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Foreign Shareholders Increasingly Told to Stay Out of U.S. Courts – Law Blog – WSJ

September 28, 2010 By Leave a Comment

Increasingly, federal courts are rolling up the welcome mat when it comes to securities suits by foreign investors.

That’s the theme of this WSJ article today that looks at the impact of the Supreme Court’s recent ruling in Morrison v. National Australia Bank.  The ruling concluded that Australian investors who purchased shares of an Australian bank should not be able to bring a securities fraud suit in U.S. court.

That holding has been a boon to multinational companies, as courts have interpreted Morrison to bar fraud claims by any investor — either from the U.S. or overseas — who purchased stock on a foreign exchange. Courts have dismissed  claims against Credit Suisse Group, Alston SA, and others in light of Morrison.

The ruling could also save millions of dollars for the likes of BP, which faces securities suits over the Gulf oil spill, and Toyota, which faces securities claims arising from its handling of sudden acceleration claims. Some of the plaintiffs in each case purchased their stock overseas, so they could be out of luck.

via Foreign Shareholders Increasingly Told to Stay Out of U.S. Courts – Law Blog – WSJ.

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Judge Delays Appointing Lead Counsel in Toyota Shareholder Litigation | National Law Journal

June 9, 2010 By Leave a Comment

A federal judge has delayed appointing the lead plaintiffs attorneys in the shareholder litigation against Toyota Motor Corp. until U.S. Supreme Court decides whether foreign purchasers of a company’s U.S. stock have standing to sue in the United States.

U.S. District Judge Dale Fischer agreed on Monday to consolidate seven class actions pending in Los Angeles on behalf of Toyota shareholders whose holdings declined by tens of millions of dollars after the company announced a series of recalls associated with sudden unintended acceleration.

After two hours of sometimes contentious arguments in a courtroom full of plaintiffs attorneys, some of whom brought representatives of their institutional clients to the hearing, she declined to appoint a lead plaintiff and lead counsel.

Rather, she told counsel to make fresh arguments 10 days after the Supreme Court rules in a case on point, Morrison v. National Australia Bank. The justices have heard oral arguments in the case, which addresses whether U.S. courts have jurisdiction over claims brought by foreign investors who purchased U.S. stock.

Fischer noted that the plaintiffs in the Toyota case include foreign purchasers of Toyota stock on U.S. and Tokyo exchanges.

via Law.com – Judge Delays Appointing Lead Counsel in Toyota Shareholder Litigation.

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US Foreign-cubed securities debate explained | Morrison & Foerster LLP – JDSupra

April 15, 2010 By Leave a Comment

Last month, the United States Supreme Court heard oral argument on whether foreign-cubed securities class actions may be litigated in the United States.

The extraterritorial reach of the federal securities laws is the central focus of Morrison v National Australia Bank. Morrison is the third in a series of fairly recent Supreme Court cases reviewing the extraterritorial application of federal statutes, following the Court’s consideration of the reach of antitrust law in F Hoffmann-LaRoche v Empagran and patent law in Microsoft v AT&T Corp. In the former (a unanimous decision) and Microsoft (an 8-1 decision), the Court concluded that the extraterritorial scope of the federal antitrust and patent statutes was a matter for Congress to decide. In the face of statutes that were ambiguous or silent on the issue, the Court applied a presumption that United States law governs domestically but does not rule the world.”

via US Foreign-cubed securities debate explained | Morrison & Foerster LLP – JDSupra.

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Justices to Consider a Border Battle Over Lawsuits | Law.com

March 27, 2010 By

“Foreign-cubed” is the name of the latest legal nemesis that keeps lawyers for companies ranging from Toyota to Vivendi up at night.

The term refers to securities class action litigation in which the investors are foreign, the issuers are foreign and the fraudulent conduct took place on foreign soil. And yet, because of some company tie to the United States, large or minuscule, they end up in U.S. courts, where plaintiffs usually can do a lot better than if the suits were filed abroad.

Six years after the moniker was first coined, a foreign-cubed suit has made its way to the U.S. Supreme Court, which will hear the case, Morrison v. National Australia Bank, today. Foreign investors accused Australia’s largest bank of fraud involving a Florida subsidiary, but the bank insists all of the disputed activity took place in Australia. So far, the bank has won.

Foreign companies and countries have flooded the Court with friend of the court briefs, signaling the importance of the case worldwide. Even parties litigating over the Toyota safety meltdown are watching; several securities class actions have been filed in federal courts against the company, which trades on the Tokyo Stock Exchange, based on statements made by Toyota officials in Japan.

The case comes to a Court that has grown increasingly skeptical about U.S. courts exerting extraterritorial jurisdiction. In the 2007 case Microsoft v. AT&T, a 7-1 majority spoke approvingly of the presumption that “United States law governs domestically but does not rule the world.” Three years earlier, in Hoffman-LaRoche v. Empagran, a unanimous Court said extending the reach of American antitrust laws too far into foreign situations would be “an act of legal imperialism.”

via Law.com – Justices to Consider a Border Battle Over Lawsuits.

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