Second Circuit Applies Morrison v. National Australia Bank To Allow Certain Extraterritorial Application Of RICO

In European Community v. RJR Nabisco, Inc., Case No. 11-CV-2475 (2d Cir. Apr. 23, 2014), the United States Court of Appeals for the Second Circuit held that the Racketeer Influenced and Corrupt Organizations ("RICO") statute, 18 U.S.C. § 1961, et seq., could apply to conduct outside the territory of the United States. In doing so, the Second Circuit addressed the United States Supreme Court's ruling in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010) [blog article here], which held that United States statutes are presumed not apply to extraterritorial conduct, unless Congress has clearly indicated its intent that the statute have extraterritorial application. Applying Morrison, the Second Circuit determined that RICO could apply to extraterritorial conduct, because a number of the statutes listed as predicate acts for RICO liability clearly apply extraterritorially. The Second Circuit ultimately concluded "that RICO applies extraterritorially if, and only if, liability or guilt could attach to extraterritorial conduct under the relevant RICO predicate." Thus, even after the Supreme Court's ruling in Morrison, RICO liability can still attach to foreign conduct where the underlying predicate statute applies to extraterritorial conduct.

In this case, the European Community and 26 of its member states (collectively the "European Community") brought an action against RJR Nabisco, Inc. and a number of its corporate affiliates (collectively, "RJR") alleging that "RJR directed, managed, and controlled a global money-laundering scheme with organized crime groups in violation of the RICO statute, laundered money through New York-based financial institutions and repatriated the profits of the scheme to the United States, and committed various common law torts in violation of New York state law. The complaint alleged a number of predicate racketeering acts, as required by the RICO statue, including violations of the Travel Act, 18 U.S.C. § 1952, and violations of the statutes criminalizing mail fraud, wire fraud, money laundering and providing material support to foreign terrorist organizations. The complaint also alleged claims under New York state law for fraud, public nuisance, unjust enrichment, negligence, negligent misrepresentation, conversion and money had and received. RJR filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing primarily that RICO could not apply to extraterritorial conduct in the wake...