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Posted: April 28, 2014

RICO Applies To Foreign Enterprises When Underlying Predicates Were Intended To Apply To Such Conduct

On April 23, 2014, the Second Circuit issued a decision in European Community v. RJR Nabisco, No. 11-2475-cv, reversing a decision of the EDNY holding that “RICO does not apply to enterprises outside the United States.”

In European Community, the plaintiff asserted RICO and associated state law claims against the defendants alleging a multi-step international scheme involving “the smuggling of illegal narcotics into Europe by Colombian and Russian criminal organizations,” money laundering and using the laundered funds to purchase cigarettes, the sale of which funded further drug smuggling. The EDNY dismissed the complaint on several grounds, including that RICO does not apply to enterprises located and directed outside the United States. The Second Circuit reversed, explaining, with respect to RICO’s extra-territorial application, that:

We conclude that RICO applies extraterritorially if, and only if, liability or guilt could attach to extraterritorial conduct under the relevant RICO predicate. Thus, when a RICO claim depends on violations of a predicate statute that manifests an unmistakable congressional intent to apply extraterritorially, RICO will apply to extraterritorial conduct, too, but only to the extent that the predicate would. Conversely, when a RICO claim depends on violations of a predicate statute that does not overcome Morrison‘s presumption against extraterritoriality, RICO will not apply extraterritorially either. In all cases, what constitutes sufficient domestic conduct to trigger liability is the same as between RICO and the predicate that forms the basis for RICO liability.

(Emphasis added).

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