Extraterritorial Application of Federal Act Both Congressionally Justified and Constitutional in the Case of the Torture Act (Eleventh Circuit) But Not in the Case of the Lanham Act, on the Facts (Ninth Circuit)

Prior posts discussed Morrison v. National Australia Bank (No. 08-1191), where the Court held that the federal securities laws did not apply to extraterritorial conduct in a so-called foreign cubed case (foreign plaintiffs sue foreign defendants for misconduct in connection with securities traded on foreign exchanges).  Notwithstanding the press generated by and the extensive judicial treatment of that decision since, there should never have been serious doubt that U.S. courts would remain available even for purely extraterritorial conduct when Congress made its will clearly known.   See our discussion of jurisdiction over international litigation that in our newly published e-book, International Practice:  Topics and Trends.

In its decision in U.S. v. Roy M. Belfast, No. 09-10461 (11th Cir. 7/15/10), the Court of Appeals upheld the convictions and 97-year sentence of the son of the former president of Liberia, Charles Taylor.  Belfast was prosecuted under the Torture Act, 18 U.S.C. §2340-2340A, which Congress enacted to implement the U.N. Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, Dec. 10, 1984, 1465 U.N.T.S. 85, 23 I.L.M. 1027.

The Defendant’s conduct in Belfast was wholly extraterritorial, committed against non-U.S. citizens in Liberia.  The statute reached a defendant if the “alleged offender is a national of the United States”, or if “the alleged offender is present in the United States, irrespective of the nationality of the victim or alleged offender”.  The Court of Appeals upheld the statute as constitutional under the Necessary and Proper Clause (Art. I, § 8, Cl. 18 of the U.S. Constitution).  The Court found the requisite Congressional intent to apply the Act to wholly extraterritorial conduct, finding that Congress overcame the “presumption against extraterritoriality” by “clear expression of Congress’ intent to extend the reach of the relevant Act beyond those places where the United States has sovereignty or has some measure of legislative control”.

In the post-Morrison decision by the Ninth Circuit  in Love v. Associated Newspapers, Ltd., et al., No. 07-56008, 07-56568 (9th Cir. 7/8/10), the Court of Appeals affirmed the dismissal of state and Lanham Act claims between two co-founders of the Beach Boys.  After affirming the district court’s application of the “effects” test to determine personal jurisdiction (the court found no personal jurisdiction), the Court of Appeals affirmed the dismissal of the state law claims (statutory and common law right of privacy) based on a choice of law analysis leading to the application of English law, which recognizes neither tort. 

Next, distinguishing Morrison, the Court of Appeals reaffirmed the general extraterritorial applicability of the Lanham Act because its “sweeping language contrasts so readily with the language of the Securities Exchange Act, not merely referring to foreign commerce but expressly covering all commerce Congress can regulate”.  Nonetheless, on the facts before it, the Ninth Circuit agreed with the district court that the Lanham Act “cannot be applied extraterritorially to encompass the acts committed in Great Britain (e.g., all copies of the recordings were distributed and sold abroad).

On the securities front, the courts continue to apply Morrison fairly broadly.  In In re Alstom SA Securities Litigation, 03 Civ. 6595 (S.D.N.Y. 9/14/10), for example, Judge Marrero rejected both the argument that Morrison didn’t apply to “purchases initiated in the United States” but effectuated over a foreign exchange and that Morrison didn’t apply to common shares “registered and listed on the NYSE, though not actually purchased there”.

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One Response to Extraterritorial Application of Federal Act Both Congressionally Justified and Constitutional in the Case of the Torture Act (Eleventh Circuit) But Not in the Case of the Lanham Act, on the Facts (Ninth Circuit)

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