RICO Insanity: Medical Marijuana, Inc. v. Horn


No shock, of civil RICO.  We don’t like how it’s by legal professionals on the opposite facet to transform run-of-the-mill pharmaceutical and medical gadget circumstances into class actions.  We don’t like that it carries the potential for treble damages and attorneys’ charges.  We don’t just like the elasticity of its phrases.  And we don’t like its nationwide private jurisdiction and venue provisions, (a)-(d). 

In brief, we expect it’s insanity to make use of civil RICO exterior of the racketeering context for which it was designed.  Right now’s dialogue of comes by the use of , the place a pending Supreme Court docket raises a problem with important ramifications for our shoppers and readers.  

RICO permits plaintiffs “injured in [their] enterprise or property by purpose of” a defendant’s racketeering exercise to sue for treble damages and attorneys’ charges. (c). 

The excellent news is that the “enterprise or property” requirement “exclud[es] … private accidents.”  RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325, 350 (2016).  

The dangerous information is that some federal circuits break up hairs to conclude, however the Supreme Court docket’s clear holding in RJR Nabisco, that financial damages that circulation from private accidents—assume medical bills and misplaced wages which might be a part of each private damage case— are “enterprise or property” inside the which means of the civil RICO statute.

Not all do.  The Sixth, Seventh, and Eleventh Circuits have rejected the concept financial damages flowing from private accidents are an damage to “enterprise or property.”  See Jackson v. Sedgwick Claims Mgmt. Servs., 731 F.3d 556 (sixth Cir. 2013) (en banc); Evans v. Metropolis of Chicago, 434 F.3d 916, 926-27 (seventh Cir. 2006), overruled on different grounds by Hill v. Tangherlini, 724 F.3d 965, 967 n.1 (seventh Cir. 2013); and Grogan v. Platt, 835 F.second 844, 848 (eleventh Cir. 1988).  These circuits, in our view, are on strong floor.  A distinction between private accidents and accidents to “enterprise or property” is just about black letter regulation.  See Black’s Regulation Dictionary 925 (Rev. 4th ed. 1968) (A “private damage” is a “damage or injury performed to a person’s individual … as distinguished from an damage to his property or fame.”).

However the Ninth Circuit has been effective with the premise that non-public damage damages like medical bills and misplaced wages are “enterprise or property” for fairly a while now.  See Diaz v. Gates, 420 F.3d 897, 900 (ninth Cir. 2005) (en banc). 

After which, in August, the Second Circuit joined that view in Horn v. Med. Marijuana, Inc., 80 F.4th 130 (second Cir. 2023), deepening the circuit break up to 3-2 and probably teeing up the problem for Supreme Court docket decision.

Does it matter that a lot that the Second and Ninth Circuits have opened the RICO door to non-public damage circumstances when financial damages are alleged?  Provided that civil RICO gives for treble damages and attorneys’ charges, and that New York (Second Circuit) and California (Ninth Circuit) already are populous magnets for each enterprise and litigation, we expect so.

It additionally issues as a result of the nationwide jurisdiction and venue provisions of civil RICO make it comparatively simple (as in comparison with unusual product legal responsibility claims) for civil RICO plaintiffs to go discussion board purchasing for favorable courts .  Venue is correct for a civil RICO declare any district through which a defendant “resides, is discovered, has an agent, or transacts his affairs.”  18 U.S.C. § 1965(a).  Civil RICO plaintiffs can be part of defendants with no connection to the discussion board if “the ends of justice” so require.  18 U.S.C. § 1965(b).  Defendants may be served “in any judicial district through which such individual resides, is discovered, has an agent, or transacts his affairs.”  21 U.S.C. § 1965(d); see additionally Laurel Gardens, LLC v. McKenna, 948 F.3d 105, 114, 118-19, 121-22 (3d Cir. 2020) (permitting nationwide service of course of for civil RICO circumstances the place justice so requires). The litigation corollary of will apply, with dangerous jurisdictions crowding out the nice.

We will likely be watching to see if the Supreme Court docket takes this case and if it does, hoping that it steps in to cease this one specific type of RICO abuse.

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