RJR Nabisco, Inc. v. European Cmty.

Background

The European Community and 26 member states sued RJR Nabisco and related companies, alleging a global money‑laundering scheme that used drug proceeds and black‑market brokers to buy and ship cigarettes. The complaint said the scheme harmed state cigarette businesses, banks, tax revenue, currency stability, and law‑enforcement costs. Lower courts split on whether RICO reaches conduct and injuries outside the United States, prompting this Supreme Court review.

Reasoning

The Court asked two simple questions: can RICO’s criminal and civil prohibitions apply to acts abroad, and can private plaintiffs get RICO damages for injuries suffered abroad? The majority held that RICO’s prohibitions (§ 1962) can cover foreign racketeering, but only when the specific underlying predicate statutes themselves apply extraterritorially. The Court also said an enterprise need not be strictly “domestic” so long as its activities significantly affect U.S. commerce. However, the private damages provision (§ 1964(c)) does not clearly authorize recovery for harms suffered abroad, so private plaintiffs must allege a domestic injury.

Real world impact

After this decision, government prosecutors and civil enforcers can reach some overseas racketeering if the predicate crimes extend abroad and the enterprise connects to U.S. commerce. Private parties, however, cannot recover treble damages for injuries that occurred entirely overseas. In this case respondents waived any domestic damages, so their remaining foreign‑injury RICO claims were dismissed.

Dissents or concurrances

Justice Ginsburg (joined by Justices Breyer and Kagan) disagreed with the majority’s bar on foreign‑injury private suits and would have allowed § 1964(c) to reach foreign injuries when § 1962 does; Justice Breyer joined that view in part, and Justice Sotomayor did not participate.