Thursday, June 24, 2010
Today the Supreme Court issued a unanimous decision in Morrison v. National Bank of Australia Ltd., covered earlier here and here. Justice Scalia wrote the majority opinion, joined by Chief Justice Roberts and Justices Kennedy, Thomas and Alito. The opinion begins: "We decide whether §10(b) of the Securities Exchange Act of 1934 provides a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges."
It concludes: "Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States. This case involves no securities listed on a domestic exchange, and all aspects of the purchases complained of by those petitioners who still have live claims occurred outside the United States. Petitioners have therefore failed to state a claim on which relief can be granted."
Part II of the opinion rejects the Second Circuit's view that the extraterritoriality question goes to the federal court's subject matter jurisdiction, concluding instead that "to ask what conduct §10(b) reaches is to ask what conduct §10(b) prohibits, which is a merits question."
Justice Breyer filed an opinion concurring in part and concurring in the judgment. Justice Stevens filed an opinion concurring in the judgment, which was joined by Justice Ginsburg. Justice Sotomayor took no part.