In 2010, the Supreme Court held that courts should employ a presumption against the extraterritorial application of federal statutes absent an “affirmative intention of the Congress clearly expressed” indicating otherwise. Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 255 (2010) (quotations and citation omitted). Post-Morrison, federal courts have summarily applied this presumption to cases alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), but differed on how to limit its extraterritorial reach—typically limiting extraterritorial application to cases involving domestic conduct amounting to a pattern of racketeering or domestic enterprises. See, e.g., United States v. Xu, 706 F.3d 965, 979 (9th Cir. 2013) (focus on the pattern of racketeering); Chevron Corp. v. Donziger, 817 F. Supp. 2d 229, 245 (S.D. N.Y. 2012) (same); United States v. Philip Morris USA, Inc., 783 F. Supp. 2d 23, 29 (D.D.C. 2011) (same); see also Cedeno v. Intech Grp., Inc., 733 F. Supp. 2d 471, 474 (S.D. N.Y. 2010) (focus on the enterprise); Sorota v. Sosa, 842 F. Supp. 2d 1345, 1350 (S.D. Fla. 2012) (same). In 2014, the Second Circuit added yet another option: applying RICO extraterritorially when the predicate act statute expressly extends to foreign conduct. Eur. Cmty. v. RJR Nabisco, Inc., 764 F.3d 129, 136 (2d Cir. 2014) [“RJR Nabisco II”]. And this past April, the Second Circuit denied RJR Nabisco’s request for rehearing en banc, thereby leaving RJR Nabisco II to serve as precedent. Eur. Cmty. V. RJR Nabisco, Inc., No. 11-2475 (2d Cir. April 13, 2015) [“RJR Nabisco III”]. Perhaps more telling than the actual denial, five judges wrote separate opinions to accompany the disposition, illustrating the Second Circuit’s internal disagreement over RICO’s extraterritorial scope.
The RJR Nabisco II decision vacated the district court’s dismissal of plaintiffs’ RICO claims. 764 F.3d at 142-43, 149. Initially, plaintiffs had filed suit in the Eastern District of New York alleging RICO violations arising from a money-laundering scheme orchestrated by RJR Nabisco, pervading the United States as well as countries in Europe, Central America, and South America. Eur. Cmty. V. RJR Nabisco, Inc., No. 02-CV-5771, 2011 WL 843957 at 1-2 (E.D. N.Y. March 8, 2011). The district court dismissed these claims, concluding that RICO’s extraterritorial application focused on the enterprise and plaintiffs had failed to allege RJR Nabisco controlled the money laundering scheme. Id. at 7. On appeal, the Second Circuit disagreed, holding that RICO applies to foreign conduct when the relevant predicate statute unambiguously applies extraterritorially and concluding plaintiffs sufficiently pleaded domestic conduct amounting to predicate acts, the statutes of which extended expressly to foreign conduct. RJR Nabisco II, 764 F.3d at 139, 140-42.
The dissonance in RJR Nabisco III rests on the apparent discord between RJR Nabisco II and the Second Circuit’s holding in Norex Petroleum Limited v. Access Industries, Inc.. 631 F.3d 29 (2d Cir. 2010). In Norex, the court held Morrison foreclosed any argument that (1) RICO’s general reference to “foreign commerce” demonstrates Congress’s intent to apply RICO extraterritorially; (2) because certain RICO predicate act statutes extend extraterritorially, RICO extends the same; and (3) vague allegations stating “defendants committed numerous acts in the United States” supports a claim for RICO to apply to these domestic acts. Id. at 31, 33. Like the divergent outcomes in Norex and RJR Nabisco II, the Second Circuit judges retain a similar division in their of analyses regarding whether these opinions can be read harmoniously or if they inevitably conflict.
While Judge Hall’s concurring opinion posits that RJR Nabisco II can be read in coherence with Morrison and Norex, the four dissents forecast confusion and inconsistency among courts moving forward. Judge Hall, a member of the RJR Nabisco II panel, expands on the panel’s reasoning. In addition to the extraterritorial application of the case’s relevant predicate acts, Judge Hall emphasizes that the post-9/11 addition of multiple predicate act statutes with similar scopes from the Patriot Act indicates Congress’s intent for RICO to span to international conduct when parties allege such predicate acts. RJR Nabisco III, at 1-3 (Hall, J., concurring). Moreover, he distinguishes Norex, noting that plaintiffs in that case had attempted to argue that RICO always applies to foreign conduct simply because some of the predicate act statutes apply to foreign conduct. Id. at 5. Unlike Norex, the RJR Nabisco II decision limits RICO’s extraterritorial application to instances in which the predicate racketeering acts expressly allow for it. Id. at 5-6.
The subsequent dissents point to observed discrepancies between the two opinions and raise questions left open by allowing both decisions to remain as precedent. Judge Jacobs’ dissent outlines these general concerns while Judge Cabranes also comments on the risk of inviting RICO claims derived from conduct occurring “anywhere in the world.” Id. at 1-2 (Jacobs, J., dissenting); id. at 3 (Cabranes, J., dissenting). The most divisive dissent, however, was Judge Raggi’s opinion, criticizing RJR Nabisco II for deviating from RICO precedent and stating that a rehearing should have been granted to consider whether and when RICO applies extraterritorially. Id. at 3-4 (Raggi, J., dissenting). She notes the contrast between other statutes’ language expressly providing for extraterritorial applications with the noticeable absence of any such provision in RICO. Id. at 6, n. 4. Moreover, her dissent points to the factual similarities between Norex and RJR Nabisco II despite their dissimilar results. Id. at 12. And like the other dissents, Judge Raggi voices concern over the panel’s choice to ground its analysis in RICO’s predicate acts rather than the enterprise or pattern of racketeering activity, opining that the panel failed to identify any “focus” as prescribed by Morrison. Id. at 18-19, 22-23.
To round out the dissenting opinions, Judge Lynch offers a new perspective by supporting the adoption of the panel’s reasoning. Id. at 1 (Lynch, J., dissenting). While Judge Lynch believes a rehearing en banc should have been granted to resolve tensions between Norex and RJR Nabisco II, he disagrees with the other dissents to the extent they suggest RICO can never apply to foreign enterprises or patterns or predicate crimes implicating statutes with extraterritorial reach. Id. at 6.
Ultimately, the Second Circuit’s disposition retains RJR Nabisco II as good law. Yet these varying opinions expose the incongruity among the Circuit and reflect the broader division across jurisdictions concerning RICO’s extraterritorial application. Thus, practitioners should be aware that the question regarding RICO’s focus for determining its extraterritorial reach remains unresolved among, and seemingly within, certain circuit courts.