RJR Nabisco, Inc. v. European Cmty.

579 U.S. 325, 136 S. Ct. 2090, 195 L. Ed. 2d 476, 26 Fla. L. Weekly Fed. S 263, 84 U.S.L.W. 4450, 2016 U.S. LEXIS 3925
Supreme Court of the United States·Decided June 20, 2016·No. No. 15–138.·Published·Cited by 282 cases

Opinion

Justice ALITOdelivered the opinion of the Court.

The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968, created four new criminal offenses involving the activities of organized criminal groups in relation to an enterprise. §§ 1962(a)-(d). RICO also created a new civil cause of action for "[a]ny person injured in his business or property by reason of a violation" of those prohibitions. § 1964(c). We are asked to decide whether RICO applies extraterritorially-that is, to events occurring and injuries suffered outside the United States.

I

A

RICO is founded on the concept of racketeering activity. The statute defines "racketeering activity" to encompass dozens of state and federal offenses, known in RICO parlance as predicates. These predicates include any act "indictable" under specified federal statutes, §§ 1961(1)(B)-(C), (E)-(G), as well as certain crimes "chargeable" under state law, § 1961(1)(A), and any offense involving bankruptcy or securities fraud or drug-related activity that is "punishable" under federal law, § 1961(1)(D). A predicate offense implicates RICO when it is part of a "pattern of racketeering activity"-a series *2097of related predicates that together demonstrate the existence or threat of continued criminal activity. H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989); see § 1961(5)(specifying that a "pattern of racketeering activity" requires at least two predicates committed within 10 years of each other).

RICO's § 1962sets forth four specific prohibitions aimed at different ways in which a pattern of racketeering activity may be used to infiltrate, control, or operate "a[n] enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce." These prohibitions can be summarized as follows. Section 1962(a)makes it unlawful to invest income derived from a pattern of racketeering activity in an enterprise. Section 1962(b)makes it unlawful to acquire or maintain an interest in an enterprise through a pattern of racketeering activity. Section 1962(c)makes it unlawful for a person employed by or associated with an enterprise to conduct the enterprise's affairs through a pattern of racketeering activity. Finally, § 1962(d)makes it unlawful to conspire to violate any of the other three prohibitions.1

Violations of § 1962are subject to criminal penalties, § 1963(a), and civil proceedings to enforce those prohibitions may be brought by the Attorney General, §§ 1964(a)-(b). Separately, RICO creates a private civil cause of action that allows "[a]ny person injured in his business or property by reason of a violation of section 1962" to sue in federal district court and recover treble damages, costs, and attorney's fees. § 1964(c).2

*2098B

This case arises from allegations that petitioners-RJR Nabisco and numerous related entities (collectively RJR)-participated in a global money-laundering scheme in association with various organized crime groups. Respondents-the European Community and 26 of its member states-first sued RJR in the Eastern District of New York in 2000, alleging that RJR had violated RICO. Over the past 16 years, the resulting litigation (spread over at least three separate actions, with this case the lone survivor) has seen multiple complaints and multiple trips up and down the federal court system. See 2011 WL 843957, *1-*2 (E.D.N.Y., Mar. 8, 2011)(tracing the procedural history through the District Court's dismissal of the present complaint). In the interest of brevity, we confine our discussion to the operative complaint and its journey to this Court.

Greatly simplified, the complaint alleges a scheme in which Colombian and Russian drug traffickers smuggled narcotics into Europe and sold the drugs for euros that-through a series of transactions involving black-market money brokers, cigarette importers, and wholesalers-were used to pay for large shipments of RJR cigarettes into Europe. In other variations of this scheme, RJR allegedly dealt directly with drug traffickers and money launderers in South America and sold cigarettes to Iraq in violation of international sanctions. RJR is also said to have acquired Brown & Williamson Tobacco Corporation for the purpose of expanding these illegal activities.

The complaint alleges that RJR engaged in a pattern of racketeering activity consisting of numerous acts of money laundering, material support to foreign terrorist organizations, mail fraud, wire fraud, and violations of the Travel Act. RJR, in concert with the other participants in the scheme, allegedly formed an association in fact that was engaged in interstate and foreign commerce, and therefore constituted a RICO enterprise that the complaint dubs the "RJR Money-Laundering Enterprise." App. to Pet. for Cert. 238a, Complaint ¶ 158; see § 1961(4)(defining an enterprise to include "any union or group of individuals associated in fact although not a legal entity").

Putting these pieces together, the complaint alleges that RJR violated each of RICO's prohibitions. RJR allegedly used income derived from the pattern of racketeering to invest in, acquire an interest in, and operate the RJR Money-Laundering Enterprise in violation of § 1962(a); acquired and maintained control of the enterprise through the pattern of racketeering in violation of § 1962(b); operated the enterprise through the pattern of racketeering in violation of § 1962(c); and conspired with other participants in the scheme in violation of § 1962(d).3 These violations allegedly harmed respondents in various ways, including through competitive harm to their state-owned cigarette businesses, lost tax revenue from black-market cigarette sales, harm to European financial institutions, currency instability, and increased law enforcement costs.4

*2099RJR moved to dismiss the complaint, arguing that RICO does not apply to racketeering activity occurring outside U.S. territory or to foreign enterprises. The District Court agreed and dismissed the RICO claims as impermissibly extraterritorial. 2011 WL 843957, at *7.

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RJR Nabisco, Inc. v. European Cmty., 579 U.S. 325, 136 S. Ct. 2090, 195 L. Ed. 2d 476, 26 Fla. L. Weekly Fed. S 263, 84 U.S.L.W. 4450, 2016 U.S. LEXIS 3925 (2016).

579 U.S. 325 (RJR Nabisco, Inc. v. European Cmty.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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