Powell, J., concurring)).
39
First Amendment Coal., 784 F.2d at 477; Stilp, 613 F.3d at
413.
40
Gannet Co., 443 U.S. at 399 (quoting Neb. Press Ass’n., 427
U.S. at 562).
41
See Ashcroft v. ACLU, 542 U.S. 656, 660 (2004).
42
Marcavage, 609 F.3d at 286 (quoting ACLU v. Mukasey, 534
F.3d 181, 190 (3d Cir. 2008)).

13

than necessary to achieve the goal, for it is important to ensure
that legitimate speech is not chilled or punished.”
43

1. The Restriction on Speech Serves a Compelling
Governmental Interest.
In reference to the application of strict scrutiny here, the
government argues that it has a compelling interest in
preserving the secrecy of grand jury proceedings. But strict
scrutiny sets a high bar for the government to meet.
“[Government] officials may not constitutionally punish
publication of the information, absent a need to further a
[governmental] interest of the highest order.”
44
We are
convinced, however, that protecting the secrecy of an
investigation is a paramount interest of the government.
45
The
government’s interest is particularly acute where, as here, the
investigation is ongoing.
46

Moreover, § 2705(b) sets out for us the governmental
interests that must exist before a court issues an NDO. Here,
the District Court and Magistrate Judge found reason to believe
that notification would “seriously jeopardize the investigation

43
Ashcroft, 542 U.S. at 666.
44
Butterworth v. Smith, 494 U.S. 624, 632 (1990) (quoting
Smith v. Daily Mail Publ’g Co., 443 U.S. 97, 103 (1979)).
45
See Douglas Oil Co. of Cal. v. Petrol Stops Nw., 441 U.S.
211, 218 (1979) (“[T]he proper functioning of our grand jury
system depends upon the secrecy of grand jury proceedings.”).
46
See id. at 222 (“[T]he interests in grand jury secrecy,
although reduced, are not eliminated merely because the grand
jury has ended its activities.”).

14

. . . by giving targets an opportunity to flee or continue flight
from prosecution, destroy or tamper with evidence, change
patterns of behavior, or notify confederates.”
47
In denying
ABC Corp.’s motion to amend, the District Court found that
the NDOs serve a compelling governmental interest in
maintaining the secrecy of the ongoing grand jury investigation
and meet several requirements under § 2705(b). We agree.

ABC Corp. concedes that the government asserts a
compelling interest in preventing notice to the target of the
investigation. But ABC Corp. “misperceives the breadth of the
compelling interest that underlies” the restriction on speech.
48

The government’s interest in grand jury secrecy is not limited
to avoiding notification to the target. The Supreme Court has
identified several reasons to maintain grand jury secrecy:

(1) To prevent the escape of those
whose indictment may be
contemplated; (2) to insure the
utmost freedom to the grand jury in
its deliberations, and to prevent
persons subject to indictment or
their friends from importuning the
grand jurors; (3) to prevent
subornation of perjury or
tampering with the witness who
may testify before [the] grand jury
and later appear at the trial of those
indicted by it; (4) to encourage free

47
JA39, JA45 (citing § 2705(b)(2), (3), (5)).
48
See Williams-Yulee v. Florida Bar, 575 U.S. 433, 435
(2015).

15

and untrammeled disclosures by
persons who have information
with respect to the commission of
crimes; (5) to protect innocent
accused who is exonerated from
disclosure of the fact that he has
been under investigation, and from
the expense of standing trial where
there was no probability of guilt.
49

To be sure, these reasons include avoiding consequences that
might flow from alerting the target. But the Supreme Court’s
reasons additionally relate to the grand jury’s ability to freely
deliberate, the desire for unfettered testimony by witnesses,
and the protection of the target from the assumption of guilt.
50

Consistent with these concerns, § 2705(b) prohibits disclosure
to “any other person” and not just to the target of the
investigation. Therefore, we must next consider whether the
NDOs are narrowly drawn and the least restrictive means to
preserve grand jury secrecy, not just whether the restriction
avoids alerting the target of the investigation.

49
Douglas Oil Co., 441 U.S. at 219 n.10 (alteration in original)
(quoting United States v. Procter & Gamble Co., 356 U.S. 677,
681 n.6 (1958)).
50
Id.; see also Sells Eng’g Inc., 463 U.S. at 424 (“Grand jury
secrecy . . . is as important for the protection of the innocent as
for the pursuit of the guilty.”) (internal quotation marks
omitted). But see Butterworth, 494 U.S. at 634
(“[R]eputational interests alone cannot justify the proscription
of truthful speech.”).

16

2. The Restriction on Speech is Narrowly Tailored.
The District Court found that the NDOs are narrowly
tailored because they are limited in time to one year. ABC
Corp. argues that time limitations are not enough to pass
constitutional muster and that restrictions must be also be
tailored in scope. To this end, ABC Corp. characterizes the
NDOs as a “total ban” on its speech. We agree that a temporal
limitation alone may not be enough to satisfy strict scrutiny.
51

The ban here is not, however, a total ban.

Courts consistently distinguish between disclosure of
information that a witness has independent of his participation
in grand jury proceedings and information the witness learns
as a result of his participation.
52
This approach strikes a
“balance” between First Amendment rights and the
government’s “interests in preserving the confidentiality of its

51
See United States v. Quattrone, 402 F.3d 304, 310 (2d Cir.
2005) (“A prior restraint is not constitutionally inoffensive
merely because it is temporary.”).
52
Butterworth, 494 U.S. at 632 (“[W]e deal only with
respondent’s right to divulge information of which he was in
possession before he testified before the grand jury, and not
information which he may have obtained as a result of his
participation in the proceedings of the grand jury.”); First
Amendment Coal., 784 F.2d at 479 (holding that confidentiality
requirement can prevent witnesses from disclosing
proceedings, with the exception of their own testimony); see
also Seattle Times, 467 U.S. at 34 (“[A] party may disseminate
the identical information covered by the protective order as
long as the information is gained through means independent
of the court’s processes.”).

17

grand jury proceedings.”
53
Here, the NDOs prohibit ABC
Corp. only from speaking about the existence of the
government’s requests—information it learned of by its
participation as a grand jury witness.
54
The NDOs do not
prohibit ABC Corp. from discussing the government’s requests
abstractly, as service providers have done by disclosing the
number of data requests and NDOs they receive in public
docket civil complaints. This can hardly be described as a
“total ban” on speech. The NDOs only proscribe speech that
would reveal the existence of this particular grand jury
investigation to a non-participant, a measure narrowly tailored
to preserve the secrecy of this grand jury proceeding.

3. The Restriction on Speech is the Least Restrictive
Means of Advancing the Governmental Interest.
ABC Corp. contends that the government can
accomplish its compelling interest through less restrictive
means. “[I]f the Government could achieve its interests in a
manner that does not restrict speech, or that restricts less
speech, the Government must do so.”
55
“When a plausible, less
restrictive alternative is offered to a content-based speech
restriction, it is the Government’s obligation to prove that the

53
See Butterworth, 494 U.S. at 630-31.
54
See id. at 636 (Scalia, J., concurring) (“[A] witness’[s]
disclosure of the grand jury proceedings . . . is knowledge he
acquires not ‘on his own’ but only by virtue of being made a
witness.”).
55
Thompson v. W. States Med. Ctr., 535 U.S. 357, 371
(2002).

18

alternative will be ineffective to achieve its goals.”
56
ABC
Corp. proposes two alternatives: (1) permission for it to notify
the bankruptcy trustee of the subpoena; or (2) permission to
notify the trustee of the subpoena without identifying the target
email account, which according to ABC Corp., would prompt
the trustee to seek more information from the District Court
and enter into a protective order to restrict further
dissemination.

We agree with the government that these alternatives
are untenable. They are impractical and would be ineffective
in maintaining grand jury secrecy. Disclosure by an electronic
service provider to a third party undermines the government’s
interest in maintaining the confidentiality of an ongoing
investigation.
57
We cannot and will not assess the
trustworthiness of a would-be confidante chosen by a service
provider. Simply put, “[w]e decline to wade into this swamp”
of unworkable line drawing.
58
Neither courts nor the
government can be expected to vet individuals selected by
service providers and determine their risk of subverting an

56
United States v. Playboy Entm’t Grp., 529 U.S. 803, 816
(2000).
57
Cf. First Amendment Coal., 784 F.2d at 479 (“The
confidentiality requirement is reasonable and may be enforced
insofar as it would prevent a person [including a witness] . . .
from disclosing proceedings taking place before the Board. . .
. The state interest in this respect, as in the grand jury setting,
is sufficiently strong to support such a ban.”).
58
Williams-Yulee, 575 U.S. at 454.

19

ongoing investigation. Strict scrutiny does not demand that
sort of prognostication.
59

In sum, the NDOs’ gag effect remains the least
restrictive means to maintain grand jury secrecy.

III. Conclusion
For the foregoing reasons we will affirm the order by
the District Court denying ABC Corp.’s motion to amend the
nondisclosure orders.

59
See id. (“The First Amendment requires that [a speech
restriction] be narrowly tailored, not that it be ‘perfectly
tailored.’”) (quoting Burson v. Freeman, 504 U.S. 191, 209
(1992)).