RESPONDENT: The European Community, et al.
LOCATION: United States District Court for the Eastern District of New York
DOCKET NO.: 15-138
DECIDED BY: Roberts Court (2016- )
LOWER COURT: United States Court of Appeals for the Second Circuit
CITATION: 579 US (2016)
GRANTED: Oct 01, 2015
ARGUED: Mar 21, 2016
DECIDED: Jun 20, 2016
David C. Frederick - for the respondents
Elaine J. Goldenberg - Assistant to the Solicitor General, for the United States as amicus curiae, in support of vacatur
Gregory G. Katsas - for the petitioners
Facts of the case
The European Community and 26 of its member states sued RJR Nabisco (RJR) and alleged that RJR directed, managed, and controlled a global money-laundering enterprise in violation of the Racketeer Influenced and Corrupt Organizations (RICO) statute. The European Community claimed that Colombian and Russian criminal organizations imported illegal drugs into European countries, where they produced revenue in euros that was then laundered back into the currency of the criminal organizations’ home countries while the euros were sold to cigarette importers at a discounted rate to purchase RJR’s cigarettes. The lawsuit alleged that RJR controlled this operation and in the course of executing it committed various violations of the RICO statute as well as violations of New York state law. The defendants moved to dismiss, and the district court granted the motion based on the presumption the U.S. statutes did not apply extraterritorially absent express Congressional intent. The U.S. Court of Appeals for the Second Circuit reversed and held that claims under the RICO statute can apply extraterritorially when the RICO claim is a violation of a predicate statute that Congress clearly intended to apply extraterritorially.
Can the Racketeer Influenced Corrupt Organizations (RICO) statute apply extraterritorially?
Media for RJR Nabisco v. The European CommunityAudio Transcription for Oral Argument - March 21, 2016 in RJR Nabisco v. The European Community
Audio Transcription for Opinion Announcement - June 20, 2016 in RJR Nabisco v. The European Community
John G. Roberts, Jr.:
Justice Alito also has our opinion this morning in case 15-138, RJR Nabisco versus the European Community.
Samuel A. Alito, Jr.:
This case is somewhat more complicated.
In this case, we decide whether the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO applies extraterritorially, that is to conduct and injuries occurring outside the United States.
RICO is concerned with racketeering activity, as a term of art which is defined to include various federal and state crimes known as predicates.
In 18 USC §1962 RICO creates four criminal offenses that involved a pattern, that's another term of art of racketeering activity in connection with an enterprise still another term of art that is engaged in interstate commerce.
Specifically subsection (a) of §1962 makes it illegal to invest income from the pattern of racketeering activity in an enterprise.
Subsection (b) makes it illegal to acquire an interest in an enterprise through a pattern of racketeering activity.
Subsection (c) makes it illegal to conduct an enterprise's affairs through a pattern of racketeering activity and subsection (d) makes it illegal to conspire to violate subsections (a), (b) and (c).
Another provision, §1964(c), creates a cause of action for persons injured in their business or property by violation of the criminal prohibitions in §1962.
In this case respondents, the European Community and 26 European countries sued RJR Nabisco under §1964(c), the provision creating a private civil cause of action alleging that RJR violated each of §1962's criminal prohibitions.
According to the complaint, RJR participated in a global money laundering scheme that involved, among other things, smuggling drugs into Europe and using the proceeds to buy RJR cigarettes.
As part of this scheme, RJR allegedly engaged in various predicate acts of racketeering both here and abroad.
RJR moved to dismiss arguing that the lawsuit involves an impermissible extraterritorial application of RICO.
The district court agreed and dismissed the complaint.
Second Circuit reinstated the claims holding that RICO applies extraterritorially to the same extent as the predicates that underlie the alleged RICO violation.
The Second Circuit also rejected RJR's argument that §1964(c) requires the plaintiff to allege a domestic injury.
We granted RJR's petition for certiorari.
In addressing these questions, we apply a rule of statutory construction known as the presumption against extraterritoriality.
This means that unless Congress clearly directs that a statute applies outside the United States we will interpret the statute to have only domestic application.
Drawing from two of our recent cases Morrison versus National Australia Bank and Kiobel versus Royal Dutch Petroleum, we follow a two-step framework for analyzing extraterritoriality issues.
At step one we ask whether the presumption against extraterritoriality has been rebutted, in other words, whether the statute gives a clear indication that it applies outside the United States.
If the presumption is not rebutted we move to step two where we examine the statute's focus to determine whether the case involves a domestic application of the statute.
But if the presumption is rebutted, if the statute clearly indicates that it applies outside the United States we do not have to determine the statute's focus, instead we simply apply the statute extraterritorially subject to any limits that Congress has imposed on its foreign application.
With this in mind we first consider RICO's substantive prohibitions in §1962.
We find that the presumption against extraterritoriality has been rebutted with respect to certain applications of that provision.
RICO defines racketeering activity to include a number of predicates statutes that expressly apply to at least some foreign conduct.
Here is one example, that is RICO predicate if a United States person engages in monetary transactions outside the United States involving criminally derived property.
Here is another.
It is a RICO predicate to take a US national hostage outside the United States for the purpose of compelling action by the US government, and they are others.
We conclude that Congress' incorporation of these statutes into RICO gives a clear indication that §1962 applies to foreign racketeering activity, but we emphasize this is true only to the extent that the predicates alleged in a particular case themselves apply extraterritorially.