Antitrust Law Daily Wrap Up, TOP STORY—2nd Cir.: Lack of domestic injury did not doom EC’s RICO action against tobacco companies, (Aug 21, 2014)

By Greg Hammond, J.D.

A group of tobacco companies were unable to persuade the U.S. Court of Appeals in New York City that the Racketeer Influenced and Corrupt Organizations (RICO) statute required the European Community to allege a domestic injury in order to maintain an action against the companies. In denying the tobacco companies’ petition for a panel rehearing, the court determined that there was no reason to construe RICO to include a domestic injury requirement (European Community v. RJR Nabisco, Inc., August 20, 2014, Per Curiam).

Background. The European Community, consisting of 26 member states, filed a RICO suit against RJR Nabisco, Inc. and other affiliated tobacco companies (collectively, RJR). The federal district court in Brooklyn dismissed the complaint, concluding that RICO does not apply to enterprises outside the United States. However, the appeals court vacated and remanded the lower court’s decision, finding that the European Community’s RICO claims were within the scope of the statute. RJR petitioned the court of appeals for a panel and en banc rehearing of its decision, vacating the lower court’s dismissal of the complaint. Specifically, RJR argued that the lower court’s decision should be affirmed on the ground that the European Community was required to allege domestic injuries for each RICO violation pleaded in their complaint.

Domestic injury. The RICO statute provides that any person injured in his business or property by reason of a violation of 18 U.S.C. sec. 1962 may sue for and recover treble damages and attorneys’ fees. RJR argued that, regardless of whether the conduct giving rise to the European Community’s injury may have taken place outside of the United States, the injury itself must be domestic. The court disagreed, noting that, “if an injury abroad was proximately caused by the violation of a statute which Congress intended should apply to injurious conduct performed abroad, we see no reason to import a domestic injury requirement simply because the victim sought redress through the RICO statute.” It further found that its conclusion was consistent with Congress’ expansive language and overall approach, and its express admonition that RICO should “be liberally construed to effectuate its remedial purposes.” Consequently, the European Community was not required to plead that their alleged injuries actually occurred in the United States, and RJR’s petition for panel rehearing was denied.

The case number is 11-2475-cv.

Attorneys: John J. Halloran, Jr. (Speiser, Krause, Nolan & Granito), Kevin A. Malone, and Carlos A. Acevedo (Krupnick Campbell Malone Buser Slama Hancock Liberman & McKee, P.A.) for European Community. Gregory G. Katsas, David M. Cooper, and Mark R. Seiden (Jones Day) for Defendants-Appellees.

Companies: RJR Nabisco, Inc.

MainStory: TopStory RICO ConnecticutNews NewYorkNews VermontNews