Almost a year ago (how time flies!), we brought you our first Rico Madness post, regarding the cert petition in Medical Marijuana, Inc. v. Horn, and promised to keep you updated if the Supreme Court took the case.  Well, they did and we are.

In our prior post, we noted that we are not fans of civil RICO, and object to its misuse by the other side in non-racketeering contexts, its treble damages and attorneys’ fees provisions, and its nationwide personal jurisdiction and venue provisions, 18 U.S.C. 1965(a)-(d). 

But our issue in these RICO madness posts involves the meaning of RICO’s statement that “Any person injured in [their] business or property” by a predicate act “shall recover threefold the damages” sustained plus attorneys’ fees.  18 U.S.C. § 1964(c). 

The Supreme Court previously held that “injured in [their] business or property” “exclud[es] … personal injuries.”  RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325, 350 (2016).  And one would think that RJR Nabisco pretty much put the end to plaintiffs trying to recovery traditional personal injury damages—think lost wages or medical expenses—in civil RICO actions, but one would be wrong. 

In Horn v. Med. Marijuana, Inc., 80 F.4th 130 (2d Cir. 2023), the Second Circuit joined the Ninth Circuit in concluding that what we see all the time as traditional personal injury damages—lost wages and medical expenses—are in fact “business or property” recoverable under civil RICO.  See Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en banc). 

Because, fortunately, other circuits disagree with the Ninth and the Second, the meaning of “business or property” under civil RICO has returned to the high court.  See Jackson v. Sedgwick Claims Mgmt. Servs., 731 F.3d 556 (6th Cir. 2013) (en banc); Evans v. City of Chicago, 434 F.3d 916, 926-27 (7th Cir. 2006), overruled on other grounds by Hill v. Tangherlini, 724 F.3d 965, 967 n.1 (7th Cir. 2013); and Grogan v. Platt, 835 F.2d 844, 848 (11th Cir. 1988).  

According to their merits brief, the Plaintiff/Respondent in Medical Marijuana has taken the position that civil RICO’s “business or property” provision authorizes treble damages for any “harm” for which the plaintiff can “produce receipts, like lost profits, increased expenditures, bills, lost wages, and the like.”  Under their position, civil RICO’s exclusion of personal injuries only keeps out unfixed “nonpecuniary damages,” like pain and suffering.  In other words, plaintiff’s view is that lost wages are not a measure of damages that arise from a personal injury, they are a stand-alone “business or property” injury in their own right. 

Which brings us to October 15, 2024, when the Supreme Court held oral argument in this case and heard from two formidable advocates:  Lisa Blatt of Williams & Connolly for the Defendants/Petitioners, and Easha Anand of the Stanford Supreme Court Litigation Clinic for the Plaintiff/Respondent.  You can listen to the argument or read the transcript at https://www.oyez.org/cases/2024/23-365.

The argument brought up several interesting, and some concerning, questions from the bench. 

One set of questions, raised most often by Justice Kentanj Brown Jackson, probed whether this particular case is the right vehicle for the Supreme Court to address the question presented.  These questions noted that the Defendants/Petitioners framed the claim as one for personal injury but the case was in fact unlike the prototypical product liability case we see, where a plaintiff suffers physical injury from use of a product and incurs expenses due to the resulting medical care and time off work. 

In Medical Marijuana, however, the Plaintiff/Respondents did not contend they suffered some adverse physician event from ingesting the defendants’ product, a CBD tincture.  Instead, the claim was that the plaintiff truck driver took the product because its label stated it was THC-free, when the product in fact had minute traces of THC.  The product caused no ill physical effects, but it did lead to a failed drug test and a lost of employment.  This line of questioning painted the Plaintiff/Respondent’s case as narrow and distinct from the usual product liability case, and sought to position the lost job, on these facts, a direct “injury to business” (the plaintiff’s business being employment as a truck driver) rather than a type of damage secondary to physical injuries caused by the product. 

A related thread dug into whether “medical expenses” are the same as, or different from, a loss of employment in this civil RICO context and on the particular facts of this particular case.  The Plaintiff/Respondent’s position was that medical expenses were not before the Court—Plaintiff had no adverse physical effect from ingesting the product, so he had no medical expenses—and the Supreme Court thus could duck that question if it wanted.  But if the Court were to address the issue, medical expenses certainly would be injury to property (in that money is property) and allowed under civil RICO, even if they flowed from a physical injury (as in a traditional personal injury, product liability case).

Justices Barrett and Kavanaugh had questions about the Defendants/Petitioners’ proposed interpretation of the statutory language, and authorities that support drawing a distinction between the terms “injury”  “harm” and “damages”.  Here, there were frequent references to “the Restatement” and “common law” as helpful guides.  To be honest, casual references to how things supposedly work in “product liability” set us a bit on edge, because we have seen non-experts get details about our area of the law wrong all too often.  We also worry about the “Always Liability Increases” tendencies that have crept into the ALI’s Restatement-drafting process, as well as the many nuances of product liability law that provide enough fodder to supply near-daily posts for this blog.   

Other questions from the Justices sought to address arguments by the Defendants/Petitioners (and amici) that upholding plaintiff’s interpretation would flood federal courts with state tort claims in civil RICO guise.  Some Justices sought to downplay those concerns, with questions highlighting guardrails imposed by other parts of the civil RICO statute, such as its causation requirement, or the need for a recognized RICO predicate act.  Justice Sonia Sotamayor, for example, stated during questioning that because product liability cases mostly involve “negligence or strict liability” they do not involve the “willfulness or intent” that civil RICO requires.  Having plenty of experience with the plaintiffs’ bar’s creativity in pleading and the sometimes fine line between things like “failure to warn” and “fraud”, we are not buying that assurance.     

We have to agree here with Defendants/Respondents and their amici.  If the Supreme Court converts what traditionally are called personal injury “economic damages” into business or property injuries recoverable under civil RICO, it does potentially turn many, if not most,  run-of-the-mill personal injury tort claim into triple-damages and attorneys’ fees civil RICO cases.  Assuming the plaintiff will be able to prove causation and shoehorn the case into a civil RICO predicate act (which they will, by calling an allegedly misleading drug warning “mail fraud” or some other such nonsense).  In the appellate world, litigants and amici often argue the sky will fall if the court adopts one view or another.  We don’t know if the sky will fall if the Court accepts plaintiff’s view, but we do think civil RICO filings will go through the roof. 

And now we wait for the opinion.  Stay tuned for Rico Madness, Part III when that opinion does come out.