Kannon Shanmugam: Welcome to “Court Briefs,” a podcast from Paul, Weiss. I'm your host, Kannon Shanmugam, the chair of the firm's Supreme Court and Appellate Litigation Practice and co-chair of our Litigation Department. In this podcast, we analyze Supreme Court decisions of interest to the business community.
For today's episode, the first of our second season, I'm joined by my colleague Matteo Godi to talk about the Supreme Court's recent decision in a case called Medical Marijuana v. Horn. Now, this case involves a federal statute lovingly known as RICO. The full name of the statute is Racketeer Influenced and Corrupt Organizations Act. Now, Matteo, this is a statute that originally was targeted at mobsters. So tell us a little bit about why this statute matters to ordinary businesses as well.
Matteo Godi: As you mentioned, RICO is currently applied to regular businesses too, and that is because of its language. It refers “any person injured in his business or property” and allows that person to sue under RICO, so long as there's a pattern of racketeering activity, which just means at least two predicate acts, which may be mail and wire fraud, securities fraud, money laundering or murder as the statute's origins may suggest. And if a plaintiff is successful in pleading and proving a RICO case, they may recover threefold the damages they suffered.
So the damages are quite sweeping, but there are limitations to the liability that RICO may impose. And the one that is relevant for the case we'll discuss today is the bar on seeking personal injuries damages. What that means is that, usually, RICO has been applied by courts consistently to exclude damages that result from personal injuries. Those may be physical or emotional harms to a person such as a bodily harm, pain and suffering and the like. And the question in this case is exactly how to draw the line between business and property injuries and personal injuries.
Kannon Shanmugam: So as you might imagine, with a case that has medical marijuana in the title, this case has some pretty interesting facts. So Matteo, tell us about the case and how it got to the Supreme Court.
Matteo Godi: Yes, as you mentioned, the title says it all. The question in this case is whether a truck driver who took some CBD product that was supposed to be THC-free and later failed a drug test because the product in fact contained THC can sue under RICO for the loss of his employment and medical bills related to it.
In this case, the district court granted summary judgment for the defendant, finding that the economic loss that plaintiff suffered derived from a personal injury and therefore was barred by the interpretation of the RICO statute. The Second Circuit reversed, and it deepened the circuit split on the question.
Kannon Shanmugam: So that brings us to the Supreme Court's decision. This was a closely divided case. So Matteo, tell us a little bit about what the Supreme Court decided and what the Court did not decide.
Matteo Godi: Yes, a lot of what was at issue in the case was not decided by the Court. The only question that the Court addressed was whether RICO categorically bars recovery for business or property losses that derive from a personal injury. The Court expressly did not resolve whether the injury at issue here is a personal one, whether business under RICO includes plaintiff's employment, or what constitutes an injury to property under RICO. The Court only focused on the meaning of “injured” in RICO and whether or not it refers to the invasion of a legal right, which was the position the dissent took, authored by Justice Kavanaugh, or, as the majority held, whether “injured” refers to simply being harmed or damaged.
And according to the Court, in light of the context of RICO, that is what injured means: it simply refers to a harm to business or property, and it does not prohibit recovery simply because those harms may themselves result or derive from a personal injury. The dissent took a contrary view, and it was primarily motivated by the concern that liability would be expanded under the majority's interpretation of the statute.
Kannon Shanmugam: So Matteo, what does this mean for businesses? Obviously, the Court has left open the possibility of broader RICO exposure. I guess the question is, how much broader?
Matteo Godi: And I think we'll see the answer to that question in the decisions that will come down the road. But for now, it's important to note that plaintiffs will likely attempt to argue that injuries that may seem personal in nature are in fact the antecedent injury to a business or property harm that qualifies under RICO.
But of course, that is going to tee up the questions that the Court and the majority left unanswered. What is a personal injury, whether employment qualifies as a business, etc. And so going forward, it seems that it's hard to predict what impact this may have on businesses, but it's likely going to be not a significant one.
Another reason that liability may be limited and may continue to be so is the requirement under RICO that there must be a direct relation between the personal injury or business injury asserted and the injurious conduct alleged. And that may be, as the majority recognized, an insurmountable obstacle in Horn's case. So, at the end of the day, it's hard to see where courts will go with this, but there are a lot of questions that the Court left unanswered.
Kannon Shanmugam: So not for the first time on this podcast, a Supreme Court decision that promises more litigation to come. So thank you, Matteo, for joining us to discuss Medical Marijuana v. Horn. And if you have any questions about the decision of the Supreme Court in this case, please feel free to reach out either to Matteo or to me. And we hope you enjoyed this episode.
For more information about Paul, Weiss's Supreme Court and Appellate Litigation Practice, please visit us at our website, paulweiss.com. And please subscribe to “Court Briefs” wherever you listen to your podcasts. We'll be back again soon with another episode. But until then, thank you for joining us and take care.
