Civil R.I.C.O.: How Far Does the Law Reach?

The Racketeer Influenced and Corrupt Organizations Act of 1970 (“RICO”) created a civil cause of action for violations of its provisions. To state a claim, a plaintiff must allege: “(1) conduct, (2) of an enterprise, (3) through a pattern, (4) of racketeering activity (known as ‘predicate acts’), (5) causing injury to the plaintiff’s ‘business or property’ by the conduct constituting the violation.”[1] But how far does the law reach? Does it encompass injuries suffered both inside and outside of the United States? The Supreme Court ruled on June 20, 2016, that causes of action based on civil RICO violations due to racketeering activity does not extend to business or property injuries and damages suffered outside the United States.[2] In RJR Nabisco, Inc., et al. v. European Community et al., the European Union and 26 of its member states alleged that RJR Nabisco and related entities participated in a global money-laundering scheme in association with various organized crime groups. In this alleged scheme, drug traffickers smuggled narcotics into Europe and sold them for euros that—through transactions involving black-market money brokers, cigarette importers, and wholesalers—were used to pay for large shipments of RJR cigarettes into Europe.[3]

The District Court ruled that RICO does not apply to racketeering activity occurring outside the United States and territories or to foreign enterprises, and granted RJR’s motion to dismiss. The Second Circuit reversed the District Court’s ruling, concluding that RICO applies extraterritorially under circumstances present in the case.

However, in reversing the Second Circuit with a 4-3 decision, the Supreme Court found that in order to obtain relief in the United States under 18 U.S.C. § 1962 (the RICO statute), the plaintiffs must show that their business or property has been injured inside the United States.[4]

Civil RICO laws are considerably complex, and the case law surrounding the law is not always clear. If you or someone you know is faced with or would like to bring a civil RICO claim, make sure to contact a competent attorney who understands the RICO laws.

—By Ara M. Baghdassarian, Esq., Barnes Law

Ara is an associate attorney with Barnes Law, licensed to practice law in California. 

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] http://www3.ce9.uscourts.gov/jury-instructions/node/299 (citing Living Designs, Inc. v. E.I. Dupont de Numours & Co., 431 F.3d 353, 361 (9th Cir.2005)).

[2] RJR Nabisco, INc., et al. v. European Community et al.; http://www.supremecourt.gov/opinions/15pdf/15-138_5866.pdf

[3] Id.

[4] Id.