RJR Nabisco, Inc. v. European Cmty.
The Court ruled that RICO's criminal and civil bans on racketeering can reach some overseas conduct, but only when the underlying crime itself is one Congress said applies abroad, such as certain money laundering or killing Americans overseas.
The Court also held that RICO's private lawsuit provision works differently and more narrowly: even where the underlying conduct is covered abroad, a private plaintiff suing for damages must show it was actually hurt inside the United States, so the European governments' claims for their overseas losses failed.
“It is not enough to say that a private right of action must reach abroad because the underlying law governs conduct in foreign countries.”
Explains why the Court analyzed RICO's private lawsuit provision separately from its underlying bans on racketeering.
How it got here: A federal trial court dismissed the RICO claims as improperly extending U.S. law abroad; the Second Circuit reinstated them; the Supreme Court took the case to resolve a split among lower courts.
The Case in Depth
What happened
European governments accused a major U.S. tobacco company of helping launder drug money for South American traffickers through a complex chain of black-market cigarette sales in Europe, and of selling cigarettes to Iraq in violation of sanctions. The governments said the scheme cost them tax revenue, hurt their state-owned cigarette businesses, damaged banks, and destabilized currencies, and sued the company under RICO for treble damages.
The question before the Court
Could European governments sue an American tobacco company under the U.S. anti-racketeering law, RICO, for financial harm they suffered outside the United States?
The Court's answer
Partly — the Court held that RICO's underlying bans on racketeering can reach conduct overseas, because Congress built extraterritorial reach into RICO by including crimes, like certain money laundering and killing Americans abroad, that already apply outside the country. So a company or enterprise can still violate RICO's core prohibitions through foreign conduct tied to those crimes.
But the Court also ruled that RICO's private lawsuit provision is stricter: a private plaintiff suing for treble damages must show it was actually injured in the United States, not just that the underlying racketeering violated a law that reaches abroad. Because the European governments here relied entirely on losses suffered in Europe — lost tax revenue, harm to their businesses, currency problems — after giving up their domestic-injury claims, their lawsuit failed.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Businesses, individuals, and now foreign governments harmed by international racketeering schemes can no longer use civil RICO's treble-damages lawsuits to recover for losses suffered entirely outside the United States, even when the wrongdoing itself violated RICO. This narrows a powerful private enforcement tool and pushes purely foreign-injury claims toward other countries' courts or other legal remedies.
What changes now
The case returns to the lower courts, but because the European governments had already given up their claims for domestic injuries in a stipulation, their remaining RICO damages claims rest entirely on foreign losses and must be dismissed. This is a final merits ruling on RICO's reach abroad, though the Court left open questions about equitable relief under RICO and how courts should classify harder cases as domestic or foreign injuries.
What this does not decide
The Court did not decide whether the European governments' complaint actually proves the underlying racketeering crimes, whether private plaintiffs can still seek non-damages equitable relief under RICO, or exactly how to classify a given injury as domestic or foreign in closer cases — it addressed only whether RICO reaches abroad at all.
Concurrences and dissents
Dissent in part — Justice Ginsburg
Justice Ginsburg agreed that RICO's underlying bans on racketeering can reach foreign conduct tied to predicate crimes that apply abroad, but she disagreed with treating the private lawsuit provision differently. She argued that because the private-suit provision is triggered by 'a violation of section 1962,' it should reach abroad exactly as far as section 1962 does, and that nothing in the text or history singles out private plaintiffs for a stricter domestic-injury rule.
Dissent in part — Justice Breyer
Justice Breyer joined the parts of the majority opinion finding RICO applies abroad, but agreed with Justice Ginsburg that the private lawsuit provision should reach foreign injuries too. He noted this case was not a 'foreign-cubed' dispute with no U.S. ties, and he was unwilling to accept the government's unsupported claim that allowing foreign-injury suits would cause international friction.
How the Court got there
The legal reasoning, step by step
- The Court applied its two-step framework from earlier cases for deciding whether a U.S. law reaches conduct abroad: first ask whether the statute clearly shows Congress meant it to apply outside the country, and only if not, ask whether the specific conduct at issue falls within the law's core 'focus' inside the United States.
- RICO defines the racketeering crimes it targets to include several federal offenses that Congress explicitly wrote to apply overseas, such as certain money-laundering crimes and killing an American abroad. The Court treated Congress's choice to build these extraterritorial crimes into RICO as a clear signal that RICO's underlying bans on racketeering can reach foreign conduct — but only when the specific crime involved is itself one that applies abroad.
- Because that clear signal existed, the Court skipped the 'focus' inquiry and held that RICO's bans on operating or controlling an enterprise through racketeering are not limited to enterprises based in the United States; a foreign-based enterprise can still trigger RICO as long as it has real ties to U.S. commerce and its racketeering activity is otherwise covered.
- The Court then treated RICO's private right to sue for damages as a separate legal question from the underlying bans on racketeering, reasoning that letting private citizens sue for foreign harm creates its own risk of friction with other countries beyond simply applying U.S. conduct rules abroad.
- Nothing in the text of RICO's private-suit provision — which lets 'any person injured in his business or property' sue — clearly showed Congress meant to cover injuries suffered abroad, unlike a similar antitrust law that explicitly lists foreign corporations as eligible plaintiffs.
- Because the private lawsuit provision didn't clear that bar, the Court concluded that a private plaintiff suing under RICO must show it was hurt in the United States, and since the European governments' remaining claims rested entirely on harm suffered abroad, those claims could not proceed.
Doctrinal impact
Cases affected by this decision
Reaffirms Morrison v. National Australia Bank Ltd. (561 U.S. 247)
The Court relies on and applies Morrison's two-step test for deciding whether a federal law reaches conduct abroad.
Reaffirms Kiobel v. Royal Dutch Petroleum Co.
The Court extends Kiobel's rule that even a jurisdiction-only law must be checked separately for extraterritorial reach.
Distinguishes Pfizer Inc. v. Government of India (434 U.S. 308)
The Court says RICO's private lawsuit provision, unlike the antitrust law in Pfizer, was not written to cover foreign plaintiffs' injuries.