136 S. Ct. 2090 (2016)
In 2000 the European Community and 26 of its member states filed suit in the Eastern District of New York against RJR Nabisco and numerous related entities.1 They alleged that RJR participated in a global money-laundering scheme in association with organized crime groups.2 The complaint described how Colombian and Russian drug traffickers smuggled narcotics into Europe and sold the drugs for euros.3 The proceeds were routed through black-market money brokers, cigarette importers, and wholesalers to pay for large shipments of RJR cigarettes into Europe.4
In other variations RJR allegedly dealt directly with traffickers in South America and sold cigarettes to Iraq in violation of sanctions.5 RJR later acquired Brown & Williamson Tobacco Corporation to expand the activities.6 The complaint alleged that RJR engaged in a pattern of racketeering activity consisting of money laundering, material support to foreign terrorist organizations, mail fraud, wire fraud, and Travel Act violations.7
These acts formed an association-in-fact enterprise called the RJR Money-Laundering Enterprise.8 Its members included U.S. companies, and its activities depended on sales conducted through the U.S. mails and wires.9 The alleged violations harmed respondents through competitive injury to state-owned cigarette businesses, lost tax revenue from black-market sales, harm to European financial institutions, currency instability, and increased law enforcement costs.10
The resulting litigation spanned more than sixteen years and involved multiple complaints across at least three separate actions.11 The District Court granted RJR's motion to dismiss the RICO claims on the ground that RICO does not apply to racketeering activity occurring outside U.S. territory or to foreign enterprises.12 The Second Circuit reinstated the claims.13 It concluded that RICO applies extraterritorially to the same extent as the predicate acts alleged and that the civil action permits recovery for foreign injuries caused by violations of predicates that apply extraterritorially.14 The panel later denied rehearing and issued a supplemental opinion on the injury issue.15 The Second Circuit then denied rehearing en banc.16 Because of the conflict among the circuits and the importance of the issue, the Supreme Court granted certiorari.17
Whether RICO's substantive prohibitions contained in 18 U.S.C. § 1962 apply to conduct that occurs in foreign countries?18
Yes. The Court applied the two-step framework from Morrison v. National Australia Bank Ltd. and Kiobel v. Royal Dutch Petroleum Co. At step one the Court determined that the presumption against extraterritoriality has been rebutted with respect to applications of RICO's substantive prohibitions in 18 U.S.C. § 1962 to foreign patterns of racketeering activity where the predicates apply extraterritorially.21
RICO defines racketeering activity to include predicates such as the prohibition against engaging in monetary transactions in criminally derived property under 18 U.S.C. § 1957(d)(2).22 That provision expressly applies when the defendant is a United States person to offenses taking place outside the United States.23 Similar extraterritorial predicates cover the assassination of government officials and hostage taking.24 This incorporation gives a clear affirmative indication that 18 U.S.C. § 1962 applies to foreign racketeering activity to the extent the predicates alleged apply extraterritorially.25
The complaint alleged a pattern consisting of money laundering, material support to foreign terrorist organizations, mail fraud, wire fraud, and Travel Act violations.26 The Second Circuit found that the money laundering and material support statutes expressly apply extraterritorially in the circumstances alleged.27 The alleged enterprise also has a sufficient tie to U.S. commerce because its members include U.S. companies and its activities depend on sales of RJR's cigarettes conducted through the U.S. mails and wires.28 Therefore the allegations that RJR violated 18 U.S.C. §§ 1962(b) and (c) do not involve an impermissibly extraterritorial application of RICO.29
RICO's substantive prohibitions apply to foreign conduct to the extent the underlying predicate statutes apply extraterritorially.30
Whether RICO's private right of action contained in 18 U.S.C. § 1964(c) applies to injuries that are suffered in foreign countries?31
No. The Court applied the presumption against extraterritoriality separately to RICO's cause of action even though it had been overcome with respect to the substantive prohibitions.34
Section 1964(c) provides a cause of action to any person injured in his business or property by reason of a violation of section 1962.35 Neither the word any nor the reference to injury to business or property indicates extraterritorial application.36 The Court declined to transplant the Clayton Act's allowance for foreign injury recovery into the RICO context because RICO lacks the explicit language including foreign corporations that the Court found critical in Pfizer Inc. v. Government of India.
Respondents filed a stipulation in the District Court waiving their damages claims for domestic injuries.37 The District Court accepted this waiver and dismissed those claims with prejudice.38 Their remaining RICO damages claims therefore rest entirely on injury suffered abroad and must be dismissed.39 Allowing recovery for foreign injuries would create a danger of international friction without clear direction from Congress.40
RICO's private right of action requires a domestic injury and does not apply to foreign injuries.41
Related opinions on this issue
Joined by Justices Breyer And Kagan
Justice Ginsburg concurred in the holding that RICO's substantive prohibitions apply extraterritorially to the extent the predicates do but dissented from the judgment on the private right of action.42 She argued that one cannot extract a domestic-injury requirement from the text of section 1964(c), which affords a right of action to any person injured in his business or property by reason of a violation of section 1962. Since section 1962 encompasses foreign injuries, section 1964(c) should as well when triggered by a violation of section 1962.43
She noted that RICO's private right of action was modeled after section 4 of the Clayton Act, which allows recovery for foreign injuries, and saw no reason to depart from that alignment. In this case all defendants are U.S. corporations headquartered in the United States and charged with a pattern of racketeering activity directed and managed from the United States.44 She would affirm the Second Circuit's judgment that a private plaintiff must show the defendant engaged in a pattern of racketeering activity in a manner forbidden by section 1962 and that these activities were the proximate cause of some injury to the plaintiff's business or property.45
Justice Breyer joined Parts I through III of the Court's opinion but dissented from Part IV.46 He agreed with Justice Ginsburg that the private right of action has extraterritorial application.47 He noted that this case does not involve purely foreign facts creating foreign-cubed litigation but instead has the United States written all over it.48
He declined to accept as controlling the Government's argument as amicus curiae that allowing recovery for foreign injuries presents a danger of international friction.49 The Government did not provide examples or consult with foreign governments.50 In contrast, the European Community and 26 member states indicated that the complaint comports with limitations on prescriptive jurisdiction under international law.51 Consequently he joined Justice Ginsburg's opinion.52