An Opportunity to Limit the Application of U.S. Laws to Foreign Conduct

February 16, 2010

In a recent decision, the U.S. Court of Appeals for the D.C. Circuit held that American racketeering laws applied to the foreign conduct of an English tobacco company because its participation in the alleged fraudulent scheme had foreseeable effects in the United States. United States v. Philip Morris USA, Inc., 566 F.3d 1095, 1130-31 (D.C. Cir. 2009). The court declined to follow the traditional presumption that American laws apply only within the United States unless Congress says otherwise, which it did not in the racketeering laws. Instead, the court borrowed an "effects" standard from cases interpreting the securities and antitrust laws—both of which expressly apply to extraterritorial conduct.

This decision dramatically expands the reach of American law and should be of concern to all international companies whose activities may impact the United States.  In March, amicus briefs may be filed encouraging the U.S. Supreme Court to overturn this result and adhere to the traditional presumption that American laws apply only to conduct within the United States.  If your company is interested in participating in an amicus brief and would like more information, please contact your Bracewell lawyer or J. Brett Busby by Monday, February 22, 2010.