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SUPREME COURT OF THE UNITED STATES
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Nos. 91-1111 and 91-1128
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HARTFORD FIRE INSURANCE CO., et al.,
PETITIONERS
91-1111              v.
CALIFORNIA et al.

MERRETT UNDERWRITING AGENCY MANAGE-
MENT LIMITED, et al., PETITIONERS
91-1128              v.
CALIFORNIA et al.
on writs of certiorari to the united states court
of appeals for the ninth circuit
[June 28, 1993]

  Justice Scalia delivered the opinion of the Court with
respect to Part I, and delivered a dissenting opinion with
respect to Part II, in which Justice O'Connor, Justice
Kennedy, and Justice Thomas have joined.
  With respect to the petition in No. 91-1111, I join the
Court's judgment and Part I and II-A of its opinion.  I
write separately because I do not agree with Justice
Souter's analysis, set forth in Part II-B of his opinion,
of what constitutes a -boycott- for purposes of 3(b) of the
McCarran-Ferguson Act, 15 U. S. C. 1013(b).  With
respect to the petition in No. 92-1128, I dissent from the
Court's ruling concerning the extraterritorial application
of the Sherman Act.  Part I below discusses the boycott
issue; Part II extraterritoriality.
                      I
  Determining proper application of 3(b) of the
McCarran-Ferguson Act to the present case requires
precise definition of the word -boycott.-  It is a relatively
new word, little more than a century old.  It was first
used in 1880, to describe the collective action taken
against Captain Charles Boycott, an English agent
managing various estates in Ireland.  The Land League,
an Irish organization formed the previous year, had
demanded that landlords reduce their rents and had urged
tenants to avoid dealing with those who failed to do so.
Boycott did not bend to the demand and instead ordered
evictions.  In retaliation, the tenants -sen[t] Captain
Boycott to Coventry in a very thorough manner.-
J. McCarthy, England Under Gladstone 108 (1886).  -The
population of the region for miles round resolved not to
have anything to do with him, and, as far as they could
prevent it, not to allow any one else to have anything to
do with him. . . . [T]he awful sentence of excommunication
could hardly have rendered him more helplessly alone for
a time.  No one would work for him; no one would supply
him with food.-  Id., at 108-109; see also H. Laidler,
Boycotts and the Labor Struggle 23-27 (1968).  Thus, the
verb made from the unfortunate Captain's name has had
from the outset the meaning it continues to carry today.
To -boycott- means -[t]o combine in refusing to hold
relations of any kind, social or commercial, public or
private, with (a neighbour), on account of political or other
differences, so as to punish him for the position he has
taken up, or coerce him into abandoning it.-  2 The
Oxford English Dictionary 468 (2d ed. 1989).
  Petitioners have suggested that a boycott ordinarily
requires -an absolute refusal to deal on any terms,- which
was concededly not the case here.  Brief for Petitioners
in No. 91-1111 p. 31; see also Reply Brief for Petitioners
in No. 91-1111 pp. 12-13.  We think not.  As the
definition just recited provides, the refusal may be
imposed -to punish [the target] for the position he has
taken up, or coerce him into abandoning it.-  The refusal
to deal may, in other words, be conditional, offering its
target the incentive of renewed dealing if and when he
mends his ways.  This is often the case-and indeed
seems to have been the case with the original Boycott
boycott.  Cf. McCarthy, supra, at 109 (noting that the
Captain later lived -at peace- with his neighbors).
Furthermore, other dictionary definitions extend the term
to include a partial boycott-a refusal to engage in some,
but not all, transactions with the target.  See Webster's
New International Dictionary 321 (2d ed. 1950) (defining
-boycott- as -to withhold, wholly or in part, social or
business intercourse from, as an expression of disapproval
or means of coercion-) (emphasis added).
  It is, however, important-and crucial in the present
case-to distinguish between a conditional boycott and a
concerted agreement to seek particular terms in particular
transactions.  A concerted agreement to terms (a
-cartelization-) is -a way of obtaining and exercising
market power by concertedly exacting terms like those
which a monopolist might exact.-  L. Sullivan, Law of
Antitrust 257 (1977).  The parties to such an agreement
(the members of a cartel) are not engaging in a boycott,
because:
-They are not coercing anyone, at least in the usual
sense of that word; they are merely (though
concertedly) saying `we will deal with you only on the
following trade terms.'
     -. . . Indeed, if a concerted agreement, say, to
include a security deposit in all contracts is a `boycott'
because it excludes all buyers who won't agree to it,
then by parity of reasoning every price fixing
agreement would be a boycott also.  The use of the
single concept, boycott, to cover agreements so varied
in nature can only add to confusion.-  Ibid. (emphasis
added).
Thus, if Captain Boycott's tenants had agreed among
themselves that they would refuse to renew their leases
unless he reduced his rents, that would have been a
concerted agreement on the terms of the leases, but not
a boycott.  The tenants, of course, did more than that;
they refused to engage in other, unrelated transactions
with Boycott-e.g., selling him food-unless he agreed to
their terms on rents.  It is this expansion of the refusal
to deal beyond the targeted transaction that gives great
coercive force to a commercial boycott: unrelated
transactions are used as leverage to achieve the terms
desired.
  The proper definition of -boycott- is evident from the
Court's opinion in Eastern States Retail Lumber Dealers'
Assn. v. United States, 234 U. S. 600 (1914), which is
recognized in the antitrust field as one of the -leading
case[s] involving commercial boycotts.-  Barber, Refusals
to Deal under the Federal Antitrust Laws, 103 U. Pa. L.
Rev. 847, 873 (1955).  The associations of retail lumber
dealers in that case refused to buy lumber from wholesale
lumber dealers who sold directly to consumers.  The
boycott attempted -to impose as a condition . . . on [the
wholesale dealers'] trade that they shall not sell in such
manner that a local retailer may regard such sale as an
infringement of his exclusive right to trade.-  234 U. S.,
at 611.  We held that to be an -artificial conditio[n],-
since -the trade of the wholesaler with strangers was
directly affected, not because of any supposed wrong which
he had done to them, but because of a grievance of a
member of one of the associations.-  Id., at 611-612.  In
other words, the associations' activities were a boycott
because they sought an objective-the wholesale dealers'
forbearance from retail trade-that was collateral to their
transactions with the wholesalers.
  Of course as far as the Sherman Act (outside the
exempted insurance field) is concerned, concerted
agreements on contract terms are as unlawful as boycotts.
For example, in Paramount Famous Lasky Corp. v. United
States, 282 U. S. 30 (1930), and United States v. First
National Pictures, Inc., 282 U. S. 44 (1930), we held
unreasonable an agreement among competing motion
picture distributors under which they refused to license
films to exhibitors except on standardized terms.  We also
found unreasonable the restraint of trade in Anderson v.
Shipowners Assn. of Pacific Coast, 272 U. S. 359 (1926),
which involved an attempt by an association of employers
to establish industry-wide terms of employment.  These
sorts of concerted actions, similar to what is alleged to
have occurred here, are not properly characterized as
-boycotts,- and the word does not appear in the opinions.
In fact, in the 65 years between the coining of the word
and enactment of the McCarran-Ferguson Act in 1945,
-boycott- appears in only seven opinions of this Court
involving commercial (nonlabor) antitrust matters, and not
once is it used as Justice Souter uses it-to describe a
concerted refusal to engage in particular transactions until
the terms of those transactions are agreeable.
  In addition to its use in the antitrust field, the concept
of -boycott- frequently appears in labor law, and in this
context as well there is a clear distinction between
boycotts and concerted agreements seeking terms.  The
ordinary strike seeking better contract terms is a -refusal
to deal--i.e., union members refuse to sell their labor
until the employer capitulates to their contract demands.
But no one would call this a boycott, because the
conditions of the -refusal to deal- relate directly to the
terms of the refused transaction (the employment
contract).  A refusal to work changes from strike to
boycott only when it seeks to obtain action from the
employer unrelated to the employment contract.  This
distinction is well illustrated by the famous boycott of
Pullman cars by Eugene Debs' American Railway Union
in 1894.  The incident began when workers at the
Pullman Palace Car Company called a strike, but the
-boycott- occurred only when other members of the
American Railway Union, not Pullman employees,
supported the strikers by refusing to work on any train
drawing a Pullman car.  See In re Debs, 158 U. S. 564,
566-567 (1895) (statement of the case); H. Laidler,
Boycotts and the Labor Struggle 100-108 (1968).  The
refusal to handle Pullman cars had nothing to do with
Pullman cars themselves (working on Pullman cars was
no more difficult or dangerous than working on other
cars); rather, it was in furtherance of the collateral
objective of obtaining better employment terms for the
Pullman workers.  In other labor cases as well, the term
-boycott- invariably holds the meaning that we ascribe to
it: its goal is to alter, not the terms of the refused
transaction, but the terms of workers' employment.
  The one case in which we have found an activity to
constitute a -boycott- within the meaning of the
McCarran-Ferguson Act is St. Paul Fire & Marine Ins. Co.
v. Barry, 438 U. S. 531 (1978).  There the plaintiffs were
licensed physicians and their patients, and the defendant
(St. Paul) was a malpractice insurer that had refused to
renew the physicians' policies on an -occurrence- basis,
but insisted upon a -claims made- basis.  The allegation
was that, at the instance of St. Paul, the three other
malpractice insurers in the State had collectively refused
to write insurance for St. Paul customers, thus forcing
them to accept St. Paul's renewal terms.  Unsurprisingly,
we held the allegation sufficient to state a cause of action.
The insisted-upon condition of the boycott (not being a
former St. Paul policyholder) was -artificial-: it bore no
relationship (or an -artificial- relationship) to the proposed
contracts of insurance that the physicians wished to
conclude with St. Paul's competitors.
  Under the standard described, it is obviously not a
-boycott- for the reinsurers to -refus[e] to reinsure
coverages written on the ISO CGL forms until the desired
changes were made,- ante, at 21, because the terms of the
primary coverages are central elements of the reinsurance
contract-they are what is reinsured.  See App. 16-17
(Cal. Complaint --26-27).  The -primary policies are . . .
the basis of the losses that are shared in the reinsurance
agreements.-  1 B. Webb, H. Anderson, J. Cookman, & P.
Kensicki, Principles of Reinsurance 87 (1990); see also id.,
at 55; Gurley, Regulation of Reinsurance in the United
States, 19 Forum 72, 73 (1983).  Indeed, reinsurance is
so closely tied to the terms of the primary insurance
contract that one of the two categories of reinsurance
(assumption reinsurance) substitutes the reinsurer for the
primary or -ceding- insurer and places the reinsurer into
contractual privity with the primary insurer's
policyholders.  See id., at 73-74; Colonial American Life
Ins. Co. v. Commissioner, 491 U. S. 244, 247 (1989); T.
Newman & B. Ostrager, Insurance Coverage Disputes
15-16 (1990).  And in the other category of reinsurance
(indemnity reinsurance), either the terms of the
underlying insurance policy are incorporated by reference
(if the reinsurance is written under a facultative
agreement), see J. Butler & R. Merkin, Reinsurance Law
B.1.1-04 (1992); R. Carter, Reinsurance 235 (1979), or (if
the reinsurance is conducted on a treaty basis) the
reinsurer will require full disclosure of the terms of the
underlying insurance policies and usually require that the
primary insurer not vary those terms without prior
approval, see id., at 256, 297.
  Justice Souter simply disregards this integral
relationship between the terms of the primary insurance
form and the contract of reinsurance.  He describes the
reinsurers as -individuals and entities who were not
members of ISO, and who would not ordinarily be parties
to an agreement setting the terms of primary insurance,
not being in the business of selling it.-  Ante, at 21.
While this factual assumption is crucial to Justice
Souter's reasoning (because otherwise he would not be
able to distinguish permissible agreements among primary
insurers), he offers no support for the statement.  But
even if it happens to be true, he does not explain why it
must be true-that is, why the law must exclude
reinsurers from full membership and participation.  The
realities of the industry may make explanation difficult:
     -Reinsurers also benefit from the services by ISO
and other rating or service organizations.  The
underlying rates and policy forms are the basis for
many reinsurance contracts.  Reinsurers may also
subscribe to various services.  For example, a
facultative reinsurer may subscribe to the rating
service, so that they have the rating manuals
available, or purchase optional services, such as a
sprinkler report for a specific property location.-  2 R.
Reinarz, J. Schloss, G. Patrik, & P. Kensicki,
Reinsurance Practices 18 (1990).
  Justice Souter also describes reinsurers as being
-outside the primary insurance industry.-  Ante, at 22.
That is technically true (to the extent the two symbiotic
industries can be separated) but quite irrelevant.  What
matters is that the scope and predictability of the risks
assumed in a reinsurance contract depend entirely upon
the terms of the primary policies that are reinsured.  The
terms of the primary policies are the -subject-matter
insured- by reinsurance, Carter, supra, at 4, so that to
insist upon certain primary-insurance terms as a condition
of writing reinsurance is in no way -artificial-; and hence
for a number of reinsurers to insist upon such terms
jointly is in no way a -boycott.-
  Justice Souter seems to believe that a non-boycott is
converted into a boycott by the fact that it occurs -at the
behest of,- ante, at 21, or is -solicited- by, ibid.,
competitors of the target.  He purports to find support for
this implausible proposition in United States v. South-
Eastern Underwriters Assn., 322 U. S. 533 (1944), which
involved a classic boycott, by primary insurers, of
competitors who refused to join their price-fixing
conspiracy, the South-Eastern Underwriters Association
(S.E.U.A.).  The conspirators would not deal with
independent agents who wrote for such companies, and
would not write policies for customers who insured with
them.  See id., at 535-536.  Moreover, Justice Black's
opinion for the Court noted cryptically, -[c]ompanies not
members of S.E.U.A. were cut off from the opportunity to
reinsure their risks.-  Id., at 535 (emphasis added).
Justice Souter speculates that -the [S.E.U.A.] defendants
could have [managed to cut the targets off from
reinsurance] by prompting reinsurance companies to refuse
to deal with nonmembers.-  Ante, at 22.  Even assuming
that is what happened, all that can be derived from
S.E.U.A. is the proposition that one who prompts a boycott
is a coconspirator with the boycotters.  For with or
without the defendants' prompting, the reinsurers' refusal
to deal in S.E.U.A. was a boycott, membership in the
association having no discernible bearing upon the terms
of the refused reinsurance contracts.
  Justice Souter suggests that we have somehow
mistakenly -posit[ed] . . . autonomy on the part of the
reinsurers.-  Ante, at 25.  We do not understand this.
Nothing in the complaints alleges that the reinsurers were
deprived of their -autonomy,- which we take to mean that
they were coerced by the primary insurers.  (Given the
sheer size of the Lloyd's market, such an allegation would
be laughable.)  That is not to say that we disagree with
Justice Souter's contention that, according to the
allegations, the reinsurers would not -have taken exactly
the same course of action without the intense efforts of
the four primary insurers.-  Ante, at 25.  But the same
could be said of the participants in virtually all
conspiracies:  If they had not been enlisted by the -intense
efforts- of the leaders, their actions would not have been
the same.  If this factor renders otherwise lawful
conspiracies (under McCarran-Ferguson) illegal, then the
Act would have a narrow scope indeed.
  Perhaps Justice Souter feels that it is undesirable, as
a policy matter, to allow insurers to -prompt- reinsurers
not to deal with the insurers' competitors-whether or not
that refusal to deal is a boycott.  That feeling is certainly
understandable, since under the normal application of the
Sherman Act the reinsurers' concerted refusal to deal
would be an unlawful conspiracy, and the insurers'
-prompting- could make them part of that conspiracy.
The McCarran-Ferguson Act, however, makes that
conspiracy lawful (assuming reinsurance is state-
regulated), unless the refusal to deal is a -boycott.-
  Under the test set forth above, there are sufficient
allegations of a -boycott- to sustain the relevant counts of
complaint against a motion to dismiss.  For example, the
complaints allege that some of the defendant reinsurers
threatened to -withdra[w] entirely from the business of
reinsuring primary U. S. insurers who wrote on the
occurrence form.-  App. 31 (Cal. Complaint -89), id., at
83 (Conn. Complaint -93).  Construed most favorably to
the respondents, that allegation claims that primary
insurers who wrote insurance on disfavored forms would
be refused all reinsurance, even as to risks written on
other forms.  If that were the case, the reinsurers might
have been engaging in a boycott-they would, that is,
unless the primary insurers' other business were relevant
to the proposed reinsurance contract (for example, if the
reinsurer bears greater risk where the primary insurer
engages in riskier businesses).  Cf. Gonye, Underwriting
the Reinsured, in Reinsurance 439, 463-466 (R. Strain ed.
1980); 2 R. Reinarz, J. Schloss, G. Patrik, & P. Kensicki,
Reinsurance Practices 21-23 (1990) (same).  Other
allegations in the complaints could be similarly construed.
For example, the complaints also allege that the
reinsurers -threatened a boycott of North American CGL
risks,- not just CGL risks containing dissatisfactory terms,
App. 26 (Cal. Complaint -74), id., at 79 (Conn. Complaint
-78); that -the foreign and domestic reinsurer
representatives presented their agreed upon positions that
there would be changes in the CGL forms or no
reinsurance,- id., at 29 (Cal. Complaint -82), id., at 81-82
(Conn. Complaint 86); that some of the defendant insurers
and reinsurers told -groups of insurance brokers and
agents . . . that a reinsurance boycott, and thus loss of
income to the agents and brokers who would be unable
to find available markets for their customers, would ensue
if the [revised] ISO forms were not approved.-  Id., at 29
(Cal. Complaint -85), id., at 82 (Conn. Complaint -89).
  Many other allegations in the complaints describe
conduct that may amount to a boycott if the plaintiffs can
prove certain additional facts.  For example, General Re,
the largest American reinsurer, is alleged to have -agreed
to either coerce ISO to adopt [the defendants'] demands
or, failing that, `derail' the entire CGL forms program.-
Id., at 24 (Cal. Complaint -64), id., at 77 (Conn.
Complaint -68).  If this means that General Re intended
to withhold all reinsurance on all CGL forms-even forms
having no objectionable terms-that might amount to a
-boycott.-  Also, General Re and several other domestic
reinsurers are alleged to have -agreed to boycott the 1984
ISO forms unless a retroactive date was added to the
claims-made form, and a pollution exclusion and a defense
cost cap were added to both [the occurrence and claims
made] forms.-  Id., at 25 (Cal. Complaint -66), id., at 78
(Conn. Complaint -70).  Liberally construed, this
allegation may mean that the defendants had linked their
demands so that they would continue to refuse to do
business on either form until both were changed to their
liking.  Again, that might amount to a boycott.  -[A] com-
plaint should not be dismissed unless `it appears beyond
doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief.'-
McLain v. Real Estate Bd. of New Orleans, Inc., 444 U. S.
232, 246 (1980) (quoting Conley v. Gibson, 355 U. S. 41,
45-46 (1957)).  Under that standard, these allegations are
sufficient to sustain the First, Second, Third, and Fourth
Claims for Relief in the California Complaint and the
First and Second Claims for Relief in the Connecticut
Complaint.
                     II
  The petitioners in No. 91-1128, various British
corporations and other British subjects, argue that certain
of the claims against them constitute an inappropriate
extraterritorial application of the Sherman Act.  It is
important to distinguish two distinct questions raised by
this petition: whether the District Court had jurisdiction,
and whether the Sherman Act reaches the extraterritorial
conduct alleged here.  On the first question, I believe that
the District Court had subject-matter jurisdiction over the
Sherman Act claims against all the defendants (personal
jurisdiction is not contested).  The respondents asserted
nonfrivolous claims under the Sherman Act, and 28
U. S. C. 1331 vests district courts with subject-matter
jurisdiction over cases -arising under- federal statutes.
As precedents such as Lauritzen v. Larsen, 345 U. S. 571
(1953), make clear, that is sufficient to establish the
District Court's jurisdiction over these claims.  Lauritzen
involved a Jones Act claim brought by a foreign sailor
against a foreign shipowner.  The shipowner contested the
District Court's jurisdiction, see id., at 573, apparently on
the grounds that the Jones Act did not govern the dispute
between the foreign parties to the action.  Though
ultimately agreeing with the shipowner that the Jones Act
did not apply, see discussion infra, at 18, the Court held
that the District Court had jurisdiction.
-As frequently happens, a contention that there is
some barrier to granting plaintiff's claim is cast in
terms of an exception to jurisdiction of subject matter.
A cause of action under our law was asserted here,
and the court had power to determine whether it was
or was not founded in law and in fact.-  345 U. S.,
at 575.
See also Romero v. International Terminal Operating Co.,
358 U. S. 354, 359 (1959).
  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.  See EEOC
v. Arabian American Oil Co., 499 U. S. 244, ___ (1991)
(Aramco) (slip op., at 2) (-It is our task to determine
whether Congress intended the protections of Title VII to
apply to United States citizens employed by American
employers outside of the United States-).  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.  See Romero, supra, at
384 (holding no claim available under the Jones Act);
American Banana Co. v. United Fruit Co., 213 U. S. 347,
359 (1909) (holding that complaint based upon foreign
conduct -alleges no case under the [Sherman Act]-).
  There is, however, a type of -jurisdiction- relevant to
determining the extraterritorial reach of a statute; it is
known as -legislative jurisdiction,- Aramco, supra, at ___
(slip op., at 8), Restatement (First) Conflict of Laws 60
(1934), or -jurisdiction to prescribe,- 1 Restatement (Third)
of Foreign Relations Law of the United States 235 (1987)
(hereinafter Restatement (Third)).  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 interests are affected.  See Ford v.
United States, 273 U. S. 593, 621-623 (1927); United
States v. Bowman, 260 U. S. 94, 98-99 (1922); American
Banana, supra, at 356.  But the question in this case is
whether, and to what extent, Congress has exercised that
undoubted legislative jurisdiction in enacting the Sherman
Act.
  Two canons of statutory construction are relevant in this
inquiry.  The first is the -long-standing principle of
American law `that legislation of Congress, unless a
contrary intent appears, is meant to apply only within the
territorial jurisdiction of the United States.'-  Aramco,
supra, at ___ (slip op., at 3) (quoting Foley Bros., Inc. v.
Filardo, 336 U. S. 281, 285 (1949)).  Applying that canon
in Aramco, we held that the version of Title VII of the
Civil Rights Act of 1964 then in force, 42 U. S. C.
2000e-2000e-17 (1988 ed.), did not extend outside the
territory of the United States even though the statute
contained broad provisions extending its prohibitions to,
for example, -`any activity, business, or industry in
commerce.'-  Id., at ___ (slip op., at 4) (quoting 42
U. S. C. 2000e(h)).  We held such -boilerplate language-
to be an insufficient indication to override the
presumption against extraterritoriality.  Id., at ___ (slip
op., at 5); see also id., at ___-___ (slip op., at 6-8).  The
Sherman Act contains similar -boilerplate language,- and
if the question were not governed by precedent, it would
be worth considering whether that presumption controls
the outcome here.  We have, however, found the
presumption to be overcome with respect to our antitrust
laws; it is now well established that the Sherman Act
applies extraterritorially.  See Matsushita Elec. Industrial
Co. v. Zenith Radio Corp., 475 U. S. 574, 582, n. 6 (1986);
Continental Ore Co. v. Union Carbide & Carbon Corp.,
370 U. S. 690, 704 (1962); see also United States v.
Aluminum Co. of America, 148 F. 2d 416 (CA2 1945).
  But if the presumption against extraterritoriality has
been overcome or is otherwise inapplicable, a second canon
of statutory construction becomes relevant:  -[A]n act of
congress ought never to be construed to violate the law
of nations if any other possible construction remains.-
Murray v. The Charming Betsy, 2 Cranch 64, 118 (1804)
(Marshall, C. J.).  This canon is -wholly independent- of
the presumption against extraterritoriality.  Aramco, 499
U. S., at ___ (Marshall, J., dissenting) (slip op., at 4).  It
is relevant to determining the substantive reach of a
statute because -the law of nations,- or customary
international law, includes limitations on a nation's
exercise of its jurisdiction to prescribe.  See Restatement
(Third) 401-416.  Though it clearly has constitutional
authority to do so, Congress is generally presumed not to
have exceeded those customary international-law limits on
jurisdiction to prescribe.
  Consistent with that presumption, this and other courts
have frequently recognized that, even where the
presumption against extraterritoriality does not apply,
statutes should not be interpreted to regulate foreign
persons or conduct if that regulation would conflict with
principles of international law.  For example, in Romero
v. International Terminal Operating Co., 358 U. S. 354
(1959), the plaintiff, a Spanish sailor who had been
injured while working aboard a Spanish-flag and Spanish-
owned vessel, filed a Jones Act claim against his Spanish
employer.  The presumption against extraterritorial
application of federal statutes was inapplicable to the case,
as the actionable tort had occurred in American waters.
See id., at 383.  The Court nonetheless stated that, -in
the absence of contrary congressional direction,- it would
apply -principles of choice of law that are consonant with
the needs of a general federal maritime law and with due
recognition of our self-regarding respect for the relevant
interests of foreign nations in the regulation of maritime
commerce as part of the legitimate concern of the
international community.-  Id., at 382-383.  -The
controlling considerations- in this choice-of-law analysis
were -the interacting interests of the United States and
of foreign countries.-  Id., at 383.
  Romero referred to, and followed, the choice-of-law
analysis set forth in Lauritzen v. Larsen, 345 U. S. 571
(1953).  As previously mentioned, Lauritzen also involved
a Jones Act claim brought by a foreign sailor against a
foreign employer.  The Lauritzen Court recognized the
basic problem: -If [the Jones Act were] read literally,
Congress has conferred an American right of action which
requires nothing more than that plaintiff be `any seaman
who shall suffer personal injury in the course of his
employment.'-  Id., at 576.  The solution it adopted was
to construe the statute -to apply only to areas and
transactions in which American law would be considered
operative under prevalent doctrines of international law.-
Id., at 577 (emphasis added).  To support application of
international law to limit the facial breadth of the statute,
the Court relied upon-of course-Chief Justice Marshall's
statement in The Charming Betsy quoted supra, at 16.
It then set forth -several factors which, alone or in
combination, are generally conceded to influence choice of
law to govern a tort claim.-  345 U. S., at 583; see id., at
583-593 (discussing factors).  See also McCulloch v.
Sociedad Nacional de Marineros de Honduras, 372 U. S.
10, 21-22 (1963) (applying The Charming Betsy principle
to restrict application of National Labor Relations Act to
foreign-flag vessels).
  Lauritzen, Romero, and McCulloch were maritime cases,
but we have recognized the principle that the scope of
generally worded statutes must be construed in light of
international law in other areas as well.  See, e.g., Sale
v. Haitian Centers Council, Inc., 509 U. S. ___, ___, n. 35
(1993) (slip op., at 22, n. 35); Weinberger v. Rossi, 456
U. S. 25, 32 (1982).  More specifically, the principle was
expressed in United States v. Aluminum Co. of America,
148 F. 2d 416 (CA2 1945), the decision that established
the extraterritorial reach of the Sherman Act.  In his
opinion for the court, Judge Learned Hand cautioned -we
are not to read general words, such as those in [the
Sherman] Act, without regard to the limitations
customarily observed by nations upon the exercise of their
powers; limitations which generally correspond to those
fixed by the `Conflict of Laws.'-  Id., at 443.
  More recent lower court precedent has also tempered
the extraterritorial application of the Sherman Act with
considerations of -international comity.-  See Timberlane
Lumber Co. v. Bank of America, N.T & S.A., 549 F. 2d
597, 608-615 (CA9 1976); Mannington Mills, Inc. v.
Congoleum Corp., 595 F. 2d 1287, 1294-1298 (CA3 1979);
Montreal Trading Ltd. v. Amax Inc., 661 F. 2d 864,
869-871 (CA10 1981); Laker Airways v. Sabena, Belgian
World Airlines, 235 U. S. App. D. C. 207, 236, and n. 109,
731 F. 2d 909, 938, and n. 109 (1984); see also Pacific
Seafarers, Inc. v. Pacific Far East Line, Inc., 131
U. S. App. D. C. 226, 236, and n. 31, 404 F. 2d 804, 814,
and n. 31 (1968).  The -comity- they refer to is not the
comity of courts, whereby judges decline to exercise
jurisdiction over matters more appropriately adjudged
elsewhere, but rather what might be termed -prescriptive
comity-: the respect sovereign nations afford each other
by limiting the reach of their laws.  That comity is
exercised by legislatures when they enact laws, and courts
assume it has been exercised when they come to
interpreting the scope of laws their legislatures have
enacted.  It is a traditional component of choice-of-law
theory.  See J. Story, Commentaries on the Conflict of
Laws 38 (1834) (distinguishing between the -comity of
the courts- and the -comity of nations,- and defining the
latter as -the true foundation and extent of the obligation
of the laws of one nation within the territories of
another-).  Comity in this sense includes the choice-of-law
principles that, -in the absence of contrary congressional
direction,- are assumed to be incorporated into our
substantive laws having extraterritorial reach.  Romero,
supra, at 382-383; see also Lauritzen, supra, at 578-579;
Hilton v. Guyot, 159 U. S. 113, 162-166 (1895).
Considering comity in this way is just part of determining
whether the Sherman Act prohibits the conduct at issue.
  In sum, the practice of using international law to limit
the extraterritorial reach of statutes is firmly established
in our jurisprudence.  In proceeding to apply that practice
to the present case, I shall rely on the Restatement
(Third) of Foreign Relations Law for the relevant
principles of international law.  Its standards appear fairly
supported in the decisions of this Court construing
international choice-of-law principles (Lauritzen, Romero,
and McCulloch) and in the decisions of other federal
courts, especially Timberlane.  Whether the Restatement
precisely reflects international law in every detail matters
little here, as I believe this case would be resolved the
same way under virtually any conceivable test that takes
account of foreign regulatory interests.
  Under the Restatement, a nation having some -basis-
for jurisdiction to prescribe law should nonetheless refrain
from exercising that jurisdiction -with respect to a person
or activity having connections with another state when the
exercise of such jurisdiction is unreasonable.-
Restatement (Third) 403(1).  The -reasonableness-
inquiry turns on a number of factors including, but not
limited to: -the extent to which the activity takes place
within the territory [of the regulating state],- id.,
403(2)(a); -the connections, such as nationality, residence,
or economic activity, between the regulating state and the
person principally responsible for the activity to be
regulated,- id., 403(2)(b); -the character of the activity
to be regulated, the importance of regulation to the
regulating state, the extent to which other states regulate
such activities, and the degree to which the desirability
of such regulation is generally accepted,- id., 403(2)(c);
-the extent to which another state may have an interest
in regulating the activity,- id., 403(2)(g); and -the
likelihood of conflict with regulation by another state,- id.,
403(2)(h).  Rarely would these factors point more clearly
against application of United States law.  The activity
relevant to the counts at issue here took place primarily
in the United Kingdom, and the defendants in these
counts are British corporations and British subjects having
their principal place of business or residence outside the
United States.  Great Britain has established a
comprehensive regulatory scheme governing the London
reinsurance markets, and clearly has a heavy -interest in
regulating the activity,- id., 403(2)(g).  See 935 F. 2d, at
932-933; In re Insurance Antitrust Litigation, 723 F. Supp.
464, 487-488 (ND Cal. 1989); see also J. Butler & R.
Merkin, Reinsurance Law A.1.1-02 (1992).  Finally, 2(b)
of the McCarran-Ferguson Act allows state regulatory
statutes to override the Sherman Act in the insurance
field, subject only to the narrow -boycott- exception set
forth in 3(b)-suggesting that -the importance of
regulation to the [United States],- id., 403(2)(c), is slight.
Considering these factors, I think it unimaginable that an
assertion of legislative jurisdiction by the United States
would be considered reasonable, and therefore it is
inappropriate to assume, in the absence of statutory
indication to the contrary, that Congress has made such
an assertion.
  It is evident from what I have said that the Court's
comity analysis, which proceeds as though the issue is
whether the courts should -decline to exercise . . .
jurisdiction,- ante, at 31, rather than whether the
Sherman Act covers this conduct, is simply misdirected.
I do not at all agree, moreover, with the Court's
conclusion that the issue of the substantive scope of the
Sherman Act is not in the case.  See ante, at 29, n. 22;
ante, at 30, n. 24.  To be sure, the parties did not make
a clear distinction between adjudicative jurisdiction and
the scope of the statute.  Parties often do not, as we have
observed (and have declined to punish with procedural
default) before.  See the excerpt from Lauritzen quoted
supra, at 14; see also Romero, 358 U. S., at 359.  It is not
realistic, and also not helpful, to pretend that the only
really relevant issue in this case is not before us.  In any
event, if one erroneously chooses, as the Court does, to
make adjudicative jurisdiction (or, more precisely,
abstention) the vehicle for taking account of the needs of
prescriptive comity, the Court still gets it wrong.  It
concludes that no -true conflict- counseling nonapplication
of United States law (or rather, as it thinks, United
States judicial jurisdiction) exists unless compliance with
United States law would constitute a violation of another
country's law.  Ante, at 31-32.  That breathtakingly broad
proposition, which contradicts the many cases discussed
earlier, will bring the Sherman Act and other laws into
sharp and unnecessary conflict with the legitimate
interests of other countries-particularly our closest
trading partners.
  In the sense in which the term -conflic[t]- was used in
Lauritzen, 345 U. S., at 582, 592, and is generally
understood in the field of conflicts of laws, there is clearly
a conflict in this case.  The petitioners here, like the
defendant in Lauritzen, were not compelled by any foreign
law to take their allegedly wrongful actions, but that no
more precludes a conflict-of-laws analysis here than it did
there.  See id., at 575-576 (detailing the differences
between foreign and United States law).  Where applicable
foreign and domestic law provide different substantive
rules of decision to govern the parties' dispute, a conflict-
of-laws analysis is necessary.  See generally R. Weintraub,
Commentary on Conflict of Laws 2-3 (1980); Restatement
(First) of Conflict of Laws 1, Comment c and Illustrations
(1934).
  Literally the only support that the Court adduces for its
position is 403 of the Restatement (Third) of Foreign
Relations Law-or more precisely Comment e to that
provision, which states:
-Subsection (3) [which says that a state should defer
to another state if that state's interest is clearly
greater] applies only when one state requires what
another prohibits, or where compliance with the
regulations of two states exercising jurisdiction
consistently with this section is otherwise impossible.
It does not apply where a person subject to regulation
by two states can comply with the laws of both . . . .-
The Court has completely misinterpreted this provision.
Subsection (3) of 403 (requiring one State to defer to
another in the limited circumstances just described) comes
into play only after subsection (1) of 403 has been
complied with-i.e., after it has been determined that the
exercise of jurisdiction by both of the two states is not
-unreasonable.-  That prior question is answered by
applying the factors (inter alia) set forth in subsection (2)
of 403, that is, precisely the factors that I have
discussed in text and that the Court rejects.
                  *   *   *
  I would reverse the judgment of the Court of Appeals
on this issue, and remand to the District Court with
instructions to dismiss for failure to state a claim on the
three counts at issue in No. 91-1128.