The Myth of Morrison: Securities Fraud Litigation Against Foreign Issuers

Authors

Robert Bartlett, University of California - BerkeleyFollow
Matthew D. Cain, Harvard UniversityFollow
Jill E. Fisch, University of Pennsylvania Carey Law SchoolFollow
Steven Davidoff Solomon, Berkeley LawFollow

ORCID

Jill Fisch 0000-0002-6771-6287

Document Type

Article

Publication Date

2019

Abstract

Using a sample of 388 securities fraud lawsuits filed between 2002 and 2017 against foreign issuers, we examine the effect of the Supreme Court's decision in Morrison v. National Australia Bank Ltd. We find that the description of Morrison as a steamroller, substantially ending litigation against foreign issuers, is a myth. Instead, we find that Morrison did not significantly change the type of litigation brought against foreign issuers, which, both before and after this case, focused on foreign issuers with a U.S. listing and substantial U.S. trading volume. Although dismissal rates rose post-Morrison, we find no evidence that this was related to the decision. Settlement amounts and attorneys' fees remained unchanged post-Morrison. We use these findings to theorize that Morrison was primarily a preemptive decision about standing that firmly delineated the exposure of foreign issuers to U.S. liability in response to the Vivendi case, which sought to expand the scope of liability for foreign issuers whose shares traded primarily in non-U.S. venues. When Morrison is placed in its true context, it is justified as a decision in line with administrative and court actions that have historically aligned firms' U.S. liability to be proportional to their U.S. presence. Although Morrison had this defining effect, it did not change the litigation environment for foreign issuers, which was the oft-cited import of the decision. More generally, our analysis of Morrison underscores how the decision has been mistakenly characterized as a case primarily about extraterritoriality rather than standing.

Keywords

Civil procedure, transnational securities fraud litigation, class action, Supreme Court of the United States, SCOTUS, Morrison v. National Australia Bank Ltd., Securities Act of 1934, Rule 10b-5, jurisdiction, standing, In re Vivendi Universal, S.A.

Publication Title

Business Law Review

Publication Citation

74 Bus. Law. 967 (2019)

Repository Citation

Bartlett, Robert; Cain, Matthew D.; Fisch, Jill E.; and Davidoff Solomon, Steven, "The Myth of Morrison: Securities Fraud Litigation Against Foreign Issuers" (2019). All Faculty Scholarship. 2025.
https://scholarship.law.upenn.edu/faculty_scholarship/2025