Clifford Chance
Second Circuit Court of Appeals Opens the Door for Extraterritorial RICO Claims
25 April 2014
Taking a step back from the recent trend to limit the extraterritorial application of US law, an influential federal appellate court has reinstated claims by the European Community and several member states against RJR Nabisco, Inc. ("RJR"), alleging that RJR directed and controlled a global money-laundering scheme involving sales of cigarettes. Seemingly contrary to an earlier case that held that the federal racketeering statute, the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1961 et seq., did not apply extraterritorially, the US Court of Appeals for the Second Circuit held in European Community v. RJR Nabisco, Inc. that the US Congress "unmistakably" intended for RICO to apply extraterritorially, at least where the underlying racketeering activity involves statutes (such as foreign money laundering) clearly intended to reach foreign conduct. The Second Circuit's decision in European Community opens the door for RICO claims premised upon cross border or foreign conduct. Because RICO provides a private cause of action and treble damages provision, plaintiffs seeking rich recoveries will likely seize this opportunity to attempt to bring RICO claims based upon largely foreign schemes into US courts.
