Thursday, June 20, 2024
HomeHealth LawRICO Insanity: Medical Marijuana, Inc. v. Horn

RICO Insanity: Medical Marijuana, Inc. v. Horn


Photo of Lisa Baird

No shock, we aren’t followers of civil RICO.  We don’t like how it’s misused by attorneys on the opposite facet to transform run-of-the-mill pharmaceutical and medical machine instances into class actions.  We don’t like that it carries the potential of treble damages and attorneys’ charges.  We don’t just like the elasticity of its phrases.  And we don’t like its nationwide private jurisdiction and venue provisions, 18 U.S.C. 1965(a)-(d). 

Briefly, we expect it’s insanity to make use of civil RICO outdoors of the racketeering context for which it was designed.  Immediately’s dialogue of RICO insanity comes by means of Medical Marijuana, Inc. v. Horn, the place a pending Supreme Courtroom cert petition raises a difficulty with important ramifications for our purchasers and readers.  

RICO permits plaintiffs “injured in [their] enterprise or property by motive of” a defendant’s racketeering exercise to sue for treble damages and attorneys’ charges. 18 U.S.C. § 1964(c). 

The excellent news is that the “enterprise or property” requirement “exclud[es] … private accidents.”  RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325, 350 (2016).  

The unhealthy information is that some federal circuits cut up hairs to conclude, however the Supreme Courtroom’s clear holding in RJR Nabisco, that financial damages that circulate from private accidents—assume medical bills and misplaced wages which are a part of each private damage case— are “enterprise or property” inside the that means of the civil RICO statute.

Not all do.  The Sixth, Seventh, and Eleventh Circuits have rejected the concept financial damages flowing from private accidents are an damage to “enterprise or property.”  See Jackson v. Sedgwick Claims Mgmt. Servs., 731 F.3d 556 (sixth Cir. 2013) (en banc); Evans v. Metropolis of Chicago, 434 F.3d 916, 926-27 (seventh Cir. 2006), overruled on different grounds by Hill v. Tangherlini, 724 F.3d 965, 967 n.1 (seventh Cir. 2013); and Grogan v. Platt, 835 F.2nd 844, 848 (eleventh Cir. 1988).  These circuits, in our view, are on stable floor.  A distinction between private accidents and accidents to “enterprise or property” is just about black letter legislation.  See Black’s Legislation Dictionary 925 (Rev. 4th ed. 1968) (A “private damage” is a “damage or harm completed to a person’s individual … as distinguished from an damage to his property or status.”).

However the Ninth Circuit has been fantastic with the premise that private damage damages like medical bills and misplaced wages are “enterprise or property” for fairly a while now.  See Diaz v. Gates, 420 F.3d 897, 900 (ninth Cir. 2005) (en banc). 

After which, in August, the Second Circuit joined that view in Horn v. Med. Marijuana, Inc., 80 F.4th 130 (2nd Cir. 2023), deepening the circuit cut up to 3-2 and doubtlessly teeing up the problem for Supreme Courtroom decision.

Does it matter that a lot that the Second and Ninth Circuits have opened the RICO door to private damage instances when financial damages are alleged?  Provided that civil RICO supplies for treble damages and attorneys’ charges, and that New York (Second Circuit) and California (Ninth Circuit) already are populous magnets for each enterprise and litigation, we expect so.

It additionally issues as a result of the nationwide jurisdiction and venue provisions of civil RICO make it comparatively simple (as in comparison with abnormal product legal responsibility claims) for civil RICO plaintiffs to go discussion board searching for favorable courts .  Venue is correct for a civil RICO declare any district wherein a defendant “resides, is discovered, has an agent, or transacts his affairs.”  18 U.S.C. § 1965(a).  Civil RICO plaintiffs can be a part of defendants with no connection to the discussion board if “the ends of justice” so require.  18 U.S.C. § 1965(b).  Defendants may be served “in any judicial district wherein such individual resides, is discovered, has an agent, or transacts his affairs.”  21 U.S.C. § 1965(d); see additionally Laurel Gardens, LLC v. McKenna, 948 F.3d 105, 114, 118-19, 121-22 (3d Cir. 2020) (permitting nationwide service of course of for civil RICO instances the place justice so requires). The litigation corollary of Gresham’s Legislation will apply, with unhealthy jurisdictions crowding out the nice.

We can be watching to see if the Supreme Courtroom takes this case and if it does, hoping that it steps in to cease this one explicit type of RICO abuse.

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