RJR Nabisco, Inc. v. European Community
The Court ruled that RICO's criminal and civil bans can reach some overseas conduct, but that private individuals and governments suing under RICO's civil-lawsuit provision must show they were injured inside the United States.
Because the European governments in this case had waived any claim of domestic harm, their lawsuit against the tobacco company was thrown out even though the underlying law itself can sometimes apply abroad.
“A private RICO plaintiff therefore must allege and prove a domestic injury to its business or property.”
The majority's core holding limiting who can sue for damages under RICO.
How it got here: A federal trial court dismissed the RICO claims as improperly reaching overseas conduct; the Second Circuit reinstated them, and the tobacco company asked the Supreme Court to review that ruling.
The Case in Depth
What happened
The European Community and 26 of its member states sued RJR Nabisco and related companies, claiming the tobacco company took part in a global money-laundering scheme with organized crime groups. Drug traffickers allegedly sold narcotics in Europe for euros that were funneled through money brokers and cigarette wholesalers to pay for large shipments of RJR cigarettes, causing financial harm to European governments and institutions.
The question before the Court
Could a European group of governments use America's racketeering law, RICO, to sue a tobacco company over a global money-laundering scheme, when the harm they suffered happened outside the United States?
The Court's answer
Partly — the Court ruled that RICO's core criminal and civil bans on running a criminal enterprise can reach conduct that happened outside the United States, but only when the specific underlying crime alleged is itself one Congress clearly meant to apply abroad, like certain money-laundering or terrorism-support offenses.
But when it came to the separate provision letting private parties and governments sue for money damages, the Court said that provision needed its own, independent green light to reach overseas harm, and found none. So while a U.S. prosecutor or the U.S. government could go after purely foreign racketeering conduct, a private plaintiff — including a foreign government — suing for damages must show it was injured inside the United States. Because the European governments here had given up any claim of domestic harm, their case was dismissed.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Companies and individuals accused of running international crime schemes can still face U.S. prosecution or a government civil suit even for conduct occurring abroad, but private plaintiffs suing for money damages under RICO now need to show they were hurt on U.S. soil. This narrows who can bring lucrative treble-damages RICO lawsuits over overseas harm.
What changes now
The case returns to the lower courts, but there is little left to litigate: the European governments had already given up any claim that they suffered harm inside the United States, so their damages claims are dismissed. The ruling is a final decision on the merits of RICO's reach, though it leaves open unresolved questions, such as whether equitable relief under RICO could still be available for domestic injuries.
What this does not decide
The Court did not decide whether the European governments' complaint actually proves a RICO violation on the merits, nor whether equitable (non-monetary) relief under RICO requires the same domestic-injury showing as money damages. It also left unresolved exactly how to distinguish a 'foreign' injury from a 'domestic' one in harder cases.
Concurrences and dissents
Dissent in part — Justice Ginsburg
“Because the Court has no authority so to amend RICO, I dissent.”Ginsburg's closing objection that the majority added a requirement Congress never wrote.
Justice Ginsburg agreed that RICO's core prohibitions can reach overseas crimes tied to predicates that themselves apply abroad, but she disagreed that the private lawsuit provision needs a separate domestic-injury showing. She argued the text ties private suits directly to violations of the main provisions, so if those provisions reach foreign conduct, private suits should too, and she doubted the majority's new rule would actually reduce friction with other countries.
Dissent in part — Justice Breyer
Justice Breyer joined the first three parts of the majority opinion but rejected the domestic-injury requirement for private RICO suits. He was unpersuaded by the government's unsupported claim that foreign-injury suits create international friction, noting the European governments themselves said their suit respected other countries' sovereignty, and he joined Justice Ginsburg's reasoning.
How the Court got there
The legal reasoning, step by step
- The Court applied a two-step framework for deciding whether a federal law reaches conduct abroad: first ask whether Congress clearly indicated the law applies overseas, and only if not, ask what specific conduct the law is really aimed at ('focus') to see if enough of that conduct happened domestically.
- Because RICO's list of underlying crimes ('predicates') includes offenses like hostage-taking and killing Americans abroad that plainly apply overseas, the Court found Congress clearly meant RICO's core bans on running a criminal enterprise to reach foreign conduct too, but only when the specific predicate crime alleged is itself one that applies abroad.
- The Court rejected the company's argument that RICO requires the criminal 'enterprise' itself to be based in the United States, reasoning that such a rule would let foreign criminal groups operating inside the U.S. escape RICO entirely and would produce arbitrary results.
- Turning to RICO's separate provision letting private parties and governments sue for money damages, the Court held the presumption against overseas application must be applied to that lawsuit provision on its own, separately from the underlying crimes it addresses, because a right to sue for damages carries distinct risks of friction with foreign countries.
- Finding nothing in the text of the damages provision clearly extending it to harm suffered abroad, and rejecting the argument that a similar antitrust damages law's broader reach should carry over to RICO, the Court concluded that a private RICO plaintiff must show an injury to business or property located within the United States.
Doctrinal impact
Cases affected by this decision
Reaffirms Morrison v. National Australia Bank Ltd. (561 U. S. 247)
The Court relied on and applied Morrison's two-step test for deciding if a law reaches foreign conduct.
Reaffirms Kiobel v. Royal Dutch Petroleum Co.
The Court followed Kiobel's rule that lawsuit provisions get their own separate overseas-reach analysis.
Distinguishes Pfizer Inc. v. Government of India (434 U. S. 308)
The Court declined to extend this antitrust damages ruling's foreign-injury rule to RICO's damages provision.
Distinguishes Sedima, S. P. R. L. v. Imrex Co. (473 U. S. 479)
The Court said this earlier RICO ruling did not settle whether foreign injuries are recoverable under RICO.