Textualism and Transnational Securities Law: A Reappraisal of Justice Scalia's Analysis in Morrison v. National Australia Bank

Abstract

In 2010 the Supreme Court issued its opinion in Morrison v. National Australia Bank, which almost certainly effectively wiped out forty years of case law that addressed transnational issues under the U.S. securities laws in a powerful opinion by Justice Scalia, establishing a “transactional” test requiring a securities purchase on a U.S. exchange or otherwise within U.S. territory to recover. More recently, in late 2012, Justice Scalia, along with a co-author, published Reading Law: The Interpretation of Legal Texts. Reading Law purports to be an analysis of statutory interpretation, an update of older treatises on statutory interpretation as well as a comprehensive summary of the various canons and other rules of statutory interpretation. Interestingly, with respect to Morrison, Justice Scalia and his co-author have a separate section addressed specifically to the presumption against the extraterritorial application of statutes, the principal concern of Morrison. In addition, Justice Scalia states his views on what he (and others) call “purposivism” which is also critical to the reasoning of Morrison. Other sections of Reading Law also shed new light on Morrison. In short, Reading Law gives greater insight into the Morrison opinion, and its history and critique of the “conduct” and “effects” test that had held sway for over 40 years in transnational litigation involving the securities laws. In particular, the analysis of the presumption against extraterritoriality in Reading Law can be viewed as an attempt to bolster one of the key, but weaker, sections of the Morrison opinion. Thus, a reappraisal of the textual analysis of Morrison in light of Justice Scalia’s later work is enlightening. Further, his recent attack in Reading Law on “purposivism” and his linking it straightforwardly to the presumption against extraterritoriality is significant. Whether Justice Scalia’s use of the concept of statutory “focus” is a species of his own purposivist views is considered. Similarly, his attack on the technique of interpretation (a species of purposivism) that asks what Congress “would have meant” informs his strident attack on Judge Henry Friendly’s jurisprudence in the extraterritorial area. Unspoken is the unarticulated rejection of the possibility of “concurrent” jurisdiction or other alternative weighing of multi-jurisdictional interests in the contemporary international system although Justice Scalia had previously endorsed that, at least partially, in his plurality opinion in Hartford Fire. Finally, this article attempts to give a close reading to the opinion analyzing and critiquing its use of prior case law, including the “in connection with” body of case law under Section 10(b) of the Securities Exchange Act of 1934 (hereinafter “the ’34 Act”), which is a key intellectual pivot point in Morrison.