No shock, we’re not followers of civil RICO.  We don’t like how it’s misused by attorneys on the opposite facet to transform run-of-the-mill pharmaceutical and medical system circumstances into class actions.  We don’t like that it carries the potential of 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, 18 U.S.C. 1965(a)-(d). 

In brief, we predict it’s insanity to make use of civil RICO exterior of the racketeering context for which it was designed.  At the moment’s dialogue of RICO insanity comes by means of Medical Marijuana, Inc. v. Horn, the place a pending Supreme Court docket cert petition raises a difficulty with vital 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. 18 U.S.C. § 1964(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 stream from private accidents—suppose medical bills and misplaced wages which can be a part of each private harm 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 harm 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.2nd 844, 848 (eleventh Cir. 1988).  These circuits, in our view, are on stable floor.  A distinction between private accidents and accidents to “enterprise or property” is just about black letter legislation.  See Black’s Legislation Dictionary 925 (Rev. 4th ed. 1968) (A “private harm” is a “harm or harm finished to a person’s particular person … as distinguished from an harm to his property or status.”).

However the Ninth Circuit has been high-quality with the premise that non-public harm 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 (2nd 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 private harm circumstances when financial damages are alleged?  On condition that civil RICO supplies 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 predict so.

It additionally issues as a result of the nationwide jurisdiction and venue provisions of civil RICO make it comparatively straightforward (as in comparison with unusual product legal responsibility claims) for civil RICO plaintiffs to go discussion board looking for favorable courts .  Venue is correct for a civil RICO declare any district wherein 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 might be served “in any judicial district wherein such particular person 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 Gresham’s Legislation will apply, with dangerous jurisdictions crowding out the nice.

We might 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 explicit type of RICO abuse.