European Community v. RJR Nabisco, Inc.
783 F.3d 123
2d Cir.2015Background
- This appeal concerns whether RICO (18 U.S.C. §§ 1961 et seq.) can reach conduct abroad when the alleged predicate offenses themselves have extraterritorial reach.
- The underlying civil suit (European Community v. RJR Nabisco) alleged an international scheme involving money‑laundering and sale of cigarettes, asserting RICO predicates that include statutes Congress made extraterritorial (many added by the PATRIOT Act).
- A panel of the Second Circuit held RICO applies extraterritorially to the extent that the pleaded predicate statutes themselves reach extraterritorially.
- A vote to rehear en banc was requested and denied; multiple judges wrote separate opinions: Judge Hall concurred in denial, defending the panel’s predicate‑based approach; several judges (Jacobs, Cabranes, Raggi, Lynch) dissented from the denial, arguing the panel conflicts with Morrison and Norex and mischaracterizes RICO’s focus.
- Central practical concern: whether private civil RICO suits may be used to pursue treble damages for foreign conduct whenever any pleaded predicate crime is extraterritorial, or whether Morrison’s presumption against extraterritoriality and Norex limit RICO’s reach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RICO can apply extraterritorially when a pleaded predicate statute has extraterritorial reach | RICO should reach foreign conduct to the extent predicates incorporated into RICO are extraterritorial | RICO does not itself have extraterritorial reach; predicates do not convert RICO into an extraterritorial statute | Panel: RICO applies extraterritorially to the extent that extraterritorial predicates are the basis of liability (affirmed by denial of en banc rehearing) |
| Proper test for domestic vs extraterritorial application of RICO (focus inquiry) | RICO’s application can be determined by whether pleaded predicates are extraterritorial | RICO’s focus is the enterprise/pattern; Morrison requires looking to statutory focus, not individual predicates | Dissenters: panel erred by making individual predicates dispositive; court needs en banc clarification (not adopted) |
| Interaction with Morrison’s presumption against extraterritoriality | Inclusion of extraterritorial predicates is a clear congressional expression overcoming the presumption | Morrison requires a clear affirmative intent; predicates alone do not clearly show Congress intended RICO itself to reach abroad | Panel: predicates suffice to show congressional intent for limited extraterritorial application; dissenters disagree |
| Consistency with Norex precedent | RJR Nabisco: Norex is ambiguous and does not bar RICO’s limited extraterritorial application when predicates reach abroad | Norex (interpreting Morrison) concluded RICO is silent and lacks extraterritorial reach; panel conflicts with Norex | Denial of rehearing leaves tension between RJR Nabisco and Norex unresolved; several judges call for en banc review |
Key Cases Cited
- Morrison v. National Australia Bank Ltd., 561 U.S. 247 (U.S. 2010) (presumption against extraterritoriality; statute applies abroad only with clear congressional intent)
- Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29 (2d Cir. 2010) (held RICO is silent as to extraterritorial application and relied on Morrison)
- Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (U.S. 2013) (extraterritoriality principle as applied to the Alien Tort Statute; relevant to presumption analysis)
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (U.S. 1985) (RICO’s civil remedy and the statute’s distinct object beyond predicates)
- H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (U.S. 1989) (definition and requirements for a RICO ‘pattern’ of racketeering)
- Agency Holding Corp. v. Malley‑Duff & Assocs., 483 U.S. 143 (U.S. 1987) (RICO’s focus on pattern of racketeering as central to claims)