State Extraterritorial Powers Reconsidered: A Reply

INTRODUCTION I greatly appreciate Professor Rosen's thoughtful reply (1) to my recent article. (2) In many ways, our differences on extraterritoriality doctrine and practice are modest. We agree that current doctrine has its flaws; we agree that courts are useful "first cut" actors in formulating responses to extraterritoriality disputes; (3) and we agree that the system functions as harmoniously as it does because states, for the most part, have chosen to regulate in a way that respects their neighbors' territorial prerogatives. (4) I respond to Professor Rosen primarily to clarify what I take to be our principal area of disagreement: that is, whether current doctrine reflects meaningful and coherent policy choices (such as a decision to recognize multiple constitutional values) or, instead, whether it is better described as a haphazard assemblage of sometimes-inconsistent principles that courts have failed to justify or reconcile to any meaningful degree. I argue, of course, for the latter view--and it is my skepticism of the current doctrinal regime, more than my belief in a single doctrinal standard for its own sake, that leads me to argue for a reconsideration of the approach courts take to extraterritoriality problems. I. LIMITATIONS OF THE CURRENT FRAMEWORK At the moment, we have (at least) two standards for assessing the extraterritorial effect of state regulation. (5) On the one hand, state legislation affecting commerce is purportedly governed by the Edgar/ Healy dormant Commerce Clause standard (itself something of a jumble of standards, possibly prohibiting both regulation of wholly out-of-state conduct and regulation that creates the danger of "inconsistent legislation" (6)). On the other, the decision of a state court to apply state law to a given dispute (whether commercial in nature or not) is governed by the Hague "aggregation of contacts" standard, apparently rooted in both the Due Process and the Full Faith and Credit Clauses. (7) Both of these standards are themselves unsatisfactory; they can be rightfully criticized for their unclear scope (in the case of the Edgar/Healy test) and (in the case of the Hague test) their toothlessness and their slighting of full faith and credit concerns. As a result, they simply do not--jointly or individually--supply courts with a useful way of thinking about extraterritoriality problems. But perhaps even more troublingly, the existence of these two tests rests on a distinction between regulation by state legislatures and application of state law by state courts that simply cannot be maintained or justified. (8) A New York regulation that purports to apply New York standards to out-of-state conduct is, in most respects, functionally indistinguishable from the decision of a New York court to enjoin the defendant from engaging in behavior in another state that violates New York law. Yet our existing case law would apply sharply divergent standards in assessing each act's constitutionality. Professor Rosen likewise sees deficiencies in current case law. (9) But he defends the current regime on the grounds that two (or, he would argue, more) extraterritoriality standards are not only unproblematic but also desirable. In Rosen's view, multiple standards are called for, first, because multiple constitutional provisions potentially speak to the extraterritoriality problem (10) and, second, because an act of extraterritorial regulation may in fact affect the disparate interests of "individuals, ... states, and ... the interstate federal system." (11) Fair enough. A coherent extraterritoriality standard should in fact take account of all these interests. While such a standard should integrate the disparate strands of current doctrine, it need not be monolithic. It could, for example, provide for the application of varying levels of scrutiny where meaningful distinctions are present, the most important one being whether the state is attempting to regulate commercial or noncommercial conduct. …