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The Presumption Against Extraterritoriality in Two Steps

Part of: AGORA: Reflections on RJR Nabisco v. European Community

Published online by Cambridge University Press:  20 January 2017

William S. Dodge
William S. Dodge*
Affiliation:
University of California, Davis, School of Law
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For the past twenty-five years, the presumption against extraterritoriality has been the Supreme Court’s principal tool for determining the geographic scope of federal statutes. In 2010, Morrison v. National Australia Bank used the presumption to decide the scope of Section 10(b) of the Securities Exchange Act, which prohibits securities fraud. Morrison approached the question in two steps. First, it looked for a “clear indication of extraterritoriality” to rebut the presumption and found none. Second, it looked to see if application of the statute would be domestic or extraterritorial by examining the “focus” of the provision. Plaintiffs argued that applying Section 10(b) would be domestic because the alleged fraud occurred in the United States, although they had bought their shares in Australia. The Court disagreed, holding that application of Section 10(b) would be extraterritorial because “the focus of the Exchange Act is not upon the place where the deception originated, but upon purchases and sales of securities in the United States,” and in this case the transaction occurred abroad.

Type
AGORA: Reflections on RJR Nabisco v. European Community
Information
AJIL Unbound , Volume 110 , 2016 , pp. 45 - 50
Copyright
Copyright © American Society of International Law 2016

References

1 EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991), revived the presumption as a canon of statutory interpretation in 1991. Apart from a brief mention in 1989, see Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 440 (1989), the Supreme Court had not applied the presumption to determine the geographic scope of a federal statute since 1949. See Foley Bros. v. Filardo, 336 U.S. 281 (1949).

2 Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247 (2010).

3 Id. at 255-65.

4 Id. at 266.

5 RJR Nabisco, Inc. v. European Community, 136 S. Ct. 2090, 2101, slip op. at 9 (2016). Part II of the opinion was joined by all seven participating Justices. Justice Scalia passed away before oral argument. Justice Sotomayor was recused because she heard an earlier incarnation of the case as a judge on the Second Circuit. See European Community v. RJR Nabisco, Inc., 424 F.3d 175 (2005) (Sotomayor, J.), cert. denied, 546 U.S. 1092 (2006).

6 RJR, 136 S. Ct. at 2101, slip op. at 9. The Court also said: “We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction.” Id. The Court was trying, in a shorthand way, to describe its application of the presumption to the implied cause of action under the jurisdictional Alien Tort Statute in Kiobel v. Royal Dutch Petroleum, 133 S. Ct. 1659 (2013). For explanation why the presumption against extraterritoriality does not apply to jurisdictional statutes, even after RJR, see William S. Dodge, The Presumption Against Extraterritoriality Still Does Not Apply to Jurisdictional Statutes, Opinio Juris (July 1, 2016, 4:57 PM).

7 RJR, 136 S. Ct. at 2101, slip op. at 9.

8 Id.

9 18 U.S.C. §§ 1961-1968.

10 Id. § 1964(c).

11 Id. § 1957(d)(2).

12 RJR, 136 S. Ct. at 2111, slip op. at 27.

13 Id. at 2101-02, slip op. at 9-11.

14 Id. at 2102, slip op. at 11.

15 Id.

16 Morrison, 561 U.S. at 265.

17 Sale v. Haitian Centers Council, Inc., 509 U.S. 155, 177 (1993).

18 Foley Bros. v. Filardo, 336 U.S. 281, 285 (1949).

19 RJR, 136 S. Ct. at 2103, slip op. at 13.

20 Id.

21 Id.

22 Id. at 2104, slip op. at 14.

23 Id.

24 Id.

25 Id. at 2103, slip op. at 13.

26 It seems harder to justify a distinction between Section 1962(a) and (b). If Congress was not concerned about investment in foreign enterprises, why should it be considered about control of foreign enterprises?

27 RJR, 136 S. Ct. at 2100, slip op. at 8 (quoting Morrison, 561 U.S. at 266).

28 Id. at 2104, slip op. at 15.

29 Id. at 2103, slip op. at 14.

30 See, e.g., United States v. Ali, 718 F.3d 929, 939 (D.C. Cir. 2013) (“Generally, the extraterritorial reach of an ancillary offense like aiding and abetting or conspiracy is coterminous with that of the underlying criminal statute.”).

31 RJR, 136 S. Ct. at 2106, slip op. at 19.

32 See, e.g., Morrison, 561 U.S. at 265; Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 455-56 (2007).

33 RJR, 136 S. Ct. at 2108, slip op. at 22.

34 Id.

35 Id. at 2109-10, slip op. at 25-26.

36 Id. at 2110, slip op. at 27.

37 Id. at 2113, slip op. at 4 (Ginsburg, J., concurring in part and dissenting in part).

38 Id. at 2113-14, slip op. at 5-6 (Ginsburg, J., concurring in part and dissenting in part).

39 Id . at 2101, slip op. at 9.

40 Id. at 2110, slip op. at 27.

41 Id. at 2102, slip op. 11.

42 Morrison, 561 U.S. at 266.

43 Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60, 69 (2d Cir. 2012).

44 F. Hoffman-La Roche Ltd. v. Empagran, S.A., 542 U.S. 155, 165 (2004); see also Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796 (1993) (“[T]he Sherman Act applies to foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States.”).

45 Hartford Fire, 509 U.S. at 770-77 (describing alleged boycott).

46 RJR, 136 S. Ct. at 2101, slip op. at 9.

47 In fact, the Court did not apply the presumption in either Empagran or Hartford Fire.

48 RJR, 136 S. Ct. at 2100, slip op. at 8.

49 Morrison, 561 U.S. at 261.