A key feature of U.S. jurisprudence since the U.S. Supreme Court decided Morrison v. Nat’l Australia Bank Ltd in 2010 has been the shrinking reach of U.S. law. Applying Morrison, U.S. courts, including the Supreme Court, limited the extraterritorial reach of U.S. law across a number of substantive areas ranging from commodities regulation to human rights to RICO. Morrison and its progeny provided a powerful weapon for non-U.S.-based clients to resist the reach of U.S. courts, and many clients structured their affairs to take advantage of the reinvigorated presumption against the extraterritorial application of law and minimize their U.S. litigation exposure.
Now, nearly 10 years later, there are signs that this trend may be reversing. Recent decisions from the U.S. Courts of Appeals for the Second and Ninth Circuits have shown a willingness to allow claims based on conduct occurring outside the United States to survive dismissal at the pleading state. Time will tell whether these decisions are a sign of what is to come, or merely an exception to the ongoing trend to limit U.S. law’s extraterritorial reach. However, the renewed willingness of U.S. courts to sustain claims involving obviously extraterritorial conduct—based on little more than a scintilla of a U.S. connection—should concern non-U.S. clients and their lawyers alike, and re-emphasize the importance of structuring corporate organizations and transactions so as to minimize litigation risk, both substantively and geographically.
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