Is Non-Extraterritoriality a Question of Subject Matter Jurisdiction?

The distinction between subject matter jurisdiction and proving a prima facie element of the cause of action is not always easy to discern and in some areas is subject to a healthy disagreement among judges, beginning with the debate between Justices Souter (for the majority on this issue) and Scalia (dissenting on this issue) in Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993) involving the reach of the Sherman Act. Justice Souter's remarks are brief:

Justice Scalia believes that what is at issue in this litigation is prescriptive, as opposed to subject-matter, jurisdiction. … The parties do not question prescriptive jurisdiction, however, and for good reason: it is well established that Congress has exercised such jurisdiction under the Sherman Act.

Justice Scalia's remarks are more extensive:

The second question—the extraterritorial reach of the Sherman Act—has nothing to do with the jurisdiction of the courts. It is a question of substantive law turning on whether, in enacting the Sherman Act, Congress asserted regulatory power over the challenged conduct. …If a plaintiff fails to prevail on this issue, the court does not dismiss the claim for want of subject-matter jurisdiction - want of power to adjudicate; rather, it decides the claim, ruling on the merits that the plaintiff has failed to state a cause of action under the relevant statute ….

There is, however, a type of “jurisdiction” relevant to determining the extraterritorial reach of a statute; it is known as “legislative jurisdiction,… This refers to “the authority of a state to make its law applicable to persons or activities,” and is quite a separate matter from “jurisdiction to adjudicate,” see id., at 231. There is no doubt, of course, that Congress possesses legislative jurisdiction over the acts alleged in this complaint: Congress has broad power under Article I, § 8, cl. 3, “[t]o regulate Commerce with foreign nations,” and this court has repeatedly upheld its power to make laws applicable to persons or activities beyond our territorial boundaries where United States interest are affected.

Most recently, in Arbaugh v. Y&H Corp., 126 S.Ct. 1235 (2006), the Supreme Court addressed whether the limitation in 42 U.S.C. § 200e(b) that title VII suits may be brought only if the defendant business has “fifteen or more employees” was a subject matter jurisdiction requirement or an element of the cause of action. Defendant had stipulated to subject matter jurisdiction; the case was tried to a jury which found for plaintiff. The court entered verdict for plaintiff. In a post-trial motion, defendant for the first time asserted that it had fewer than 15 employees and that this fact deprived the court of subject matter jurisdiction, requiring vacating the judgment and dismissing the case. Although the trial court rightly stated that to do so was “unfair and a waste of judicial resources,” it granted plaintiff's motion. The Fifth Circuit affirmed. The Supreme Court reversed.

Acknowledging that its own use of the term “jurisdictional” had been inconsistent, the Court remarkably did nothing to provide a consistent analytical framework. At bottom, the Court merely noted a parade of horribles that resulted when a particular challenge was classified as involving subject matter jurisdiction. This is the modern Supreme Court, incapable of deciding even the few cases it takes.

In cases under the Copyright Act, courts uniformly have treated the issue as involving subject matter jurisdiction; that is, until Tuesday, when the Court of Appeals for the Federal Circuit issued its opinion in Litecubes, LLC v. Northern Light Products, Inc., 2008 WL 1848659, Docket No. 2006-1646. Here is a link to the opinion on the court’s website.

The case was brought in the Eastern District of Missouri as one for patent and copyright infringement, the patent part of it explaining how the case got to the Federal Circuit. What is not explained is how a copyright registration was issued for the product in question, a novelty artificial ice cube containing a L.E.D. and a battery. The copyright infringement claim is not clearly spelled out but defendant argued that it had neither sold the allegedly infringing products in the United States nor imported them. Presumably then, plaintiff was arguing that the manufacture of the goods overseas somehow violated U.S. law. The court however found substantial evidence of a sale within the United States, but still addressed the question of whether the defense of extraterritorial conduct was one that challenged the court’s subject matter jurisdiction, or went to an element of plaintiff’s prima facie case, holding that it was the latter, but deciding the issue as it thought the Eighth Circuit would – in the absence of any case law from that circuit.

My research has found case law in the Second, Sixth, Seventh, Ninth, and Eleventh circuits, all but the Seventh being court of appeals opinions, and all have held that the question is one of subject matter jurisdiction. None however are after the Supreme Court’s 2006 Arbaugh opinion, although given the Supreme Court’s Delphic-like clarity, it is hard to pin anything on that opinion. It is not surprising therefore that the Federal Circuit merely tossed out a conclusion: “There is n indication that Congress intended the extraterritorial limitations on the scope of Copyright Act to limit the subject matter jurisdiction of the federal courts.” Of course, there is no indication it didn’t either, and given that the Federal Circuit’s interpretation of Eighth Circuit is not binding on that circuit or on its district courts, we are no further in answering the question than before the opinion.