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Tuesday, August 23, 2011

Third Circuit on jurisdictionality of FTAIA

An important aspect of the Supreme Court's recent campaign to eliminate drive-by jurisdictional rulings is a signaling function--emphasizing to lower courts the similar urgency to stop making drive-by rulings and to back away from past rulings. The Third Circuit last week did just that in a case under the Foreign Trade Antitrust Improvements Act (FTAIA), overturning two circuit precedents and concluding, properly, that the FTAIA (which limits the extraterritorial application of federal antitrust law) went to the merits and not the court's jurisdiction.

The court concludes that its prior jurisdictionality cases cannot survive Arbaugh v. Y&H Corp., which established a clear-statement rule under which a rule is not jurisdictional if Congress does not label it jurisdictional. Like Title VII (at issue in Arbaugh), the FTAIA does not mention the jurisdiction of the district courts or speak in jurisdictional terms. Good, as far as it goes. But I still would have preferred the Court have taken the more absolute approach to the jurisdiction/merits divide suggested in Morrison v. National Australia Bank: The extraterritorial "reach" of the Securities and Exchange Act is a merits issue (seemingly regardless of legislative text), because the "reach" of a statute is synonymous with the scope of what a statute "prohibits," which is inherently a merits question. In fact, I am convinced that Morrison establises the essential merits nature of extraterritoriality of all federal laws, including the FTAIA (a question the Court left open, and confused, several years ago). Unfortunately, the Third Circuit focused only on Arbaugh and not on the broader, and better, analysis in Morrison.

This decision now sets up a bit of a circuit split on the characterization of the FTAIA. The Seventh Circuit reached the opposite conclusion pre-Arbaugh, over a strenuous dissent by Judge Wood, a departing decision that the Third Circuit acknowledges and dismisses (because Arbaugh changed the landscape). In addition, the Ninth Circuit assumed the FTAIA's jurisdictional character, while recognizing that the issue is unclear. Given the Court's interest in weighing in on jurisdictionality questions, might a cert grant be possible? Or will SCOTUS simply give the Seventh Circuit a chance to eventually correct itself?



Posted by Howard Wasserman on August 23, 2011 at 09:31 AM in Civil Procedure, Howard Wasserman | Permalink


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