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Director, Center for Supreme Court AdvocacyNational Association of Attorneys General
May 9, 2024 | Volume 31, Issue 11
This Report summarizes cases granted review on April 19 and 26, 2024 (Part I).
Case Granted Review
Medical Marijuana, Inc. v. Horn, 23-365.
At issue is whether economic harms resulting from personal injuries can be injuries to “business or property by reason of” the defendant’s acts for purposes of a civil treble-damages action under the Racketeer Influenced and Corrupt Organizations Act (RICO). Title 18 U.S.C. §1964(c), known as civil RICO, authorizes “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter [to] sue therefor in any appropriate United States district court[.]” Respondent Douglas Horn was a commercial truck driver subject to random drug testing. Following a car accident, he investigated natural remedies for pain and discovered petitioners’ CBD product, Dixie X, which was advertised as tetrahydrocannabinol (THC) free. But after consuming the product, Horn failed his employer’s drug tests and lost his job. Suspecting that Dixie X was to blame for his positive test, he sent some to an independent lab to test the product, which confirmed the product contained THC. Horn filed a nine-count complaint in federal court alleging eight New York state-law claims and one RICO claim. The district court granted summary judgment to petitioners on the civil RICO claim, finding that Horn’s lost earnings stemmed from a personal injury, the bodily invasion of THC, and therefore did not constitute an injury to “business or property” that is recoverable in a civil RICO action. The Second Circuit reversed. 80 F.4th 130.
The Second Circuit stated that the district court improperly relied on the Sixth Circuit’s narrow interpretation of the civil RICO statute. Instead, the Second Circuit found that the term “business” encompasses “employment,” and thus Horn suffered an injury as contemplated by the civil RICO statute. The Second Circuit explicitly rejected what it termed “the antecedent-personal-injury bar,” finding that there is no textual reason to extend RICO’s exclusion of recovery for personal injury to an injury to a “business or property” to which a personal injury was a precursor. By doing so, the Second Circuit joined the Ninth Circuit in finding that civil RICO permits recovery for injuries derivative of a personal injury.
Petitioners take up the Sixth Circuit’s “antecedent-personal-injury bar,” which they allege is also applied in the Seventh and Eleventh Circuits. In those circuits, civil RICO’s “business or property” requirement firmly excludes economic harms arising from personal injuries. Petitioners argue that this limit is supported by Congress’s choice to limit civil RICO to “business or property” injuries. In petitioners’ view, “[p]ersonal injuries are the antithesis of injuries to business or property,” and “[a]ny other reading would deprive RICO’s ‘business or property’ requirement of ‘restrictive significance.’” And petitioners insist that “[i]f plaintiffs suffering any monetary harm can sue under civil RICO, . . . [c]ountless state-law tort claims could be repleaded as federal treble-damages actions.” In short, maintain petitioners, “[e]conomic harms from personal injuries are part of the personal injury and thus not injuries to ‘business or property’ covered by RICO.”
Horn argues that the circuit split is illusory and that no circuit has adopted a rule that bars recovery in a civil RICO claim because a personal injury occurred in the chain of causation between the prohibited racketeering activity and an otherwise compensable business or property injury. Further, he argues that petitioners’ concerns about opening floodgates are unfounded because a cause of action under §1964(c) is comprised of “three elements: (1) an injury to business or property (2) by reason of (3) a violation of Section 1962.” Defendants must commit “at least two crimes enumerated in Section 1961 within a ten-year period”; and the “by reason of” language “imposes a proximate-causation requirement more stringent than the common-law doctrine.”
NAAG Center for Supreme Court Advocacy Staff
- Dan Schweitzer, Director and Chief Counsel
- Melissa Patterson, Supreme Court Fellow
- Amanda Schwartz, Supreme Court Fellow
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