United States: Recent Decisions Clarify The Extraterritorial Reach Of U.S. Securities Laws Under The Second Prong Of Morrison

Last Updated: September 14 2017
Article by Edward J. Kirk and Adeyemi Ojudun

In view of the high potential exposure in U.S. litigation, it is important that global companies and their insurers understand the extraterritorial reach of U.S. laws. Despite the U.S. Supreme Court's 2010 ruling in Morrison v. National Australia Bank limiting the application of U.S. securities laws to foreign transactions, shareholders continue to file record numbers of U.S. securities class actions against companies based outside of the U.S. We discuss below some of the recent court decisions applying Morrison in different factual scenarios and clarifying further the exterritorial reach of U.S. securities laws under the second prong of its transactional test.

The Morrison decision limited the ability of investors who purchased shares in a company based outside of the U.S. to file securities actions against the company and its directors and officers ("D&Os") in U.S. courts. Morrison rejected the prior "conduct and effects test," which considered whether the alleged conduct occurred in the U.S. or whether conduct occurring overseas had a substantial effect in the U.S. Instead, the Court created a two-part "transactional test" intended to provide more certainty and consistency regarding the extraterritorial reach of U.S. securities laws. Specifically, Morrison held that §10(b) of the Securities and Exchange Act of 1934 (the "Exchange Act") only applies to (i) "transactions in securities listed on domestic exchanges" and (ii) "domestic transactions in other securities." With respect to securities not listed on a domestic exchange, the Court found that the exclusive focus should be on domestic purchases and sales.

While Morrison was generally viewed as favorable for defendants, it did not end U.S. securities lawsuits against foreign companies and likely contributed to an increase in litigation in other countries. By limiting access to U.S. courts, Morrison encouraged investors to develop and pursue class or collective actions in new jurisdictions. At the same time, in the years after Morrison, purchasers of American Depository Receipts ("ADRs") of companies based outside of the U.S. have filed high numbers of U.S. securities class actions. In 2016, shareholders filed 42 new securities class actions against foreign issuers, which is well-above the annual average number of such lawsuits prior to Morrison.

Morrison also did not limit the rising number of U.S. regulatory investigations and actions against foreign companies and their D&Os. Within a month after the Supreme Court issued its decision in Morrison, the U.S. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd Frank"). Pursuant to Section 929P of Dodd Frank, the broad conduct and effects test determines jurisdiction in actions brought by the Securities and Exchange Commission (the "SEC") or the Department of Justice (the "DOJ") under the antifraud provisions of the Exchange Act, the Securities Act of 1933 (the "Securities Act") and the Investment Advisers Act. Accordingly, the SEC and DOJ have asserted that Dodd Frank essentially overruled Morrison with respect to their regulatory and criminal actions, and they continue to aggressively pursue investigations and actions against foreign companies and their D&Os around the world.1

Since Morrison, appellate and district courts have provided further guidance regarding when shareholders may bring securities fraud claims against foreign companies and their D&Os in the U.S. Pursuant to the first prong of the Morrison test, U.S. courts consistently allow shareholder claims against foreign companies that listed securities on one of the U.S. registered securities exchanges. Determining whether U.S. securities laws apply to transactions in securities that are not listed on a U.S. exchange has been more challenging. A consensus has emerged, however, that under Morrison's second prong, the U.S. securities laws apply to foreign companies where irrevocable liability was incurred or title was transferred in the U.S. for the relevant securities transaction. Further, a number of recent decisions have found that U.S. securities laws apply with respect to transactions in sponsored ADRs, but not unsponsored ADRs.2

The Second Circuit Line of Cases Addressing Morrison's Second Prong

The U.S. Court of Appeals for the Second Circuit has issued a series of decisions addressing the second prong of Morrison and taken the lead among U.S. courts on this issue.

In Absolute Activist Master Fund Ltd. v. Ficeto,3 the Second Circuit examined whether transactions involving securities that were not traded on a U.S. registered exchange, could still be subject to § 10(b) as "domestic transactions" under Morrison's second prong. The plaintiffs were Cayman Islands hedge funds that allegedly suffered $195 million in losses in a pump-and-dump scheme by their U.S. broker and investment manager. The defendants allegedly advised the funds to purchase through the U.S. broker penny stocks of thinly capitalized U.S. companies that were not traded on a U.S. registered exchange. The defendants had secretly invested in the stocks, and after causing the funds to purchase the stocks directly from the companies, they allegedly artificially inflated the stock prices for their own benefit.

The court first noted that Morrison provided little guidance as to what constitutes a domestic purchase or sale. Under the Exchange Act, the definitions of the terms "purchase" and "sale" "suggest that the act of purchasing or selling securities is the act of entering into a binding contract to purchase or sell securities." In other words, "the 'purchase' and 'sale' take place when the parties become bound to effectuate the transaction." Accordingly, the point of irrevocable liability determines the locus of a securities purchase or sale. Therefore, the Second Circuit held that Morrison's second prong applies to securities transactions where (i) the parties incurred irrevocable liability to purchase or deliver a security within the U.S., or (ii) title was transferred within the U.S.

Applying this test to the complaint in Absolute Activist, the court found that the plaintiffs failed to allege facts demonstrating that the purchaser incurred irrevocable liability within the U.S. to "take and pay for a security" or "deliver a security", or "that title to the shares was transferred within the [U.S.]." Specifically, the court determined that the following facts and allegations alone were insufficient to allege a domestic transaction in the U.S.: (a) a conclusive allegation that the transactions took place in the U.S.; (b) the investors wired money to the funds in the U.S.; (c) the funds were marketed in the U.S.; (d) investors in the U.S. were harmed; (e) certain defendants were U.S. citizens or resided in the U.S.; and (f) some of the fraudulent conduct occurred in the U.S. As these factors did not demonstrate that the purchases and sales were made in the U.S., the court dismissed the complaint, although it allowed plaintiffs to file an amended complaint pleading facts regarding the location of the securities transactions.

Two years later, the Second Circuit expanded upon its analysis in Absolute Activist in two other cases involving different securities transactions. In City of Pontiac Policemen's and Firemen's Retirement System, et al. v. UBS AG, et al.4, the court examined whether Morrison applied to claims by U.S. investors who purchased securities of a foreign issuer on a foreign exchange through a buy order initiated in the U.S. First, the court rejected the plaintiffs' so-called "listing theory," which argued that the dual listing of the securities on both domestic and foreign exchanges satisfied the first prong of Morrison. Next, the court found that "the fact that a U.S. entity places a buy order in the [U.S.] for the purchase of foreign securities on a foreign exchange" did not constitute a domestic transaction under Morrison. As both prongs of the Morrison test focus on the domestic location of the securities transaction, the mere cross-listing of the security on a U.S. exchange is insufficient to satisfy Morrison with respect to claims brought by foreign and American plaintiffs who purchased their shares on a foreign exchange.

Shortly after its decision in City of Pontiac, the Second Circuit revisited Morrison under more complex circumstances in Parkcentral Global Hub Ltd. v. Porsche Auto Holdings SE.5 In the Parkcentral case, U.S. investors asserted §10(b) claims for losses incurred on swap agreements they purchased in the U.S., but which were tied to the value of Volkswagen shares traded on foreign exchanges. For purposes of the defendants' motion to dismiss, the court assumed that the swap agreements were executed and performed in the U.S. and the underlying transaction therefore constituted a domestic securities transaction. Nevertheless, the court declined to allow the case to proceed, finding that while a domestic transaction is necessary, it is not alone sufficient under Morrison, as the Supreme Court did not hold that §10(b) applies to any domestic securities transaction. Applying the statute whenever a claim is predicated on a domestic transaction, "regardless of the foreignness of the facts constituting the defendants' alleged violation, would seriously undermine Morrison's insistence that §10(b) has no extraterritorial application."

In granting the defendants' motion to dismiss, the district court found that the "value of securities-based swap agreements is intrinsically tied to the value of the referenced security [and] the economic reality is that [the swaps] are essentially 'transactions conducted upon foreign exchanges and markets,' and not 'domestic transactions' that merit the protection of §10(b)." The Second Circuit determined that applying U.S. securities laws based only on the execution of such swap agreements in the U.S. "would subject to U.S. securities laws conduct that occurred in a foreign country, concerning securities in a foreign company, traded entirely on foreign exchanges, in the absence of any congressional provision addressing the incompatibility of U.S. and foreign law nearly certain to arise." Therefore, as the claims were "so predominantly foreign as to be impermissibly extraterritorial," the court held that the transactions did not satisfy the standards for a domestic transaction under Absolute Activist.

The Second Circuit acknowledged in Parkcentral the complexity of determining the extraterritorial reach of U.S. securities laws under the second prong of Morrison, particularly "in a world of easy and rapid transnational communications and financial innovation," and declined to adopt a comprehensive rule or "bright-line" test for extraterritoriality in §10(b) cases. Instead, courts must carefully consider the facts of every case "so as to eventually develop a reasonable and consistent governing body of law on this elusive question."

In 2016, the Second Circuit revisited Morrison in In re Vivendi, S.A. Securities Litigation.6 Shareholders in Vivendi common stock filed a securities class action against the company, which is a foreign media corporation, and certain of its D&Os. The plaintiffs argued that they incurred irrevocable liability in the U.S. and thus satisfied Morrison's second prong because they were located in the U.S. when a three-way merger through which they acquired Vivendi ordinary shares was completed. The Second Circuit upheld the dismissal of the securities fraud claims, finding that incurring irrevocable liability means either "becom[ing] bound to effectuate the transaction" or "entering into a binding contract to purchase or sell securities." The location of the investors in the U.S. who acquired ordinary shares as a result of the merger, but were not parties to the merger, was irrelevant to a determination of whether the merger qualified as a "domestic purchase or sale." The plaintiffs did not point to any evidence that the parties to the merger otherwise incurred irrevocable liability in the U.S.

On July 7, 2017, the Second Circuit applied the second prong of Morrison with respect to the certification of plaintiff classes in In Re Petrobras Securities Litigation.7 In Petrobras, the defendants appealed an order by the district court certifying two plaintiff classes of all otherwise eligible persons who purchased Petrobras ADSs on the NYSE and Petrobras debt securities in "domestic transactions" as defined in Morrison. As the debt securities traded over-the-counter ("OTC") and not on a domestic exchange, the district court was required to assess whether those securities transactions were domestic transactions under Morrison.

In their appeal, the defendants asserted that the debt securities class failed to satisfy the ascertainability and predominance requirements for class certification because the class members were required to establish on an individual basis that they acquired their securities in a "domestic transaction."8 With respect to ascertainability, the defendants argued that it would be too difficult to determine which of the OTC trades were "domestic transactions" under Morrison. The Second Circuit disagreed, finding that the district court's criteria for identifying the securities purchases was "clearly objective", and it was therefore "objectively possible" to determine whether the debt securities were acquired in domestic transactions.9

Next, the Second Circuit considered whether the predominance requirement for class certification was satisfied, which would require a finding that the resolution of any "material 'legal or factual questions... can be achieved through generalized proof', and 'these [common] issues are more substantial than the issues subject only to individualized proof.'" In Petrobras, this analysis raised two predicate inquiries about the role of Morrison, including (i) whether the determination of domesticity is material to the plaintiffs' class claims, and (ii) if so, is that determination susceptible to generalized class-wide proof such that it represents a common, rather than an individual, question.

The Second Circuit found that although the lower court sought to certify classes that extended as far as Morrison would allow, it failed to carefully scrutinize whether the domesticity of the debt security transactions was susceptible to class-wide proof. Under the second prong of Morrison, a plaintiff must produce evidence of, among other things, "facts concerning the formation of the contract, the placement of purchase orders, the passing of title, or the exchange of money." While the need to show a "domestic transaction" applies equally to putative class members and may therefore present a common question, the "Plaintiffs bear the burden of showing that, more often than not, they can provide common answers." The district court suggested that the pertinent locational details for each transaction were likely to be found in the "record[s] routinely produced by the modern financial system," and "are likely to be documented in a form susceptible to the bureaucratic processes of determining who belongs to a Class." This did not, however, obviate the need to consider the plaintiff specific nature of the Morrison inquiry. The district court did not consider the ways in which evidence of domesticity might vary in nature or availability across the various permutations of the transactions, including who sold the relevant securities, how the transactions were effectuated, and what forms of documents might be offered to support domesticity. Therefore, the Second Circuit vacated the class certification and directed the district court to conduct a robust predominance inquiry with respect to the domesticity of the underlying transactions. The Second Circuit's ruling in Petrobras demonstrates that Morrison may create substantial hurdles to class certification, even after investors have sufficiently pleaded a domestic transaction under Morrison.

Court finds Bank owes an "intermediate" duty to retail customer in relation to switch to fixed rate loans

In Thomas v Triodos Bank (2017) the claimants owned a farming business and, in 2008, became concerned about the potential for interest rates to rise. They had various discussions with individuals at the defendant bank, with whom they had a number of loans, and then switched from a variable into a 10 year fixed rate in respect of two of their loans. Following the financial crisis the claimants found it difficult to service the loans and were told that if they repaid the loans the redemption penalty on the second loan would be GBP 96,000, subsequently revised to GBP 55,000. This was far in excess of the penalty that the claimants expected, and a claim was brought against the bank for various misrepresentations and breach of duty.

Judge Havelock-Allan QC noted that fixed rate lending is not a regulated activity under FSMA and even if it was, the claimants were unlikely to qualify as private persons under the COBS Rules. This was also held not to be an advice case. The Judge considered the authorities and noted that there is a clear distinction between the duty owed in relation to the sale of financial products by banks where advice is given whether to purchase, and the duty owed where all that is provided is information. Where advice is given, there is a duty to ensure the advice is full and accurate, covers the available options and the pros and cons of any product being recommended that enables the customer to make an informed decision. It was held in Green v Rowley (2012) (and the relevant analysis approved in the Court of Appeal) that where a bank gives information only about a product, the only duty owed to the customer is a Hedley Byrne duty to take reasonable steps not to mislead. The Judge in this case found that there could be an intermediate duty between the two, outside of the advisory relationship, the existence of which would depend on the facts of the case. In this case the Bank had advertised to the claimants that it subscribed to the Business Banking Code ("BBC"), which included a promise that if the bank was asked about a product, that it would give a balanced view of the product in plain English, with an explanation of its financial implications. The Judge found that when the claimants had asked about fixing the rate, the Bank had therefore owed a duty to explain what fixing the rate entailed and its consequences. The Judge held that the bank had made a misrepresentation and breached this duty by making comment that the claimants would be sensible to fix for 10 years rather than a lesser period as the rate was lower, without explaining the financial downside of a longer fix with regard to redemption penalties. There was also a misrepresentation and breach of duty when the Bank failed to correct the claimant when he asked whether the maximum penalty was likely to be in the range of GBP 10,000 - GBP 20,000.

This demonstrated that the claimants did not understand how the relevant clauses relating to redemption penalties worked, and there should have been an accurate description given in relation to them.

There are some conflicting first instance authorities regarding the duties of banks where they are providing information rather than advice to customers, and this is an issue that will no doubt, at some stage, be the subject of consideration by the appeal courts. This case suggests that where a bank advertises that it subscribes to a voluntary code of conduct, it may owe more than the Hedley Byrne duties in respect of giving information.

It is also notable in this case that the Court indicated that, in relation to the question of how far a bank should go in providing information in response to questions from a customer in a non-advised transaction, the approach to be adopted in considering materiality is that in the case of Montgomery v Lanarkshire (2015). This meant that the relevant question is: would a reasonable person, in the position of the customer, be likely to attach significance to a piece of information. In O'Hare v Coutts (2016) the High Court recently held that the Montgomery test would apply rather than the traditional Bolam test (which is whether the defendants were acting in accordance with the practice of competent respected professional opinion) in an advisory case. This applied in relation to the question of the required level of communication about the risks of the investments. O'Hare v Coutts is under appeal.

Application of Morrison to Sponsored and Unsponsored ADRs

A number of recent district court decisions have examined whether U.S. securities laws apply to foreign companies' ADRs purchased and sold in the U.S. In Stoyas v. Toshiba Corp.,10 investors who purchased unsponsored ADRs in Toshiba traded on the OTC market in the U.S. alleged that the company and certain of its D&Os violated U.S. securities laws as well as Japan's Financial Instruments & Exchange Act. The defendant argued that under Morrison, §§10(b) and 20(a) of the Exchange Act did not apply because Toshiba had not listed the ADRs on a U.S. exchange or sold the securities in the U.S.

The district court found that the first prong of Morrison did not apply because the OTC market is not a domestic exchange. The plaintiffs also could not satisfy the second prong of Morrison because they had not alleged any affirmative act by Toshiba related to the purchase and sale of securities in the U.S. Although the ADRs were based on Toshiba common stock traded on a foreign exchange, they were sold by U.S. depository banks without the participation of Toshiba. There were no allegations that Toshiba sponsored, solicited or committed any other affirmative act with respect to the ADRs. The court reasoned that holding companies like Toshiba liable in the U.S. for secondary securities they had not approved would "create essentially limitless reach" for U.S. securities laws.

Other courts have determined that U.S. securities laws may apply where the defendant company sponsored the ADRs at issue. In In re Volkswagen "Clean Diesel" Marketing, Sales Practices, and Product Liability Litigation,11 the Northern District of California found that under Morrison, Volkswagen and certain of its D&Os could be liable under U.S. securities laws with respect to ADRs sponsored by the company and traded in the U.S. Investors in Volkswagen ADRs filed a alleged that the defendants misled investors by failing to disclose that the company had utilized a "defeat device" in its diesel cars that allowed the cars to temporarily reduce emissions during testing. The defendants filed a motion to dismiss arguing that under Morrison the U.S. securities laws did not apply to the ADR transactions.

As the ADRs traded on the OTC market and were not listed on a U.S. exchange, Morrison's first prong did not apply. The defendants, citing Parkcentral, argued that Morrison's second prong also did not apply because the ADR transactions were predominately foreign. Unlike the swap agreements in Parkcentral, however, the defendant company had taken affirmative steps to make its sponsored ADRs available to investors in the U.S. The court also noted that the ADRs had numerous connections to the U.S., including that they were traded in the U.S. pursuant to an agreement subject to New York law and a Form F-6 Registration Statement submitted to the SEC. As a result, the ADRs were not predominately foreign and were sufficiently domestic to satisfy the "domestic transactions" requirement under Morrison.

Most recently, in Vancouver Alumni Asset Holdings Inc., et al. v. Daimler AG, et al.,12 another district court in California held that U.S. securities laws apply to OTC transactions in Daimler A.G.'s sponsored ADRs. As in Volkswagen, the ADR shareholders alleged damages from misrepresentations and omissions pertaining to emission control systems in certain of the defendant company's diesel vehicles. The defendants also cited Parkcentral and argued that the plaintiffs could not satisfy either prong of Morrison because the ADRs were "predominantly foreign in nature." The court disagreed, noting that the Parkcentral test was not binding on its determination and the plaintiffs in that case had not alleged that the defendant company was a party to the relevant swap agreements or participated in the market for the swaps. In contrast, the ADRs were not independent from Daimler foreign securities or from Daimler itself, and the company sponsored and was directly involved in the domestic offering of the ADRs. Further, Daimler took affirmative steps to make its securities available to investors in the U.S., and all broker-dealers, settling agents and clearing houses associated with the transactions were U.S. institutions. Therefore, the court determined that the plaintiffs alleged a sufficient connection between the ADR transactions and the U.S. as required under Morrison's second prong.

As plaintiffs continue to target foreign companies and their D&Os in U.S. securities actions, it is important that they understand whether they could be subject to claims under U.S. securities laws. The cases discussed above have provided greater certainty regarding the exterritorial reach of U.S. securities laws. As the Second Circuit noted in Parkcentral, however, application of Morrison's "transactional test" is often not a straightforward exercise, and U.S. courts will likely continue to update and refine the extraterritorial reach of U.S. securities laws to increasingly complex fact patterns and securities transactions. Therefore, global companies and their insurers should closely monitor developments in this area.

Director liability for nuisance call fines

On 23 October 2016, the government announced that it would amend the Privacy and Electronic Communications (EC Directive) Regulations 2003 (SI 2003/2426) in "spring 2017" to give the Information Commissioner's Office (ICO) the power to fine directors personally, up to £500,000 for nuisance calls. If multiple directors were culpable, then each could be liable for a fine, in addition to any fine imposed on the company.

This reflects the government's intention to strengthen the ICO's enforcement powers in order to protect individuals' rights and, follows the recommendation of the UK Information Commissioner, Elizabeth Denham, at a parliamentary meeting about the Digital Economy Act (passed on 27 April 2017). The Commissioner noted that the ICO had issued a total of GBP 4 million in fines in 2016 but only collected a small percentage of that figure. The Commissioner welcomed the proposal as, "Making directors responsible will stop them ducking away from fines by putting their company into liquidation. It will stop them leaving by the back door as the regulator comes through the front door".

Increased ICO powers

The ICO does not yet have the power to fine directors, although it recently imposed a fine of GBP 400,000 on Talk Talk, its largest ever fine for a breach of data protection law.

Enforcement of the General Data Protection Regulation ("GDPR") commences on 25 May 2018. This gives the ICO the power to impose fines of up to the greater of EUR 20 million or 4% of worldwide turnover. In the event that personal liability is extended to directors for all data protection breaches (as recommended by the Information Commissioner) then it could be extremely costly for individuals who receive these fines.

Impact on insurance for regulatory fines and the costs of the associated investigations

Insurance cover for fines is typically limited, either by any applicable levels of indemnity or by wording which limits cover for fines and costs "to the extent that they are conclusively determined to be legally insurable". Whether a cyber policy will cover a fine imposed by the regulator following, for instance, a data breach depends on what is meant by "legally insurable". The difficulty with insuring fines arises from the law on public policy (often referred to, by lawyers at least, as the ex turpi causa rule). Broadly speaking, this prevents companies and individuals negating the deterrent effect of fines for wrongful conduct by insuring their exposure. The application of the rule to criminal behaviour is clear. However, the position becomes more difficult in respect of behaviour which is wrongful without being criminal. In addition, it is not simply the fine that poses a risk to the assured as the costs of responding to the regulator's investigation could also be significant.

There is currently no precedent which establishes how a fine flowing from a breach of data protection legislation may be treated, however Safeway v Twigger (2010)1 suggested that the ex turpi causa principle can be engaged by conduct which reaches a certain level of moral turpitude falling short of criminal behaviour. Although the case law is not entirely clear cut, it is likely that conduct falling short of deliberate or reckless (and possibly negligent) acts will not be sufficient to engage the principle. The GDPR, as well as the current form of the Data Protection Act 1998, focus on the nature of the conduct in question when considering whether to impose a fine, and provide that when fines are assessed, the nature of the conduct will be taken into account setting the level of the fine2. There may therefore be the possibility that the most serious fines under the GDPR will not be recoverable, but each case will of course turn on its own facts.

With the scale of fines about to dramatically increase beyond current levels (up to 4% of worldwide turnover under the GDPR), Insurers may wish to review their policy wordings and sub-limits on fines and the associated investigation costs and consider their approach for future policy years.

1. Other cases such as Bilta (UK) Ltd (In Liquidation) v Nazir and Les Laboratoires Servier v Apotex Inc also considered the issue in non-insurance scenarios which are nonetheless relevant.

2. S55A(1) of the DPA 1998 provides that a penalty may be imposed if there has been a serious contravention of s4(4) which was of a kind likely to cause substantial damage or distress and the contravention was deliberate (s55A(2)) or the data controller knew or ought to have known there was a risk of such contravention and it would be likely to cause substantial damage or distress but failed to take steps to prevent the contravention (s55A(3)). Art 83 of GDPR sets out the general conditions for imposing administrative fines. Art 83(2)(b) provides that when deciding whether to impose administrative fines and deciding on the amount regard shall be had to the intentional or negligent character of the infringement. Sub-sections (a) – (k) list other factors which should be taken into account when imposing fines, including nature, gravity and duration of infringement (a); and action taken to mitigate damage (c).

Footnotes

1. See Sec. & Exch. Comm'n v. Traffic Monsoon, LLC, 2017 WL 1166333 (D. Utah Mar. 28, 2017) (finding that with respect to actions by the SEC, pursuant to § 929P(b) of Dodd Frank, Congress intended §§ 10(b) and 17(a) of the Exchange Act to apply to extraterritorial transactions to the extent that the conduct and effects test is satisfied).

2. ADRs are issued by U.S. depository banks and each represents one or more shares of a foreign stock. They allow foreign equities to be traded on U.S. exchanges. Sponsored ADRs are issued by a bank on behalf of a foreign company whose equity serves as the underlying asset for the ADR. Unsponsored ADRs are issued by a depositary bank, usually in response to investor demand, without the involvement, participation or consent of the foreign issuer whose stock underlies the ADR. (See www.investopedia.com)

3. 677 F.3d 60 (2d Cir. 2012).

4. 752 F.3d 173 (2d Cir. 2014).

5. 763 F.3d 198 (2d Cir. 2014).

6. 838 F.3d 223 (2d Cir. 2016).

7. --F.3d --, 2017 WL 2883874 (2d Cir. July 7, 2017).

8. 1Plaintiffs seeking class certification bear the burden to satisfy the numerosity, commonality, typicality, and adequacy requirements of Rule 23 of the Federal Rules of Civil Procedure. They must also show that "questions of law or fact common to class members... predominate over questions affecting only individual class members." Courts have also recognized an implied requirement of ascertainability under Rule 23.

9. The Second Circuit rejected application of a heightened ascertainability requirement applied by other Circuit Courts, under which any proposed class must be "administratively feasible," over and above the requirement that a class be definite and "defined by objective criteria," and separate from the predominance and superiority requirements.

10. 191 F. Supp. 3d 1080 (C.D. Cal. 2016).

11. 2017 WL 66281 (N.D. Cal. Jan. 4, 2017.

12. 2017 WL 2378369 (C.D. Cal. May 31, 2017).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions