The coverage of the Supreme Court’s RJR Nabisco decision began with the statement that the company “won” its case or that the Court “threw out” the RICO claim against it. This is very misleading. The Court sensibly allowed RICO to apply extraterritorially, that is to foreign conduct, to the extent Congress provided for it. It could have taken a harder line and said 1964(c), RICO’s civil damages remedy, does not expressly provide for extraterritorial application, so there shall be none. No justice took that position. That would have been quite hostile to RICO. It also could be defensible under the Court’s Morrison decision from six years ago, which demanded that kind of hostility to the interpretation of all statutes which might apply abroad.
The Supreme Court has had several opportunities to quash civil RICO. It could have done so way back in 1985 and held a prior criminal conviction is needed before a civil action can be brought. It could have done so in 1989 by holding some connection to “organized crime” is required before a civil action can be brought. It could have done so in 2001 by holding the owner of a business is not “distinct” from the business even if he is operating in the “scope of his authority.” It could have done so in 2006 by holding that corporations cannot be part of an association-in-fact enterprise. And it could have done so this term by slamming the door on any extraterritorial application of the law. The Supreme Court has consistently taken a cautiously pro-plaintiff view of civil RICO. It recognizes Congress enacted 1964 for a reason. It wanted civil lawsuits to be brought. But there are reasonable limits, like proximate causation, standing, and the aforementioned Morrison decision.
Plaintiffs can assert extraterritorial conduct if the specific predicate act provides for it. Mail and wire fraud, the most commonly used RICO predicates do not. So there should be no new proliferation of civil RICO cases against foreigners. But others, like money laundering, do apply abroad. There may be an uptick in RICO cases brought be U.S. plaintiffs against foreigners where the RICO violations are atypical and involve these newer predicate acts which are extraterritorial.
On the other hand, the four most “conservative” justices imposed a “domestic injury” requirement in 1964. This shows concern, if not outright hostility, with the use of civil RICO. These justices do not want foreigners bringing RICO suits against American companies in U.S. courts. The Supreme Court is generally against any interpretation of a law that will expand the amount of civil litigation beyond what was foreseen in the enactment of a law. There is nothing in the history of RICO to indicate Congress believed it would allow such cases to be brought. A strict textualist would reject the imposition of a “domestic injury” requirement. But none of the justices are strict textualists. Those that adhere to that interpretation in some cases were nowhere to be found when the implication would be expansive. The Court has always been reasonable with RICO, and this decision is no exception.