In a decision earlier this year, the US Supreme Court held that plaintiffs bringing civil Racketeer Influenced and Corrupt Organizations Act (RICO) claims may be able to recover damages for business or property losses that stem from personal injuries.
The Supreme Court’s holding in Medical Marijuana, Inc., et al. v. Horn (Apr. 2, 2025, No. 23-365) potentially broadens the types of claims that plaintiffs may recover for under RICO, § 1964(c).
Civil RICO claims are attractive to plaintiffs because, if successful, they may recover treble damages and attorney’s fees, which may not otherwise be available under other statutes or from other types of claims. While some, including the dissenting Justices, expressed concern that the majority opinion would open the floodgates to plaintiffs bringing RICO claims in personal injury cases, the Court emphasized that fundamental elements of RICO claims, including its strict proximate cause standard, would balance against those fears.
What’s RICO Got To Do With It?
US Congress established RICO to help criminal prosecutors fight organized crime. The statute also offers a legal remedy for private individuals or entities harmed by organizations involved in racketeering activities such as mail and wire fraud. These “civil RICO claims” are limited to “[a]ny person injured in his business or property.” 18 U.S.C. § 1964(c). Before the Medical Marijuana, Inc. decision, however, it was unclear whether the plaintiffs could recover for injuries to business or property that derived from personal injuries. The Sixth, Seventh, and Eleventh Circuits held that RICO contains an “antecedent personal injury bar” and denied relief for economic losses stemming from personal injuries, while the Second and Ninth Circuits found there was no antecedent personal injury bar.
How Did the Supreme Court Resolve the Circuit Split?
In Medical Marijuana, Inc., the plaintiff, truck driver Douglas Horn, was fired from his job after failing a drug test and refusing to complete a substance-abuse program. Horn had been injured in a trucking accident and consumed “Dixie X,” a cannabinoid product marketed as “THC-free,” to treat chronic pain stemming from the accident. Horn asserted that he had purposely sought a pain relief product that did not contain THC because he knew he could lose his job after a positive drug test.
After Horn was fired, he sued the manufacturer of Dixie X. He brought, among others, a civil RICO claim alleging that the manufacturer engaged in a RICO “enterprise” by marketing, distributing, and selling Dixie X. The district court granted summary judgment to the manufacturer on the RICO claim because Horn’s employment loss stemmed from a personal injury, specifically, when THC entered his system. The Second Circuit reversed, holding that Horn suffered a “business loss” when he lost his job and the fact that the business loss stemmed from a personal injury did not preclude him from pursuing a civil RICO claim.
In a 5-4 decision written by Justice Amy Coney Barrett, the Supreme Court upheld the Second Circuit’s ruling. The Court determined that while RICO limits the “kind of harm” for which a plaintiff may recover, it does not restrict recovery based on the “cause of the harm.” The Court focused on the ordinary meaning of “injure” and “injury.” The Court rejected the manufacturer’s argument that “injured in his business or property” should refer specifically to the “invasion of a legal right,” and in the RICO context, specifically limited the statute to recovery for business or property torts.
The majority opinion recognized the concern that allowing civil RICO claims for business or property losses deriving from personal injuries could potentially allow plaintiffs to “easily transform garden-variety personal-injury claims into RICO suits for treble damages.” However, the majority pointed to three safeguards: (1) RICO’s “direct relationship” requirement between the injury and the alleged injurious conduct; (2) the fact that pleading a RICO claim requires establishing a pattern of racketeering activity (and therefore cannot stem from a single tort); and (3) other limiting terms in RICO, including “business” and “property,” which do not necessarily include all types of monetary harm such as lost wages or medical expenses.
Where Does RICO Go From Here?
RICO suits offer considerable incentives for plaintiffs. While Medical Marijuana, Inc. may broaden the potential pool of claimants eligible to bring civil RICO claims, it is unclear whether the Supreme Court’s narrow broadening of the statute will actually lead to an increase of civil RICO suits.
For example, even with the Supreme Court’s resolution of the circuit split, it’s uncertain whether plaintiff in the underlying suit will be able to bring a successful RICO claim. The Supreme Court specifically stated that it expressed no view on whether plaintiff had actually suffered any personal injury in accidentally ingesting THC, did not decide whether the Second Circuit had correctly determined that “business” included “employment,” and did not determine the types of financial loss included in an “injury to property.”
While these issues work through the court system, it’s also possible that Congress will revisit the statute. As the Court noted, “civil RICO has undeniably evolved ‘into something quite different from the original conception of its enactors,’” but “[i]f the breadth of the statute ‘leads to the undue proliferation of RICO suits, the “correction must lie with Congress.”’”
[View source.]
