Morrison, et al. v. National Australia Bank Ltd., et al.

Case Updates

Held:

1. The Second Circuit erred in considering §10(b)’s extraterritorial reach to raise a question of subject-matter jurisdiction, thus allowing dismissal under Rule 12(b)(1).

2. Section 10(b) does not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges.

NCLC urged the U.S. Supreme Court to reject a proposed expansion of U.S. securities laws, which would open U.S. courts to “foreign-cubed” class actions – lawsuits brought by foreign plaintiffs against foreign defendants, based on conduct that occurred in a foreign country. In this case, an Australian company, with virtually all of its shareholders outside the United States, faces protracted class action litigation in U.S. courts for alleged misstatements made to its non-U.S. investors in connection with securities transactions conducted in the Australian market. In its brief, NCLC argued that the Australian company’s decision to invest in a U.S. subsidiary does not justify expanding the private right of action under Section 10(b) of the securities laws to permit ‘foreign-cubed’ class actions. NCLC warned that opening U.S. courts to foreign litigation will discourage foreign companies from investing in American capital markets.