Opinion ID: 2745034
Heading Depth: 4
Heading Rank: 2

Heading: Morrison’s “Focus” Analysis

Text: To determine how to undertake the extraterritoriality analysis where plaintiffs allege some “connections” to the United States, we first look to the Court’s opinion in Morrison, in which the Court actually engaged in the required “further analysis” with respect to § 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). After determining that the presumption against extraterritorial effect of statutes applied to the Exchange Act, the Court then sought to determine which “territorial event[s]” or “relationship[s]” were the “focus” of the Exchange Act. Morrison, 561 U.S. at 266. The Court determined that the “focus” of the statute was on “purchases and sales of securities in the United States,” rather than “the place where the deception originated.” Id. Analyzing transactions of securities not registered on domestic exchanges, the Court again noted that “it is the foreign location of the transaction that establishes (or reflects the presumption of) the Act’s inapplicability.” Id. at 268. In light of Congress’s focus on domestic transactions, the Court categorically limited the territorial reach of the statute by establishing that § 10(b) purely jurisdictional statutes, such as the ATS. See, e.g., Morrison, 561 U.S. at 273 (holding that the presumption against extraterritoriality applied to section 10(b) of the Securities Exchange Act, precluding claims for misconduct in connection with securities traded on foreign exchanges); Sale v. Haitian Ctrs. Council, Inc., 509 U.S. 155, 159 (1991) (holding that section 243(h) of the Immigration and Nationality Act of 1952 did not apply extraterritorially); Equal Opportunity Emp’t Comm’n v. Arabian Am. Oil Co., 499 U.S. 244, 259 (1991) (holding that Title VII of the Civil Rights Act of 1964 did not apply extraterritorially). While mindful of the distinction between substantive and jurisdictional statutes, we think the Court’s analysis in the above cases, applying the presumption against extraterritoriality to substantive statutes, is instructive and relevant to the question presented here. 24 No. 10‐5258‐cv applies “only [to] transactions in securities listed on domestic exchanges, and domestic transactions in other securities.” Id. at 267; see id. at 285 (Stevens, J., concurring in the judgment) (characterizing Court’s test as a “bright‐line rule[]”); City of Pontiac, 752 F.3d at 180 (same). Adopting the Supreme Court’s methodology in Morrison, the first step of our inquiry here involves an evaluation of the “territorial event[s]” or “relationship[s]” that were the “focus” of the ATS. Morrison, 561 U.S. at 266. This inquiry again begins with the Supreme Court’s most comprehensive and recent examination of the ATS in Kiobel. There, plaintiffs were Nigerian nationals who accused Dutch, British, and Nigerian corporations of aiding and abetting violations of customary international law by Nigerian military and police forces. Kiobel, 133 S. Ct. at 1662. Plaintiffs claimed that the defendant multi‐national corporations aided and abetted the abuses by “providing the Nigerian forces with food, transportation, and compensation, as well as by allowing the Nigerian military to use respondents’ property as a staging ground for attacks.” Id. at 1662‐ 63. The United States ties alleged were that defendants’ shares were traded on the New York Stock Exchange, and that they had a New York City office (owned by an affiliate) that “helps to explain their business to potential investors.” Id. at 1677 (Breyer, J., concurring in the judgment). Focusing on the fact that “all the relevant conduct took place outside the United States,” the Supreme Court held that the ATS did not extend to plaintiffs’ claims. Id. at 1669. In Balintulo, we explained 25 No. 10‐5258‐cv that the phrase “relevant conduct” in Kiobel referred, at all times and “[i]n all cases,” to the conduct constituting the alleged offenses under the law of nations. Balintulo, 727 F.3d at 189‐90, 192. 10 Indeed, we undertook a careful examination of the Supreme Court’s choice of language in Kiobel, and underscored that, on at least eleven occasions, the Court “framed” its analysis as one “focusing solely on the location of the relevant ‘conduct’ or ‘violation.’” Id. at 189 (quoting Kiobel, 133 S. Ct. at 1665‐69). Accordingly, in conducting our extraterritoriality analysis, we looked solely to the site of the alleged violations of customary international law. Id. at 189‐90.11 We have recently had another occasion to apply the Supreme Court’s Kiobel 10 holding in Chowdhury, 746 F.3d 42, where we determined that, because all of the conduct set forth in plaintiff’s complaint occurred in Bangladesh, his claims brought under the ATS were not cognizable. Id. at 49‐50. After determining that the ATS does not apply extraterritorially, the Supreme 11 Court in Kiobel had no need to decide what allegations would be sufficient to displace the presumption, because the Kiobel plaintiffs did not allege any conduct that took place in the United States. However, in his concurring opinion in Kiobel, Justice Alito did explicitly apply the Morrison “focus” analysis to the ATS. In doing so, he noted that, pursuant to the Supreme Court’s opinion in Sosa, 542 U.S. 692, “when the ATS was enacted, congressional concern was focus[ed] on the three principal offenses against the law of nations that had been identified by Blackstone: violation of safe conducts, infringement of the rights of ambassadors, and piracy.” 133 S. Ct. at 1670 (Alito, J., concurring) (internal quotation marks and citation omitted). He thus concluded that “a putative ATS cause of action will fall within the scope of the presumption against extraterritoriality— and will therefore be barred—unless the domestic conduct is sufficient to violate an international law norm that satisfies Sosa’s requirements of definiteness and acceptance among civilized nations.” Id. We agree that a defendant’s domestic conduct must be the focal point of our inquiry. This reflects the perspective of the majority opinion of the Chief Justice in Kiobel 26 No. 10‐5258‐cv We then applied this ATS “focus” analysis—examining the conduct alleged to constitute violations of the law of nations, and the location of that conduct—to the facts of Balintulo itself. There, the conduct at issue was the sale, by subsidiaries of the defendant corporations, of cars and computers to the apartheid government of South Africa, which allegedly aided and abetted that regime’s violations of customary international law. Id. at 182‐83. Of particular relevance to the instant case, the Balintulo plaintiffs predicated their claim on an assertion that defendants “took affirmative steps in this country to circumvent the sanctions regime” against South Africa. Id. at 192. We rejected the Balintulo plaintiffs’ arguments, holding that their allegations were insufficient to displace the presumption. We reasoned that defendants’ alleged domestic conduct lacked a clear link to the human rights abuses occurring in South Africa that were at the heart of plaintiffs’ action. Id. (stating that none of plaintiffs’ allegations “ties the relevant human rights violations to actions taken within the United States”). We thus concluded that the alleged violations were “based solely on conduct occurring abroad,” and and its repeated emphasis on “the location of the relevant ‘conduct’ or ‘violation.’” Balintulo, 727 F.3d at 189. Accordingly, the site of the alleged violation should be the central inquiry for lower courts asked to apply the Kiobel presumption to facts allegedly sufficient to overcome it. 27 No. 10‐5258‐cv hence were not cognizable in U.S. courts under the teachings of the Supreme Court in Kiobel. Id. at 182.12