United States: Presumption Against Extraterritoriality in Morrison v. National Australia Bank Extended to Private Party Whistleblower Retaliation Cases

The US Court of Appeals for the Second Circuit has ruled that the presumption against extraterritoriality applies to private party actions under Section 21(h) of the Securities Exchange Act of 1934 ("Exchange Act").1 The Second Circuit's August 14, 2014 decision in Liu v. Siemens AG addressed some of the questions left unanswered in the US Supreme Court's 2010 decision in Morrison v. National Australia Bank.2

Federal statutes are presumed not to have effect outside of the territorial jurisdiction of the United States absent a clearly expressed affirmative intent by Congress.3 In Morrison, the Supreme Court invoked the presumption against extraterritoriality to hold that civil actions for securities fraud under Section 10(b) of the Exchange Act cannot be based on foreign conduct, but rather must concern "transactions in securities listed on domestic exchanges, and domestic transactions in other securities."4 However, because Morrison involved an action under Section 10(b), and was decided prior to the passage of the Dodd-Frank Act, the Court did not consider whether or how the presumption against extraterritoriality would apply to private lawsuits brought to enforce the whistleblower anti-retaliation protections of Section 922 of the Dodd-Frank Act (the "Anti-Retaliation Protections").5

In Liu, the Second Circuit focused on whether the presumption against extraterritoriality extends to actions brought to enforce the Anti-Retaliation Protections.6 The plaintiff, Liu Meng-Lin, a Taiwanese citizen and resident, filed suit claiming that his employment with a Chinese subsidiary of the German company Siemens AG was impermissibly terminated after he internally reported that "Siemens employees were indirectly making improper payments to officials in North Korea and China in connection with the sale of medical equipment in those countries," in violation of the Foreign Corrupt Practices Act ("FCPA").7 Notably, Liu did not claim to have reported the misconduct to the US Securities and Exchange Commission ("SEC") before his termination; nor did he claim that any of the events connected with his termination occurred within the United States or that any persons involved in his termination were located in the United States. The district court dismissed Liu's suit for failure to state a claim under Rule 12(b)(6).8

Assuming without deciding that Liu's internal reporting would have qualified him for the Anti-Retaliation Protections, the Second Circuit framed Liu's burden to survive Siemen's motion to dismiss as demonstrating "either (1) that the facts alleged in his complaint state a domestic application of the anti-retaliation provision of the Dodd‐Frank Act or (2) that the anti-retaliation provision is intended to apply extraterritorially."9 The court held that Liu failed to meet either requirement.

More specifically, the Second Circuit concluded, in part, that the facts alleged in Liu's complaint failed to state a claim for the domestic application of the Anti-Retaliation Protections because there was "essentially no contact with the United States regarding either the wrongdoing or the protected activity." In reaching that conclusion, the Second Circuit specifically rejected Liu's argument that Siemen's listing of a class of stock on the New York Stock Exchange subjected it to the US federal securities laws. The court noted that, under Morrison, "where a plaintiff can point only to the fact that a defendant has listed securities on a US exchange, and the complaint alleges no further meaningful relationship between the harm and those domestically listed securities, the listing of securities alone is the sort of 'fleeting' connection that 'cannot overcome the presumption against extraterritoriality.'"10

The Second Circuit further concluded that nothing in the Dodd-Frank Act, or its legislative history, indicates that "Congress intended the antiretaliation provision to regulate the relationships between foreign employers and their foreign employees working outside the United States."11 The court accordingly rejected Liu's argument that Congress's grant of extraterritorial jurisdiction in Section 929P evidenced its intent to extend extraterritorial jurisdiction to the Anti-Retaliation Protections. The court reasoned that Liu's statutory construction, which would confer extraterritorial jurisdiction to the entire Dodd-Frank Act, would also violate "the ordinary canons of statutory interpretation" by rendering Section 929P's explicit grant of extraterritorial jurisdiction redundant.12 Moreover, the court noted that Liu lacked any other basis for jurisdiction under Section 929P, writing that "Liu is not a governmental actor, he has not pled facts of the sort that would confer jurisdiction under § 929P(b), and he cannot argue that the antiretaliation provision qualifies as an antifraud provision" of the Exchange Act.13

Finally, the court rejected Liu's argument that the SEC's regulations implementing Dodd-Frank evidence the extraterritorial application of the Anti-Retaliation Protections. Essentially, Liu argued that the SEC regulations governing the granting of monetary awards (bounties) to whistleblowers contemplate the extraterritorial reach of the bounty provision and thereby provide a basis to apply the Anti-Retaliation Protections extraterritorially. The court strongly suggested, but did not conclude, that the SEC regulations are insufficient to overcome the presumption against extraterritoriality. And, even if SEC regulations could extend the authority to grant monetary awards to non-US persons, the court reasoned that "none of the arguments that the bounty provision is meant to have extraterritorial reach provide any support for Liu's claim that the antiretaliation provision is meant to have extraterritorial reach."14

Liu's importance to future whistleblower anti-retaliation cases is uncertain. While its extraterritorial application holding is consistent with the Supreme Court's decision in Morrison, as well as with other courts that have addressed the same issue, it fails to resolve the lingering ambiguities with respect to whether internal reporting is sufficient to trigger the protections of Section 922 and when reporting of FCPA violations will be found sufficient to trigger the Anti-Retaliation Protections. Liu's most durable legacy may be to reinforce that post-Morrison courts will vigorously apply the presumption against extraterritoriality in all but the most clearly defined circumstances.

Learn more about our Banking & Finance Litigation, Financial Services Regulatory & Enforcement, Securities Litigation & Enforcement, and White Collar Defense & Compliance practices.

1 Liu v. Siemens AG, No. 13-4385-CV, 2014 WL 3953672, at *1 (2d Cir. Aug. 14, 2014), aff'g, 978 F.Supp.2d 325 (S.D.N.Y. 2013).
2 The Second Circuit also declined to address whether Section 806 of the Sarbanes‐Oxley Act requires or protects disclosures of FCPA violations.
3 Morrison v. National Australia Bank Ltd., 561 U.S. 247, 257-59 (2010).
4 Id. at 267.
5 Pub. L. No. 111-203 § 922, 124 Stat. 1376, 1841-49 (2010) (the "Dodd-Frank Act") (codified in relevant part at Exch. Act § 21F(h)(1); 15 U.S.C. § 78u‐6(h)(1)).
6 See Asadi v. G.E. Energy (USA), LLC,No. 4:12‐345, 2012 WL 2522599 (S.D. Tex. June 28, 2012), aff'd on other grounds, 720 F.3d 620 (5th Cir. 2013).
7 Liu at *1.
8 Liu v. Siemens AG, 978 F.Supp.2d 325, 326 (S.D.N.Y. 2013), aff'd, No. 13-4385-CV, 2014 WL 3953672 (2d Cir. Aug. 14, 2014).
9 Liu at *3.
10 Liu at *4.
11 Id.
12 Liu at *5.
13 Id.
14 Liu at *7 (emphasis in original).

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2014. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.