Legal Commentary

RICO Extraterritoriality: The Second Circuit Weighs In

By John Elwood

In late June, I posted on the Supreme Court?s recent decision in Morrison v. National Australia Bank, which included a very full-throated reaffirmation of the presumption against extraterritorality.  I noted in my post that ?[t]he Court?s opinion has implications for a petition that the Court considered at its private conference yesterday, British American Tobacco Co. v. United States, 09?980, involving whether civil RICO applies extraterritorially to a foreign defendant in DOJ?s long-running suit against the tobacco industry.?  I said that ?[i]t may be that the Court simply decides to grant, vacate, and remand in light of? Morrison.

Well, shows what I know.  The Court denied cert a few days later.  Petitioner?s lawyer petitioned for rehearing, asking the Court to GVR the case for consideration in light of Morrison.  The rehearing petition argued:

Not only does Morrison invalidate the rationales underlying the D.C. Circuit?s extraterritoriality decision, but it also repudiates the legal authorities on which the lower courts relied[.]
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In light of Morrison, there is a virtual certainty ? far more than merely the requisite ?reasonable probability? ? that the D.C. Circuit would reject the premises underlying its decision to use the ?effects? test (a) to measure RICO?s extraterritorial reach, and more generally (b) to disregard the presumption against extraterritorial application of U.S. laws.

On September 3, the Court denied rehearing.

Today, just over three weeks later, the Second Circuit held in Norex Petroleum v. Acess Industries that, in light of Morrison, civil RICO does not apply extraterritorially, and that even the fact that ?some domestic conduct occurred cannot support a claim of domestic application.?  Slip op. 7.   That is at least in tension with the D.C. Circuit at issue in BATCo, United States v. Philip Morris, where the D.C. Circuit concluded that RICO applied to foreign conduct with domestic effects.

It will be interesting to see what comes of this.

(And, as noted in my earlier post, ?I was among the small army of people who filed an amicus brief? supporting BATCO.)

Full post as published by The Volokh Conspiracy on September 28, 2010 (boomark / email).