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RJR Nabisco, Inc. v. European Cmty

Justia Summary

The Racketeer Influenced and Corrupt Organizations Act (RICO), makes it a crime to invest income derived from a pattern of racketeering activity in an enterprise “which is engaged in, or the activities of which affect, interstate or foreign commerce,” 18 U.S.C. 1962(a); to acquire or maintain an interest in an enterprise through a pattern of racketeering activity, 1962(b); to conduct an enterprise’s affairs through a pattern of racketeering activity, 1962(c); and to conspire to violate any of the other three prohibitions, 1962(d). Section 1964(c) creates a private right of action. The European Community and 26 member states filed a RICO civil suit, alleging that RJR participated in a global money-laundering scheme in association with organized crime groups, under which drug traffickers smuggled narcotics into Europe and sold them for euros that—through black-market money brokers, cigarette importers, and wholesalers—were used to pay for large shipments of RJR cigarettes into Europe. The Second Circuit reversed dismissal of the claims, concluding that RICO permits recovery for a foreign injury caused by the violation of a predicate statute that applies extraterritorially. The Supreme Court reversed, first noting the presumption against extraterritoriality. While allegations under Sections 1962 (b) and (c) do not involve an impermissibly extraterritorial application of RICO, Section 1964(c), creating private remedies, does not overcome the presumption against extraterritoriality. Allowing recovery for foreign injuries in a civil RICO action could create a danger of international friction that militates against recognizing foreign-injury claims without clear direction from Congress that is not present in Section 1964(c).

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