Supreme Court Holds That RICO Plaintiffs May Recover for Business or Property Loss Even When the Loss Results from Personal Injury
Case Name and Number: Medical Marijuana, Inc. v. Horn, No. 23-365
Introduction: Today, the Supreme Court held in a 5-4 decision that the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1964(c), allows plaintiffs to seek treble damages for business or property losses even if those losses resulted from an antecedent personal injury.
Background: Commercial truck driver Douglas Horn purchased and consumed “Dixie X,” a CBD tincture that Medical Marijuana, Inc. markets as free of THC, the active cannabinoid found in marijuana. Horn later tested positive for THC and was fired after refusing to participate in a substance abuse program. Horn sued Medical Marijuana, Inc. under RICO based on alleged mail and wire fraud, claiming that the loss of his employment was a business injury actionable under civil RICO.
The district court held that Horn could not recover under RICO because his alleged business injury derived from a personal injury—the introduction of THC into his body by ingesting Dixie X. The Second Circuit reversed, holding that RICO does not bar claims based on an antecedent personal injury. This deepened a circuit split—with the Second and Ninth Circuits on one side and the Sixth, Seventh, and Eleventh Circuits on the other.
Issue: Whether RICO, which creates a cause of action for “[a]ny person injured in his business or property,” 18 U.S.C. § 1964(c), provides a remedy for business or property losses resulting from a personal injury.
Court’s Holding: In an opinion written by Justice Barrett and joined by Justices Sotomayor, Kagan, Gorsuch, and Jackson, the Supreme Court held that a civil RICO plaintiff may recover treble damages from business and property losses that result from a personal injury.
The Court rejected Medical Marijuana, Inc.’s argument that the statutory text—“injured in his business or property”—requires a plaintiff to show that he suffered an invasion of a business or property right. Instead, the Court looked to the ordinary meaning of an “injury,” which it said sweeps more broadly to cover “harm” or “damage” no matter the original source. The Court also rejected the principal dissent’s concerns about an “over federalization of traditional state-law claims,” saying that this was a matter for Congress to resolve.
But the majority cautioned that “other constraints on civil RICO claims” would limit claims based on personal injuries. First, the Court pointed to its previous holdings that “§ 1964(c)’s ‘by reason of’ language demands ‘some direct relation between the injury asserted and the injurious conduct alleged.’” It stated that “[g]iven the number of steps in Horn’s theory and the multiple actors involved, this requirement may present an insurmountable obstacle in his case.” Second, the plaintiff must “establish a pattern of racketeering activity”—“harm resulting from a single tort is not a ticket to federal court for treble damages.” Third, because RICO’s reference to “’business’ may not encompass every aspect of employment, and ‘property’ may not include every penny in the plaintiff ’s pocketbook,” “not every monetary harm—be it lost wages, medical expenses, or otherwise—necessarily implicates RICO.”
Justice Jackson authored a short concurring opinion, in which she emphasized Congress’s statement that RICO should be “liberally construed to effectuate its remedial purposes.”
Justice Kavanaugh, joined by Chief Justice Roberts and Justice Alito, dissented. Analogizing RICO’s reference to “injur[y] in his business or property” to similar language in various antitrust statutes, they would have held that civil RICO claims require allegations of business or property injuries.
Justice Thomas dissented separately. To him, certiorari was inappropriate in light of what he deemed inadequate briefing as well as a threshold dispute between the parties over whether Horn suffered a personal injury at all.
Read the opinion here.
Short Quote from Decision: “[T]he ‘business or property’ requirement operates with respect to the kinds of harm for which the plaintiff can recover, not the cause of the harm for which he seeks relief. For example, if the owner of a gas station is beaten in a robbery, he cannot recover for his pain and suffering. But if his injuries force him to shut his doors, he can recover for the loss of his business. In short, a plaintiff can seek damages for business or property loss regardless of whether the loss resulted from a personal injury.”
– Justice Barrett, for the Court