In Medical Marijuana, Inc. v. Horn, the Supreme Court by a 5-4 majority, allowed a RICO claim stemming from a “personal injury” to proceed. The dispute centers around the meaning of “business or property” in RICO’s civil damage provision, 18 U.S.C. sec. 1964(c). The Sixth, Seventh and Eleventh Circuits had interpreted this to exclude claims for damages related to a “personal injury.” Personal injuries, as every lawyer knows, are physical injuries causing pain and suffering to the plaintiff. Everyone, including the five justices that voted to allow Mr. Horn’s RICO case to proceed, agrees the phrase excludes some claims from being brought under RICO. But the disagreement centers around other damages that follow a personal injury. Mr. Horn suffered from a back injury and sought to relieve his pain by using a product sold by Medical Marijuana containing CBD, a chemical compound found in the cannabis plant. It does not have the mind-altering qualities of THC, also found in cannabis. He relied on the company’s representations the product did not contain THC. However, when his employer gave him a random drug test, he tested positive for THC and was fired. Contending he was the victim of mail fraud, he sued the company under RICO for his lost wages. He lost in the district court, but the Second Circuit reversed, which held his damage from the fraud was not caused by a personal injury.
In affirming the Second Circuit the Supreme Court rejected Medical Marijuana’s argument that the phrase “injured in his business or property” is a term of art borrowed from the Clayton Antitrust Act of 1914 with a “specialized meaning” that precludes not only personal injuries but any damage derived from a personal injury. Thus, under this view, in enacting RICO Congress was limiting recovovery to a certain kind of “business tort” as opposed to a “personal injury tort.” But the majority relied upon the Court’s 1985 decision in Sedima, in which the antitrust analogy was limited because Congress did not intend to impose the complex “antitrust injury” requirement to RICO. Therefore, Congress did not intend the phrase to have all the limitations it does in the Clayton Act. So “injured” just means “harmed.”
The dissent, written by Justice Kavanaugh, would categorically exclude any damages stemming from a personal injury, even the loss of wages and medical expenses, which are not the core pain and suffering. He traces tort law back to Blackstone (1768) to show how the common law distinguished between “business injury” and “personal injury” and those categories made it into the Clayton Act and therefore RICO.
Yet I find this “business” analysis hard to reconcile with the ability of persons, not just businesses, to be able to bring civil RICO cases premised upon mail and wire fraud, the most commonly used predicate acts. How is lying to a consumer, which is the basis of innumerable RICO cases, a “business tort?” And how can the strict adherence to the Clayton Act be intended if the Court rejected the “antitrust injury” requirement back in its very first civil RICO case in 1985?
I do not foresee a significant increase in RICO filings for personal injury-related cases of this type. RICO is a hard statute to use, and there are too many requirements to deter the typical personal injury plaintiffs lawyer, who is afraid of federal courts, from trying to use it. In short, RICO has dodged another bullet.