On June 20, the Supreme Court issued its much-anticipated decision in RJR Nabisco v. European Community,1 applying its new extraterritoriality analysis to RICO claims. The result is an opinion that addresses some disputes among the lower courts, leaves others unaddressed, and breaks new ground to limit the availability of U.S. courts to decide intrinsically foreign civil disputes.
Morrison Decision
For almost four decades, lower courts—led by the U.S. Court of Appeals for the Second Circuit—applied a complex and nuanced “conduct and effects” test to determine whether section 10(b) of the Securities Act should apply in securities fraud cases with extraterritorial scope. This test balanced “whether the wrongful conduct had a substantial effect in the United States or upon United States citizens” and “whether the wrongful conduct occurred in the United States.”2
