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The Scope and Limitations of the Presumption against Extraterritoriality

Part of: AGORA: Reflections on RJR Nabisco v. European Community

Published online by Cambridge University Press:  20 January 2017

Hannah L. Buxbaum
Hannah L. Buxbaum*
Affiliation:
Indiana University Maurer School of Law
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In RJR Nabisco v. European Community, the Supreme Court addressed the extraterritorial application of U.S. law for the third time in six years—in this case examining the geographic scope of the Racketeer Influenced and Corrupt Organizations Act (RICO). The decision consolidates and in certain respects expands upon the test for analyzing extraterritoriality issues that the Court had introduced in Morrison v. National Australia Bank and refined in Kiobel v. Royal Dutch Petroleum. It also provides further evidence of the Court’s continuing quest to identify categorical, territory-based rules governing the application of U.S. statutes in cases involving significant foreign elements. As I will argue, however, like other recent decisions, RJR raises doubt as to the sufficiency of such rules to address the messy and often unpredictable patterns of transnational economic activity.

Type
AGORA: Reflections on RJR Nabisco v. European Community
Information
AJIL Unbound , Volume 110 , 2016 , pp. 62 - 67
Copyright
Copyright © American Society of International Law 2016

References

1 RJR Nabisco, Inc. v. European Community, 136 S. Ct. 2090 (2016).

2 18 U.S.C. ch. 96.

3 Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 255 (2010).

4 Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013).

5 RJR, 136 S. Ct. at 2098, slip op. at 4.

6 Id. at 2098, slip op. at 5. In an earlier opinion, the Second Circuit had barred the claims for lost tax revenue on the basis of the so called “revenue rule,” under which the courts of one country will not enforce the tax laws of another. European Community v. RJR Nabisco, Inc., 424 F.3d 175 (2d. Cir. 2005).

7 RJR, 136 S. Ct. 2102, slip op. at 11.

8 Id. at 2106, slip op. at 19.

9 Id. at 2106-2108, slip op. at 20-21.

10 Id. at 2117, n. 9, slip op. at 20 n. 9 (quoting one of the amicus briefs).

11 Id. at 2108, slip op. at 22.

12 Id. at 2107, slip op. at 21.

13 Id. at 2109, slip op. at 24.

14 Id. at 2108, slip op. at 22.

15 See, e.g., Colangelo, Anthony J., Kiobel: Muddling the Distinction Between Prescriptive and Adjudicative Jurisdiction , 28 Md. J. Int’l L. 65 (2013)Google Scholar.

16 RJR, 136 S. Ct. 2101, slip op. at 9.

17 William S. Dodge, The Presumption Against Extraterritoriality Still Does Not Apply to Jurisdictional Statutes, Opinio Juris (July 1, 2016, 4:57 PM).

18 EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991).

19 42 U.S.C. § 2000e(f).

20 Kiobel, 133 S. Ct. 1659, 1672 (2013) (Breyer, J., concurring).

21 Id.

22 Id. at 1673-74.

23 RJR, 136 S. Ct. at 2115, slip op. at 8 (Ginsburg, J., dissenting).

24 Justice Stevens makes this point in his concurrence in Morrison, characterizing the majority’s opinion as part of “‘the Court’s continuing campaign to render the private cause of action under § 10(b) toothless.’” Morrison, 561 U.S. at 286 (quoting Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 175 (Stevens, J., dissenting).

25 In RJR itself, “[a]ll defendants are U.S. corporations, headquartered in the United States, charged with a pattern of racketeering activity directed and managed from the United States, involving conduct occurring in the United States. . . . In short, this case has the United States written all over it.” RJR, 136 S. Ct. at 2115, slip op. at 7 (Ginsburg, J., dissenting).

26 “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.” Morrison, 561 U.S. at 273.

27 Hoffmann-LaRoche v. Empagran, 542 U.S. 155 (2004).

28 Id. at 158.

29 Kiobel, 133 S. Ct. at 1669.

30 Buxbaum, Hannah L., Morrison v. National Australia Bank: Defining the Domestic Interest in International Securities Legislation , 105 ASIL Proceedings 402 (2011)Google Scholar.

31 RJR, 136 S. Ct. at 2111, slip op. at 27. Interestingly, though, the Court did not draw from this observation the same conclusion it had in the first part of its opinion. RJR had argued that even if RICO applies to foreign racketeering activity, it does not apply to the activity of foreign enterprises. The Court rejected this argument, and noted that

[i]t is easy to see why Congress did not limit RICO to domestic enterprises. A domestic enterprise requirement would lead to difficult line-drawing problems and counterintuitive results . . . These difficulties are largely avoided if, as we conclude today, RICO’s extraterritorial effect is pegged to the extraterritoriality judgments Congress has made in the predicate statutes . . .

Id. at 2104-2105, slip op. at 15-16.

32 Parkcentral Global Hub Limited v. Porsche Automobile Holdings S.E., 763 F.3d 198 (2d. Cir. 2014).

33 Id. at 215.

34 Id. at 216.

35 RJR, 136 S. Ct. at 2101, 2103, slip op. at 10, 14.

36 Id. at 2104, slip op. at 14.