RJR Nabisco, Inc. v. European Cmty.
136 S. Ct. 2090
| SCOTUS | 2016Background
- Plaintiffs: the European Community and 26 member states sued RJR Nabisco and related entities alleging a global money‑laundering and fraud scheme that used drug‑proceeds to buy RJR cigarettes and harmed European governments and institutions.
- Complaint alleges a RICO enterprise (an association‑in‑fact) and a pattern of racketeering comprising money‑laundering, material support to terrorists, mail and wire fraud, and Travel Act violations.
- District Court dismissed the RICO claims as impermissibly extraterritorial; the Second Circuit reversed, holding some RICO predicates have extraterritorial reach and that §1964(c) permits recovery for foreign injuries.
- The Supreme Court granted certiorari to resolve whether (1) RICO §1962 substantive prohibitions apply to foreign conduct and (2) the private civil remedy §1964(c) covers foreign injuries.
- Supreme Court: §1962(b) and (c) can reach foreign conduct to the extent the predicate statutes themselves have extraterritorial effect; §1964(c) does not permit private recovery for injuries suffered abroad, so private foreign‑injury RICO claims fail.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RICO §1962 applies extraterritorially to foreign conduct | RICO predicates include statutes that apply abroad, so §1962 should reach foreign racketeering | RICO’s text lacks an express extraterritorial provision; incorporation of predicates shouldn’t make RICO broadly extraterritorial | §1962(b) and (c) may apply to foreign conduct but only insofar as the underlying predicate statutes themselves apply extraterritorially; predicates that lack extraterritorial reach cannot support foreign predicates under RICO |
| Whether RICO requires a domestic enterprise (i.e., enterprise located in U.S.) | Plaintiffs: no domestic enterprise requirement; focus is on the pattern of racketeering and predicates | RJR: RICO’s “focus” is the enterprise being corrupted; Congress did not clearly authorize foreign enterprises | No independent domestic‑enterprise requirement; RICO covers foreign enterprises so long as the enterprise’s activities affect U.S. commerce in a significant way and predicates permit foreign application |
| Whether §1962(a) (investment of racketeering proceeds) applies to foreign proceeds or foreign use | Plaintiffs: §1962(a) should reach income derived from foreign racketeering when invested in the U.S. | RJR: §1962(a) may be limited to domestic uses of racketeering income | Court assumed without deciding that a domestic investment was pled and did not resolve the broader question; treated (a) as more complicated but not dispositive here |
| Whether private RICO remedy §1964(c) reaches injuries suffered abroad | Plaintiffs/Second Circuit: if §1962 applies abroad, §1964(c) should allow private recovery for foreign injuries caused by extraterritorial predicates | RJR/ U.S. Gov’t amicus: allowing private foreign‑injury suits risks international friction; presumption against extraterritoriality requires clear congressional intent | §1964(c) does not overcome the presumption against extraterritoriality; private plaintiffs must allege a domestic injury to business or property; foreign‑injury damages claims dismissed |
Key Cases Cited
- Microsoft Corp. v. AT & T Corp., 550 U.S. 437 (2007) (U.S. law generally governs domestically; extraterritoriality presumption explained)
- Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010) (two‑step extraterritoriality framework; identify clear congressional intent then, if none, ask whether application is a permissible domestic one by reference to the statute’s focus)
- Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013) (presumption against extraterritoriality applies to private causes of action; courts may not recognize extraterritorial causes of action absent clear congressional direction)
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) (private §1964(c) action is triggered by a §1962 violation; compensable injury ties to predicate acts forming the pattern)
- H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989) (pattern of racketeering requires relatedness and continuity)
- Pfizer Inc. v. Government of India, 434 U.S. 308 (1978) (Clayton Act §4 allows recovery for foreign injuries; Court explains why Clayton Act reasoning does not automatically import to RICO §1964(c))