Tesser Ryan Blog

Supreme Court decision on private civil RICO actions brought for conduct occurring outside of the U.S.

by Managing Partner Gregory J. Ryan

The Supreme Court has addressed the viability of civil Racketeer Influenced and Corrupt Organization Act (RICO) actions for conduct which took place outside of the United States. In ruling on the case brought by the European Union against R.J. Nabisco over fifteen years ago, the Supreme Court ruled that the RICO statute was one of the few Federal laws which may be applied to foreign conduct. The Court then established a major qualification to this rule: although the RICO statute itself may apply to conduct that occurs outside the United States, a private plaintiff may not maintain a RICO action if the injury also occurred outside of the United States. To maintain an action and seek damages under RICO, a private plaintiff must establish that the foreign conduct resulted in injury within the United States.

In writing the majority opinion for a 4-3 Court (Justice Sotomayor did not participate because the case had been heard by the Second Circuit while she was on that court), Justice Alito wrote that the RICO statute overcame the presumption that a United States law should not apply outside of the country, stating that the “unique structure makes RICO the rare statute that clearly evidences extraterritorial effect despite lacking an express statement of extraterritoriality.” That portion of the decision was unanimous as all seven justices agreed with that analysis.

Justice Alito then stated that “something more” was necessary to allow for the application of the United States law to foreign conduct, and that was injury within the United States, which the Court found was missing in this case.

In order to now use the powerful RICO statute, which includes treble damages, against entities for foreign actions, a plaintiff must be able to show that the foreign conduct result in domestic injury.   The decision applies only to private causes of action, not actions brought by the United States Government.

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