Key Takeaways
- On April 2, 2025, a divided U.S. Supreme Court held that while the federal Racketeer Influenced and Corrupt Organizations Act ("RICO") does not permit civil claimants to recover for personal injury, it also "does not preclude recovery for all economic harms that result from personal injuries."Medical Marijuana, Inc. v. Horn, No. 23-365, 2025 WL 978102, at *11 (U.S. Apr. 2, 2025) (emphasis added).
- The decision resolves a 3-2 circuit split, but its holding is narrow and leaves several key questions to be addressed on remand and by lower courts. Those questions include whether plaintiffs may characterize lost wages and medical expenses from personal injuries as RICO injuries to "business or property."
- The decision also underscores that RICO's requirement of a direct causal link may be an "insurmountable obstacle" in personal injury cases, which will likely involve multiple actions between an alleged RICO violation like mail or wire fraud; a personal injury to the plaintiff; and any subsequent loss of wages or payment of medical expenses.
- Thus, while personal injury plaintiffs suing in federal court may attempt to add RICO claims to traditional state law tort complaints, defendants remain well-armed to challenge such claims and seek appellate review where decisions exceed the bounds of RICO and Horn.
Background
RICO targets criminal enterprises by creating criminal penalties and allowing civil actions for racketeering violations. On the civil side, the statute permits "[a]ny person injured in his business or property" by RICO violations to sue for treble damages and attorney's fees. 18 U.S.C. § 1964(c). As a result, since its 1970 enactment, plaintiffs have increasingly sought to convert ordinary state law claims into civil RICO claims. Courts have agreed, however, that the statute's reference to injury to "business or property" excludes RICO claims for personal injury. See RJR Nabisco, Inc. v. European Community, 579 U.S. 325, 348 (2016).
This limitation led to the question in Horn: "whether the statute, by implicitly denying a remedy for personal injuries, also denies a remedy for business and property loss that derives from a personal injury." Horn, 2025 WL 978102, at *3 (emphasis in original). The Court answered that it does not.
Horn was a truck driver who consumed "Dixie X," a CBD tincture advertised as free of THC, a cannabinoid. Id. Horn was fired after a random drug test detected THC in his system. Id. at *4. He brought a RICO claim against the makers and sellers of Dixie X, claiming they committed mail and wire fraud by marketing the product as THC-free and that the presence of THC cost him his job. Id. The district court granted summary judgment in defendants' favor, finding that Horn's lost job was "derivative of" a personal injury—namely, the presence of THC in his body from Dixie X. Id. The district court held that RICO's requirement of injury to "business or property" excluded recovery not only for personal injury but also for harm to business or property resulting from a personal injury. Id.
The Second Circuit reversed and held that RICO does not exclude recovery for business and property harms that derive from a personal injury Id. It joined the Ninth Circuit in allowing recovery and split from the Sixth, Seventh, and Eleventh Circuits. Id.at *5.
Majority Opinion
The Court, in a 5-4 opinion authored by Justice Barrett, affirmed the Second Circuit and remanded for further proceedings. Id. at *11. Justices Sotomayor, Kagan, Gorsuch, and Jackson joined the majority.
The Court held that under RICO, "[t]he phrase 'injured in his business or property' does not preclude recovery for all economic harms that result from personal injuries."Id. It applied "[t]he ordinary meaning of 'injure'"—"to 'cause harm or damage to' or to 'hurt,'" and deemed the issue "straightforward": "A plaintiff has been 'injured in his business or property' if his business or property has been harmed or damaged. Section 1964(c) requires nothing more." Id. at *5 (citations omitted). The Court held that this interpretation applies "regardless of whether the loss resulted from a personal injury." Id. at *6.
The Court reasoned that RICO's "'business or property' requirement operates with respect to the kinds of harm for which the plaintiff can recover, not the cause of the harm for which he seeks relief." Id. (emphasis in original). It rejected the interpretation advanced by the principal dissent that would distinguish a cognizable injury to business or property under RICO from the damages sought as a result of the injury. Id.at *6-8; id. at *17-18, 20 (Kavanaugh, J., dissenting).
The majority also responded to concerns that permitting RICO claims for "economic harm flowing from a personal injury" will allow plaintiffs to "easily transform garden-variety personal-injury claims into RICO suits for treble damages." Id. at *11. While acknowledging that civil RICO cases have proliferated beyond Congress's original intent to target organized crime, id., the Court identified several constraints that should limit RICO's use by personal injury plaintiffs:
- First, RICO requires a direct relation between the alleged RICO violation and injury. Id. The Court noted this may present an obstacle in Horn's case "[g]iven the number of steps" and "the multiple actors involved" in his alleged injury. Id. The "distance between the first link in the chain ([defendants'] misrepresentations) and the last (Horn's job loss)" could be "insurmountable."< em>Id.
- Second, because RICO requires a pattern of racketeering activity, with two or more predicate crimes within a single scheme, "harm resulting from a single tort is not a ticket to federal court for treble damages." Id.
- Third, the Court emphasized that "not every monetary harm—be it lost wages, medical expenses, or otherwise—necessarily implicates RICO['s]" "business or property" requirement. Id.
The Court left for the lower court to address on remand whether, under RICO, an injury to "business" encompasses loss of employment and "what it means for a plaintiff to be 'injured in his ... property.'" Id. at *5.
Dissenting Opinions
Justice Kavanaugh, joined by Chief Justice Roberts and Justice Alito, dissented and would have held that "RICO excludes suits for personal injuries, regardless of what losses or damages ensue from those personal injuries." Id. at *19 (Kavanaugh, J., dissenting). In their view, "RICO incorporated [the] traditional distinction" between personal-injury, business-injury, and property-injury suits "into the statutory text," and excluded claims where the invasion is to one's person, regardless of the nature of the alleged losses or damages from that injury. Id. at *20. Thus, they posited, "a plaintiff can recover 'damages' from a 'business or property' injury, but not damages from a personal injury." Id. at *28.
The dissenters forecast that "the Court's failure to decide" whether lost wages and medical expenses from a personal injury are business or property injuries recoverable under RICO "will undoubtedly produce significant confusion and litigation in the lower courts." Id. at *30.
They credited the majority, however, for "stress[ing] that proximate cause is strictly cabined in the RICO context, requiring a direct relationship, not mere foreseeability," and "that RICO does not allow suits for a single tort, but requires a 'pattern of racketeering activity.'" Id. at *29 (citations omitted).
Separately, Justice Thomas dissented and opined that certiorari was improvidently granted because the parties disagreed about whether Horn had even experienced a personal injury. Id. at *12.
Conclusions
Horn resolved a circuit split by holding that civil RICO does not bar damages solely because they derive from a personal injury. The decision should not, however, be read to open the floodgates to adding RICO claims to traditional personal injury litigation. The claimed RICO injury must still fit within the parameters of harm to "business or property." And as the Court emphasized, RICO's requirements both of a direct relation between the RICO violation and alleged injury and a pattern of racketeering may be difficult for personal injury cases to satisfy.
Defendants facing efforts to expand RICO to personal injury litigation should be prepared to apply those limitations, beginning at the pleadings stage, and to show that claimed damages are incongruent with the meaning of injury to business or property under RICO.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
