Supreme Court Holds That Business And Property Harms Resulting From Personal Injury Can Be Available Under RICO
Client Alert | April 2, 2025
Medical Marijuana, Inc. v. Horn, No. 23-365 – Decided April 2, 2025
Today, in a 5-4 decision, the Supreme Court held that damages can be available under civil RICO for harm to business or property by reason of a racketeering activity, even when such harm stems from a personal injury.
“[A] plaintiff can seek damages for business or property loss regardless of whether the loss resulted from a personal injury.”
Justice Barrett, writing for the Court
Background:
More than five decades ago, Congress passed the Racketeer Influenced and Corrupt Organizations Act (“RICO”) to bolster efforts to fight organized crime. In addition to imposing criminal penalties for violating RICO, Congress also authorized “any person injured in his business or property by a violation of” RICO to bring a civil suit and recover triple damages. 18 U.S.C. § 1964(c).
Douglas Horn bought Medical Marijuana, Inc.’s hemp-based product after reading that it contained CBD but not THC, the active chemical compound in marijuana. After Horn failed a THC blood test, he was fired from his job as a commercial truck driver. Horn sued under RICO, alleging that the makers of the product had engaged in mail and wire fraud that caused him to suffer injury to his business or property. The district court granted summary judgment to the company, concluding that Horn sought recovery for a personal injury—unwitting consumption of THC—and so did not allege an injury to “business or property.” The Second Circuit reversed, holding that Horn could recover under RICO because his lost employment is an injury to business even if it flowed from a personal injury.
Issue:
Whether RICO’s civil-action provision permits recovery for injuries to “business or property” resulting from personal injuries.
Court’s Holding:
Yes. Injuries to business or property resulting from personal injuries can be recovered under RICO’s civil-action provision.
What It Means:
- The Court interpreted the phrase “injured in his business or property” in RICO’s civil-action provision as “not preclud[ing] recovery for all economic harms that result from personal injuries.” Op. 19. Thus, injuries to business or property flowing from a personal injury may be recoverable under 18 U.S.C. § 1964(c).
- The Court took pains to emphasize the narrowness of its decision: “The only question we address is the one squarely before us: whether civil RICO bars recovery for all business or property harms that derive from a personal injury.” Op. 5. The Court expressed no views on whether respondent suffered an antecedent personal injury at all, whether the term “business” includes “employment,” or whether an injury to “property” includes “all pecuniary loss.” Op. 4–5. The Court left these issues for another day.
- In response to the dissent’s concern that today’s decision would “eviscerate RICO’s ‘business or property’ limitation,” the Court highlighted several guardrails that constrain civil RICO claims: (1) the requirement that there be “some direct relation between the injury asserted and the injurious conduct,” (2) the requirement that civil RICO plaintiffs establish a pattern of racketeering activity, and (3) the possibility that “business” does not “encompass every aspect of employment” or that “property” does not include “every penny in the plaintiff’s pocketbook.” Op. 17–18.
The Court’s opinion is available HERE.
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This alert was prepared by associates Elizabeth A. Kiernan and Bryston Gallegos.
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