Atlantic Trading USA, LLC, et al. v. BP P.L.C., et al.

In Morrison v. National Australia Bank, Ltd., 561 U.S. 247, 259-60 (2010), this Court severely criticized the Second Circuit’s so-called “conduct-and-effects” test, and instead adopted a bright-line rule to determine whether a claim seeks a permissibly territorial application of U.S. law. As applied to the Securities Exchange Act, this simple “transactional test” asks “whether the purchase or sale” underlying the claim “[wa]s made in the United States, or involve[d] a security listed on a domestic exchange.” Id. at 269-70. The Second Circuit and Ninth Circuit now disagree about whether passing this test is merely necessary, or instead sufficient, to state a permissibly territorial claim. See Stoyas v. Toshiba Corp., 896 F.3d 933 (9th Cir. 2018). And notwithstanding this disagreement—and direct criticism from the United States government—the Second Circuit below doubled down, and extended its holding that a domestic transaction is insufficient to claims brought under the Commodity Exchange Act, including claims based on transactions “on a domestic exchange.” It purported to do so for two reasons: (1) first and foremost, because its doctrine correctly regards Morrison’s test as merely necessary; and (2) because, while this Court said in Morrison that the Securities Exchange Act is focused on the location of the exchange, the Commodity Exchange Act is not. The questions presented are:

1. Whether passing Morrison’s domestic-transaction test is sufficient or merely necessary.

2. Whether the focus of the Commodity Exchange Act differs from the Securities Exchange Act’s focus on the location of the exchange or transaction at issue.