Morrison v. Nat'l Austl. Bank Ltd., No. 08–1191.

CourtUnited States Supreme Court
Writing for the CourtJustice SCALIA delivered the opinion of the Court.
Citation561 U.S. 247,130 S.Ct. 2869,177 L.Ed.2d 535
PartiesRobert MORRISON, et al., Petitioners, v. NATIONAL AUSTRALIA BANK LTD. et al.
Decision Date24 June 2010
Docket NumberNo. 08–1191.

561 U.S. 247
130 S.Ct.
2869
177 L.Ed.2d 535

Robert MORRISON, et al., Petitioners,
v.
NATIONAL AUSTRALIA BANK LTD. et al.

No. 08–1191.

Supreme Court of the United States

Argued March 29, 2010.
Decided June 24, 2010.


Thomas A. Dubbs, for petitioners.

George T. Conway, III, for respondents.

Matthew D. Roberts, for the United States as amicus curiae, by special leave of the Court, supporting respondents.

Eric Seiler, Friedman Kaplan Seiler & Adelman LLP, New York, NY, A. Graham Allen, Rogers Towers, P.A., Jacksonville, FL, George T. Conway, III, Counsel of Record, John F. Lynch, Carrie M. Reilly, Wachtell, Lipton, Rosen & Katz, New York, NY, for Respondents.

Samuel Issacharoff, New York, NY, Thomas A. Dubbs, Counsel of Record, James W. Johnson, Richard W. Joffe, Barry M. Okun, Labaton Sucharow LLP, New York, NY, for petitioners.

Opinion

Justice SCALIA delivered the opinion of the Court.

561 U.S. 250

We decide whether § 10(b) of the Securities Exchange Act of 1934 provides a cause of action to foreign plaintiffs suing

561 U.S. 251

foreign and American defendants for misconduct in connection with securities traded on foreign exchanges.

I

Respondent National Australia Bank Limited (National) was, during the relevant time, the largest bank in Australia. Its Ordinary Shares—what in America would be called “common stock”—are traded on the Australian Stock Exchange Limited and on other foreign securities exchanges, but not on any exchange in the United States. There are listed on the New York Stock Exchange, however, National's American Depositary Receipts (ADRs), which represent the right to receive a specified number of National's Ordinary Shares. 547 F.3d 167, 168, and n. 1 (C.A.2 2008).

The complaint alleges the following facts, which we accept as true. In February 1998, National bought respondent HomeSide Lending, Inc., a mortgage servicing company headquartered in Florida. HomeSide's business was to receive fees for servicing mortgages (essentially the administrative tasks associated with collecting mortgage payments, see J. Rosenberg, Dictionary of Banking and Financial Services 600 (2d ed.1985)). The rights to receive those fees, so-called mortgage-servicing rights, can provide a valuable income stream. See 2 The New Palgrave Dictionary of Money and Finance 817 (P. Newman, M. Milgate, & J. Eatwell eds.1992). How valuable each of the rights is depends, in part, on the likelihood that the mortgage to which it applies will be fully repaid before it is due, terminating the need for servicing. HomeSide calculated the present value of its mortgage-servicing rights by using valuation models designed to take this likelihood into account. It recorded the value of its assets, and the numbers appeared in National's financial statements.

From 1998 until 2001, National's annual reports and other public documents touted the success of HomeSide's business, and respondents Frank Cicutto (National's managing director

561 U.S. 252

and chief executive officer), Kevin Race (HomeSide's chief operating officer), and Hugh Harris (HomeSide's chief executive officer) did the same in public statements. But on July 5, 2001, National announced that it was writing

130 S.Ct. 2876

down the value of HomeSide's assets by $450 million; and then again on September 3, by another $1.75 billion. The prices of both Ordinary Shares and ADRs slumped. After downplaying the July write-down, National explained the September write-down as the result of a failure to anticipate the lowering of prevailing interest rates (lower interest rates lead to more refinancings, i.e., more early repayments of mortgages), other mistaken assumptions in the financial models, and the loss of goodwill. According to the complaint, however, HomeSide, Race, Harris, and another HomeSide senior executive who is also a respondent here had manipulated HomeSide's financial models to make the rates of early repayment unrealistically low in order to cause the mortgage-servicing rights to appear more valuable than they really were. The complaint also alleges that National and Cicutto were aware of this deception by July 2000, but did nothing about it.

As relevant here, petitioners Russell Leslie Owen and Brian and Geraldine Silverlock, all Australians, purchased National's Ordinary Shares in 2000 and 2001, before the write-downs.1 They sued National, HomeSide, Cicutto, and the three HomeSide executives in the United States District Court for the Southern District of New York for alleged violations of §§ 10(b) and 20(a) of the Securities and Exchange Act

561 U.S. 253

of 1934, 48 Stat. 891, 15 U.S.C. §§ 78j(b) and 78t(a), and SEC Rule 10b–5, 17 CFR § 240.10b–5 (2009), promulgated pursuant to § 10(b).2 They sought to represent a class of foreign purchasers of National's Ordinary Shares during a specified period up to the September write-down. 547 F.3d, at 169.

Respondents moved to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim under Rule 12(b)(6). The District Court granted the motion on the former ground, finding no jurisdiction because the acts in this country were, “at most, a link in the chain of an alleged overall securities fraud scheme that culminated abroad.” In re National Australia Bank Securities Litigation, No. 03 Civ. 6537(BSJ), 2006 WL 3844465, *8 (S.D.N.Y., Oct.25, 2006). The Court of Appeals for the Second Circuit affirmed on similar grounds. The acts performed in the United States did not “compris[e] the heart of the alleged fraud.” 547 F.3d, at 175–176. We granted certiorari, 558 U.S. 1047, 130 S.Ct. 783, 175 L.Ed.2d 513 (2009).

II

Before addressing the question presented, we must correct a threshold

130 S.Ct. 2877

error in the Second Circuit's analysis. It considered the extraterritorial reach of § 10(b) to raise a question of subject-matter jurisdiction, wherefore it affirmed the District

561 U.S. 254

Court's dismissal under Rule 12(b)(1). See 547 F.3d, at 177. In this regard it was following Circuit precedent, see Schoenbaum v. Firstbrook, 405 F.2d 200, 208, modified on other grounds en banc, 405 F.2d 215 (1968). The Second Circuit is hardly alone in taking this position, see, e.g., In re CP Ships Ltd. Securities Litigation, 578 F.3d 1306, 1313 (C.A.11 2009); Continental Grain (Australia) Pty. Ltd. v. Pacific Oilseeds, Inc., 592 F.2d 409, 421 (C.A.8 1979).

But to ask what conduct § 10(b) reaches is to ask what conduct § 10(b) prohibits, which is a merits question. Subject-matter jurisdiction, by contrast, “refers to a tribunal's ‘ “power to hear a case.” ’ ” Union Pacific R. Co. v. Locomotive Engineers and Trainmen Gen. Comm. of Adjustment, Central Region, 558 U.S. 67, ––––, 130 S.Ct. 584, 596, 175 L.Ed.2d 428 (2009) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006), in turn quoting United States v. Cotton, 535 U.S. 625, 630, 122 S.Ct. 1781, 152 L.Ed.2d 860 (2002)). It presents an issue quite separate from the question whether the allegations the plaintiff makes entitle him to relief. See Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946). The District Court here had jurisdiction under 15 U.S.C. § 78aa3 to adjudicate the question whether § 10(b) applies to National's conduct.

In view of this error, which the parties do not dispute, petitioners ask us to remand. We think that unnecessary. Since nothing in the analysis of the courts below turned on the mistake, a remand would only require a new Rule 12(b)(6) label for the same Rule 12(b)(1) conclusion. As we have done before in situations like this, see, e.g., Romero v. International Terminal Operating Co., 358 U.S. 354, 359, 381–384, 79 S.Ct. 468, 3 L.Ed.2d 368 (1959), we proceed to address whether petitioners' allegations state a claim.

561 U.S. 255

III

A

It is a “longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.’ ” EEOC v. Arabian American Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991) (Aramco) (quoting Foley Bros., Inc. v. Filardo, 336 U.S. 281, 285, 69 S.Ct. 575, 93 L.Ed. 680 (1949)). This principle represents a canon of construction, or a presumption about a statute's meaning, rather than a limit upon Congress's power to legislate, see Blackmer v. United States, 284 U.S. 421, 437, 52 S.Ct. 252, 76 L.Ed. 375 (1932). It rests on the perception that Congress ordinarily legislates with respect to domestic, not foreign matters. Smith v. United States, 507 U.S. 197, 204, n. 5, 113 S.Ct. 1178, 122 L.Ed.2d 548 (1993). Thus, “unless there is the affirmative intention of the Congress clearly expressed” to give a statute extraterritorial effect, “we must presume it is primarily concerned with domestic conditions.” Aramco, supra, at 248, 111 S.Ct. 1227 (internal quotation marks omitted). The...

To continue reading

Request your trial
1326 practice notes
  • Inst. for Fisheries Res. v. Hahn, Case No. 16-cv-01574-VC
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • December 19, 2019
    ...manner, there's no practical difference to adding a gratuitous jurisdictional label. See Morrison v. National Australia Bank, Ltd. , 561 U.S. 247, 254, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010).8 Minor Use and Minor Species Animal Health Act of 2004, Pub. L. No. 108-282, § 102(b)(4), 118 Stat.......
  • Global v. Prithvi Info. Sols., Civil Action No. 2:18-cv-01290-WSS
    • United States
    • U.S. District Court — Western District of Pennsylvania
    • March 10, 2020
    ...extraterritoriality. RJR Nabisco, Inc. v. Euro. Community, 136 S. Ct. 2090, 2100 (2016) (citing Morrison v. Nat'l Austl. Bank Ltd., 561 U.S. 247, 255 (2010)). In that vein, the United States Supreme Court has interpreted the RICO statute to afford extraterritorial jurisdiction only to the e......
  • In re Libor-Based Fin. Instruments Antitrust Litig., 11 MDL 2262 (NRB)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 4, 2015
    ...Equip. Corp. v. Maxwell, 468 F.2d 1326, 1341 (2d Cir. 1972), abrogated on other grounds by Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247 (2010). And, because "[d]ue process limits on [a court's] adjudicative authority principally protect the liberty of the nonresident defendant—not th......
  • Al Bahlul v. United States, No. 11–1324.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 14, 2014
    ...we “divin[e] what Congress would have wanted if it had thought of the situation before the court,” Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247, 130 S.Ct. 2869, 2881, 177 L.Ed.2d 535 (2010) ; see also United States v. Public Utilities Comm'n of Cal., 345 U.S. 295, 319, 73 S.Ct. 706, ......
  • Request a trial to view additional results
1315 cases
  • Inst. for Fisheries Res. v. Hahn, Case No. 16-cv-01574-VC
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • December 19, 2019
    ...manner, there's no practical difference to adding a gratuitous jurisdictional label. See Morrison v. National Australia Bank, Ltd. , 561 U.S. 247, 254, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010).8 Minor Use and Minor Species Animal Health Act of 2004, Pub. L. No. 108-282, § 102(b)(4), 118 Stat.......
  • Global v. Prithvi Info. Sols., Civil Action No. 2:18-cv-01290-WSS
    • United States
    • U.S. District Court — Western District of Pennsylvania
    • March 10, 2020
    ...extraterritoriality. RJR Nabisco, Inc. v. Euro. Community, 136 S. Ct. 2090, 2100 (2016) (citing Morrison v. Nat'l Austl. Bank Ltd., 561 U.S. 247, 255 (2010)). In that vein, the United States Supreme Court has interpreted the RICO statute to afford extraterritorial jurisdiction only to the e......
  • In re Libor-Based Fin. Instruments Antitrust Litig., 11 MDL 2262 (NRB)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 4, 2015
    ...Equip. Corp. v. Maxwell, 468 F.2d 1326, 1341 (2d Cir. 1972), abrogated on other grounds by Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247 (2010). And, because "[d]ue process limits on [a court's] adjudicative authority principally protect the liberty of the nonresident defendant—not th......
  • Al Bahlul v. United States, No. 11–1324.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 14, 2014
    ...we “divin[e] what Congress would have wanted if it had thought of the situation before the court,” Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247, 130 S.Ct. 2869, 2881, 177 L.Ed.2d 535 (2010) ; see also United States v. Public Utilities Comm'n of Cal., 345 U.S. 295, 319, 73 S.Ct. 706, ......
  • Request a trial to view additional results
8 firm's commentaries
  • Understanding and Litigating Trade Secrets: An Outline for Analyzing the Statutory and Common Law of Trade Secrets In Illinois
    • United States
    • JD Supra United States
    • February 17, 2022
    ...must be considered against the backdrop of the 2010 United States Supreme Court decision in Morrison v. National Australia Bank, Ltd., 561 U.S. 247 (2010). In that case, the Supreme Court held that the presumption against extraterritorial application of federal laws applies to all cases. Id......
  • HelbizCoin Litigation Lives On After Unanimous Second Circuit Decision
    • United States
    • Mondaq United States
    • October 29, 2021
    ...a plaintiff (1) transacting in "securities listed on domestic exchanges" or (2) entering into "domestic transactions in other securities." 561 U.S. 247, 267 (2010). Put another way, the Supreme Court concluded that the Exchange Act does not provide a cause of action to plaintiffs who sue in......
  • HelbizCoin Litigation Lives On After Unanimous Second Circuit Decision
    • United States
    • Mondaq United States
    • October 29, 2021
    ...a plaintiff (1) transacting in "securities listed on domestic exchanges" or (2) entering into "domestic transactions in other securities." 561 U.S. 247, 267 (2010). Put another way, the Supreme Court concluded that the Exchange Act does not provide a cause of action to plaintiffs who sue in......
  • Paul Weiss Discusses Second Circuit Ruling on Liability Under Rule 10b-5(a) and (c)
    • United States
    • LexBlog United States
    • August 3, 2022
    ...139 S. Ct. at 1103. [29] SEC v. Rio Tinto plc, — F.4th –, 2022 WL 2760323, *6 (2d Cir. 2022). [30] Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 276 (2010) (Stevens, J., concurring) (citation omitted). This post comes to us from Paul, Weiss, Rifkind, Wharton & Garrison LLP. It is bas......
  • Request a trial to view additional results
8 books & journal articles
  • DEFERRING TO FOREIGN COURTS.
    • United States
    • University of Pennsylvania Law Review Vol. 169 Nbr. 8, August 2021
    • August 1, 2021
    ...See Zachary Clopton, Horizontal Choice of Law in Federal Court, 169 U. PA. L. REV. 2191 (2021). (344) Morrison v. Nat'l Austl. Bank Ltd., 561 U.S. 247, 253-54 (2010). To be clear, the federal presumption against extraterritoriality does not apply to state statutes. See generally Dodge, supr......
  • SECURITIES FRAUD
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • July 1, 2021
    ...sharing between securities regulators in response to the events of September 11, 2001). 511. Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 273 (2010); see also Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60, 62 (2d Cir. 2012) (def‌ining a domestic transaction as one ......
  • Endangered Species at Sea: Applying the ESA to Maritime Jurisdictions
    • United States
    • Environmental Law Reporter Nbr. 51-6, June 2021
    • June 1, 2021
    ...(Third) of Foreign Relations Law, supra note 20, §502. 56. Restatement (Second) of Foreign Relations Law, supra note 54, §36. 57. 561 U.S. 247 (2010). See also William S. Dodge, he Presumption Against Extraterritoriality in Today’s Supreme Court , 33 Harv. L. Rev. 1582 (2020). 58. Morrison ......
  • Rethinking legal globalization: the case of transnational personal jurisdiction.
    • United States
    • William and Mary Law Review Vol. 54 Nbr. 5, April 2013
    • April 1, 2013
    ...only the extraterritoriality of federal antidiscrimination statutes, not the presumption stated in ARAMCO). (319.) Id. at 248. (320.) 130 S. Ct. 2869, 2875, 2883 (321.) Id. at 2877 (quoting ARAMCO, 499 U.S. at 248 (quoting Foley Bros. v. Filardo, 336 U.S. 281, 285 (1949))). (322.) Id. at 28......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT