Petition for Writ of Certiorari — Jeffrey Laydon, Individually and on Behalf of All Others Similarly Situated, Petitioner v. Cooperatieve Rabobank U.A., et al.

No. 23-___

IN THE

JEFFREY LAYDON ON BEHALF OF HIMSELF AND

ALL OTHERS SIMILARLY SITUATED,

Petitioner,

v.

COOPERATIEVE RABOBANK U.A., ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the United

States Court of Appeals for the Second Circuit

PETITION FOR A WRIT OF CERTIORARI

Vincent Briganti

Margaret Maclean

LOWEY DANNENBERG,

P.C.

44 South Broadway

Suite 1100

White Plains, NY 10601

Kevin K. Russell

Counsel of Record

GOLDSTEIN, RUSSELL &

WOOFTER LLC

1701 Pennsylvania Ave. NW

Suite 200

Washington, DC 20006

(202) 240-8433

kr@goldsteinrussell.com

i

QUESTION PRESENTED

This Court has “repeatedly and explicitly held”

that to decide whether a case involves a domestic

application of a statute—as opposed to an

impermissibly extraterritorial one—“courts must

identify the statute’s focus and ask whether the

conduct relevant to that focus occurred in United

States territory.” Abitron Austria GmbH v. Hetronit

Intn’l, Inc., No. 21-1043, slip op. at 4 (June 29, 2023)

(cleaned up). “If the conduct relevant to the statute’s

focus occurred in the United States, then the case

involves a permissible domestic application of the

statute, even if other conduct occurred abroad.” Id. at

5 (cleaned up). The Second Circuit has read this

precedent to establish a necessary, but not a sufficient,

condition for domestic application of a law. In

applying federal securities and commodities laws, the

Circuit has held that even if the conduct relevant to

the statute’s focus occurred in the U.S., a claim may

still be extraterritorial if other conduct occurred

abroad and a court decides that, all things considered,

the claim is “predominantly foreign.” Other circuits

read this Court’s focus test as establishing a necessary

and sufficient condition for a domestic application.

And the First and Ninth Circuit—along with the SEC,

the Commodity Futures Trading Commission, and the

Solicitor General—have rejected the “predominantly

foreign” test in particular as inconsistent with this

Court’s precedents. The question presented is:

Whether, to decide if a claim involves a domestic

application of a statute, courts may consider factors

other than whether the conduct relevant to the

statute’s focus occurred in the United States.

ii

PARTIES TO THE PROCEEDING

1. Petitioner Jeffrey Laydon was the plaintiff in

the district court and the appellant below.

2. Respondents Coöperative Rabobank U.A.,

Barclays Bank PLC, Société Générale S.A., The Royal

Bank of Scotland Group PLC, UBS AG, Lloyds

Banking Group PLC, UBS Securities Japan Co., Ltd.,

The Royal Bank of Scotland PLC, and RBS Securities

Japan Limited, were defendants in the district court

and appellees below.

3. Barclays Bank PLC, Citibank Japan Ltd.,

Citibank N.A., Citigroup Global Markets Japan, Inc.,

Citigroup Inc., Deutsche Bank AG, HSBC Bank PLC,

HSBC Holdings PLC, J.P. Morgan Chase & Co., J.P.

Morgan Chase Bank, National Association, J.P.

Morgan Securities PLC, Martin Brokers (UK) Ltd.,

Mitsubishi UFJ Trust and Banking Co., Ltd., Mizuho

Corporate Bank, Ltd., R.P. Martin Holdings Limited,

Credit Agricole CIB, Chuo Mitsui Trust & Banking Co.

Ltd., ICAP plc, ICAP Europe Limited, Tullett Prebon

PLC, Resona Bank Ltd., Shinkin Central Bank,

Sumitomo Mitsui Banking Corporation, Sumitomo

Mitsui Trust Bank, Ltd., The Bank of TokyoMitsubishi UFJ, Ltd., The Bank of Yokohama, Ltd.,

The Norinchukin Bank, The Shoko Chukin Bank, Ltd.,

and The Sumitomo Trust and Banking Co., Ltd. were

defendants in the district court, but were not parties

to the appeal.

4. Oklahoma Police Pension & Retirement System

and Stephen Sullivan were plaintiffs to the proposed

Third Amended Class Action Complaint, which the

district court did not permit plaintiffs to file.

iii

California State Teachers Retirement System sought

leave to intervene as a plaintiff in the district court,

which was denied.

RELATED PROCEEDINGS

The proceedings directly related to this petition

are:

1. Laydon v. Coöperative Rabobank U.A., Nos. 203626, 20-3775, 55 F. 4th 86 (2d Cir. decided Oct. 18,

2022, amended Dec. 8, 2022), reh’g denied, Order at 1

(2d Cir. Feb. 24, 2023).

2. Laydon v. Mizuho Bank, Ltd., No. 12-CV-3419,

2020 WL 5077186 (S.D.N.Y. Aug. 27, 2020) (order

granting motion for judgment on the pleadings).

iv

TABLE OF CONTENTS

QUESTION PRESENTED .......................................... i

PARTIES TO THE PROCEEDING ........................... ii

RELATED PROCEEDINGS ..................................... iii

TABLE OF AUTHORITIES .......................................vi

PETITION FOR A WRIT OF CERTIORARI.............. 1

OPINIONS BELOW .................................................... 1

JURISDICTION .......................................................... 1

RELEVANT STATUTORY PROVISIONS ................. 1

INTRODUCTION ........................................................ 2

STATEMENT OF THE CASE .................................... 4

I.

Legal Background ...............................................4

II.

Factual And Procedural History .........................8

REASONS FOR GRANTING THE PETITION........ 13

I.

The Circuits Are Divided. .................................15

II.

The Question Presented Is Important And The

Continuing Division Intolerable. ......................20

III. The Decision Below Is Wrong ...........................25

IV. This Case Provides An Ideal Vehicle. ...............30

V.

At The Very Least The Court Should Call For

The Views Of The Solicitor General Or GVR In

Light Of Abitron. ...............................................33

CONCLUSION .......................................................... 34

APPENDIX

Appendix A, Court of Appeals Decision (Amended)

(Dec. 8, 2022) ........................................................ 1a

v

Appendix B, Court of Appeals Decision

(Oct. 18, 2022) ..................................................... 27a

Appendix C, District Court Decision

(Aug. 27, 2020) .................................................... 55a

Appendix D, District Court Decision

(March 31, 2015) ................................................. 62a

Appendix E, District Court Decision

(Mar. 28, 2014)..................................................... 79a

Appendix F, Order Denying Rehearing

(Feb, 24, 2023) .................................................. 111a

Appendix G, Relevant Statutory Provisions ........ 113a

vi

TABLE OF AUTHORITIES

Cases

Abitron Austria GmbH v. Hetronic Int’l, Inc.,

No. 21-1043, slip op.

(June 29, 2023) ............................. 2, 5, 13, 21, 26, 33

Absolute Activist Value Master Fund Ltd. v.

Ficeto, 677 F.3d 60 (2d Cir. 2012) ................... 19, 20

Adhikari v. Kellog, Brown & Root, Inc.,

845 F.3d 184 (5th Cir. 2017) .................................. 19

Cargill, Inc. v. Hardin,

452 F.2d 1154 (8th Cir. 1971) ................................ 23

Cavello Bay Reinsurance Ltd. v. Shubin

Stein, 986 F.3d 161 (2d Cir. 2021)................... 15, 16

CFTC v. Am. Metals Exch. Corp.,

991 F.2d 71 (3d Cir. 1993) ..................................... 21

CFTC v. Baragosh,

278 F.3d 319 (4th Cir. 2002) .................................. 21

CFTC v. Monex Credit Co.,

931 F.3d 966 (9th Cir. 2019) .................................. 21

Commodity Futures Trading Comm’n v.

Schor, 478 U.S. 833 (1986) ...................................... 7

Dennis v. JPMorgan Chase & Co.,

343 F. Supp. 3d 122 (S.D.N.Y. 2018)..................... 24

Greenwood v. Dittmer,

776 F.2d 785 (8th Cir. 1985) .................................. 21

Harry v. Total Gas & Power N.A., Inc.,

889 F.3d 104 (2d Cir. 2018) ................................... 33

In re London Silver Fixing, Ltd., Antitrust

Litig., 332 F. Supp. 3d 885 (S.D.N.Y. 2018) .......... 24

vii

In re: London Silver Fixing, Ltd., Antitrust

Litigation, No. 1:14-MC-0257302573-VEC,

slip op. (S.D.N.Y May 22, 2023). ........................... 30

In re Platinum and Palladium Antitrust

Litig., 61 F.4th 242 (2d Cir. 2023) ......................... 19

Loginovskaya v. Batratchenko,

764 F.3d 266 (2d Cir. 2014) ................................... 31

Merrill Lynch, Pierce, Fenner & Smith Inc. v.

Dabit, 547 U.S. 71 (2006)....................................... 21

Morrison v. National Australia Bank, Ltd.,

561 U.S. 247 (2010) ............. 2-7, 14-17, 19, 20, 22-30

Parkcentral Global Hub Ltd. v. Porsche

Automobile. Holdings SE, 763 F.3d 198 (2d

Cir. 2014) ..................... 6, 8, 14, 15, 17, 20, 22, 28-31

Prime International Trading, Ltd. v. BP

P.L.C., 937 F.3d 94 (2d Cir. 2019) ... 8, 15, 16, 30, 32

Quail Cruise Ship Mgmt. Ltd. v. Agencia de

Giagens CVS Tur Limitada, 645 F.3d 1307

(11th Cir. 2011) ................................................ 17, 20

RJR Nabisco, Inc. v. Eur. Cmty.,

579 U.S. 325 (2019) ............ 4, 5, 7, 14, 16, 18, 26, 33

Schwab Short-Term Bond Market Fund v.

Lloyds Banking Group PLC,

22 F.4th 103 (2d Cir. 2021) .................................... 33

SEC v. Marrone,

997 F.3d 52 (1st Cir. 2021) ........................ 17, 19, 20

Spanski Enterprises, Inc. v. Telewizja Polska,

S.A., 883 F.3d 904 (D.C. Cir. 2018) ................. 17, 18

viii

Stoyas v. Toshiba Corp.,

896 F.3d 933 (9th Cir. 2018)

............................ 7, 14, 16, 17, 19, 20, 22, 23, 31, 33

United States v. Elbaz,

52 F.4th 593 (4th Cir. 2022) .................................. 18

United States v. Harris,

991 F.3d 552 (4th Cir. 2021) .................................... 5

United States. v. Hussain,

972 F.3d 1138 (9th Cir. 2020) ................................ 18

United States v. Skinner,

70 F.4th 219 (2023) .......................................... 18, 19

WesternGeco LLC v. Ion Geophysical Corp.,

138 S. Ct. 2129 (2018) ............ 5, 7, 14, 16, 26, 27, 33

Statutes

7 U.S.C. § 1 et seq. ....................................................... 7

7 U.S.C. § 1a(9) .......................................................... 11

7 U.S.C. § 6 .................................................................. 7

7 U.S.C. § 6b(a) ............................................................ 7

7 U.S.C. § 6b(a)(2)(B) ................................................. 32

7 U.S.C. § 6c(a) ............................................................ 8

7 U.S.C. § 7b-1(a) ....................................................... 32

7 U.S.C. § 25(a)(1)........................................................ 8

15 U.S.C. § 78a et seq. ................................................. 2

28 U.S.C. § 1254(1) ...................................................... 1

ix

Other Authorities

Br. Amicus Curiae U.S. CFTC Supp. Reh’g.,

Laydon v. Cooperative Rabobank U.A., No.

20-3626 (Nov. 29, 2022) (Second Cir.

Docket No. 383) .................................... 12, 13, 16, 30

Br. U.S. as Amicus, Toshiba Corp. v.

Automotive Indus. Pension Tr. Fund, No.

18-486 ................................................................. 3, 16

Cornerstone Research, Securities Class Action

Filings: 2022 Year in Review ................................. 23

TRAC Reports, Securities and Commodities

Exchange Litigation Reaches All-Time High

in September 2020 .................................................. 24

1

PETITION FOR A WRIT OF CERTIORARI

Petitioner Jeffrey Laydon respectfully petitions

this Court for a writ of certiorari to review the

judgment of the U.S. Court of Appeals for the Second

Circuit.

OPINIONS BELOW

The amended opinion of the court of appeals (Pet.

App. 1a–26a) is reported at 55 F.4th 86. An initial

panel decision (Pet. App. 27a-54a) was originally

reported at 51 F.4th 476, but later withdrawn. The

district court’s 2020 order (Pet. App. 55a-61a) is

unreported but available at 2020 WL 5077186. The

district court’s 2015 order (Pet. App. 62a-78a) is

unreported but available at 2015 WL 1515487. The

district court’s 2014 order (Pet. App. 79a-110a) is

unreported but available at 2014 WL 1280464.

JURISDICTION

The Second Circuit issued its initial opinion on

October 17, 2022. Pet. App. 27a. In response to a

timely filed petition for rehearing, the court amended

its decision on December 8, 2022. Id. 1a. The court

denied a timely petition for rehearing en banc on

February 24, 2023. Id. 111a. On May 18, 2023, Justice

Sotomayor extended the deadline for filing this

petition through July 24, 2023. 22A1003. This Court

has jurisdiction under 28 U.S.C. § 1254(1).

RELEVANT STATUTORY PROVISIONS

Relevant provisions of the Commodity Exchange

Act and Securities Exchange Act of 1934 are

reproduced in Appendix F to this petition (Pet. App.

113a-126a).

2

INTRODUCTION

Most statutes apply only domestically, but many

violations of those statutes include at least some

foreign activity. A defendant may, for example,

defraud U.S. investors through false emails or

telephone calls originated abroad. The question thus

commonly arises whether the foreign aspects of a case

make otherwise illegal conduct immune from

challenge under U.S. law.

This Court confronted this kind of question in

Morrison v. National Australia Bank, Ltd., 561 U.S.

247 (2010), a case under the Securities Exchange Act

(SEA), 15 U.S.C. § 78a et seq. To decide whether the

plaintiffs in that case sought a domestic application of

the statute, the Court looked to the “focus” of the Act,

which it concluded was “not upon the place where the

deception originated, but upon purchases and sales of

securities in the United States.” 561 U.S. at 266. In

light of that focus, the Court adopted a “transactional

test” for the SEA that asks, “whether the purchase or

sale is made in the United States, or involves a

security listed on a domestic exchange.” Id. at 269-70.

This Court has since used Morrison’s approach as

a universal framework. As the Court explained last

term, to decide whether a case seeks a domestic

application of federal law, “courts must identify the

statute’s focus and ask whether the conduct relevant

to that focus occurred in United States territory.”

Abitron Austria GmbH v. Hetronic Int’l, Inc., No. 211043, slip op. 4 (June 29, 2023) (cleaned up).

The circuits are intractably divided over whether

meeting this test is a sufficient, or merely necessary,

3

condition for domestic application of federal law. The

Second Circuit holds that an SEA claim can be

impermissibly extraterritorial even if it arises out of a

transaction on a domestic security exchange. Pet.

App. 6a. An application is still extraterritorial, the

circuit holds, if other aspects of the case render the

claims “predominantly foreign.” Ibid. Applying this

rule, the Second Circuit holds that federal securities

laws provide no remedy for frauds involving

transactions on U.S. securities markets when the

fraudulent conduct principally took place overseas. Id.

17a. Other circuits treat the focus test as necessary

and sufficient, with the First and Ninth Circuits

rejecting Second Circuit precedent and the

“predominantly foreign” test by name.

In a prior case, the Solicitor General told this

Court that the Second Circuit’s approach is

inconsistent with Morrison, but recommended

denying certiorari to review that precedent in the

hopes that the Second Circuit would change its law on

its own. See Br. U.S. as Amicus 14-15, 19-20, Toshiba

Corp. v. Automotive Indus. Pension Tr. Fund, No. 18486. In this case, the Commodity Futures Trading

Commission filed an amicus brief urging the Second

Circuit to grant rehearing en banc to do just that. See

CTFC Amicus Br. 2, available at 2023 WL 370994

(arguing that the “panel decision should be reheard en

banc because it relied on the . . . ‘predominantly

foreign’ test which is inconsistent with Supreme Court

precedent and deepens a circuit split”). But the

Second Circuit denied the petition.

Accordingly, it is now clear that despite the

Government’s earlier hopes, nothing short of this

4

Court’s intervention will resolve the circuit conflict

over the basic framework for deciding when a statute

applies domestically or the disagreement over the

Second Circuit’s “predominantly foreign” test in

securities cases.

The Court should take this

opportunity to clarify its extraterritoriality rules and

restore uniformity to the law.

STATEMENT OF THE CASE

I.

Legal Background

1. “Absent clearly expressed congressional intent

to the contrary, federal laws will be construed to have

only domestic application.” RJR Nabisco, Inc. v. Eur.

Cmty., 579 U.S. 325, 335 (2019). As noted, this Court

considered the proper test for whether a statute is

being applied domestically in Morrison v. National

Australia Bank, Ltd., 561 U.S. 247 (2010). The Court

began by forcefully rejecting the Second Circuit’s

“conduct and effects” test, under which courts decided

whether plaintiffs sought an extraterritorial

application of the SEA by considering “whether the

wrongful conduct occurred in the United States” and

whether that conduct “had a substantial effect in the

United States.” Id. at 257 (citations omitted). This

Court explained that the test was untethered from the

text of the statute, was indeterminate and difficult to

apply, and led to “unpredictable and inconsistent”

results. Id. at 258-60.

Instead, the Court held that whether a plaintiff

seeks a domestic application of a statute turns on the

relationship between the facts of the case and “the

‘focus’ of congressional concern.” Id. at 266 (citation

omitted). The focus of a statute can be “conduct,

5

parties, or interests that Congress sought to protect or

regulate.” Abitron, supra, at 11 (cleaned up). Thus,

the focus need not be the defendant’s conduct. See,

e.g., RJR Nabisco, 579 U.S. at 346 (focus of private

RICO claim is the plaintiff’s injury, which must be

domestic); United States v. Harris, 991 F.3d 552, 559

(4th Cir. 2021) (focus of 18 U.S.C. § 2422(b) is

protecting children from sexual exploitation). In

Morrison, the Court held that the “focus of the

Exchange Act is not upon the place where the

deception originated, but upon purchases and sales of

securities in the United States.”

Id. at 266.

Accordingly, the SEA applies domestically when the

fraud involves “transactions in securities listed on

domestic exchanges” or “domestic transactions in

other securities.” Id. at 267.

In later cases, the Court adopted Morrison’s focusbased approach as the general test for whether a claim

requires extraterritorial application of federal law and

made clear that so long as conduct relevant to the

statute’s focus occurred in the United States, the

application is domestic. See Abitron, supra, at 5 (“If

the conduct relevant to the statute’s focus occurred in

the United States, then the case involves a permissible

domestic application of the statute, even if other

conduct occurred abroad.”) (cleaned up); RJR Nabisco,

579 U.S. at 325 (same); see also WesternGeco LLC v.

Ion Geophysical Corp., 138 S. Ct. 2129, 2136 (2018)

(courts ask “whether the conduct relevant to [the

statute’s] focus occurred in United States territory. If

it did, then the case involves a permissible domestic

application of the statute.”) (citations omitted).

6

2. Remarkably, in the years since Morrison the

Second Circuit has not only persisted in applying a

version of its “conduct and effects” test in cases under

the SEA but has extended that approach to other

indistinguishable provisions of federal law as well.

a. In Parkcentral Global Hub Ltd. v. Porsche

Automobile Holdings SE, 763 F.3d 198 (2d Cir. 2014),

the Second Circuit acknowledged that it was “of course

bound by Morrison,” but concluded that while “a

domestic securities transaction” is “necessary to a

properly domestic invocation” of the SEA, “such a

transaction is not alone sufficient.” Id. at 214-15.

Instead, the court held that the defendant’s conduct

must also not be “so predominantly foreign as to be

impermissibly extraterritorial.” Id. at 216. And even

though Morrison insisted that the location of the

deceptive conduct was not the focus of the SEA, the

Second Circuit held that the case before it was

impermissibly extraterritorial in significant part

because the “complaints concern statements made

primarily in Germany.” Ibid.

Despite Morrison’s criticism of the indeterminacy

of the “conduct and effects” test, the Second Circuit

openly acknowledged that its “predominantly foreign”

standard was not “a test that will reliably determine

whether a particular invocation of [the statute] will be

deemed appropriately domestic or impermissibly

extraterritorial.” Id. at 217. Rather, the Second

Circuit “believe[d] courts must carefully make their

way with careful attention to the facts of each case and

to combinations of facts that have proved

determinative in prior cases, so as eventually to

7

develop a reasonable and consistent governing body of

law on this elusive question.” Ibid.

b.

The Ninth Circuit subsequently rejected

Parkcentral’s “predominantly foreign” standard as

inconsistent with Morrison. See Stoyas v. Toshiba

Corp., 896 F.3d 933, 950 (9th Cir. 2018). When the

defendant in Toshiba petitioned for certiorari, this

Court called for the views of the Solicitor General. 139

S. Ct. 935 (2019). In its invitation brief, the United

States agreed that the Second Circuit’s test defied this

Court’s teaching in Morrison and “replicat[ed] several

principal defects that this Court identified in earlier

Second Circuit law.” U.S. Br. 15. The Solicitor

General nonetheless recommended the Court deny the

petition, noting that the case was interlocutory and

that the Second Circuit might reconsider its position

in light of the Court’s intervening extraterritoriality

decisions in RJR Nabisco and WesternGeco. Id. at 1820. The Court denied the petition. 139 S. Ct. 2766

(2019).

c. Since the denial in Toshiba, the Second Circuit

has not only refused to reconsider Parkcentral but has

extended its rule to the materially identical context of

the Commodity Exchange Act (CEA), 7 U.S.C. § 1 et

seq.

Like the SEA, the CEA “broadly prohibits

fraudulent and manipulative conduct” with regard to

a domestic security, here “commodity futures.”

Commodity Futures Trading Comm’n v. Schor, 478

U.S. 833, 836 (1986); see, e.g., 7 U.S.C. § 6 (establishing

regulatory regime for U.S. futures exchanges); id.

§ 6b(a) (prohibiting fraud in the sale of futures

8

contracts on U.S. exchanges); id. § 6c(a) (prohibiting

false or “wash sales” to manipulate prices); id. § 13(a)

(prohibiting manipulation of prices on U.S. futures

exchange). Section 22 of the CEA provides an express

private right of action against “[a]ny person . . . who

violates” the Act or “who willfully aids, abets, counsels,

induces, or procedures the commission of a violation.”

7 U.S.C. § 25(a)(1).

In Prime International Trading, Ltd. v. BP P.L.C.,

937 F.3d 94 (2d Cir. 2019), the Second Circuit

recognized that like the SEA, the “focus of

congressional concern” in the CEA’s private right of

action “is clearly transactional, given its emphasis on

domestic conduct and domestic transactions.” Id. at

104 (cleaned up). Finding no relevant distinction

between the two statutes, the court held that

“Parkcentral’s rule carries over to the CEA,” and

therefore required, in addition to a domestic

transaction, that the allegedly illegal conduct “must

not be ‘so predominately foreign as to be impermissibly

extraterritorial.’” Id. at 105, 106 (quoting Parkcentral,

763 F.3d at 216).

II. Factual And Procedural History

1. This case arises from a scheme to manipulate

the price of futures contracts tied to two privately

published benchmarks known as Yen-LIBOR and

Euroyen TIBOR. Pet. App. 5a. The benchmarks are

calculated on the basis of submissions from

participating banks reporting the interest rate at

which the submitters could borrow Yen outside of

Japan. Id. 6a-7a. Euroyen-Tibor is calculated by the

Japanese Bankers Association at 11am Tokyo time

9

each weekday based on submission from banks

headquartered primarily in Japan. Id. 7a. YenLIBOR is set by the British Bankers’ Association using

submissions from its members (some of which also

participate in setting Euroyen-Tibor) later in the day,

at 11 a.m. London time. Ibid.

The market for financial instruments priced based

on Yen-LIBOR and Euroyen TIBOR “is one of the

largest and most active markets for such products in

the world” with active trading by U.S. investors,

including on the Chicago Mercantile Exchange

(CME). See US Department of Justice Statement of

Facts ¶ 21, C.A. J.A. 1766. During the relevant period,

trillions of dollars’ worth of financial instruments

priced on Yen-LIBOR and Euroyen TIBOR were

traded by U.S. investors, including futures on the

CME. See id. ¶ 1; In the Matter of UBS AG and UBS

Securities Japan Co., Ltd. at 6, 8, CFTC Docket No.

13-09 (Dec. 19, 2012) (C.A. J.A. 1816, 1818).

Respondents include banks that participated in

setting these benchmark rates even while they and the

respondent brokers also traded derivatives whose

prices were directly tied to those rates. Id. at 8a. In

many instances the same bank employees were

responsible for rate submissions to the benchmarksetting bodies and for making trades whose

profitability depended on the benchmark rates

eventually set. Id. at 9a.

Starting in 2012, regulators from around the

world, including the United States Department of

Justice and the Commodity Futures Trading

Commission (CFTC), discovered that respondents and

10

others were engaged in a conspiracy to manipulate

these benchmarks to unlawfully profit in their trading

operations. Third Am. Compl. (Complaint) ¶¶ 1-25. 1

Respondents would coordinate false submissions to

the rate-setting boards and then cash in on the

manipulation, including through trades of EuroyenTIBOR futures contracts on U.S. futures exchanges.

Id. ¶¶ 158-163. To date, regulators have collected $7

billion in fines and penalties from the conspirators. Id.

¶ 164. The U.S. Government brought a variety of

criminal and administrative actions against the

participants and obtained deferred prosecution

agreements with substantial fines from many of the

defendants in this case. Id. ¶¶ 3-14, 758.

2. Petitioner brought this proposed class action on

behalf of investors who suffered losses from Euroyen

TIBOR futures transactions on U.S. exchanges due to

the conspiracy. Pet. App. 2a. He alleged violations of

CEA and federal antitrust laws. Ibid.

Respondents moved to dismiss the CEA claims.

Among other things, they argued that the

manipulated benchmarks did not constitute

“commodities” under the statute and that the

Complaint failed to adequately allege causation. Pet.

App. 88a. The district court denied the motion. It

noted that the “CFTC has repeatedly found that YenLIBOR and Euroyen TIBOR each are a ‘commodity’

The Complaint is reproduced at pages 1309-1751 of the

Second Circuit Excerpt of Records.

1

11

within the meaning of the CEA.” Ibid. 2 The court

further found that the “allegations in the Complaint

are sufficient to show” that the alleged manipulation

of “Yen-LIBOR significantly impacted Euroyen

TIBOR” and therefore proximately caused petitioner’s

alleged injuries. Id. 90a. 3

Six years later, after the Second Circuit extended

its “predominantly foreign” test to the CEA in Prime,

respondents moved for judgment on the pleadings,

arguing that petitioner’s CEA claims required an

impermissibly extraterritorial application of the

statute because the bulk of the manipulative conduct

took place overseas. Id. 57a. The district court agreed

and dismissed. Id. 59a-60a.

3. The Second Circuit affirmed. The panel

acknowledged that “the focus of the statute is

transactional” and that Morrison therefore controlled.

Pet. App. 15a. The court further accepted for purposes

of the appeal that petitioner’s injuries arose from

domestic transactions. Pet. App. 16a. But applying

Prime, the court held that “[s]imply pleading a

domestic transaction” was “not enough.” Id. 15a. The

Although the word “commodity” most immediately conjures

up images of wheat or pork bellies, Congress defined the term

more broadly in order to protect investors participating in the full

breadth of modern futures markets. See 7 U.S.C. § 1a(9)

(“commodity” defined to include “all services, rights and interests

. . . in which contracts for future delivery are presently or in the

future dealt with”).

2

The court dismissed petitioner’s antitrust claims on the belief

that “he would not be an ‘efficient enforcer’ of the alleged

antitrust violation.” Pet. App. 3a. In 2015, the court denied leave

to amend to add racketeering claims. Ibid.

3

12

panel then concluded that petitioner’s “CEA claims are

impermissibly extraterritorial because the conduct he

alleges is ‘predominantly foreign.’” Id. 16a.

The court acknowledged petitioner’s argument

that “his claims must be domestic because they involve

both core domestic transactions (i.e., transactions on a

domestic exchange) and manipulation of a domestic

commodity market” (i.e., manipulation of indices

traded on a domestic exchange). Id. 17a (cleaned up).

The court did not dispute either premise but decided

that Prime nonetheless precludes any remedy for

manipulation of a commodity trading on a U.S.

exchange so long as the manipulative conduct took

place outside U.S. borders. Id. 17a-19a. 4

4. Laydon filed a petition for rehearing en banc,

supported by an amicus brief from the CFTC. In

addition to explaining that the “predominantly

foreign”

test

conflicts

with

this

Court’s

4

Originally, the panel held that benchmark indices are not

“commodities” under the CEA. Pet. App. 44a-45a. But after the

CFTC filed an amicus brief in support of rehearing, explaining

that the panel decision “overlooked the operative text” and

created a circuit conflict “on an issue of major national

importance,” the panel amended its opinion to delete the relevant

passage. Br. Amicus Curiae U.S. CFTC Supp. Reh’g. 2, Laydon

v. Cooperative Rabobank U.A., No. 20-3626 (Nov. 29, 2022)

(Second Cir. Docket No. 383).

As explained below, and

demonstrated by the fact that the CFTC filed a subsequent

amicus brief requesting rehearing of the amended opinion as

well, the revision did not resolve the conflict between the

“predominantly foreign” test and the law of other circuits and this

Court.

13

extraterritoriality precedents, the Commission argued

that “Congress specifically intended the CEA to

regulate U.S. futures contracts based on foreign

commodities” and that “manipulation frequently

involves conduct off of an exchange that profits the

perpetrator by distorting prices on an exchange.”

CFTC Amicus Br. 8. Shielding such manipulation of a

commodity on a U.S. exchange, the Commission

argued, undermines the statute’s central purpose,

which “is to protect the integrity of prices in U.S.

markets.” Id. 7-8.

The court denied the petition for rehearing, Pet.

App. 111a, and this petition followed.

REASONS FOR GRANTING THE PETITION

As recently as last June, this Court emphasized

that it has “repeatedly and explicitly held” to decide

whether a case presents a domestic application of a

federal law, “courts must identify the statute’s focus

and ask whether the conduct relevant to that focus

occurred in United States territory.” Abitron, No. 211043 at 4 (cleaned up). The Second Circuit insists that

the Court’s repeated description of the test is

incomplete and that even when the conduct relevant

to a statute’s focus occurs in the United States, the fact

that other conduct related to the case occurred

overseas can render the claims “predominantly

foreign” and therefore impermissibly extraterritorial.

Four years ago, this Court seriously considered

granting certiorari to decide whether the Second

Circuit is correct, calling for the views of the United

States on a petition arising from the Ninth Circuit’s

rejection of the Second Circuit’s standard. The

14

Solicitor General told the Court that the question was

important, that the Ninth Circuit’s decision was

correct, and that the Second Circuit appeared to have

adopted “a repackaged version of the conduct-andeffects test that the Morrison Court had rejected.”

U.S. Toshiba Br. 8-9.

But the Government

recommended that the Court deny review because the

case was interlocutory, there was some uncertainty as

to what the Second Circuit’s position was, and there

was a prospect that the Second Circuit might change

its views in light of this Court’s intervening decisions

in RJR Nabisco and WesternGeco. U.S. Toshiba Br. 89.

Since then, the Second Circuit has made clear that

it meant what it said in Parkcentral. And it has

maintained its position despite the Government

repeatedly pointing out the conflict between its rule

and RJR Nabisco and WesternGeco. Meanwhile, the

First Circuit has joined the Ninth Circuit in directly

rejecting the “predominantly foreign” test as

inconsistent with Morrison and this Court’s

extraterritoriality framework. It is time for the Court

to intervene.

This case provides an ideal vehicle for doing so.

The Second Circuit accepted that the conduct relevant

to the focus of the CEA claims occurred in the United

States, and dismissed solely because it believed this

fact was insufficient to establish a domestic

application of federal law. That this case arises under

the Commodity Exchange Act rather than the

Securities Exchange Act is no impediment to review.

The Second Circuit applies the same test to both

statutes because there is no difference between them

15

material to the extraterritoriality analysis. But more

importantly, the question presented and the circuit

conflict are not limited to the application of a

particular statute, but address a profound

disagreement about this Court’s general framework

for deciding when a claim involves a domestic

application of federal law. Deciding whether it is

sufficient that conduct relevant to a statute’s focus

occurred in the United States will resolve the circuit

conflict over the doctrine and also ensure uniform

application of both the SEA and the CEA throughout

the nation.

I.

The Circuits Are Divided.

The circuits are intractably divided over the basic

framework for deciding when a claim involves a

domestic application of federal law and over the

validity of the “predominantly foreign” test in

particular.

1. The Second Circuit’s position is no longer in

doubt. In Cavello Bay Reinsurance Ltd. v. Shubin

Stein, 986 F.3d 161 (2d Cir. 2021), for example, the

court emphasized under circuit precedent, “the

presence of a domestic transaction alone cannot satisfy

the statute’s geographic requirements; claims must

not be ‘so predominantly foreign as to be

impermissibly extraterritorial.’” Id. at 165 (quoting

Parkcentral, 763 F.3d at 216); see also id. at 266

(“Morrison’s ‘domestic transaction’ rule operates as a

threshold requirement, and as such may be

underinclusive.”) (citation omitted). In both Prime

and in this case, the Second Circuit assumed

petitioners’ claims involved domestic transactions but

16

nonetheless held them extraterritorial solely because

it found the defendants’ manipulative conduct was

“predominantly foreign.” See Prime, 937 F.3d at 105;

Pet. App. 16a. 5

Moreover, the Second Circuit has applied this rule

despite parties—including the Solicitor General in

Toshiba and the CFTC in this case and in Prime—

pointing out the Court’s intervening decisions in RJR

Nabisco and Western-Geco. See, e.g., U.S. Toshiba Br.

12; CFTC Laydon Amicus Br. 4; CFTC Prime Amicus

Br. 19; see also Cavello Bay, 986 F.3d at 166 (citing

RJR Nabisco); Prime, 937 F.3d at 102, 105 (citing RJR

Nabisco and WesternGeco); Pet. App. 14a-15a (same).

2. At the same time, multiple circuits have

rejected the Second Circuit’s “predominantly foreign”

test and the underlying premise that domesticity can

turn on factors beyond where the conduct that is the

focus of the statute occurred.

In Toshiba, the Ninth Circuit correctly perceived

that the Second Circuit views Morrison’s domestictransaction test as “necessary but not sufficient” and

explained that this “turns Morrison and Section 10(b)

on their heads.” Toshiba, 896 F.3d at 949. In

particular, the Ninth Circuit rejected the premise that

The Second Circuit also has not limited its rule to any special

category of securities. Compare U.S. Toshiba Amicus Br. 20

(holding out that Second Circuit might limit rule to the

“distinctive context” of “a security-based swap agreement”) with

Pet. App. 17a (applying rule to case involving standard futures

contracts), and Prime, 937 F.3d at 98 (futures and derivatives),

and Cavello Bay, 986 F.3d at 163 (standard equity shares).

5

17

domesticity depends on anything other than where the

conduct relevant to the focus of the statute occurred:

“because we are to examine the location of the

transaction, it does not matter that a foreign entity

was not engaged in the transaction.” Ibid.

After the Court denied certiorari in Toshiba, the

First Circuit reached the same conclusion. In SEC v.

Marrone, 997 F.3d 52 (1st Cir. 2021), the First Circuit

declared that “[l]ike the Ninth Circuit, we reject

Parkcentral as inconsistent with Morrison.” Id. at 60.

This Court, the First Circuit observed, “explicitly said

that, if a transaction is domestic, § 10(b) applies.”

Ibid. The court of appeals agreed with the SEC that

the “existence of a domestic transaction suffices to

apply the federal securities laws under Morrison. No

further inquiry is required.” Ibid.

Other circuits, while not rejecting Second Circuit

precedent by name, likewise hold that a claim is

domestic if conduct relevant to the statute’s focus

occurred in the United States, without any further

inquiry or requirements. For example, the Eleventh

Circuit has held that “Morrison deliberately

established a bright-line test based exclusively on the

location of the purchase or sale.” See Quail Cruise

Ship Mgmt. Ltd. v. Agencia de Giagens CVS Tur

Limitada, 645 F.3d 1307, 1310-11 (11th Cir. 2011)

(emphasis added).

Other circuits have adopted the same rule in the

course of administering a range of other statutes. For

example, in Spanski Enterprises, Inc. v. Telewizja

Polska, S.A., 883 F.3d 904 (D.C. Cir. 2018), the D.C.

Circuit rejected a defendant’s claim that it could not

18

be liable under U.S. copyright law because it had

distributed its pirated copies of television shows over

the internet from servers in Poland. Id. at 914. The

court explained that the focus of the statute was

infringing performances, which took place here.

“Accordingly, because ‘the conduct relevant to the

statute’s focus occurred in the United States,’ this case

‘involves a permissible domestic application’ of the

Copyright Act, ‘even if other conduct occurred

abroad.’” Ibid (quoting RJR Nabisco, 579 U.S. at 337).

Similarly, the Fourth Circuit has held that

because the focus of the federal wire fraud statute is

use of the wires, a fraudulent scheme conducted by

defendants from Israel involved a domestic application

because the scheme involved internet communications

and phone calls to victims in Maryland. United States

v. Elbaz, 52 F.4th 593, 604 (4th Cir. 2022); see also

United States. v. Hussain, 972 F.3d 1138 (9th Cir.

2020) (same where violations “stemmed from phone or

video conference calls among participants in the

United Kingdom and California” and “press releases

distributed from England to California”).

The Fourth Circuit has likewise found a domestic

application of a federal criminal statute whose focus is

“the production of a visual depiction of a minor

engaging in sexually explicit conduct” where “the

conduct relevant to the statute’s focus occurred in

Virginia.” United States v. Skinner, 70 F.4th 219, 225

(2023) The “fact that [the defendant] was in New

Zealand when he participated in the video calls and

made the recordings of [the minor] does not prevent

his case from qualifying as a domestic application of”

the statute, the court held, because “the statute is

19

primarily concerned with the production or

transmission of the visual depiction.” Id. at 227.

Given this focus, “the domestic application analysis

does not depend on the defendant’s location in

recording the depiction and receiving the

transmission.” Ibid.

In none of these decisions did the courts consider

whether other aspects of the case, including the

location of the defendant’s conduct, would nonetheless

render the statute’s application extraterritorial.

Instead, these courts and others have understood this

Court’s cases to mean what they plainly say: “Only

conduct relevant to the statute’s focus determines

domestic application of the statute.” Adhikari v.

Kellog, Brown & Root, Inc., 845 F.3d 184, 194 (5th Cir.

2017). That understanding is irreconcilable with the

Second Circuit’s interpretation of the focus-test as a

mere necessary condition and with that circuit’s

invention of the additional requirement that the

location of the defendant’s conduct not render the

claims “predominantly foreign.”

*

*

*

The Second Circuit acknowledges much of this. It

admits that the First and Ninth Circuits reject its

“predominantly foreign” test “as ‘inconsistent with

Morrison.’” In re Platinum and Palladium Antitrust

Litig., 61 F.4th 242, 267 n.7 (2d Cir. 2023) (quoting

Marrone, 997 F.3d at 60, and citing Stoyas, 896 F.3d

at 950). And it has recognized that the Eleventh

Circuit views Morrison as adopting a “bright-line test”

that turns exclusively on the location of the

transaction. Absolute Activist Value Master Fund Ltd.

20

v. Ficeto, 677 F.3d 60, 68 (2d Cir. 2012) (quoting Quail,

645 F.3d at 1310-11).

II. The Question Presented Is Important And

The Continuing Division Intolerable.

The Court should not delay resolving the circuits’

conflicting understandings of its extraterritoriality

framework any longer.

1. The conflict will not resolve itself. Since

Toshiba, the Second Circuit has repeatedly reaffirmed

its rule in SEA cases and extended it to the materially

identical CEA context. It has done so even while

recognizing that other circuits reject its reading of

Morrison and in the face of the Government’s calls to

revisit its precedent. See supra at 12-13.

Nor is there any prospect that any (much less all)

of the circuits on the other side of the split will reverse

course and adopt the Second Circuit’s rule. The Ninth

Circuit has rejected Parkcentral’s holding root and

branch. See 896 F.3d at 949-950 (cataloging the ways

in which Parkcentral is “contrary to Section 10(b) and

Morrison itself”). “Like the Ninth Circuit,” the First

Circuit “reject[ed] Parkcentral as inconsistent with

Morrison,” making clear that it lacks the power to

change its precedent without further intervention

from this Court. Morrone, 997 F.3d at 60. And since

the split developed, the Second Circuit has provided no

meaningful response to the other circuits’ criticisms

that could cause those courts to change their views.

2. To be sure, other circuits have yet to reject the

Second Circuit’s interpretation of Morrison in the

specific context of a CEA claim. But that is no reason

to allow the circuit conflict over the correct standard

21

for domestic application to persist. The circuits are

avowedly in conflict over the basic question of whether

this Court’s extraterritoriality precedents permit an

inquiry that extends beyond whether “the conduct

relevant to the statute’s focus occurred in the United

States.” Abitron, supra, at 4 (emphasis and citation

omitted). That conflict would warrant review even if

it had not spawned conflicting rulings on the scope of

any particular statute. That the doctrinal dispute has

led to an open conflict over how to apply the SEA

provides added reason for the Court to intervene. But

the dispute is not limited to—or even focused on—the

meaning of that particular statute.

In any event, as the Second Circuit has explained,

because there is no material difference between the

SEA’s and the CEA’s “focus” (both are transactional),

a circuit’s rule for determining a domestic application

of the SEA necessarily applies to the CEA as well. See

supra at 8. 6 Accordingly, there is no genuine prospect

that despite their avowed conflict in SEA cases, both

the First and the Ninth Circuits will accept the

“predominantly foreign” test in a future case under the

Other circuits have similarly acknowledged that the CEA was

modeled on the SEA in relevant part. See CFTC v. Monex Credit

Co., 931 F.3d 966, 976 (9th Cir. 2019) (“We presume that by

copying §10(b)’s language and pasting it in the CEA, Congress

adopted §10(b)’s judicial interpretations as well.” (citing Merrill

Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 85-86

(2006)); Greenwood v. Dittmer, 776 F.2d 785, 789 n.4 (8th Cir.

1985) (similar); CFTC v. Baragosh, 278 F.3d 319, 333 n.5 (4th Cir.

2002) (cases interpreting SEA “are persuasive authority for

interpreting” parallel provisions of CEA); CFTC v. Am. Metals

Exch. Corp., 991 F.2d 71, 76 n.9 (3d Cir. 1993) (same).

6

22

CEA. Nor would any purpose be served by waiting for

the inevitable CEA conflict to arise. Additional CEA

decisions will not shed further light on the question

presented, which turns on the meaning of this Court’s

extraterritoriality decisions, not on anything specific

to the CEA. And in briefs filed by the Solicitor

General, the SEC, and the CFTC, the Government has

repeatedly made clear its view that, as applied to

either statute, the “predominantly foreign” test is

“inconsistent with Supreme Court precedent.” CFTC

Amicus Br. 1 (CEA case); see also CFTC Prime Amicus

Br. 3 (same); SEC Marrone Amicus Br. 22 (arguing in

SEA case that “Parkcentral has been expressly

rejected by the Ninth Circuit as contrary to Section

10(b) and Morrison itself, has not been followed by

another circuit, and should not be followed here.”)

(cleaned up).

Accordingly, this case presents the Court an

opportunity to kill multiple birds with one stone,

resolving a fundamental disagreement about the

Court’s basic extraterritoriality framework in a

context that will align the circuits’ application of both

the SEA and the CEA.

3. At the same time, the cost of allowing the

conflict to persist is significant.

As the Court clearly recognized in calling for the

views of the Solicitor General in Toshiba, the proper

application of the nation’s securities laws is a matter

of great national and international importance.

Trillions of dollars pass through our nation’s

exchanges, due in significant part on their worldwide

reputation as safe fora for investment and trading.

23

Futures markets in particular are integral to the

overall U.S. financial market with the “main economic

functions” of the futures market being “the

stabilization of commodity prices, the provision of

reliable pricing information, and the insurance

against loss from price fluctuation.” Cargill, Inc. v.

Hardin, 452 F.2d 1154, 1173 (8th Cir. 1971). Allowing

manipulation of those markets simply because the

interference was conducted from abroad interferes

with those important functions, threatens the

international reputation of U.S. markets, and subjects

U.S. investors to real injuries Congress intended to

avoid.

At the same time, the question presented has

significant implication for other nations as well, as

illustrated by the outpouring of amicus briefs from

international entities in Toshiba, urging the Court to

settle the conflict over Morrison’s meaning. See, e.g.,

U.S. Toshiba Br. 21 (addressing international briefs).

In responding to the Court’s calls for the views of the

United States on the petition, the Solicitor General

acknowledged that these “concerns are weighty” and it

was important to get the balance right. Ibid.

The Second and Ninth Circuits’ continued division

on such a foundational question in the securities

context is particularly intolerable. These two circuits

decide the majority of federal securities claims and

exert broad influence in the lower courts in the circuits

that have yet to decide the question. See Cornerstone

Research, Securities Class Action Filings: 2022 Year in

Review (“The Second and Ninth Circuits made up 69%

24

of all core federal [securities] filings in 2022. . . .”)7;

TRAC Reports, Securities and Commodities Exchange

Litigation Reaches All-Time High in September 2020

(majority of SEA and CEA cases filed in district courts

within Second and Ninth Circuits in 2020) 8; see also

Morrison, 561 U.S. at 260 (noting the Second Circuit’s

“preeminence in the field of securities law” and

influence on other courts).

Finally, as discussed in greater detail below, the

continued application of the Second Circuit’s

“predominantly foreign” test is also harmful for all the

reasons that led this Court to reject the Circuit’s

predecessor “conduct and effects” test: it leaves

litigants and lower courts at sea over whether U.S.

securities laws apply to particular cases, leads to

inconsistent and arbitrary results, and deprives

Congress of “a stable background against which” it can

“legislate with predictable effects.” Id. at 258, 261. 9

https://www.cornerstone.com/wp-content/uploads/2023/05/Se

curities-Class-Action-Filings-2022-Year-in-Review.pdf

7

8

https://trac.syr.edu/tracreports/civil/632/.

Compare, e.g., Dennis v. JPMorgan Chase & Co., 343 F. Supp.

3d 122, 182 (S.D.N.Y. 2018) (finding CEA claims were domestic

even though the “[mis]conduct alleged here largely occurred in

Australia”), with In re London Silver Fixing, Ltd., Antitrust

Litig., 332 F. Supp. 3d 885, 917-18 (S.D.N.Y. 2018) (finding CEA

claims arising from transactions on a domestic commodities

exchange extraterritorial because they were based on “foreign

bad acts”).

9

25

III. The Decision Below Is Wrong.

Certiorari is also warranted because the Second

Circuit has consistently defied this Court’s

extraterritoriality precedents in two distinct ways.

First, the Second Circuit’s conclusion that a

domestic transaction is merely a necessary, but not a

sufficient, condition for a domestic application of the

SEA is contradicted by Morrison and its progeny.

Perhaps the “predominantly foreign” test could be

reconciled with Morrison if the SEA had a second focus

the Court forgot to mention, one directed at the

defendant’s deceptive conduct.

But Morrison

expressly rejected that possibility, holding that “focus

of the Exchange Act is not upon the place where the

deception originated.” 561 U.S. at 266 (emphasis

added).

The only other possibility is that even though the

location of the deception was not the focus of the

statute, it is still an important—indeed, often

determinative—factor in deciding whether an

application of the statute is domestic. But if the Court

believed that, it surely would have said so in Morrison.

After all, one of the Morrison plaintiffs’ central

contentions was that their claims were domestic

because the defendants engaged in deceptive conduct

from within the United States. Ibid. This Court

acknowledged that argument but rejected it on the

ground that the location of that conduct was simply

irrelevant because it was not the focus of the statute.

Ibid.

If there were any doubt, later cases removed it.

Whether an application of the statute is domestic, the

26

Court has summarized, is answered by identifying

“the statute’s focus and asking whether the conduct

relevant to that focus occurred in United States

territory.” WesternGeco, 138 S. Ct. at 2137 (cleaned

up). “If it did, then the case involves a permissible

domestic application of the statute.” Ibid. Full stop.

End of analysis. In RJR Nabisco, the Court drove the

point home: “If the conduct relevant to the statute’s

focus occurred in the United States, then the case

involves a permissible domestic application even if

other conduct occurred abroad.” 579 U.S. at 337.

(citing Morrison).

Just last Term, the Court emphasized again that

the test turns exclusively on whether “the conduct

relevant to the statute’s focus occurred in the United

States.” Abitron, supra, at 4 (citing, e.g., Morrison);

see also id. at 5 (Sotomayor, J., concurring in the

judgment) (“An application is domestic when the

object of the statute’s focus is found in, or occurs in,

the United States.”) (citing Morrison). “If the conduct

relevant to the statute’s focus occurred in the United

States, then the case involves a permissible domestic

application of the statute, even if other conduct

occurred abroad.’” Id. at 4 (majority opinion) (cleaned

up). And “if the relevant conduct occurred in another

country, then the case involves an impermissible

extraterritorial application regardless of any other

conduct that occurred in U. S. territory.” Ibid.

(cleaned up). It’s that simple. There are no other

factors.

The “predominantly foreign” test not only conflicts

with what this Court has consistently said in these

cases; it is irreconcilable with what the Court did. As

27

noted, Morrison held that the requested application of

the

SEA

was

extraterritorial

despite

the

predominantly domestic nature of the deceptive

conduct. Conversely, in WesternGeco, the Court found

a domestic application of the Patent Act without giving

any weight to the significant foreign conduct in that

case. The Court identified the focus of the relevant

provisions of the Patent Act as the “act of exporting

components from the United States” to be used in

creating a patent-infringing article abroad. 138 S. Ct.

at 2138. Because the defendant had “suppl[ied] the

components that infringed WesternGeco’s patents”

from the United States, the case involved a “domestic

application of” the statute, even though the infringing

product was assembled abroad and all of the plaintiff’s

damages arose from lost foreign sales. Ibid. The Court

did not pause to consider whether these additional

facts made the infringement “predominantly foreign.”

Instead, it held that these facts fell outside the

statute’s focus and, therefore, made no difference. Id.

at 2138.

Second, even if the Court had left the door open to

adding some further step to the analysis, it surely

would not have contemplated the “predominantly

foreign” standard the Second Circuit cribbed from its

“conduct and effects” test. Morrison’s criticisms of that

test were scathing and apply equally to the

replacement standard. The Court denigrated the

Second Circuit’s prior handiwork as lacking a “textual

or even extratextual basis,” amounting to “judicialspeculation-made law,” while being “not easy to

administer” and “vague,” leading to results that were

“unpredictable and inconsistent.” Id. at 258, 260.

28

Indeed, the Court wrote, there was “no more damning

indictment of the ‘conduct’ and ‘effects’ tests than the

Second Circuit’s own declaration that ‘the presence or

absence of any single factor which was considered

significant in other cases . . . is not necessarily

dispositive in future cases.’” Id. at 259 (citation

omitted).

In creating the “predominantly foreign” standard,

the Second Circuit likewise cited no textual (or

atextual) source. See Parkcentral, 763 F.3d at 216.

The test is equally indeterminate. Indeed, it is

entirely question-begging, declaring that an

application of the statute is impermissibly

extraterritorial if the claims are “so predominantly

foreign as to be impermissibly extraterritorial.” Ibid.

The court noted that the “potential for incompatibility

between U.S. and foreign law” was a relevant factor

but emphasized that this was “just one form of

evidence” and not “the only relevant consideration.”

Id. at 216-17. The court did not identify any other

relevant considerations or provide any guidance on

how to weigh them. Ibid.

Indeed, despite Morrison’s “damning indictment”

of the “conduct and effects” test for lacking any

dispositive factors, the Second Circuit went out of its

way to stress that the same is true of its

“predominantly foreign” test. The Parkcentral court

declared, “We do not purport to proffer a test that will

reliably determine when a particular invocation of

§ 10(b) will be deemed appropriately domestic or

impermissibly extraterritorial.” 763 F.3d. at 217.

Instead, “courts must carefully make their way with

careful attention to the facts of each case and to

29

combinations of facts that have proved determinative

in prior cases.” Ibid. In this way, the Second Circuit

hoped, courts may “eventually . . . develop a reasonable

and consistent governing body of law on this elusive

question.” Ibid. (emphasis added).

The Second Circuit’s principal justification for all

of this was that Congress would not have intended for

the statute to apply when the illegal conduct took

place principally overseas. Parkcentral, 763 F.3d at

215. But that is precisely the kind of “judicialspeculation-made-law” this Court displaced in favor of

its focus test grounded in the language of the statute.

Morrison, 561 U.S. at 261. Moreover, there is no

conflict between Morrison’s transactional test and the

Court’s “insistence that § 10(b) has no extraterritorial

application.” Parkcentral, 763 F.3d at 215. The

statute applies to foreign conduct that manipulates

the price of a security traded on a U.S. exchange

because “it is parties or prospective parties to those

transactions that the statute seeks to protect.”

Morrison, 561 U.S. at 267 (cleaned up).

The Second Circuit’s reliance on the supposed

“potential for incompatibility between U.S. and

foreign law” is also misplaced. Parkcentral, 763 F.3d

at 216-17. The potential conflict the Court avoided in

Morrison arose from on the assumption that “[l]ike the

United States, foreign countries regulate their

domestic securities exchanges and securities

transactions occurring within the territorial

30

jurisdiction.” Ibid. Morrison’s transactional test is

consistent with that international understanding. 10

Indeed, it is far harder to understand how the

Second Circuit’s interpretation could be consistent

with general congressional intent. Given the focus of

the statutes, Congress surely did not intend that

“defendants may deliberately manipulate the U.S.

commodity and exchange markets by simply sitting in

another country when they do so.” In re: London Silver

Fixing, Ltd., Antitrust Litigation, No. 1:14-MC-02573VEC, slip op. 23 (S.D.N.Y May 22, 2023). But as a New

York district court recently explained, that “is

precisely . . . the rule established by Prime and

Laydon.” Ibid.

IV. This Case Provides An Ideal Vehicle.

This case is an ideal vehicle for resolving the

conflict and clarifying the Court’s extraterritoriality

framework. The question was squarely presented

below, and its resolution was outcome determinative—

the only reason the Second Circuit gave for dismissing

petitioner’s CEA claims was their failure to satisfy the

Given this understanding, the CFTC explained below, the

“predominantly foreign” test “creates a risk that some

manipulation might not be subject to legal action in any

jurisdiction.” CFTC Amicus Br. 5. When “persons in a foreign

country engage in manipulative conduct targeted specifically at a

U.S. exchange,” the Commission wrote, “courts in that country

might conclude it is not their business—particularly if they find

Morrison persuasive.” Ibid. At the same time, under the Second

Circuit test, that conduct would be unactionable in the United

States because the manipulating conduct was “predominantly

foreign.” Ibid.

10

31

Circuit’s “predominantly foreign test.” See Pet. App.

16a. The Second Circuit further had the benefit of

extensive briefing on the question by both the parties

and the CFTC as amicus, including briefs at the

petition-for-rehearing stage that directly focused on

the propriety of that test.

At the same time, this case does not present any

of the features that led the Court to deny certiorari on

similar questions in prior cases. As discussed, the

Court declined review in Toshiba after the Solicitor

General questioned whether the Second Circuit really

meant what it said in Parkcentral, an uncertainty that

has since been resolved. Nor is this case in the

interlocutory posture the United States viewed as a

reason to deny review in Toshiba. U.S. Toshiba Br. 18.

The Court also denied certiorari in Prime. 141 S.

Ct. 113 (2020). But that case was complicated by the

Second Circuit’s alternative holding that even if the

focus of the CEA’s private right of action was “clearly

transactional,” the underlying substantive provisions

at issue in that particular case had a different focus.

937 F.3d at 104, 107; see Prime BIO 24-25. That

complication does not arise here. The sole basis for the

Second Circuit’s dismissal of petitioner’s CEA claim in

this case was its application of its “predominantly

foreign” test to Section 22 of the CEA, whose focus, the

court affirmed, “is transactional.” Pet. App. 15a-16a

(quoting Loginovskaya v. Batratchenko, 764 F.3d 266,

272 (2d Cir. 2014) (“In § 22, the focus of congressional

concern is clearly transactional.”) (cleaned up)). This

was no oversight.

Petitioners rely on different

substantive provisions in this case and respondents

made no claim that those provisions lacked a

32

transactional focus. Compare Prime, 937 F.3d at 107

(discussing focus of Sections 6(c)(1) and 9(a)(2)) with

C.A. J.A. 1744-45 (Third Amended Complaint,

alleging violations of Sections 4b(a), 4c(a), and 9(a)),

and Resp. C.A. Br. 23-38 (raising no extraterritoriality

argument regarding the substantive provisions in this

case). 11

In Prime the respondent also argued that the case

presented a poor vehicle because the Second Circuit

had independently dismissed the CEA claims on

alternative causation grounds. Prime BIO 27-28. No

such alternative ground is present here: the district

court rejected the defendant’s causation arguments

regarding the CEA claims, Pet. App. 88a, and the

Second Circuit did not disturb that ruling on appeal,

see id. 16a-19a. 12

In Prime, the Second Circuit held that Section 6(c)(1) lacked

a transactional focus because it “contains no mention of a

‘national security exchange.’” 937 F.3d at 107. As the CFTC has

explained, that conclusion was clearly wrong. CFTC Amicus

Br. 9. But regardless, here petitioners found their claims on

provisions like Section 4b(a), which prohibits willfully making

“any false report or statement” in “connection with . . . any

contract of sale of any commodity in interstate commerce or

future delivery that is made, on or subject to the rules of a

designated market,” a reference to a regulated domestic futures

market. 7 U.S.C. § 6b(a)(2)(B) (emphasis added); see id. § 7b-1(a)

(defining “designated market”).

11

The Second Circuit did discuss causation in dismissing

petitioners’ antitrust claims. Pet. App. 20a-21a. However, in

that context, the court applied the circuit’s “so-called ‘first step

rule’” under which only “‘injuries that happen at the first step

following the harmful behavior are considered proximately

12

33

V. At The Very Least The Court Should Call

For The Views Of The Solicitor General Or

GVR In Light Of Abitron.

If the Court entertains any doubts as to whether

the circuit conflict is real or warrants review, or

whether this case presents an appropriate vehicle for

resolving the split, it should call for the views of the

Solicitor General, as it did in Toshiba. At the very

least, the Court should grant the petition, vacate, and

remand for reconsideration in light of last Term’s

decision in Abitron, which made unmistakably clear

that a claim is domestic if the conduct relevant to the

focus of the statute occurred in the United States. See

supra at 26. To be sure, the Second Circuit has refused

to change its precedent in light of similar statements

in RJR Nabisco and WesternGeco. But the Second

Circuit has never before been ordered by this Court to

reconcile its rulings with those authorities. A GVR in

light of Abitron may prompt the Second Circuit to

finally acknowledge that reconciliation is impossible

and cause it to correct its precedent.

caused by that behavior.” Id. 20a (quoting Schwab Short-Term

Bond Market Fund v. Lloyds Banking Group PLC, 22 F.4th 103,

116 (2d Cir. 2021)). As respondents effectively acknowledged

below, however, the stringent “first step rule” does not apply

under the CEA. See Resp. C.A. Br. 38 (explaining that to

established causation under the CEA, plaintiff need only plead

“with sufficient detail (1) that the defendant ‘t[ook] an action that

had an impact on the [plaintiff’s position],’ and (2) that the impact

was ‘negative.’”) (quoting Harry v. Total Gas & Power N.A., Inc.,

889 F.3d 104, 112 (2d Cir. 2018)).

34

CONCLUSION

The petition for certiorari should be granted.

Respectfully submitted,

Vincent Briganti

Margaret Maclean

LOWEY DANNENBERG, P.C.

44 South Broadway

Suite 1100

White Plains, NY 10601

July 24, 2023

Kevin K. Russell

Counsel of Record

GOLDSTEIN, RUSSELL &

WOOFTER LLC

1701 Pennsylvania Ave. NW

Suite 200

Washington, DC 20006

(202) 240-8433

kr@goldsteinrussell.com