U.S. Supreme Court

Private civil RICO plaintiffs can't sue based on overseas injuries, Supreme Court rules

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The law allowing civil suits by private plaintiffs based on racketeering activity does not reach injuries to business or property suffered outside the United States, the U.S. Supreme Court has ruled.

Civil RICO plaintiffs must allege and prove a domestic injury to their business or property, the court ruled on Monday in a 4-3 decision (PDF). Justice Sonia Sotomayor did not participate in the case.

The decision tosses civil RICO claims against RJR Nabisco in a suit filed in Brooklyn federal court by the European Union and 26 member states. The plaintiffs had claimed the company participated in a scheme to launder the proceeds of illegal drug sales in Europe that was carried out through the sale of black-market cigarettes.

Justice Samuel A. Alito Jr. wrote the majority decision, which was joined in full by Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy and Clarence Thomas. Justice Sonia Sotomayor did not participate in the decision.

The civil RICO statute does not provide a clear indication that Congress intended to create a private right of action for injuries suffered outside of the United States, Alito said.

Justices Ruth Bader Ginsburg, Stephen G. Breyer and Elena Kagan joined a portion of Alito’s decision that said RICO violations pursued by the government may be based on overseas conduct, as long as the offenses violate a predicate statute with an extraterritorial reach. An example would be violations based on a pattern of overseas killings of Americans, which would violate the predicate law barring the killing of a U.S. national outside the United States.

Ginsburg didn’t see a reason for the distinction with regard to private civil plaintiffs. Her dissent argued that a private plaintiff should also be able to sue for a civil RICO violation that is based on violation of a law that Congress intended to have an overseas reach.

The case is RJR Nabisco Inc. v. European Community.

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