RJR Nabisco, Inc. v. European Community

The European Community and its member states sued RJR Nabisco, Inc., a U.S. tobacco company, under the Racketeer Influenced and Corrupt Organizations Act (RICO). The plaintiffs alleged that RJR Nabisco participated in a global money laundering scheme with Colombian and Russian drug cartels, smuggling cigarettes and laundering proceeds through New York financial institutions. The case reached the U.S. Supreme Court, which primarily addressed whether RICO applies extraterritorially. The Court held that while some substantive provisions of RICO could apply to certain foreign conduct with a sufficient domestic nexus, the private right of action under RICO requires a plaintiff to allege and prove a domestic injury to business or property. The ruling partially affirmed and partially reversed the Second Circuit’s decision, remanding for further proceedings consistent with the opinion.

The Supreme Court held that RICO’s private right of action does not overcome the presumption against extraterritoriality and requires a domestic injury. Certain RICO substantive provisions may apply to foreign conduct if relevant predicate statutes themselves indicate extraterritorial reach or the conduct involves a domestic element. The judgment of the Second Circuit was reversed in part, vacated in part, and remanded.

Whether RICO’s substantive prohibitions apply extraterritorially to conduct occurring abroad, and whether the statute’s private civil action allows recovery for injuries suffered outside the United States.

The decision clarified the limits of U.S. law in transnational litigation, restricting the ability of foreign plaintiffs to seek damages under RICO for overseas harms. It reinforced the presumption against extraterritorial application of U.S. statutes, impacting future international racketeering and anti-corruption lawsuits while underscoring the need for domestic injury in civil RICO claims.