Beyond Securities Fraud: The Territorial Reach of U.S. Laws After Morrison v. N.A.B.

Thursday, May 2nd, 2013 at 11:07 am by David He

David He, Beyond Securities Fraud: The Territorial Reach of U.S. Laws After Morrison v. N.A.B., 2013 Colum. Bus.L. Rev. 148.

In Morrison v. National Australia Bank, the Supreme Court sent a clear signal that the presumption against extraterritorial application of federal legislation must be construed seriously going forward.  The Court then adopted a transaction-based approach to resolving claims brought under the antifraud provision of the Exchange Act, focusing almost exclusively on the place of the transaction.  In the months after the decision, practitioners and academics alike directed much of their attention––and criticism––on the impact it would have on private securities litigations.  This Note posits that the real significance of Morrison lies in its application beyond securities law.  Indeed, in the two and a half years since the decision, Morrison has been raised by defendants seeking to dismiss claims brought under the RICO Act, the Alien Tort Statute, the Torture Act, the Lanham Act, the Sherman Act, and the Anti-Retaliation Provision of the Dodd-Frank Act, to name a few.

The use of Morrison to limit claims beyond securities fraud is troubling for several reasons.  First, finding a clear expression of extraterritorial effect in the language and context of a statute is an inherently subjective exercise.  Different courts have applied, and will continue to apply, inconsistent standards concerning similar statutes.  Second, the transaction-based approach, which acts as a bright-line test in cases involving exchange-traded securities, may not be so readily adapted under a wholly different set of law and facts.  As a result, courts that agree on a statute’s lack of extraterritorial effect may nonetheless disagree regarding its extension to reach a claim.  Finally, many of the policy rationales for limiting the cross-border application of the Exchange Act do not so readily extend to other statutes.  This Note examines the application of Morrison both inside and outside of securities law.  It then makes a case against extending Morrison, and suggests steps that Congress may take to provide greater clarity for the courts.

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Executive Articles Editor. J.D. Candidate 2013, Columbia Law School; B.S. Charles H. Dyson School of Applied Economics and Management 2008, Cornell University