U.S. Chamber Opposes Opening American Courts to Foreign Securities Class Actions

Thursday, February 25, 2010 - 7:00pm

Chamber Urges Supreme Court to Bar 'Foreign Cubed' Lawsuits to Curb Global Forum Shopping

WASHINGTON, D.C.—Today, the U.S. Chamber of Commerce filed a friend-of-the-court brief urging the U.S. Supreme Court to reject a proposed expansion of U.S. securities laws which would open U.S. courts to "foreign-cubed" class actions – lawsuits brought by foreign plaintiffs, against foreign defendants, based on conduct that occurred in a foreign country. The case is Morrison v. National Australia Bank.

"So-called 'foreign-cubed' class actions have no place in U.S. courts," said Robin S. Conrad, executive vice president of the National Chamber Litigation Center, the Chamber's public policy law firm. "If we open our courts to foreign litigation, we will discourage foreign companies from investing in American capital markets. While the Chamber is focused on creating new jobs, strengthening our capital markets and expanding our exports, the trial bar is focused on importing foreign lawsuits into our courts."

In this case, an Australian company, with virtually all of its shareholders outside the United States, faces protracted class action litigation in U.S. courts for alleged misstatements made to its non-U.S. investors in connection with securities transactions conducted in the Australian market. The plaintiffs claim that the Australian company's decision to invest in a U.S. subsidiary justifies expanding the private right of action under Section 10(b) of the securities laws to permit "foreign-cubed" class actions. Under the plaintiffs' legal theory, the decision to acquire a U.S. business would open foreign companies to potentially ruinous securities class action lawsuits.

"The plaintiffs' bar is trying to take advantage of America's liberal class action laws, leaving American taxpayers to foot the bill for litigating in the U.S. court system," said Conrad. "Two lower courts already saw through this scheme and rejected it. Now the Supreme Court should do the same."

NCLC is the public policy law firm of the U.S. Chamber of Commerce that advocates fair treatment of business in the courts and before regulatory agencies.

The U.S. Chamber of Commerce is the world's largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

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