The Racketeer Influenced and Corrupt Organizations Act (“RICO”) was principally intended as a mechanism to combat organized crime. However, RICO’s scope is significantly broader than its anti-crime origin. The statute also allows persons who are injured by racketeering activities — illegal conduct usually coordinated by multiple people and often disguised as legitimate business deals for the purpose of earning a profit — to sue the wrongdoers in civil court and obtain monetary damages and other civil remedies.
To establish a civil RICO claim, a plaintiff must prove the defendant engaged in a “pattern of racketeering activity” that caused the plaintiff to be “injured in his business or property.” See 18 U.S.C. §§ 1962, 1964(c). Significantly, the civil remedies section of the Act — 1964(c) — permits any injured person to recover “threefold the damages he sustains[.]” Due to the threat of treble damages, private plaintiffs have increasingly alleged RICO claims in ordinary business disputes that hardly resemble the types of concerted mob activity the law was initially conceived to curtail.
But the statute’s use in personal injury lawsuits has remained relatively scarce. This is because RICO does not provide remedies for typical personal injuries such as pain and suffering, emotional distress or mental health conditions. The language of §1964(c) — “injured in his business or property” — would appear to contemplate only injuries of an economic nature.
This all may change, however, in the wake of the U.S. Supreme Court’s recent decision, Medical Marijuana, Inc., et al. v. Douglas J. Horn, No. 23-365, 2025 WL 978102 (U.S. Apr. 2, 2025). In a 5-4 opinion, the Court held that while recovery for ordinary personal injuries is precluded under RICO, §1964(c) does not categorically foreclose recovery for economic harms that result from personal injuries.
The implications of Horn are potentially significant. Economic loss is a regular (and, not infrequently, the foremost) component of damages in personal injury cases. Under Horn, those damages may now be tripled if the case also involves sufficient elements of racketeering. Thus, stakeholders exposed to personal injury liabilities are advised to prepare for an increase of civil RICO claims in personal injury filings, and with that, heightened damages requests and settlement demands.
Background
Before Horn, there was a divide in the federal circuit courts of appeals on the question of whether economic losses resulting from a personal injury — such as lost wages — constituted an “injury to business or property” under §1964(c). The Sixth, Seventh, and Eleventh Circuits had each interpreted §1964(c) to preclude any economic loss that results from a personal injury. The Ninth Circuit, on the other hand, did not distinguish between a business or property loss suffered as an immediate consequence of a RICO violation and one that was secondary to a personal injury.
In Horn, before the case reached the Supreme Court, the Second Circuit deepened the split by siding with the Ninth Circuit in refusing to distinguish between a business or property loss suffered as an immediate consequence of a RICO violation and one derived from, or a secondary effect of, a personal injury.
Facts and Procedural History
Douglas J. Horn was a commercial truck driver involved in a car accident that caused injuries to his back and shoulder. Suffering from chronic pain, he sought out alternative natural remedies and eventually discovered an advertisement for Dixie X Cannabidiol (CBD) Dew Drops Tincture made by Medical Marijuana, Inc. The advertisement claimed Dixie X contained 0% tertrahydrocannabinol (THC). This was important to Mr. Horn who, as a condition of his employment, was subject to random drug tests. After carefully investigating Dixie X, he purchased and consumed the product. Weeks later, Mr. Horn was selected for a random drug screening by his employer. The test detected THC in his system and Mr. Horn was subsequently fired, losing his job, wages and benefits. Later, independent lab tests confirmed that Dixie X contained THC, contrary to the manufacturer’s representations.
Mr. Horn sued the companies that manufactured and alleged falsely marketed the product in the U.S. District Court for the Western District of New York. In addition to state law claims, Mr. Horn brought a civil RICO claim, alleging that the defendants constituted a RICO “enterprise” engaged in marketing, distributing and selling Dixie X. He further alleged that defendants’ false or misleading advertising (i.e., the claim that Dixie X contained 0% THC) satisfied the elements of mail and wire fraud and that those activities amounted to a pattern of racketeering activity under the statute, which directly led to his loss of employment, and thus, wages. Nonetheless, the trial court granted summary judgment to the defendants on the RICO claim, concluding that Mr. Horn lacked RICO standing because his claim for lost wages was derivative of an “antecedent” personal injury (the car accident) rather than defendants’ racketeering activities.
On appeal, the Second Circuit vacated, determining that nothing in the text of RICO’s civil action provision, or in its structure or history, supports preclusion simply because the otherwise recoverable economic loss was connected to a personal injury.
The Supreme Court granted the defendants’ petition for a writ of certiorari to resolve the circuit split.
The Decision
The question presented to the Supreme Court was whether RICO bars recovery for all business or property harms that derive from a personal injury. The Court, in an opinion written by Justice Barrett and joined by Justices Sotomayor, Kagan, Gorsuch, and Jackson, held that the statute does not impose such a bar.
The Court’s analysis centered on a conventional interpretation of the word “injured” and its root, “injury,” as it is used in §1964(c) (“[a]ny person injured in his business or property by reason of a violation of [RICO] may sue. . . .”). The Court reasoned that “injury” in this context is to be given its plain, ordinary meaning of “harmed,” “hurt,” or “wounded,” and the phrase “business or property” simply restricts the kinds of harm for which the plaintiff can recover under RICO but not the causes of that harm. Adopting the plain meaning of “injured” or “injury,” the Court concluded that the phrase “injured in his business or property” in §1964(c) means “[a] plaintiff has been 'injured in his business or property' if his business or property has been harmed or damaged.” Transplanting this definition to the statutory text, §1964(c) would read something like the below under the Court's analysis:
Any person who suffered harm in his business or property by reason of a RICO violation may sue.
The Court observed that while this interpretation does not permit a remedy under RICO for injuries of a personal nature, it does not exclude economic damages that may result from those injuries.
The Court concluded with a reassurance against the fears of federalizing “garden-variety” personal injury torts under RICO. To this end, the majority identified three inherent “constraints” in bringing a RICO claim that should operate to limit the number of personal injury RICO filings:
- First is the requirement that there be a “direct relationship” between the injury asserted and the racketeering activities alleged, something that is not easy to establish.
- Second is the requirement that there be a “pattern” of racketeering activity, which is unlikely to exist in ordinary tort suits.
- Third is the requirement that the economic loss resulting from a personal injury meet the definition of “business” or “property” injury under §1964(c). The majority reiterated that its decision does not define those terms and does not determine whether any economic damage in a personal injury suit qualifies under those terms.
Justice Kavanaugh wrote a dissenting opinion, which was joined by Chief Justice Roberts and Justice Alito. They advocated for a different definition of “injury”: invasion of a legal right. In the dissent’s view, §1964(c) limits RICO injuries to those that correspond to a business or property tort, and therefore the relevant section would read something like:
Any person who has suffered an invasion of a business or property right by reason of a RICO violation may sue.
Thus, under that interpretation, personal injuries could never give rise to a RICO cause of action because they involve invasions of personal rather than business or property rights. However, as noted, that interpretation did not carry the day.
Justice Thomas dissented on the separate ground that the case was not ripe for Supreme Court review. In his opinion, the absence of a factual determination as to whether Mr. Horn even sustained a personal injury — and the failure to define the meaning of the additional words “business” and “property” in §1964(c) — precluded meaningful insight into the core issue: whether an economic loss flowing from a personal injury constitutes the kind of business or property harm redressable under RICO. Thus, in Justice Thomas’s view, the writ of certiorari should have been dismissed as improvidently granted.
Takeaways
Whether Mr. Horn will ultimately recover under RICO remains to be seen. The Court expressly declined to opine on whether the ingestion of a falsely marketed cannabis product is considered a personal injury and whether lost wages are considered harms to “business” or “property” under RICO. The Court remanded those issues. Nevertheless, the Court made clear that not all economic losses resulting from personal injuries are precluded under RICO. But which economic losses are subject to preclusion, which are permitted, and how to distinguish one from the other is currently unclear. These unanswered questions will certainly be litigated and developed through the court system in the foreseeable future.
In the near term, however, stakeholders exposed to personal injury liability can expect a marked increase in federal and state filings alleging RICO violations. For all the Horn decision does not say, it does unequivocally permit recovery of treble economic damages in personal injury actions involving RICO elements. Such actions already allege significant economic losses; the potential for exponentially higher recoveries will incentivize plaintiffs to develop RICO claims even in cases where the statute’s connection to the facts appear tenuous.
In anticipation of these emerging claims, personal injury defendants and their counsel will be well-served to consider modifying defense strategies that are currently attuned to, for the most part, a negligence-dominated area of litigation. Such considerations should include, at the very least: earlier engagement at the pre-answer stage to develop viable arguments for dismissal of specious racketeering claims; revisiting document repositories to accommodate discovery into traditionally irrelevant areas of inquiry such as fraud, embezzlement, money laundering and bribery; broadening witness identification and preparation efforts to offer competent testimony regarding business operations and activities; and conducting internal investigations to develop defenses in line with the RICO “constraints” discussed in Horn.
For now, it is too early to tell whether the proverbial “floodgates” will be opened as Justice Kavanaugh’s Horn dissent cautioned or whether they will be moderated by the statute’s innate requirements as the majority reassured. If the history of RICO litigation is any indication, however, personal injury defendants can at minimum expect to see increased RICO allegations in filings moving forward. Early and informed preparation will be key in the defense of these claims
