Civil RICO Damages May Include Economic Loss Resulting From Personal Injury

In Medical Marijuana Inc. et al. v. Horn, case number 23-365, the Supreme Court of the United States expanded the range of damages that could be sought under Civil RICO to include economic injuries resulting from a personal injury and those damages could be trebled under RICO. While the case is cannabis-related because the plaintiff alleged that he lost his job when he tested positive for THC resulting after ingesting mislabeled CBD products, the effect of this decision is industry agnostic. At first blush, it would seem this decision could open the floodgates for RICO claims because the Court effectively ruled that business or property losses can be redressed under Civil RICO with treble damages even if they flow from a personal injury, such as ingesting a mislabeled consumer good.  However, whether such claims will move beyond the pleading stage will have to be seen because, as the Court noted, pleading the elements of a Civil RICO claim is not so easy, as there must be a “direct” connection between the alleged RICO violation and the alleged economic injury, as well as a pattern of racketeering:

Pleading a RICO claim is not as simple as pointing to a business or property harm. A plaintiff must first establish a pattern of racketeering activity. 18 U. S. C. §§1962, 1964(c). Doing so requires identifying two or more predicate crimes “within a single scheme that were related and that amounted to, or threatened the likelihood of, continued criminal activity.” H. J. Inc. v. Northwestern Bell Telephone Co., 492 U. S. 229, 237 (1989); see also §§1961(1) and (5), 1962. So harm resulting from a single tort is not a ticket to federal court for treble damages.

Nevertheless, recognizing the potential onslaught of RICO claims that could be brought by its expansion of damages under Civil RICO, and then washing its hands of it, the Court noted that any such flood of claims would have to corrected by Congress with changes to the statute.  Clearly, consumer fraud and personal injury lawyers now have another arrow in their quiver, and companies whose businesses and products may be exposed to consumer and personal injury claims should be on alert.