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RJR Nabisco, Inc. v. The European Community: Supreme Court Limits RICO's Extraterritorial Reach

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On June 20, 2016, the Supreme Court handed down its decision in RJR Nabisco, Inc. v. The European Community, 579 U.S. ___ (2016), providing greater clarity as to when and how the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1964, applies to foreign conduct. The Court held that private plaintiffs who have not suffered an injury inside the United States may not sue under RICO. The Court also held that RICO applies to some, but not all, predicate acts committed abroad, depending on whether the plain text of the predicate act clearly indicates a congressional intent for it to apply extraterritorially. As a result of this holding, lower courts are now left with the task of interpreting which predicate acts apply extraterritorially.

The European Community alleged a scheme in which foreign drug traffickers smuggled and sold narcotics in Europe, then used the proceeds to import and sell RJR cigarettes in Europe. It filed suit under 18 U.S.C. § 1964(c), which allows private parties to bring RICO claims.

The Court considered if this right of private action could extend to the European Community’s injuries since those injuries occurred outside of the United States. To do so, the Court applied the presumption against extraterritoriality to § 1964(c), examining the plain text of the statute for any evidence of congressional intent for it to apply extraterritorially. The Court found that it did not, instead holding that the language of the statute was too general to find such intent. Section 1964(c) states in relevant part that “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court . . . .” The Court found that neither “any person” nor “business or property” indicated an intent for the statute to apply extraterritorially, but it shed little light on how it reached this conclusion, other than noting that the language was “insufficient.” Regardless, the Court is now clear: a private party must assert a domestic injury in order to sue under RICO.

Separate from its inquiry into § 1964(c), the Court also considered if RICO’s prohibitions against conduct could apply to acts committed abroad. The Court held that whether or not a predicate act can occur extraterritorially and fall within RICO’s reach again depends on the application of the presumption against extraterritoriality. This means that for each predicate act committed abroad, the Court must examine whether the plain text of that predicate act indicates a congressional intent to apply extraterritorially.

The Court provided some examples where the text of the predicate act clearly indicates such an intent, including prohibitions against: engaging in monetary transactions in criminally derived property, § 1957(d)(2); the assassination of Government officials, §§ 351(i), 1751(k); killing a national of the United States while such national is outside the United States, § 2332(a); and hostage taking, § 1203(b). However, its silence as to the vast majority of other predicate acts indicates that it will be up to the lower courts to decide which predicate acts apply extraterritorially and which do not.

This decision greatly clarifies RICO’s extraterritorial application, but open questions remain. While the Court has expressly identified some predicate acts that apply extraterritorially, it remains to be seen if other predicate acts will apply based on lower court interpretation. Given its decree that predicate acts must “manifest[] an unmistakable congressional intent to apply extraterritorially,” the Court seems to suggest that individual predicate acts must provide a strong textual foundation for extraterritorial application and that congressional intent should not be liberally presumed.

*Emily Wilson, a Baker Botts law clerk, assisted in the preparation of this article.


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