State Presumptions Against Extraterritoriality Apply to State Statutes
July 2, 2025
At TLB, we write a lot about extraterritoriality in general and about the federal presumption against extraterritoriality in particular. For the last three decades, the federal presumption has been the principal tool that courts have used to determine the geographic scope of federal statutes. But what if the statute in question is a state statute?
In a recent decision, Renel v. Drexel Chemical Co., the Tennessee Court of Appeals made clear that the federal presumption against extraterritoriality does not apply to Tennessee statutes, which are instead interpreted according to Tennessee’s own canons of statutory interpretation. The court went on to apply a state presumption against extraterritoriality that differs from the federal presumption, holding that the Tennessee Products Liability Act (TPLA) did not apply to claims by sugar cane workers in the Dominican Republic who were allegedly injured by toxic herbicides.
Background
The 165 plaintiffs in this case work in the sugar cane industry in the Dominican Republic, where they were exposed to toxic herbicides. They sued in Tennessee state court alleging that Drexel Chemical Co., the Tennessee manufacturer, violated the TPLA by selling herbicides that it knew or should have known were defective and by failing to warn of the herbicides’ defective condition.
The trial court held that the TPLA does not apply extraterritorially using the two-step framework articulated by the U.S. Supreme Court in RJR Nabisco, Inc. v. European Community (2016). At step one of this framework, a court looks for a clear indication of extraterritoriality. If it finds one, the court applies the statute as Congress indicated. If there is no clear indication of extraterritoriality at step one, then, at step two, a court determines whether the case involves a domestic application of the statute by looking to see whether the conduct relevant to the statute’s focus occurred in the United States.
On appeal, both sides assumed that RJR Nabisco’s two-step framework applied. The plaintiffs conceded that the TPLA has no clear indication of extraterritoriality. With respect to step two, however, the plaintiffs argued that the TPLA’s “prudent manufacturer” test focuses on the location of the manufacturer without regard to where injuries are suffered.
State Presumptions Apply to State Statutes
Writing for the court, Judge Carma Dennis McGee held that the trial court was wrong to apply the federal presumption against extraterritoriality. Quoting my 2020 article Presumptions Against Extraterritoriality in State Law, Judge McGee observed that “the federal presumption does not apply to state statutes, the scope of which is a question of state law.” She cited Maggie Gardner, John Parry, the late Jeff Meyer, and the Restatement (Fourth) of Foreign Relations Law (2018) to the same effect. The federal presumption is a presumption about the intent of the U.S. Congress and therefore inapplicable to statutes passed by state legislature. In my 2020 article, I surveyed all 50 states, finding that some states had adopted a presumption against extraterritoriality, that other states had rejected a presumption against extraterritoriality, and that in still other states the status of the presumption was unclear because the state supreme court had not applied such a presumption for at least 50 years.
I classified Tennessee as one of the states that had rejected a presumption against extraterritoriality based on the Tennessee Supreme Court’s decision in Freeman Industries LLC v. Eastman Chemical Co. (2005). There, the state supreme court interpreted Tennessee’s antitrust statute to apply to conduct outside the state that caused substantial effects inside the state, relying on the purpose of the statute rather than any presumption about extraterritoriality. Judge McGee disagreed with my reasoning in a footnote. “Nothing in the opinion mentions extraterritoriality,” she wrote, declining to read silence as a departure from older Tennessee Supreme Court decisions applying a presumption such as Snyder v. Yates (1904).
“Thus,” Judge McGee continued, “the pivotal question in this case, applying Tennessee law, is whether the statute itself, the Tennessee Products Liability Act, purports to apply extraterritorially.” This is essentially the same question as RJR Nabisco’s first step, and plaintiffs had conceded that the TPLA had no clear indication of extraterritoriality. Plaintiffs’ step-two argument about the focus of the TPLA was “irrelevant,” the court concluded, because Tennessee’s presumption against extraterritoriality has no second step.
Judge J. Steven Stafford dissented. Although the plaintiffs framed their argument in terms of extraterritoriality, he noted, their fundamental claim was that the TPLA should be applied domestically to conduct in Tennessee. The “pivotal question,” Judge Stafford wrote, “is not whether the TPLA can be applied extraterritorially but whether there is a basis in the record for a domestic application of the TPLA—that is, whether sufficient conduct occurred in Tennessee that a claim can survive notwithstanding that the TPLA is not extraterritorial.”
Observations
While acknowledging that Judge McGee knows far more about Tennessee law than I do, I must say that this decision does not change my classification of Tennessee as a state that rejects a presumption against extraterritoriality. For classification, my article relied only on decisions from a state’s highest court. If I were a judge, I would find a state supreme court’s approach in 2005 more instructive than decisions from a century earlier, when territorial conceptions of jurisdiction were more deeply engrained than they are today. Renel may call my classification of Tennessee into doubt, but only Tennessee’s Supreme Court can answer the question for certain.
It is also worth noting that determining the geographic scope of a state statute does not necessarily end the analysis. Even if a state statute applies in a cross-border case, courts will typically apply the forum’s choice-of-law rules to decide whether the state statute or the law of another jurisdiction governs. This is quite different from the practice with respect to federal law, to which state choice-of-law rules do not apply.
For torts, Tennessee follows the “most significant relationship” approach of the Restatement (Second) of Conflicts. (A table listing choice-of-law methodologies for all the states is available here.) Under the Restatement (Second)’s approach, the law of the place where the injury occurred is presumed to govern—that is, the law of the Dominican Republic. The trial court gave this as an additional reason to dismiss the TPLA claims, while the court of appeals did not address the question.
Conclusion
The Renel decision is a good reminder that state rules of statutory interpretation apply to state statutes. This is a principle that federal courts sometimes forget. The decision is also a reminder that state presumptions against extraterritoriality may differ from the federal presumption—for example by having only one step not two. Finally, one must not forget that state choice-of-law rules apply to state statutes but not to federal statutes. The bottom line is that, with respect to extraterritoriality, courts cannot treat state law the same as they would treat federal law.