Legal Commentary

I don't know much about § 10(b) or its extra-territorial application, the subject of today's decision in Morrison v. National Australia Bank. But I was cheered by Part II of Justice Scalia's majority opinion, which held that the question of the extraterritorial reach of § 10(b) does not raise a question of subject matter jurisdiction. Rather "to ask what conduct § 10(b) reaches is to ask what conduct § 10(b) prohibits, which is a merits question." The court had jurisdiction under 15 U.S.C. § 78aa, an express grant of exclusive jurisdiction over all claims to enforce the Securities and Exchange Act, which gave the court the power to adjudicate the question of whether § 10(b) applies to the conduct at issue.

Thank you, Justice Scalia, for finally putting forth a clear explanation for the jurisdiction/merits divide as to federal statutes (although it would have been nice if you could have cited me). This standard should carry over to other statutory claims, such as the Foreign Trade Antitrust Improvements Act, which places limits on the extraterritorial persons and conduct reached, and thus prohibited, by the Act. A unanimous Court now has made clear that the question of whether a statute applies to some conduct means whether it prohibits some conduct, which is a merits question.