Extraterritorial Application of US Law: Liu Meng-Lin v. Siemens AG

As a general rule, US law does not apply outside the territorial jurisdiction of the United States.  A recent decision by the Second Circuit Court of Appeals (Liu Meng-Lin v. Siemens AG) provides a helpful illustration.   As a reminder, the Second Circuit Court of Appeals is a federal appellate court that decides appeals from  Connecticut, New York, and Vermont district courts.   The Second Circuit is particularly influential with respect to securities laws because it hears cases on appeal from New York, including the federal court in Manhattan.

After the 2008 financial crisis Congress passed a law called the Dodd-Frank Act.  Among many other things, the Dodd-Frank Act provides protection for whistleblowers - - persons who report securities law violations by their companies.    The Dodd-Frank Act prohibits companies from retaliating against employees who report certain types of violations of US law.  

The plaintiff in this case sued his former employer, arguing that the company illegally fired him after he internally reported corrupt practices by the company.  He complained that by firing him, the company violated the Dodd-Frank Act's protection for whistleblowers.

But the district court dismissed his case and the Second Circuit affirmed the district court's decision.  Why? The plaintiff was a foreigner (non-US citizen) working for a foreign company and all of the conduct at issue in the case occurred overseas.  Specifically:

  1. The foreign company's allegedly corrupt activity occurred outside the United States (in North Korea and China).
  2. The plaintiff reported the activity overseas.
  3. The allegedly illegal retaliation occurred overseas.

According to the Second Circuit, the only connection to the United States was that the foreign company was listed on the New York Stock Exchange.  The Second Circuit, citing recent Supreme Court decisions, explained that because Congress did not clearly intend whistleblower protection laws to apply extraterritorially, the plaintiff's case must be dismissed.

Here is a video discussing the case:

 

 

 

0 Comments:

There are no comments yet, be the first to make one!

Leave a Comment: