Investigating the Attendant Circumstances of RICO from Its Early History and Drafting to Transnational Organized Crime and Extraterritorial Applications: A Perspective on U.S. Prosecutions, Ideology, and Globalization

By: Alina Veneziano*

Abstract

This Article traces the history of extraterritorial regulation, as applied to the Racketeer Influenced and Corrupt Organizations Act (“RICO”), through an examination of underlying domestic circumstances, such as criminal prosecutions, ideology, and globalization. Legal analyses have focused either on the problems of prosecutorial decision-making domestically or the history, shortcomings, and recommendations of RICO. This Article departs from the “either-or” approach and instead combines the two paths into a single analysis of these domestic effects on the extraterritorial regulation of RICO cases. In other words, its purpose is to analyze the phenomenon of extraterritoriality under the basic principles of criminal law, including the duties of prosecutors, the roles of courts, and the ideals that influence these respective parties. While most scholarship relating to extraterritorial applications tends to analyze such issues under international law principles, such as prescriptive jurisdiction or via international comity, sovereignty, or congressional intent, this Article strives to understand these issues on a national level.

While early judicial holdings have been mainly territorial, and courts have thus resisted utilizing extraterritorial regulation, a different situation is presented with organized crime. It is easily the case that organized crime schemes cross multiple borders, and, with the advent of technological advances and globalization, the methods of manipulation and evasion are multiplying faster than law enforcement can keep up. Congress remedied this situation by drafting RICO to target organized crime in a statute that provides for both criminal and civil suits. The problem is that the courts have interpreted this arguably clear statute in a manner that negates RICO’s original intent, force, and meaning. It is these holdings that set the stage for the next era in U.S. history in dealing with transnational organized crime and RICO. Such rationales are based on attendant circumstances such as the resources of prosecutors, ideology, and globalization.

But there is a problem within the U.S. democratic system: lack of resources, ideological inclinations, and the struggle to balance adherence to congressional intent with the consistent application of relief to injured parties. The realizations/recommendations identified by this Article are threefold: (1) to understand that is perfectly permissible for Congress to be concerned with transnational organized crime only as it applies to domestic conditions; (2) to identify a sufficient U.S. nexus requirement that is consistent in civil RICO applications and reduces the risk of foreign resentment; and (3) to implement training in local, state, and federal law enforcement regarding RICO’s intended coverage and geographic scope. While foreign nationals should demonstrate the domestic injury requirement, this same reasoning should not extend to U.S. nationals. Instead, U.S. claimants under a U.S. statute should be able to assert a civil RICO claim without the unprecedented domestic injury requirement in RJR Nabisco v. European Community.[1] The U.S. nexus requirement for U.S. nationals is found in their citizenship, which should be interpreted in a manner as to satisfy the domestic injury requirement when the private RICO claimant is a U.S. national. Such realizations reduce foreign infringement, case-by-case distinctions, and foreign-cubed transactions. Critically, such recommendations have the secondary effect of alleviating prosecutorial overload by shifting some cases to private claimants, reducing the cases that prosecutors bring that fall outside the types of cases envisioned by Congress, and providing more consistent application without the need for judicial or congressional involvement. By redefining the scope and reach of RICO, internal efficiencies are achieved and this, in turn, affects the U.S. enforcement mechanisms on the international field.

 I. Introduction

A. Outline

This article examines the Racketeer Influenced and Corrupt Organizations Act[2] (“RICO”) from before its enactment to the present day. It examines how courts have treated claims asserting RICO violations instituted by either the government or private claimants and involving domestic, foreign, or transnational crimes. The problem with recent analysis of this issue is that cases of organized crime often cross multiple borders, implicating various international law principles such as jurisdiction to prescribe and risking possible violations of international comity and foreign interference. This problem is made worse by recent judicial resistance to applying RICO abroad as well as the recent burdens the Supreme Court has imposed upon private claimants seeking to bring a civil RICO claim.

By analyzing these issues through domestic lenses, this Article demonstrates that it is imperative that the courts and political branches return to Congress’ original intent when it first enacted RICO. To do this requires the understanding that RICO not be expanded to encompass conduct not originally intended to be regulated thereby, and also the understanding that in order to combat transnational organized crime—which is the Act’s very objective—the geographic reach of RICO must necessarily not be unduly restricted. This Article promotes such an understanding of the importance of regulating transnational organized crime within the U.S. domestic system.

This Article proceeds in the following manner. Part I defines white collar crime and organized crime, traces RICO’s legislative history, and details the circumstances in the United States regarding organized crime that prompted RICO. Part II analyzes case law occurring after RICO’s enactment and how the judiciary interpreted RICO prior to Morrison v. National Australian Bank Limited’s[3] clear indication test, and then briefly explains the Morrison opinion and its effect on RICO actions. Part III proceeds to analyzes the circuit split that the Morrison opinion created, including the judiciary’s struggle to define what it means to be domestic when analyzing RICO’s focus.

Part IV briefly discusses two noteworthy earlier opinions. Part V describes the RJR Nabisco, Inc. v. European Community[4] opinion in detail. Part VI discusses the critical implications of the RJR Nabisco holding. Lastly, this Part illustrates the inconsistencies of the current process of extraterritorial extensions of RICO. Building upon these implications, Part VII discusses the current domestic situation in the United States regarding the feasibility and practicality of bringing RICO actions. This Part is offered to explain why the judiciary has tended to limit a statute that clearly applies to foreign conduct in the wake of an increasing international world with persisting transnational crime. Part VIII of this Article outlines a few solutions set forth by scholars and then provides the author’s realizations and recommendations when trying to balance transnational criminal and civil RICO actions with the internal structures of the United States. Lastly, Part IX provides the Article’s conclusions.

B. White Collar Crime and Organized Crime Defined

 1. What Is White Collar Crime?

In 1940, Edwin H. Sutherland, an American sociologist and criminologist, published a unique and revolutionary article, White-Collar Criminality, on the definition of organized crime.[5] In the article, he related crime to business in an effort to develop theories for criminal behavior.[6] White collar crimes, he continued, are not different from other crimes but must be justified and analyzed under the criteria used when dealing with other crimes.[7]

 2. What Is Organized Crime?

Donald R. Cressey, also an American sociologist and criminologist, has contributed substantially to the understanding of organized crime through his various publications. He traced the origins of organized crime to the sale of illicit goods and services, the profits of which are subsequently invested in licit enterprises.[8] It is when these licit enterprises—which operate as criminal syndicates—began to undermine the political and economic spheres “that the real trouble begins.”[9] As syndicates began to “invest in every conceivable kind of legitimate business,” substantial differences emerged between “crime” and “organized crime.”[10] What was the result? Nothing less than impairment to free competition and a monopoly on the government.[11]

Additionally, the Senate Report on the Organized Crime Control Act of 1969 noted that organized crime, including illegal gambling, narcotics trafficking, loan-sharking, and fraudulent bankruptcies, was present in both cities and suburban areas.[12] This practice, the report found, has encouraged street crime, started to infiltrate organized labor, and influenced legitimate businesses via “physical terror,” “psychological intimidation,” “economic retaliation,” and “political bribery,” amid “citizen indifference and government acquiescence.”[13] The report identified obstacles to prosecution including evidence gathering, high standards of proof, the unsuccessful use of informants, and inability to obtain documentary evidence.[14]

C. Legislative History Leading Up to RICO’s Enactment

RICO is found in Title IX of the Organized Crime Control Act of 1970.[15] The RICO legislative drafting process was focused on “certain forms of criminal conduct—violence, the provision of illegal goods and services, corruption in government and labor unions, and commercial fraud.”[16] It was well understood that RICO would be applied beyond organized crime; this idea was one of the special challenges posed by criminal law and simultaneously examined during the drafting process by Senator John Little McClellan (Chairman of the Committee), Senator Roman L. Hruska, and G. Robert Blakey (consultant and adviser to the Committee), amongst other key senators.[17] Professor G. Robert Blakey, drafter and expert on RICO, notes that the statute’s legislative history demonstrates two movements: “[o]ne direction narrowed the predicate offenses to exclude political or social demonstrations; the other enlarged the predicate offenses to include white-collar crime.”[18] A significant objective was to prevent such criminal behavior from “interfer[ing] with free competition and . . . burden[ing] interstate and foreign commerce.”[19] With this as a backdrop, courts start their analysis with the “question of whether and, if so, how a free society can protect itself when groups of people . . . turn crime into an ongoing business.”[20]

D. Context During and After RICO’s Enactment

RICO was enacted primarily to eradicate the organized crime that had perplexed U.S. law enforcement for decades and caused the loss of billions of dollars from the U.S. economy.[21] Since RICO’s enactment in 1970, the statute has been used to combat the Mafia,[22] the Latin Kings street gang,[23] and many seemingly legitimate businesses engaged in illicit activities.[24] Additionally, it has been used as a weapon against white collar crime[25] and even political movements, such as anti-abortion enterprises who lack a financial motive,[26] which is in stark contrast to RICO proceedings immediately after enactment.[27]

In fact, in 1985, the Supreme Court in Sedima v. Imrex Co.[28] stated that “nstead of being used against mobsters and organized criminals, [RICO] has become a tool for everyday fraud cases brought against ‘respected and legitimate’ enterprises.”[29] Whether the Court saw this expansion as an inevitable result of RICO or perhaps as a political question, its analysis based on federalism concerns is interesting:

It is true that private civil actions under the statute are being brought almost solely against such defendants, rather than against the archetypal, intimidating mobster. Yet this defect—if defect it is—is inherent in the statute as written, and its correction must lie with Congress. It is not for the judiciary to eliminate the private action in situations where Congress has provided it simply because plaintiffs are not taking advantage of it in its more difficult applications.[30]

Finally, as enacted, RICO expressly authorized criminal and civil sanctions against all types of organized crime, such as “simple political corruption,” or “sophisticated white-collar crime schemes, as well as “traditional Mafia-type endeavors.”[31] The primary fears that RICO was an “illegitimate” litigation tool have all vanished; RICO is now regarded as the primary “tool of choice for intricate criminal and civil litigation.”[32] The legislative history briefly mentioned above adequately demonstrates the congressional intent that RICO be used to provide the “new weapons of unprecedented scope for an assault upon organized crime and its economic roots.”[33] It is now, at this stage, up to the courts to abide by such congressional intent when adjudicating cases, whether primarily within a domestic context or even when deciding cases with foreign elements.

Extraterritorial crimes receive a slightly different analysis. It has been no secret that courts have relied heavily on the “‘liberally construed’ language” to expand on the definition of possible enterprises which may fall “under the modern RICO net.”[34] However, an underestimated yet critical factor that has plagued the enforcement of RICO has been globalization. This has curtailed the statute’s power when dealing with both domestic cases as well as cases with a transnational character.[35] It is possible for transnational organized crime to span continents, with the conduct occurring, for instance, in one nation and the electronic transfer of funds taking place in another.[36] Thus, globalization has allowed the members of these organized crime schemes to capitalize on advanced technologies and operate these illicit schemes under the veil of anonymity.[37]

What has this trend meant for the United States? To start, courts have been forced to decide cases involving one or more foreign elements.[38] But this development has created a problem for the U.S. judiciary: “[W]hen is a RICO case too far removed from American soil to be decided by an American court?”[39] This question of extraterritoriality has been something that has caused confusion within the U.S. lower courts. While crimes are usually adjudicated in the place where the conduct occurs, Congress has the authority to enact laws that reach beyond the territorial borders of the United States.[40] Such power is not forbidden by the Constitution nor international law, but it is a hotly debated topic.[41]

E. RICO’s Text

While RICO was “an innovation,” it did not operate to displace or preempt other federal or state laws.[42] Under RICO, the government can bring charges against an individual or entity that has engaged in a pattern of racketeering for both civil and criminal sanctions,[43] while private civil claimants may bring a private cause of action.[44] Section 1962(a)-(d) created four criminal offenses regarding organized crime activities in relation to an enterprise.[45] First, Section 1962(a) makes it unlawful to receive income derived, directly or indirectly, through a pattern of racketeering activity in relation to an enterprise.[46] The challenge for prosecutors here is establishing the connection between this income or investment and racketeering.[47] Next, Section 1962(b) makes it unlawful to acquire or maintain, directly or indirectly, an interest in an enterprise from a pattern of racketeering activity.[48] The “indirectly” language here and in the other prohibitions indicates that mere “acquisition, maintenance, or control of an enterprise” may be sufficient.[49] Third, Section 1962(c) makes it unlawful for a person employed by or associated with an enterprise to conduct or participate, directly or indirectly, in the enterprise’s affairs through a pattern of racketeering activity.[50] Thus, the “conduct” and “participate” language require that a pattern of racketeering also be demonstrated.[51] Lastly, Section 1962(d) makes it unlawful to conspire to violate any of the above subsections.[52] While the word “conspiracy” evokes mixed feelings for prosecutors, this provision clearly criminalizes the pattern of a single conspiracy based on the “maintenance or infiltration of an ‘enterprise’ through racketeering activity.”[53] The statute makes clear that “[t]he provisions of this title shall be liberally construed to effectuate its remedial purposes.”[54]

RICO defines an enterprise as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”[55] In other words, this so-called enterprise “need not be a legal entity,” but should instead be thought of as “associations in fact.”[56] For instance, “f such an association-in-fact has a common purpose, continuity of structure and personnel, and a structure distinct from the pattern of racketeering, it is a RICO enterprise.”[57] While this interpretation in no doubt set the stage for the expansive readings that courts have adopted, it is nevertheless true that some enterprises are formed to engage in criminal acts but also have legitimate purposes.[58] Furthermore, the Supreme Court in United States v. Turkette[59] noted the three elements necessary to show the existence of an “enterprise” for RICO purposes: (1) an ongoing enterprise; (2) evidence that the associates function together for a common purpose; and (3) an existence of the entity “separate and apart” from the pattern of activity in which it is engaged.[60]

Next, the RICO charge must allege a pattern of racketeering activity, which the statute defines as “requir[ing] at least two acts of racketeering activity . . . within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity.”[61] This pattern requirement is malleable and elastic, but not vague.[62] For instance, the Supreme Court in Sedima stated that “while two acts are necessary, they may not be sufficient. Indeed, in common parlance two of anything do not generally form a ‘pattern.’”[63] The Court went on to note that legislative history concurs on this point as well.[64] Additionally, it is important to note that these offenses are not different or new crimes addressed by RICO; they are acts that are already illegal and punishable under existing state or federal law.[65] But to be actionable, there needs to be a relationship—more than a mere “single, isolated transaction”[66]—between the predicate acts, the racketeered activity and the threat of criminal activity, which usually involves factors such as “common perpetrators, methods of commission, victims, or motive.”[67]

The criminal offenses under RICO are coined “predicates,” and these predicates must be “chargeable” under State law or “indictable” under federal statutes of the U.S. code.[68] Furthermore, the operations or activities of the enterprise must affect “interstate or foreign commerce.”[69] Thus, it appears that every RICO violation requires at least two factors in addition to foreign or interstate commerce: “an enterprise and a pattern of racketeering activity.”[70]

RICO also created a private cause of action in Section 1964(c) for civil remedies that allows, or grants standing to, “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter [18 U.S.C. § 1962] may sue therefor in any appropriate United States district court and shall recover threefold the damages. . . .”[71] The civil remedy provision is preferable for private claimants because they do not have to satisfy the strong procedural protections that apply in a criminal case for defendants such as the proof beyond a reasonable doubt standard or the strict warrant procedures.[72] It is also preferable due to the possibility of treble damages and attorney fees as remedies.[73] However, now RICO adds civil sanctions, which not only lowers the burdens for law enforcement agencies and district attorneys, but also gives “courts greater flexibility to disrupt the activities of a criminal enterprise.”[74] The Supreme Court has stated that this civil provision is meant not merely to compensate victims but also to turn them into private prosecutors “dedicated to eliminating racketeering activity.”[75]

Thus, RICO is a special statute, distinct from other civil or criminal statutes in that it focuses “not on the individuals committing criminal activities but rather on the criminal enterprises.”^[76] But what happens when foreign elements are added to the mix? In RICO cases involving multiple nations, courts have adhered to the following analysis in determining the propriety of extraterritorial regulation: first, a conduct test, which asks “whether the United States has the power to reach the conduct in question under traditional principles of international law”; and second, an effects test, which asks “whether the statutes under which the defendant is charged are intended to have extraterritorial effect.”[77] The following Parts demonstrate this process.

II. RICO and the Pre-Morrison Test & RICO and Morrison

A. The Pre-Morrison Test

RICO cases prior to the 2010 Morrison decision tended to incorporate either some form of the conduct or effects tests. Whether Congress intended this statute to be applied beyond the United States was apparently unclear, despite the references to foreign commerce in the text of RICO. Nevertheless, early cases decided that there was congressional silence in RICO as to its geographic reach.[78] In United States v. Noriega,[79] decided in 1990, the district court determined that “[w]hen Congress passed RICO, it was primarily concerned with eradicating the destructive influence of organized crime on our society.”[80] How the court in Noriega explained Congress’ intention in light of RICO’s purpose is illuminating:

Keeping in mind Congress’ specific instruction that RICO be applied liberally to effect its remedial purpose, the Court cannot suppose that RICO does not reach such harmful conduct simply because it is extraterritorial in nature. As long as the racketeering activities produce effects or are intended to produce effects in this country, RICO applies.[81]

It appeared to be the effect on the U.S. society, and not the locus of the alleged criminal activity, that prompted courts to take a more active role in expanding RICO abroad despite the alleged congressional silence. The result in Noriega, which involved RICO violations in the United States and abroad, was that the court had “[j]urisdiction over Defendant’s extraterritorial conduct . . . both as a matter of international law and statutory construction.”[82]

In analyzing cases involving the extraterritorial applications of U.S. statutes in this era, such as RICO, courts have relied on the presumption against exterritoriality to determine geographic scope.[83] However, this did not yield consistent standards or procedure. Some courts and individual judges have decided that Congress did not intend for RICO to apply beyond the United States’ borders.[84] Other courts have held that even though RICO is silent as to its geographic reach, courts can look to the approaches used in other areas of law, such as securities or antitrust law,[85] which have granted extraterritorial applications in some cases. Yet some courts have incorporated forms of the conduct[86] or effects[87] tests as long as the plaintiff alleges some domestic effect on interstate commerce in their RICO claim.[88]

Thus, this era was categorized by judicial efforts to discern congressional intent by utilizing the presumption against extraterritoriality and examining the case under some form of the conduct/effects tests. Nevertheless, it was generally agreed that some U.S. nexus, such as domestic racketeering activity or domestic enterprise, was needed to adjudicate a case with foreign defendants.[89] However, such subjective analyses can lead to varying interpretations and unpredictable results, as the following Parts will prove.

B. The Morrison Test

The Morrison case involved a class action lawsuit of Australian investors against an Australian bank, National Australia Bank (NAB), in connection with alleged fraudulent securities on Australian and other foreign exchanges.[90] It was a foreign-cubed transaction[91] before the Supreme Court involving allegations of fraudulent misrepresentation in the records of NAB’s U.S. subsidiary in Florida, HomeSide, which also appeared in NAB’s annual financial statements.[92] The Supreme Court, in an opinion by Justice Scalia, reinvigorated the presumption against extraterritoriality and asserted that “[w]hen a statute gives no clear indication of an extraterritorial application, it has none.”[93] Thus, if a statute is silent or ambiguous as to its geographic reach, then that particular provision does not have an extraterritorial force. At this point, courts must determine the legislative “focus” of the statute to see if the case is sufficiently domestic to allow for judicial adjudication.[94]

Little by little, courts began to narrow RICO’s reach in a way that would have been considered highly unlikely under the prior, broader interpretations attached to the definition of “enterprise.”[95]

Courts are now to look first at the statute itself to discern whether congressional intent exists as to that provision’s extraterritorial application. While it is debated what kind of evidence can be used to rebut the presumption against extraterritoriality, the Supreme Court in Morrison did assert that this is not a clear rule and that “[a]ssuredly context can be consulted as well.”[96] If none can be discerned, there is another chance for that provision to be applied abroad: the domestic focus analysis. This “focus” analysis is important when the statute is silent because it allows for U.S. adjudication only if the case presents a domestic nexus, as determined through an analysis of “the objects of the statute’s solicitude.”[97] However, cases which fail the domestic focus analysis are dismissed as an impermissible use of extraterritoriality.

But what does this mean for claimants seeking to apply RICO extraterritorially? As a starting point, by combining the analyses from pre-Morrison cases with the Morrison holding, one result is evident among the judiciary in cases prior to RJR Nabisco: RICO has no extraterritorial application.[98] Courts have come to the conclusion that it is clear that RICO is silent as to its geographic reach.[99] The question at this stage quickly became how to apply Morrison’s focus analysis to RICO. Professor Franklin A. Gevurtz nicely explains how the process proceeded for courts at this stage:

“[U]nder Morrison this requires asking whether the thing corresponding to RICO’s statutory focus was inside the United States in the case (in which event there was no extraterritoriality to trigger the presumption) or whether the thing corresponding to RICO’s focus was outside the United States in the case (in which event the presumption against extraterritoriality blocks application of RICO). Of course, to answer this question, federal courts must determine RICO’s statutory focus. . . .”^[100]

In other words, what is the focus of RICO? What is “domestic” under Morrison? Unfortunately, the Supreme Court has not been very helpful in guiding the lower courts on how to discern a statute’s “focus,” especially when it had the chance to do so in Morrison.[101] This led to a split amongst the lower courts, as the next Part outlines.

III. The Post-Morrison, Pre-RJR Nabisco Split: What is Domestic?

Post-Morrison, pre-RJR Nabisco cases analyzed whether the case is sufficiently domestic by using one of four approaches: (1) the “enterprise” approach, (2) the “predicate offenses” approach, (3) the “pattern of racketeering” approach, or (4) the “predicate statute’s geographic reach” approach. These approaches, examined in this Part, represent the different ways courts have defined the focus of RICO.

A. The Contending Approaches

1. The Enterprise Approach

The “enterprise” approach is articulated best by the Second Circuit in Cedeño v. Intech Group, Inc.,[102] decided in 2010. In Cedeño, a private claimant, a national of Venezuela, sued Venezuelan government officials for laundering funds, which were obtained via “fraud, extortion, and private abuse of public authority,” through U.S. banks.[103] The defendants, the Venezuelan officials, had sought to dismiss the claim on the theory that the case is foreign and RICO does not extend beyond the territory of the United States.[104] Because this case was decided after Morrison, the court used the Morrison framework.[105] Since RICO was silent as to its geographic reach, the court determined the focus to be on the “enterprise”; specifically, the focus of RICO was determined to be the “enterprise as the recipient of, or cover for, a pattern of criminal activity.”[106] The court did not find any congressional concern regarding the conduct of foreign enterprises, and determined that RICO only applies to regulate domestic enterprises.[107] Using this “enterprise rule” as the determinative factor in this case, the court dismissed the action because the enterprise and predicate activities alleged by the claimants were entirely foreign.[108]

Also in 2010, about one month after Cedeño, the Second Circuit decided another case under this framework, Norex Petroleum Ltd. v. Access Indus. Inc.[109] Here, the complaint alleged predicate acts in the United States: the defendants participated in a money laundering scheme to gain control of the Russian oil industry and had illegally acquired plaintiffs’ controlling share in the companies.[110] As with Cedeño, the claim was dismissed because the claimants had alleged RICO violations perpetrated by a foreign enterprise.[111] The court noted that under Morrison’s reasoning, RICO only applies domestically.[112] Even RICO’s references to interstate or foreign commerce were insufficient for the Norex court, which concluded that “simply alleging that some domestic conduct occurred cannot support a claim of domestic application. . . . The slim contacts with the United States alleged by Norex are insufficient to support extraterritorial application of the RICO statute.”[113] The Norex opinion did not reference the possibility of satisfying the focus test via the domestic injuries nor an association-in-fact; it was instead fixated on Morrison’s bright-line rule for statutory interpretation.[114] Something interesting in this case is the court’s rejection of the argument that RICO does apply extraterritorially, since its predicate offenses apply to foreign conduct abroad.[115] But the main points under the Cedeño and Norex approaches are that RICO is silent as to its geographic reach and that its focus was upon the domestic enterprise. Thus, any cases that alleged violations by foreign enterprises had to be dismissed.

Courts soon realized that the question of determining whether an enterprise is foreign or domestic can be a challenging question, as enterprises can either lack or conceal a location. But because courts have been both active and creative in matters involving extraterritorial regulation, more tests were developed to remedy this shortcoming. For instance, the Eastern District of New York in European Community. v. RJR Nabisco, Inc.[116] adopted the “nerve center test” to determine the geographical location of the enterprise.[117] This test was adapted from a 2010 Supreme Court case, Hertz Corp. v. Friend,[118] which used the “nerve center” test to determine a corporation’s “principal place of business” for jurisdictional purposes.[119] Analogizing this test to RICO analyses, courts have used the “nerve center test” to discern if an enterprise is domestic and have generally held that, as per Hertz, the principal place of business is “the place where a corporation’s officers direct, control, and coordinate the corporation’s activities.”[120]

Attorney Miranda Lievsay has asserted that the “enterprise” approach “would allow a criminal enterprise to avoid liability by relocating the enterprise’s ‘brains’ outside the United States while continuing to direct racketeering activity within the United States.”[121] She has also asserted that this approach directly undermines congressional intent and RICO’s purpose, which is to “eradicate the harmful effects of infiltration as produced by all criminal syndicates;” thus, there is not a solely domestic focus when dealing with RICO.[122] Arguments on the other side contend that the “enterprise” approach is more aligned with Morrison since “RICO does not punish predicate acts of racketeering alone, but only racketeering activity as related to an enterprise.”[123]

  2. The Predicate Offenses Approach

CGC Holding Co. v. Hutchens[124] analyzed the “predicate acts” approach. Here, Canadian defendants were alleged to have committed a fraudulent loan scheme in violation of RICO.[125] Even though RICO, as acknowledged by the court, is silent as to its geographic reach, the court nevertheless stated that a sufficient RICO claim had been alleged because the predicate acts occurred in the United States.[126] The district court articulated the “predicate acts” approach, which looks to the location of the predicate offense in determining whether it qualified as domestic.[127] The defendant’s motion to dismiss was denied because the “racketeering activity . . . was directed at and largely occurred within the United States.”[128] The court distinguished Norex and Cedeño as cases “where the actors, victims and conduct were foreign, and the connection to the United States was essentially incidental.”[129] Here, by contrast, “the conduct of the enterprise within the United States was a key to its success.”[130] Thus, the court determined that the case involved a domestic application of RICO.[131]

Similarly, Chevron Corp. v. Donziger[132] used the “predicate acts” approach.[133] Here, it was alleged that a New York lawyer and others “conceived, substantially executed, largely funded, and significantly directed a scheme to extort and defraud Chevron, a U.S. company . . . .”[134] The court decided to follow the CGC Holding Co. court’s “predicate acts” approach, even though this case would have satisfied the “enterprise” approach because the actors were within the United States.[135] It determined that congressional intent was on “protecting American victims at least against injury caused by the conduct of the affairs of enterprises through patterns of racketeering activity that occur in this country.”[136] Thus, the defendant’s motion to dismiss was denied.[137]

There are also defects with the “predicate offenses” approach. Lievsay asserts that this approach is inconsistent with both RICO’s legislative history and the Morrison opinion. For instance, the “predicate offenses” approach “ignores Congress’s explicit warning that merely addressing the unlawful activities of an enterprise will fail to effectively eradicate organized crime.”[138] However, scholars have promoted this approach as the proper focus because “RICO only prohibits certain actions toward an enterprise when these involve a pattern of racketeering activities.”[139]

3. The Pattern of Racketeering Approach

The third approach is called the “pattern of racketeering” approach and is best elaborated upon by the Ninth Circuit in United States v. Chao Fan Xu.[140] In Chao Fan Xu, four Chinese nationals allegedly participated in a scheme to steal millions of dollars from the Bank of China and then fraudulently enter the United States with false immigration documents, illegal funds, and fraudulent marriages.[141] The Ninth Circuit found that RICO’s focus was the pattern of racketeering which, in that case, was “executed and perpetuated in the United States.”[142] The court acknowledged that the location of the enterprise may sometimes be relevant, but should not relevant in cases where the “‘brains’ of the operation were located overseas but the enterprise violated United States immigration law in the United States . . . . .”[143] In other words, even though the enterprise in Chao Fan Xu was overseas, the pattern of the racketeering activity occurred in the United States.[144] The court acknowledged the difficulties in applying Morrison’s focus inquiry to the RICO context and noted that courts have taken either the “enterprise” approach or “predicate acts” approach toward RICO’s focus.[145] In articulating the “pattern of racketeering” approach, the Ninth Circuit stated that this approach more accurately measures the focus of RICO since it is the pattern of racketeering activity that is the “heart of any RICO complaint” that is alleged.[146] The court examined the legislative history and RICO’s text[147]—which explicitly mention “pattern of racketeering activity” in each of the provisions—to support this new approach.[148] Finally, because the second part of the defendants’ plan took place in the United States and was essential to their fraudulent scheme, the Ninth Circuit affirmed their convictions.[149]

Like the preceding approaches, the “pattern of racketeering” approach has been admonished because it holds that RICO does not apply extraterritorially despite the strong congressional intent to the contrary.[150] However, it has also been noted, and correctly so, that this approach yields fairer results compared to the “enterprise” or “nerve center” approach. For instance, a RICO scheme conducted in the United States by a U.S. enterprise would be subject to RICO’s force under the “enterprise” approach, but a RICO scheme conducted in the United States by a foreign enterprise would escape liability under the “enterprise” approach.[151] As the Ninth Circuit in Chao Fan Xu stated, “an inquiry into the application of RICO to Defendants’ conduct is best conducted by focusing on the pattern of Defendants’ racketeering activity as opposed to the geographic location of Defendants’ enterprise.”[152]

 4. The “Predicate Statute’s Geographic Reach” Approach

In 2014, the Second Circuit, in European Community. v. RJR Nabisco, Inc.,[153] articulated a fourth approach or method of analyzing RICO: the “predicate statute’s geographic reach” approach.[154] This approach is different than the other three because it does not encompass a “focus” analysis of the “objects of [RICO’s] solicitude,”[155] but instead simply an analysis of whether the underlying predicates apply extraterritorially—Morrison’s first prong. The claims in this case, elaborated upon more below in Part VI, entail a complex money-laundering and drug sale scheme by RJR Nabisco and related entities. The Second Circuit apparently found sufficient evidence to rebut the presumption and, at the same time, obviate Morrison’s focus analysis. The court stated that RICO does apply extraterritorially “if, and only if, liability or guilt could attach to extraterritorial conduct under the relevant RICO predicate.”[156] In other words, the court asserted, “when a RICO claim depends on violations of a predicate statute that manifests an unmistakable congressional intent to apply extraterritorially, RICO will apply to extraterritorial conduct, too, but only to the extent that the predicate would.”[157] Of course, the opposite is true as well: “Conversely, when a RICO claim depends on violations of a predicate statute that does not overcome Morrison’s presumption against extraterritoriality, RICO will not apply extraterritorially either.”[158]

This case marked the first time RICO was applied to both foreign racketeering activity and foreign enterprises causing foreign activity,[159] until the Supreme Court modified this result. It has been promoted because it allows for extraterritorial application and is more aligned with congressional intent as well as the broad scope of RICO; however, several questions remained unanswered after this approach was endorsed by the Second Circuit, such as RICO’s applicability to international organizations.[160] One last question may have been whether Congress really intended RICO’s geographic reach to be dependent on those of its underlying predicate offenses, especially since RICO was regarded as a special statute that created new offenses to combat the increasingly-emerging trend of transnational organized crime.

IV. Noteworthy Earlier Holdings

 A. Charming Betsy

            Murray v. The Schooner Charming Betsy,[161] decided in 1804, is famous for its position that “an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains . . . .”[162] Thus, it has been well understood that Congress does not legislate to create inconsistencies in international law, unless, of course, a contrary intent is clearly demonstrated.

 B. Bowman

In 1922, United States v. Bowman[163] held that the presumption against extraterritoriality should not apply when the court is dealing with “criminal statutes which are, as a class, not logically dependent on their locality for the Government’s jurisdiction, but are enacted because of the right of the Government to defend itself against obstruction, or fraud wherever perpetrated . . . .”[164] The opinion, written by Chief Justice Taft, went on to explain that to limit the locus of these offenses to a strictly territorial approach would “greatly…curtail the scope and usefulness of the statute and leave open a large immunity for frauds . . . .”[165] Furthermore, in these cases and with such statutes, “Congress has not thought it necessary to make specific provision in the law that the locus shall include the high seas and foreign countries, but allows it to be inferred from the nature of the offense.”[166]

Thus, it was debatable whether the presumption should apply to both criminal and civil RICO in the same manner.[167] Morrison seemed to partially overrule Bowman by requiring a clear indication regarding extraterritoriality or else the statute has no extraterritorial application. Interestingly, though, RJR Nabisco seems to revitalize Bowman through its distinction between criminal actions and civil suits, which grants more flexibility and discretion to criminal prosecutions, as opposed to civil RICO claims.

V. Breaking Down the Supreme Court’s Opinion in RJR Nabisco

A. Facts and Holding

In 2016, the Supreme Court decided the important case of RJR Nabisco v. European Community.[168] In this case, the procedural history of which spanned sixteen years, RJR Nabisco and related entities (hereinafter, “RJR Nabisco”) allegedly participated in a “global money-laundering scheme” with organized crime groups,[169] which had been “orchestrated from their U.S. headquarters.”[170] Specifically, the complaint by the European Community and twenty-six of its member states (hereinafter, “European Community”) described the scheme as the participation of Colombian and Russian drug traffickers who smuggled narcotics into Europe and sold drugs for euros which were, in turn, used to purchase large shipments of cigarettes.[171] The complaint also alleged that RJR Nabisco dealt directly with drug traffickers and money launderers in South America, sold cigarettes to Iraq, which violated international sanctions, and acquired a company to further their illegal acts.[172] Thus, the complaint properly alleged a pattern of racketeering carried out in interstate commerce, thereby qualifying RJR Nabisco as a RICO “enterprise.”[173] Furthermore, each of RICO’s substantive prohibitions, outlined in sections §1962(a)-(d), were alleged to have been violated by RJR Nabisco.[174] This resulted in an alleged harm to the European Community.[175]

The District Court agreed with RJR Nabisco and dismissed the complaint, asserting that RICO does not apply to activities outside the United States;[176] however, the Second Circuit reversed, concluding that “Congress has clearly manifested an intent that [predicates for RICO liability] apply extraterritorially.”[177] Specifically, the Second Circuit concluded that two of the predicates alleged in the complaint—the money laundering and material support of terrorism statutes—apply extraterritorially, while the other three—mail fraud, wire fraud, and violation of the Travel Act[178]—do not apply extraterritorially but that the complaint nevertheless alleges sufficient domestic violations of the predicates.[179]

RJR Nabisco pursued a request for rehearing, arguing that RICO’s civil cause of action requires a showing of a domestic injury, which the panel denied.[180] Rehearing en banc was also denied by the Second Circuit.[181] Because of lower court confusion regarding whether RICO does have extraterritorial application, the Supreme Court granted certiorari.[182] The issue before the Court was simply whether RICO applies extraterritorially.[183] In particular, the Court had to decide the geographic scope of two key provisions of RICO: (1) the substantive provisions, and (2) the civil damages action, referring to the private right of action. The Court held, in an opinion by Justice Alito, that the presumption against extraterritoriality had been overcome with respect to the substantive provisions found in § 1962 “provided that each of those offenses violates a predicate statute that is itself extraterritorial,”[184] but it had not been overcome for RICO’s § 1964(c) private right of action absent the private plaintiff proving “a domestic injury to its business or property.”[185] The holding on the substantive provisions was unanimous, but the holding on the civil private right of action resulted in a 4–3 split on the Supreme Court.

B. RICO’s Substantive Provisions

The Court began its discussion by acknowledging the presumption against extraterritoriality: “Absent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.”[186] Its purpose is to “avoid the international discord that can result when U.S. law is applied to conduct in foreign countries” and reflects the notion that “Congress generally legislates with domestic concerns in mind.”[187] After briefly describing two significant prior Supreme Court cases dealing with extraterritoriality—Morrison and Kiobel[188]—the Court the articulated a two-step framework based on those cases:

At the first step, we ask whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially. We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction. If the statute is not extraterritorial, then at the second step we determine whether the case involves a domestic application of the statute, and we do this by looking to the statute’s “focus.” If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S. territory.[189]

Like Morrison and Kiobel, the Court in RJR Nabisco asserted that virtually all cases should use the presumption. However, unlike those cases, the Court here found that the presumption had in fact been rebutted for the substantive prohibitions in §1962.[190] Justice Alito based this conclusion on the text of RICO, for which there are several predicates that apply to some foreign conduct.[191] Because of Congress’ incorporation of these predicate offenses into the RICO statute, the Court concluded that “RICO gives a clear, affirmative indication that §1962 applies to foreign racketeering activity—but only to the extent that the predicates alleged in a particular case themselves apply extraterritorially.”[192] Thus, this rule does not apply to all RICO predicates, only to the ones in which the RICO predicates have extraterritorial effect.[193]

Regarding the presumption once more, Justice Alito noted that only a clear indication can rebut the presumption.[194] However, a clear statement is not needed; context can be consulted.[195] And it is with this context that the Court concluded that Congress intended RICO to have extraterritorial effect; in fact, the Court noted that “[t]his unique structure makes RICO the rare statute that clearly evidences extraterritorial effect despite lacking an express statement of extraterritoriality.”[196] Thus, RICO applies to some foreign racketeering activity.[197]

RJR Nabisco contended that RICO’s focus (which was urged to be the enterprise, not the pattern of racketeering) does not apply to foreign enterprises and thus requires a domestic enterprise; therefore, according to RJR Nabisco, RICO did not reach this case.[198] In rejecting this argument, Justice Alito reasoned that the focus inquiry is relevant only at step two, which was unnecessary in this case since there was a clear indication of extraterritorialty at step one.[199] “[T]he location of the affected enterprise does not impose an independent constraint.”[200] If it did, Alito rationalized, then foreign enterprises operating in the United States would be excluded from RICO’s reach.[201] As one final matter on this holding, the Supreme Court noted that “a RICO enterprise must engage in, or affect in some significant way, commerce directly involving the United States—e.g., commerce between the United States and a foreign country,”[202] thus drawing upon Kiobel’s “touch and concern . . . with sufficient force” standard.[203] Without this “anchor to U.S. commerce, a RICO violation cannot stand.[204] Thus, the predicates alleged here, money laundering and material support of terrorism statutes, expressly provide for extraterritorial application, but the other three alleged, fraud statutes (mail fraud and wire fraud) and the Travel Act, did not contain the clear indication to rebut the presumption, but that the complaint alleged domestic violations of those statutes.[205]

C. RICO’s Private Right of Action

The Supreme Court here, in a plurality opinion, rejected the Second Circuit’s notion that the presumption did not apply to the private right of action separately from the substantive provisions and based its reliance on Kiobel’s extension of the presumption to jurisdictional statutes.[206] Because of this, Justice Alito, no longer writing for a unanimous Court, saw fit to require that the presumption be applied separately to RICO’s causes of action, and, to support this conclusion, he noted that “providing a private civil remedy for foreign conduct creates a potential for international friction beyond that presented by merely applying U.S. substantive law to that foreign conduct.”[207] The Supreme Court provided antitrust law as an example of a situation that has generated considerable controversy over the extraterritorial applications of its treble-damages provisions to conduct in other states.[208] The risks of foreign friction appeared to be too much for the Court to overlook, at least not “without clear direction from Congress.”[209] Thus, after RJR Nabisco, when there is a risk of U.S. and foreign law clashes, “the need to enforce the presumption is at its apex.”[210]

The European Community had a very compelling argument at this stage – one that entailed their consent to any resulting international friction: “the plaintiffs are not foreign citizens seeking to bypass their home countries’ less generous remedies but rather the foreign countries themselves.”[211] In rejecting this, the Court contended that it refused to adopt a case-by-case inquiry that is dependent on “consent of the affected sovereign.”[212]

Turning to the analysis of congressional intent, the Supreme Court noted that there was nothing in § 1964(c) that demonstrated a congressional intent for the private right of action to extend to injuries suffered outside the United States.[213] It was insufficient to the Court to allow the private right of action to extend abroad just because the underlying law governing the conduct extends abroad.[214] “Something more is needed, and here it is absent.”[215] Thus, the focus of the civil private right of action is the injury caused by the RICO violation.[216]

Justice Alito concluded this part of the opinion by acknowledging that this will require a civil plaintiff to prove domestic injury to business or property; alleging foreign injuries is insufficient. He also admitted that this distinction “will not always be self-evident” but that “we need not concern ourselves with that question in this case.”[217] This was because the European Community waived their damages claims for domestic injuries in the District Court, which was accepted with prejudice. Because the rest of the claims alleged damages based on foreign injury, the presumption had not been rebutted for § 1964(c) and the Court dismissed the claims.[218]

D. The Dissents

Justice Ginsburg dissented from the holding on the private right of action. She expressed her disagreement that the private right of action requires a domestic injury and does not allow for recovery for foreign injuries.[219] Instead, Justice Ginsburg would have held that RICO reaches extraterritorial injury when the claimant is a private plaintiff.[220] In fact, as she maintained, RICO’s private right of action “expressly incorporates §1962, whose extraterritoriality, the Court recognizes, is coextensive with the underlying predicate offenses charged.”[221] Most importantly, as applied to this case, Justice Ginsburg underscores why the domestic-injury requirement “makes little sense.”[222] Here, all the defendants are United States corporations with United States headquarters and are charged with racketeering activity managed from the United States involving conduct that took place in the United States. Thus, “this case has the United States written all over it.”[223]

Turning to the majority’s “international friction concerns,” Justice Ginsburg notes that it is not entirely clear that the Court’s rule would prevent “international discord.”[224] In fact, as she observes, “[m]aking such litigation available to domestic but not foreign plaintiffs is hardly solicitous of international comity or respectful of foreign interests.”[225] In addition, doctrines such as forum non conveniens and due process constraints are “controls [that] provide a check against civil RICO litigation with little or no connection to the United States.”[226] Lastly, Justice Ginsburg points out that while the majority tries to avoid creating a double standard, they have in fact created one of their own. “U.S. defendants commercially engaged here and abroad would be answerable civilly to U.S. victims of their criminal activities, but foreign parties similarly injured would have no RICO remedy.”[227]

Justice Breyer also wrote a short dissent, disagreeing with the majority’s stance on the private right of action and instead asserting, similarly to Justice Ginsburg, that §1964(c) does demonstrate the congressional intent for extraterritorial application.[228] In fact, Breyer contends, this case does not involve a case of purely foreign facts, but foreign-cubed transactions. This case has many connections to the United States and, he asserted, the majority’s conclusion that these limits would prevent the dangers of international friction is unfounded.[229]

VI. Implications

RJR Nabisco had both global and local implications.[230] The framework for deciding transnational organized crime cases now proceeds in the following matter: first, courts will determine whether Congress has indicated its intent for the statute to be applied extraterritorially. If not, then in the second step, courts will determine whether there is conduct relevant to the statute’s focus that occurred in the United States. Despite the process, the RICO statute may geographically reach both U.S. and foreign individuals abroad and hold them liable under U.S. law in U.S. courts. Thus, even though RJR Nabisco rejected the domestic enterprise requirement, it still asserted that a connection to the United States is required. This requirement is satisfied via proof that the enterprise engaged in some form of interstate or foreign commerce, regardless of the enterprise’s connection or presence in the territory of the United States. However, this does not apply to civil plaintiffs seeking to enforce RICO for non-U.S. injuries. Thus, the question of RICO’s extraterritorial reach and its attendant circumstances continues to “take… on great significance, both in the criminal and civil spheres.”[231] These implications of RJR Nabisco will be explored in this Part.

A. The Presumption Against Extraterritorially Now Applies to Virtually Any Type of Claim

In RJR Nabisco, the Court found that Congress was not concerned with only domestic conditions; since Congress affirmatively indicated that certain predicate offenses apply to foreign conduct, RICO’s substantive provisions were therefore held to also apply abroad.[232] But this was not the case with the private right of action.[233] To justify this distinction, the Court analogized from its extension, in Kiobel, of the presumption for a “judicially-crafted private right of action under the ATS,” and used this rationale to extend this reasoning to the “legislatively-crafted private right of action” in RICO.[234] The problem with this reasoning is that judicial and legislative private rights of action are not comparable. Professor Anthony Colangelo contends that concerns over excessive prosecutorial discretion were presumably taken into account via the democratic process of enacting legislation because, as is evident in RICO, Congress expressly inserted a private right of action into the statute.[235] What the Supreme Court did in RJR Nabisco was worse than creating new rights with no basis: “the Court refused to enforce legislatively created rights through an incongruous and selective application of the presumption against extraterritoriality.”[236]

It has also been pointed out that the Court’s extension of the presumption against extraterritoriality to all types of claims is in conflict with Morrison’s distinction between subject-matter jurisdiction and merits questions (legislative jurisdiction).[237] Professor Hannah Buxbaum argues that this merits-jurisdictional distinction, regarding when the presumption can and cannot be applied, does not make sense “since applying the presumption against extraterritoriality to general jurisdictional statutes would deprive federal courts of subject-matter jurisdiction Congress clearly intends them to enjoy” and likely “frustrate[s] congressional intent.”[238]

Furthermore, this case was markedly different from Kiobel. In Kiobel, the ATS created an implied private right of action, gave federal courts the jurisdiction to hear such cases, and did not provide any substantive prohibitions—whereas, in RJR Nabisco, RICO prohibits conduct and provides an express private right of action for those injured by RICO violations.[239] Thus, as Professor Gevurtz correctly asserts, “Kiobel provides limited support for the proposition that the presumption against extraterritoriality applies separately to define the reach of a statute’s substantive prohibition and to create a different additional limitation for any private remedy provision within the statute.”[240]

The Supreme Court in RJR Nabisco decided to accept the argument for extraterritoriality based on the location of the injury and rejected the location-of-the-enterprise approach. In doing so, the Court left unresolved the issue of whether it would apply the presumption against extraterritoriality separately to every element of the plaintiff’s claim—“separate application for the injury element, but not for the different elements of the substantive violation.”[241] Moreover, the Court’s extension of the presumption to the express private right of action in RICO “intensified the barriers to transnational litigation”[242] by increasing the burden that Congress must overcome in order for a statute to apply abroad, demanding that the presumption be applied to each provision of congressional statutes, and contravening the historical notion that the presumption applies only to conduct-regulating statutes.[243]

Additionally, it is unclear whether the Court really did solve the split in the lower courts addressing RICO’s focus. It is likely that this problem wasn’t even addressed since the Court’s promulgated approach now simply looks at whether the predicate offense applies to foreign conduct.[244] Professor Gevurtz thinks that the analysis here did not moot the focus question since RICO could still apply extraterritorially based on either a focus on the “pattern of racketeering” or the “enterprise.”[245] Regarding the “added injury element” for the private right of action, it is even less clear what the focus is.[246] Apparently, the Court determined that domestic injury was the focus, but the text of § 1964(c) provides recovery for injuries from RICO violations; “[s]o, is the injury the focus or is the violation the focus?”[247] These concerns remain undressed and tend to confuse scholars as well as perpetuate barriers towards multi-state cooperation.

Moreover, what does this mean for the “focus” analysis in cases where the presumption against extraterritoriality had not been rebutted at step one? A notable question that remains is whether such presumption requires some U.S. conduct that would be irrespective of the focus. Recall the two-step framework of RJR Nabisco: step one regarding the congressional indication for extraterritoriality and step two (if step one is inapplicable) to determine if the conduct relevant to the statute’s focus is domestic.[248] But does this mean that conduct in the United States needs to be alleged “even if the focus of the provision is something other than conduct?”[249] In answering in the negative to this question, Professor Dodge notes that the opinion does not mention “conduct in the United States” when analyzing the focus with respect to the private right of action.[250] Furthermore, the Supreme Court in Morrison held that the location of the conduct is irrelevant in applying the presumption against extraterritoriality and that such a rule would “thwart Congress’s purpose when the focus of a provision is something other than conduct.”[251] Thus, for those asserting civil RICO claims, it is domestic injury, not conduct, that matters.

In conclusion, the main takeaway is that RJR Nabisco mandates that the presumption against extraterritoriality “appl[y] separately to a statute’s substantive and remedial provisions.”[252] The immediate consequence of the holding is a significant reduction of the geographic reach of U.S. statutes that do not demonstrate congressional intent as to the propriety of extraterritoriality.[253] Furthermore, as Professor Carlos Vázquez notes, the opinion actually imposes an additional requirement compared to prior cases dealing with the presumption against extraterritoriality: “the outcome for statutes that do not specifically address the extraterritoriality issue . . . is that recovery is limited to cases in which both the substantive ‘focus’ of congressional concern and the injury occurred on U.S. soil.”[254]

B. The Future of the Private Right of Action Under RICO Is Significantly Curtailed

After RJR Nabisco, the private right of action was already significantly abridged. Now, even though the private right of action still exists, private claimants must prove a U.S.-related injury.[255] This effectively requires that private litigants meet higher burdens than the government must when it brings a prosecution against the defendant, even though two such cases may be based on the same conduct. As Professor Franklin Gevurtz puts it, “private claims for injuries incurred outside the United States . . . may soon be barred, even when the location of the conduct would not preclude application of the statute in a prosecution of the defendant by the U.S. government.”[256] This restriction is also unsatisfying because it emphasizes avoiding international friction, yet places no consideration on “location of the conduct, the nationality of the parties, or other factors.”[257] It also seems to slightly contradict the Supreme Court’s statement in Morrison that “[a]ssuredly context can be consulted as well,”[258] since the analyses used in RJR Nabisco regarding the private right of action ignore RICO’s text and structure and undermine the purpose of the presumption.[259]

Scholars have argued that the Court’s holding regarding the interplay between the presumption and the private right of action is in conflict with the presumption’s historic function as a “separation-of-powers and foreign relations doctrine.”[260] In fact, the opinion “reflects the Court’s use of the presumption to transform the statute that Congress enacted into one the Court would have preferred.”[261] The U.S. injury requirement is also in conflict with RICO’s policy goals.[262]

Furthermore, RJR Nabisco does not clarify the “focus” analysis for private claimants. Professor Gevurtz notes that the opinion “gives defendants in private RICO cases two bites at hiding behind the presumption against extraterritoriality—one if the pattern of racketeering activities occurs outside the United States (and does not involve predicate crimes having extraterritorial reach) and a second if the injury occurs outside the United States.”[263] Similarly, the government is affected by this holding as well. For instance, it is equally possible for a private claimant to have RJR Nabisco standing, while the government cannot. This may occur in situations where the plaintiff has a domestic injury alleged under RICO, but where the government cannot pursue a claim because the defendant acted outside the United States.[264] Gevurtz characterizes this situation as “contrary to the underlying policy of RJR Nabisco that the presumption against extraterritoriality should curb private actions more than public prosecutions.”[265]

But what about the underlying policy of RICO? When it comes to matters of extraterritorial jurisdiction, the limited remedies and jurisdictional restrictions tend to limit the number of private claimants that can recover under civil RICO lawsuits, thus “frustrat[ing] the Act’s utility in litigating against corporate multinationals.”[266] For instance, lower courts have tended to increasingly narrow civil RICO, which directly and “substantially narrows the pool of plaintiffs that can receive compensation.”[267] Justifications for this limitation appear to be based on the “injured in his business or property” language in civil RICO.[268] Scholars have pointed out that this language evinces the congressional intent that Congress intended to compensate private victims for a more narrow type of harm, such as lost profits to business owners or something else along these lines.[269] But then how does one explain the “liberally construed” mandate found in RICO?[270]

Another major concern is the applicability of RJR Nabisco’s holding to other federal statutes. It appears that, because of the holding’s emphasis on injury, other federal statutes providing for just a private cause of action will only be extended to injuries felt in the United States unless there is a clear congressional intention for that statute to apply extraterritorially.[271] Thus, a federal statute—no matter how broadly drafted—that is silent as to its geographic reach will not allow for recovery for injuries felt outside the United States for private claimants.[272]

C. International Relations and Foreign Resentment Issues Have Not Abated

The Supreme Court in RJR Nabisco supported its holding because of concerns over the “potential for international friction.”[273] But, as Professor Anthony Colangelo points out, the facts in this case raised no issues of foreign resentment because the plaintiffs did not “resent . . . the application of U.S. law” but instead “explicitly and repeatedly requested it.”[274] In fact, it was the Court’s refusal to provide these foreign states—the plaintiffs—the same access to U.S. courts that is more likely to create “unequal treatment and itself risks foreign resentment and international friction.”[275]

This leaves one wondering why the European Community[276] sought access to U.S. courts in the first place and why it decided not to rely on any local or European law. After all, “the case also has the European Union written all over it;” furthermore, the majority of criminal activities that formed the bases for the RICO violations took place in Europe.[277] One reason could be the “promise of treble damages,” which was both a lucrative and punitive legal strategy.[278] Another reason could be the fact that RJR Nabisco was a U.S. company operating in the United States.[279] Still, an important reason could be that the European Union “offers no direct equivalent to the type of private enforcement possible under RICO.”[280] Thus, the European Community initiated the proceeding in U.S. courts and knew exactly what they were getting, which was the same as what they wanted: the application of U.S. law.

How far can this consent argument be taken and who can consent? If anyone can consent and effectively waive any possible foreign friction that may result, should this be sufficient for the judiciary to extend that provision extraterritorially? What if there is consent in one case, but not in a similar, future case? Or what if the initial consent was withdrawn? Scholars have focused on this consent argument because it was the foreign sovereigns themselves that were consenting; thus, the judiciary appeared to have no just reason to deny it and have been critically admonished for doing so.[281] Perhaps this is a strong argument since no higher entity can give consent than the respective foreign governments of individual states.

But had the Court adopted this consent argument, then the law would have been even more dependent on the specific facts in every case. More distinctions are not needed. For instance, such a consent-based approach could have resulted in situations where identical cases are decided as diametrical opposites in their holdings—one where U.S. law is extended abroad and the other where the presumption had not been rebutted. The difference between these two cases? Consent. This argument does not seem so compelling on the facts of RJR Nabisco since it was the foreign states consenting; but would it be possible, under a consent theory, for private organizations or private claimants to waive foreign resentment consequences? Even if they consent, the foreign government may not be so willing, especially if the defendant is a foreign-incorporated enterprise that happened to cause domestic injury to these claimants.

But this, too, creates too many distinctions based first on the claimant (foreign government vs. private party), then on consent, and then on the facts of the case. Such multi-layer steps and categorical distinctions will soon become too awkward. Viewed in this manner, the Court’s rejection of the consent-based approach is both sound and logical.

But why, then, did the Supreme Court not stop at their rejection of the consent-based approach but instead also differentiate between government actions and those brought by private parties? A prominent theory involves the sensitivity of foreign policy issues when in the hands of people not accountable to foreign governments.[282] Scholars have contended that this distinction has to do with the responsibility that U.S. prosecutors are given and the considerations they must weigh when initiating proceedings, which is something not demonstrated by private claimants.[283] This means that “private litigants . . . can undertake suits that may benefit themselves personally but produce public harm.”[284] Private claimants, such as attorneys handling class action suits, would normally be more concerned about getting paid and tend to lack the accountability to the public for the foreign complications resulting from their actions.[285] It seems to be likely that the Court in RJR Nabisco based its reasoning on these considerations. Thus, the judiciary tends to assert that it prefers foreign policy matters to be dealt with “by political actors who must face political accountability for their choices, not by litigants and judges who have no such responsibility.”[286]

However, is it really true that prosecutors are more likely to consider accountability issues and foreign policy than private attorneys? It could equally be possible that prosecutors are influenced by their workload, resources, success rates, etc. to the same extent as private attorneys representing private claimants or class actions suits. There is no guarantee that this is the case, nor is it a fair conclusion.

Other scholars, as well, have opposed this stance because the issue in RJR Nabisco was not foreign infringement. It has been contended that there is little evidence that comity was undermined by RICO analyses prior to Morrison.[287] Furthermore, “comity does not require that the United States tolerate or protect racketeering conduct that emanates from or has significant effects within its borders . . . .”[288] Then when is international comity affected? This is the key question but one that the Supreme Court did not address, leaving to the lower courts or to another Supreme Court decision the task of identifying when a private claim alleging foreign conduct will cause friction with foreign states.[289]

Nevertheless, the Court in RJR Nabisco asserted that even though conflict with foreign law is not a prerequisite for utilizing the presumption against extraterritoriality, “where such a risk is evident, the need to enforce the presumption is at its apex.”[290] Thus, the presumption has been supported as a valuable tool to help minimize foreign infringements and to prevent extraterritorial applications of U.S. law when there is insufficient congressional indication for that provision to extend abroad. These concerns are valid, and this validly perhaps justified the Court’s expanded application of the presumption against extraterritoriality not only to conduct-regulating provisions, but also to jurisdictional statutes and private causes of action.[291]

But if this is true, then it must also be true that where the presumption is rebutted, the result is a permissible form of extraterritoriality. However, recent Supreme Court cases, such as Morrison, Kiobel, and RJR Nabisco, have not dealt with the issue of whether permissible extensions of U.S. jurisdiction cause international friction.[292] Thus, the presumption definitely talks the talk about preventing excessive unilateral extensions of U.S. law, but it is not certain or guaranteed in any way that the presumption walks the walk at achieving this. The holdings of Morrison, Kiobel, and RJR Nabisco do not appear to represent sufficient or satisfactory safeguards.[293] This is due perhaps to the ineffective system in place for deterring the propriety of extraterritorial regulation or futility in the current use of the presumption as a deterrence. Only future cases that involve permissible extensions will reveal this answer,[294] since it has been either unaddressed or inapplicable.[295]

Notwithstanding whether the debates either supporting or denouncing RJR Nabisco’s reliance on avoiding international friction are correct, it remains to be seen whether this opinion was a good decision for the United States domestically. To determine this answer, it must be remembered that the people of the United States reside in an ever-expanding global community where technology can simultaneously connect people from around the world in a single click. That same technology can also supply the opportunity for massive transnational organized crime schemes that can involve conduct as well as effects in multiple states. Thus, does this emphasis on territorialism work well in 2020?[296] It has been asserted that RJR Nabisco promotes “litigation isolationism” in that it prevents the regulation of transnational enterprises by the United States, forces foreign nations to attempt to regulate these schemes, and causes problems—including the lack of protection from U.S. law—for U.S. nationals abroad.[297] Not only does this affect international comity,[298] but it also interferes with Congress’s ability to extend protections to its nationals in certain cases concerning transnational organized crime abroad.[299] Furthermore, an internal struggle is created between the judiciary and the political branches since RJR Nabisco’s holding “not only empowers, but arguably requires lower courts to push away transnational litigation involving conduct that Congress intended to regulate through a host of statutes.”[300]

D. Illustrating the Inconsistencies

As the law currently stands, there is a differentiation between cases brought by the government and those brought by private claimants: private claimants must prove a domestic injury before they can bring a civil RICO claim. As for the government, RICO will apply abroad only to the extent that the underlying substantive predicates do. If a prohibition extends extraterritorially, so too will the claim under RICO; however, it is less clear what happens when a substantive prohibition does not apply abroad. Under Morrison, it appears that the domestic focus inquiry would need to be utilized. But as applied to such suits brought by the government, what is the focus? Is it conduct in the United States or is it a domestic injury (effects) requirement, similar to that required for private civil claimants? This answer is unclear in RJR Nabisco. Perhaps this was because RJR Nabisco was a civil suit; nevertheless, the negative consequences from this unanswered question are far-reaching.

Because of this, it is possible for one situation to yield a claim for the government but not civil claimants and vice versa. This is true even if the claims of both the government and private claimants are linked to the same illegal conduct of the same defendant(s). The table below displays these situations with oversimplified examples.

 

		Government Prosecution**	Private Civil Claimant
Situation 1	·      U.S. injury suffered by claimant* ·      foreign illegal conduct by Defendant ·      underlying RICO predicate not applied extraterritorially	(a) No RICO Standing [301]	(b) RICO Standing [302]
Situation 2	·      foreign injury suffered by claimant* ·      foreign/domestic illegal conduct by Defendant ·      underlying RICO predicate extends extraterritorially	(c) RICO Standing [303]	(d) No RICO Standing [304]

*Note that the citizenship of the claimant is irrelevant

**It is unclear whether conduct/injury in the United States will allow for extraterritorial application when the underlying predicate offense does not apply extraterritorially. If conduct in the United States is a sufficient focus, the government’s prosecution under “(d)” can proceed, but if injury in the United States is a sufficient focus, the government’s prosecution under “(a)” can proceed.

 

Before analyzing the results of the table above, note that the location of the enterprise is irrelevant under the RJR Nabisco analysis for U.S. prosecutions: “[T]he location of the affected enterprise does not impose an independent constraint.”^[305] For government prosecutions, all that is needed to extend RICO abroad would be for the underlying predicate to apply extraterritorially or for the court to conclude that the claim satisfies the domestic focus of RICO. Additionally, even if the claim satisfies this provision, the “RICO enterprise must engage in, or affect in some significant way, commerce directly involving the United States.”^[306] For private civil RICO actions involving the propriety of extraterritorial applications, there is similarly no enterprise requirement. RJR Nabisco concluded that “rrespective of any extraterritorial application of §1962, we conclude that §1964(c) does not overcome the presumption against extraterritoriality. A private RICO plaintiff therefore must allege and prove a domestic injury to its business or property.”^[307]

As shown in the table, whether the substantive provision applies extraterritorially is usually the determining factor for U.S. prosecutions, but under private civil actions, it is the domestic injury that is required to rebut the presumption against extraterritoriality. This creates a problem in that the same conduct can be actionable where—or if—the U.S. government brings a prosecution against a defendant, [308] but not actionable if a private claimant wants to bring the claim.[309] The opposite is also true.[310] For instance, in Situation 1 in the table above, the government will likely not have standing where the underlying predicate does not extend extraterritorially (and has failed the focus analysis), but, if domestic injury is shown by a private civil claimant, then the presumption would be rebutted as to their claim.[311] Similarly, in Situation 2, the government is able to bring a RICO prosecution where the substantive predicate applies extraterritorially—thus rebutting the presumption—but the private civil claimant is precluded if there is no domestic injury alleged.[312] Thus, regardless of the conduct, nationality, or respective proceeding brought by the U.S. government, the private claimant’s suit will be dismissed if it is based entirely on foreign injury. This produces an awkward distinction. The private claimants with foreign injuries can hope that the prosecutor will take on their case and prosecute the defendant, but this is unlikely. Additionally, sometimes it is possible for civil claimants to bring a case but not the government in cases where the defendant clearly falls within the types of cases originally intended by Congress. But these distinctions and layers of analyses are what characterize the process of determining the propriety of extraterritorial extensions of RICO.

Note that the Noriega court’s result is not overruled. Even though the case involved violations of statutes (such as predicate offenses under RICO which did not apply extraterritorially),[313] the case alleged effects within the United States to rebut the presumption under the Morrison’s focus analysis. Even if the statute at issue does not apply extraterritorially as per Morison, if the complaint “alleges domestic violations of those statutes,” the focus test is met.[314] In other words, “foreign enterprises will qualify only if they engage in, or significantly affect, commerce directly involving the United States.”[315] Thus, Noriega’s result still stands, but its reasoning that in applying RICO liberally, “the Court cannot suppose that RICO does not reach such harmful conduct simply because it is extraterritorial in nature” appears to be overruled since it is contrary to Morrison’s clear indication of extraterritorial application in the statute.[316]

VII. The Harsh Reality: Politics, RICO Prosecutions, and Private Criminal Activity in 2020

A. Present-Day Status of RICO

Amending RICO, either to more accurately reflect congressional intent as to its extraterritorial reach or to better prioritize its intended scope of encompassed crimes, are both options that may resolve a majority of academic debates. However, a more difficult question concerns whether this is likely to happen. In other words, though desirable, is it even feasible at this moment to do this? Part VIII aims at illuminating this question.

A useful starting point is to examine how the United States has responded to this problem in the past. For instance, the steps articulated in the Senate Report of 1969 on the Organized Crime Control Act articulated both federal measures[317] and state and local measures[318] that were taken to combat organized crime. Critically, however, the Report concluded that “[f]ederal activity must be dramatically increased if we expect progress. More men and money, new administrative actions, and new legal authority are needed.”[319] This aggressive attitude needs to be adopted today, especially in light of the recent cut backs in extending RICO to foreign elements.

Prosecutors are given a great deal of discretion in the U.S. legal system. The power to bring charges carries with it the authority to make tough policy decisions, especially since so many laws are written broadly.[320]

As a starting point, Professor Blakey observes that crime cannot be analogized to conscious choice, but instead is more appropriately analogized to “poverty, passion, discrimination, or mental disease,” making “[r]eform of these social or economic conditions, or of the offender, [the] prime goals,” as opposed to “ssues of legal theory or governmental

Alternatively, people today are reluctant to come to one another’s aid or to report criminal activity.[324] But this gets us back to the question of what crime is in this context. When people refer to modern organized crime, they are referring to more than just cartels, but also to “para-governments within our society” such as narcotics traffickers, loan sharks, or illegal gambling operators.[325] Furthermore, this type of crime affects people’s very lives since criminals can sometimes develop illicit agreements with the “police, the prosecutors, the courts, and the legislators,” making organized crime “the most sinister kind of crime in America.”[326] But the police, prosecutors, and the courts are the ones the U.S. people depend on to bring justice.

In reality, sadly, resources are scarce and local law enforcement personnel are poorly paid, undertrained, and “[a]ll too often, politics, if not corruption, taints their work.”[327] Society needs the help of local and state agencies to assist in the problem of organized crime.

What about the courts? Are they the forum where “the forces of good and evil” battle to the finish line and where “rights are vindicated and justice done”?[328] The answer to this question is unfortunately no. The solution will likely not be found by looking to the judiciary, but instead through political branch action and “[b]etter police training, higher pay, and attitudes of fair-minded professionalism.”[329]

B. As Applied to This Analysis

The focus of this Article has been to examine these local realities and their effects on an international scale. So what happens when international organized crime is added to the picture?[330] Professor Blakey asserts that “one size will not fit all” and that the roles of the courts, legislatures in enacting rules, or law professors are secondary to the more critical role of the legislatures in “providing necessary resources and executives in exercising wise administrative and prosecutorial discretion.”[331] And how is this undernourishment fixed?[332] By focusing on the administration of the U.S. criminal justice system in prosecuting crimes.[333] This is true even if the case at hand involves foreign elements, the adjudication of which would involve issues of extraterritorial application.

Why, then, have courts slowly narrowed the reach of U.S. statutes? What are they afraid of? Take RJR Nabisco as an example. The foreign resentment arguments are unpersuasive because the foreign governments requested the imposition of U.S. law. Neither do the domestic concern assertions carry any weight since no consideration is given to a claimant’s nationality. The only reasoning that has support in the case appears to be the desire to place the responsibility for dealing with partly foreign cases in the hands of the government/prosecutors and take it away from private claimants.

But there is an inherent contradiction in this argument. By taking away, or substantially narrowing, the ability of private civil RICO claimants to bring cases, they are lodging more power with the government/prosecutors. Prosecutors already have too much discretion in bringing the cases they want against whom they want. Additionally, the attendant circumstances of prosecutors are characterized by limited resources. In other words, there is an inability to prosecute all the crimes that are occurring in the United States, regardless of whether the issue deals with only a domestic case or a transnational case of organized crime. RJR Nabisco’s limitation of the private right of action further exacerbates this problem.

Thus, it appears that these recent limits—from Morrison to Kiobel and now to RJR Nabisco—make less sense. Add technology and globalization to the manipulation potential and evasion abilities of criminals with regards to new forms of crimes and society is left with a counterintuitive state of affairs of illusory borders but limited U.S. regulatory power. But what was going on in this era? Morrison was decided in 2010, only a couple of years after the 2008 Recession. Was Morrison, as the first major Supreme Court decision cutting back on the elasticity of extraterritorial regulation, a reaction to the U.S. market crash of 2008?[334] Maybe the United States couldn’t afford— literally—to get involved in the regulation of foreign affairs via the extraterritorial regulation of foreign nations/states. Or perhaps the United States, via the Supreme Court, was afraid to accept the consequences—foreign resentment, comity concerns, or infringements of international sovereignty—in doing so. Plausibly, and more simply, it could be the result of a majority conservative bench. No matter the reason for the Court’s curbed approach to extraterritorial regulation, it has still refused to adopt broad interpretations of statutes, even if that meant delivering decisions that turned U.S. nationals away from U.S. courts or made it significantly harder for them to state a claim.

VIII. Recommendations

Courts should not be the institution to set forth different interpretations for different provisions in a statute regarding its geographic. “[C]ourts lack sufficient observations to know whether Congress normally intends courts to separately evaluate the extraterritoriality of different sections of a statute or elements of a claim.”[335] Nevertheless, this characterized the Court’s reasoning in RJR Nabisco. Perhaps they thought they had sufficient observation to know what Congress thought on the matter. Does the fact that there has been no congressional amendment subsequent to the decision make the decision align with congressional intent? After all, when Congress disagrees with a Supreme Court decision, it has on prior occasions amended the relevant provision to either reverse the Supreme Court holding on that matter or change it.[336] Apparently Congress has not and will likely not react to the opinion, making the critical question, instead: what can be done at this stage? This Part intends to elaborate upon the various arguments and possible recommendations.

A. Recommendations Suggested by Other Scholars

While applying RICO, a U.S. statute, to foreign states constitutes a violation of sovereignty, the United States must protect its territory from foreign threats.[337] Also, as applied to other statutes, if the focus of the provision occurs in the United States—“be it conduct, or injury, or a transaction”—this should be sufficient to create the domestic application needed under the RJR Nabisco analysis, as some scholars have asserted.[338] On the other hand, there is the very logical argument that these “fragile policy questions in the realm of international relations are best left to Congress’s unique capabilities and vantage point,”[339] and thus are improper matters for the judiciary to be considering. RICO is, after all, a statute that encompasses the “international nature of some organized crime” and thus the “inherently international aspect” of the predicate acts.[340]

The United States must also consider international concerns such as multi-lateral cooperation. Because the presumption is “merely a judicial invention,” some scholars have suggested that it should be inapplicable in situations where its use would enhance foreign relations interference and that the United States needs to take account of the identity and status of the claimant. [341] This is important because multi-lateral cooperation needs the consent of all parties involved. Other scholars, however, have asserted that RICO’s private right of action must be limited to domestic injuries “to avoid overextending the already expansively applied statute”[342] that could otherwise result if too many foreign factors are present in U.S. courts. Here, it has been contended that a RICO claim is domestic if it alleges “either a domestic enterprise or a domestic pattern of racketeering activity.”[343]

It appears that the majority of scholars are against the Court’s distinction between applying the presumption to RICO’s substantive prohibitions and then applying it separately to RICO’s private right of action.[344] Such dissatisfaction likely stems from the current inability to reconcile the Court’s interpretation of RICO’s provisions to RICO’s intended purpose to combat organized crime, which now includes transnational organized crime.[345] Further, Congress could not have been any clearer regarding RICO’s extraterritorial scope than its use of “interstate or foreign commerce” directly in the text[346]

The question thus becomes how to proceed to rectify these political hindrances in order to better approach the international considerations that accompany regarding extraterritorial regulation It has been suggested that Congress intervene to take away the excess discretion that the courts have acquired[347] and subsequently that courts have used to first broaden the scope of RICO and then limit its geographic reach. Congress must provide a clearer definition of “enterprise” and, in doing so, remain aware of the rationale behind RICO’s enactment, including Congress’s fear “that organized crime would destabilize the American economy and possibly even undermine the justice system through the use of bribery and intimidation.”[348] As the law stands right now, the court’s broad interpretation of “enterprise” includes defendants who are associated with “non-organized-crime-type criminal organizations,” while simultaneously “taking away the government’s ability to prosecute dangerous groups that actively engage in racketeering activity, but do not have this mafia-style structure.”[349] This is contrary to the original intent of RICO and produces unfair results where courts set forth inconsistent holdings, prosecutors are free to run the show as they please, and organized crime perpetrators manipulate the law to avoid RICO’s reach; thus, a statutory amendment to clarify the interpretation of RICO’s original intent has been the suggested solution.[350]

But a statutory amendment is not the answer because Congress is not likely to amend it. Professor Blakey suggests that the answer lies not in statutory amendments but in a more efficient administration and selection of our justice system.[351]

B. Realizations/Recommendations of This Analysis

Congressional intent must be followed; if not, courts begin to engage in “rogue policymaking” and “expand the scope of a statute.”[352] This is a slow process but gradually implicates both the domestic and international levels. For instance, “[t]he drafting of RICO began, but did not end, with an effort to sanction organized crime’s traditional activities.”[353] Now, the scope of RICO’s coverage has been substantially broadened but its geographic reach has been significantly curtailed.

It is perfectly permissible for Congress to be concerned with transnational organized crime only as it applies to domestic conditions. The Supreme Court in RJR Nabisco was correct in limiting the scope of the private of action to avoid unnecessary foreign resentment concerns, but they went too far when they similarly limited it as against U.S. nationals. Keeping this in mind, the solution should entail an approach that keeps domestic concerns primarily in mind. Thus, the private right of action for foreign claimants should require that a domestic injury be shown; however, civil RICO claims for U.S. nationals should not be similarly restricted. Therefore, the U.S. nexus for the foreign nationals would be the domestic injury requirement, while the U.S. nexus for the U.S. nationals would be their citizenship. RJR Nabisco should be interpreted in this respect, as it is consistent with the notion that Congress legislates primarily with domestic conditions in mind and is consistent with the goal of reducing foreign interference.

The effects of this approach are that it ensures that the United States is adjudicating cases with a connection to its territory as opposed to deciding he cases of other nationals either for or against foreign states. If it’s a U.S. nexus requirement that the Supreme Court is seeking, this is the answer. It is also a compromise in that it limits excessive foreign transactions in U.S. courts while also alleviating prosecutorial burden. It limits excessive foreign transactions by ensuring that the United States is somehow connected to the transaction, either via their U.S. nationals or an injury occurring within the territory of the United States. Also, should the private right of action no longer require that domestic injury be shown by U.S. nationals, the discretion associated with prosecutorial decision-making is lightened.

This approach respects international comity and reduces foreign infringement since fewer foreign-cubed transactions will be adjudicated in U.S. courts; in fact, it appears they may only be brought if the government initiates the prosecution, not private civil claimants. Lastly, there will be no distinctions based on who consents nor unfair results from the overly restrictive approach that currently faces U.S. nationals asserting a civil RICO violation. Law enforcement agencies at all levels—local, state, and federal—need to be educated on the proper interpretation of RJR Nabisco. Regarding the private cause of action, the injury requirement should be implied from a U.S. national’s citizenship because their citizenship provides the sufficient U.S. nexus in lieu of asserting an injury within the United States; however, a foreign national should demonstrate the U.S. injury to assert that connection to the United States. This helps form that connection to the United States, reduce some of the burden for prosecutors in initiating these claims, and provides a fairer application amongst claimants injured by transnational organized crime.

IX. Conclusion

This study has presented an in-depth analysis of the history of RICO including original congressional intent, the circumstances prompting RICO’s enactment, and how RICO was enforced in the judicial system. It also examined some basic concepts of criminal procedure, prosecutorial discretion, and the capabilities of domestic law enforcement agencies – local, state, and federal. Then, extraterritoriality was added to the analysis. The purpose of this study was to understand how to best deal with the concept of extraterritorial applications of RICO by looking to how matters can be improved on the domestic level. Early caselaw has tended to be territorial. However, this trend slowly lost force when technology and globalization was on the rise. Despite the legislative history to the contrary and nature of organized crime, courts have generally held that RICO was silent as to its geographic reach.

Thus, the judiciary has slowly adopted the practice of extraterritorial regulation when cases presented some combination of either foreign parties or foreign defendants but have been inconsistent in doing so. Pre-Morrison cases tended to rely on some form of the conduct or effects tests when determining whether RICO should extend abroad. After Morrison, courts have struggled with how to determine what the focus of RICO encompassed. Because of this, the lower courts in post-Morrison cases have articulated about four different focuses of RICO. Depending on what claim a court was brought, the focus of RICO was construed differently, and thus similar cases were decided differently.

In extending RICO abroad, the judiciary has been responsible for two developments that have distorted RICO’s purpose and strength: (1) the judiciary has broadened the scope of the statute’s encompassed acts; and (2) the judiciary has limited the geographic reach of the statute’s enforcement. Despite the rationales of adhering to congressional intent and reducing foreign infringement, this is not reflected in modern jurisprudence. These two movements have been urged as contrary to the original intent of the drafters since the text of RICO explicitly mentions “foreign commerce” and organized crime has traditionally and continues to be regarded as involving the types of acts that transcend multiple borders.

The Supreme Court’s decision in RJR Nabisco was significant for several reasons. The holding extended the presumption against extraterritoriality to express legislative private causes of action, curtailed the private of action for civil RICO claimants due to the added domestic injury requirement, and increased foreign tensions from the inconsistent application of U.S. laws abroad. Now, it is quite possible for many credible cases of organized crime to slip through the cracks based on the senseless formalities of RICO’s new interpretations.

While the Court was correct to limit the private of action to foreign nationals, it should not have done so with respect to U.S. nationals. As applied to foreigners, the domestic injury requirement for civil RICO ensures that the United States is adjudicating cases with some connection to the territory of the United States. However, as applied to U.S. nationals, this interpretation need not extend so far. Therefore, U.S. nationals should have an implied U.S. nexus found through their citizenship to the United States. This is how RJR Nabisco needs to be interpreted.

When developing a solution or recommendation, it is important when proceeding with extraterritorial decisions to realize that it is permissible for Congress to legislate on an international issue but be concerned with its effects on a domestic level. It is also important to adequately describe a U.S. nexus requirement for both foreign nationals and U.S. nationals when dealing with civil RICO. As mentioned, foreign nationals should demonstrate the domestic injury, but U.S. nationals are already impliedly connected to the United States via their citizenship. How can these realizations be reached? Local, state, and federal law enforcement efforts need to be strengthened and revitalized. These are the domestic forces that are most important in the U.S. system, which, in turn, affect the international system.

Adequate training as to the proper scope and geographic reach of RICO will help systemize prosecutions and private rights of actions. It is highly unlikely that Congress will set out to amend RICO, nor is there hope in obtaining clarification of the statute’s scope and geographic reach from another Supreme Court decision. Furthermore, by eliminating the extra obstacle (the domestic injury requirement) for private U.S. civil RICO claimants, some of the excess burdens and discretion are taken away from prosecutors, who tend to already be plagued by limited resources. This innovative interpretation for civil RICO—the implied U.S. nexus in citizenship for U.S. nationals—is a compromise, one that alleviates prosecutorial overload, grants standing to U.S. nationals from a U.S. statute, and provides more consistency in RICO’s operation both domestically and internationally. For there to be international harmony, there must first be harmony at the domestic level. This includes proper training, allocated workloads, dependable and predictable standards, and swift action. Finally, such compromise will better adhere to the original congressional intent without overuse or misuse of RICO’s provisions to encompass more of the unintended acts or not enough of the intended acts. With these realizations in mind, the United States can proceed to combat cross-border organized crime as it currently stands today in 2020.

 

* Alina Veneziano, Ph.D. Candidate, King’s College London, UK; LL.M., New York University School of Law, 2019; J.D., Georgetown University Law Center, 2018; M.B.A., Western Governors University; B.S., Accounting, Western Governors University. Alina Veneziano is a registered attorney of the Bar of the State of New York. She thanks Professors Ronald Goldstock and G. Robert Blakey for their feedback and advice in developing this paper and is grateful to the Harvard Journal on Legislation team for their incredible edits throughout the publication process. She also thanks her family for their endless support.

[1] RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090, 2102 (2016).

[2] See 18 U.S.C. §§ 1961–1968 (2018).

[3] 561 U.S. 247 (2010).

[4] 136 S. Ct. 2090, 2090 (2016).

[5] Edwin H. Sutherland, White-Collar Criminality, 5 Am. Soc. Rev. 1 (1940).

[6] See id. at 1 (“This paper is . . . a comparison of crime in the upper or white-collar class, composed of respectable or at least respected business and professional men, and crime in the lower class, composed of persons of low socioeconomic status.”).

[7] Id.

[8] See Donald R. Cressey, Theft of the Nation: The Structure and Operations of Organized Crime in America 1 (1969).

[9] Id. (“And the real trouble has begun in the United States.”).

[10] Id. at 1–2 (“It is one thing to make a few dollars selling illegal lottery tickets, but it is another thing to achieve a monopoly on illegal gambling services by means of a simple weapon, a gun. It is one thing to bribe a policeman to overlook gambling, but it is another thing to dictate the actions of a state legislator or federal congressman or senator. It is one thing to amass a fortune by importing narcotics, but it is another thing to use this fortune to buy immunity from prosecution for murder.”).

[11] Id. at 3.

[12] S. Rep. No. 91-617, at 35 (1969).

[13] Id.

[14] Id. at 44.

[15] See Pub. L. No. 91-452, 84 Stat. 922 (with the stated purpose “[r]elating to the control of organized crime in the United States”).

[16] See G. Robert Blakey, RICO: The Genesis of an Idea. Trends in Organized Crime, 9 Trends In Organized Crime 8, 13 (2006).

[17] Id.

[18] Id.

[19] See United States v. Forsythe, 429 F. Supp. 715, 720 (W.D. Pa. 1977).

[20] See United States v. Elliott, 571 F.2d 880, 884 (5th Cir. 1978).

[21] See Miranda Lievsay, Containing the Uncontainable: Drawing RICO’s Border with the Presumption Against Extraterritoriality, 84 Fordham L. Rev. 1735, 1737 (2016); see also Gideon Mark, RICO’s Extraterritoriality, 50 Am. Bus. L.J. 543, 604 (2013).

[22] See, e.g., United States v. Gotti, 413 F. Supp. 2d 287 (S.D.N.Y. 2005).

[23] E.g., United States v. Tello, 687 F.3d 785 (7th Cir. 2012).

[24] See, e.g., United States v. Turkette, 452 U.S. 576 (1981).

[25] See Papai v. Cremosnik, 635 F. Supp. 1402, 1411, (N.D. Ill. 1986); see also Bennett v. Berg, 685 F.2d 1053, 1063 (8th Cir. 1982).

[26] See Nat’l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 252–53, 259, 262 (1994).

[27] See Emily A. Donaher, From the Sophisticated Undertakings of the Genovese Crime Family to the Everyday Criminal: The Loss of Congressional Intent in Modern Criminal RICO Application, 28 St. Thomas L. Rev. 197, 211 (2016) (“When Congress drafted the RICO statute, it intended to target the Mafia . . . . Courts today, however, read the statute broadly . . . .”); see also G. Robert Blakey & Brian Gettings, Racketeer Influenced and Corrupt Organizations (RICO): Basic Concepts—Criminal and Civil Remedies, 53 Temp. L.Q. 1009, 1011 (1980) (“Largely ignored at first, today RICO is widely employed by federal prosecutors, not just by organized crime strike force attorneys, but by prosecutors in United States Attorney’s offices . . . .”).

[28] 473 U.S 479 (1985).

[29] See id. at 499 (quoting Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482, 487 (2d Cir. 1984)).

[30] Id. at 499–500 (emphasis added) (As demonstrated in Part V, RJR Nabisco completely disregards this passage regarding the Court’s refusal to change or eliminate the private right of action.).

[31] United States v. Cauble, 706 F.2d 1322, 1330 (5th Cir. 1983).

[32] See G. Robert Blakey & Michael Gerardi, Eliminating Overlap, or Creating a Gap? Judicial Interpretation of the Private Securities Litigation Reform Act of 1995 and RICO, 28 Notre Dame J.L. Ethics & Pub. Pol’y 435, 443 (2014).

[33] See id.

[34] Donaher, supra note 27, at 220.

[35] See Lievsay, supra note 21, at 1737.

[36] See Victoria L. Safran, RICO’s Extraterritorial Reach: The Impact of European Community v. RJR Nabisco, 4 Stan. J. Complex Litig. 47, 48 (2016).

[37] See Lievsay, supra note 21, at 1737.

[38] Id.

[39] Id.

[40] See Charles Doyle, Extraterritorial Application of American Criminal Law 1 (2016), http://www.fas.org/sgp/crs/misc/94-166.pdf [https://perma.cc/2K6Q-JBWU].

[41] See id.

[42] G. Robert Blakey, Foreword: Debunking RICO’s Myriad Myths, 64 St. John’s L. Rev. 701, 705 (1990).

[43] Id. at 707 (“The criminal enforcement mechanism of RICO provides for imprisonment, fines, and criminal forfeiture.”).

[44] See G. Robert Blakey, Time-Bars: Rico-Criminal and Civil Federal and State, 88 Notre Dame L. Rev. 1581, 1604 (2013) (“The government and private parties may bring civil suits”); see also Blakey, supra note 42, at 707 (“The civil enforcement mechanism of RICO provides for injunctions, treble damages, and counsel fees.”).

[45] See 18 U.S.C. § 1962(a)–(d) (2018).

[46] See 18 U.S.C. § 1962(a).

[47] See G. Robert Blakey & Ronald Goldstock, “On the Waterfront”: RICO and Labor Racketeering, 17 Am. Crim. L. Rev. 341, 357 (1980).

[48] See 18 U.S.C. § 1962(b).

[49] Blakey & Goldstock, supra note 47, at 358.

[50] See 18 U.S.C. § 1962(c).

[51] See Blakey & Goldstock, supra note 47, at 359.

[52] See 18 U.S.C. § 1962(d).

[53] Blakey & Goldstock, supra note 47, at 360.

[54] Pub. L. No. 91-452, 84 Stat. 922, 947 (1970).

[55] See 18 U.S.C. § 1961(4).

[56] Blakey & Gettings, supra note 27, at 1024–25.

[57] See Instituto Nacional de Comercializacion Agricola (Indeca) v. Continental Illinois Nat’l Bank & Trust Co., 576 F. Supp. 991, 999 (N.D. Ill. 1983).

[58] Blakey & Gettings, supra note 27, at 1025; see also S. Rep. No. 91-617, at 158 (1969) (describing the possibility that legitimate groups can engage in criminal acts under RICO).

[59] 452 U.S. 576 (1981).

[60] Id. at 582–83.

[61] 18 U.S.C. § 1961(5).

[62] See Uniroyal Goodrich Tire Co. v. Mutual Trading Corp., 749 F. Supp. 869, 874 (N.D. Ill. 1990) (noting that the pattern requirement is not vague where the allegations would satisfy the pattern requirement and represent the type of scenario envisioned by Congress to be within RICO’s coverage).

[63] Sedima v. Imrex Co., 473 U.S. 479, 496 n.14 (1985).

[64] Id. (“The legislative history supports the view that two isolated acts of racketeering activity do not constitute a pattern.”).

[65] See Blakey & Goldstock, supra note 47, at 348.

[66] Secon Serv. Sys. v. St. Joseph Bank & Trust Co., 855 F.2d 406, 420 (7th Cir. 1988) (citing Skycom Corp. v. Telstar Corp., 813 F.2d 810, 818 (7th Cir. 1987) (“[A] single, isolated transaction does not satisfy the RICO requirement of a ‘pattern’ of racketeering activity.”)).

[67] See Graham v. Slaughter, 624 F. Supp. 222, 225 (N.D. Ill. 1985); see also United States v. Elliott, 571 F.2d 880, 899 n.23 (5th Cir. 1978) (“Thus, the Act does require a type of relatedness: the two or more predicate crimes must be related to the affairs of the enterprise but need not otherwise be related to each other.”).

[68] See 18 U.S.C. § 1961(1).

[69] See 18 U.S.C. § 1962(a)–(d).

[70] See Lievsay, supra note 21, at 1743; see also Blakey & Goldstock, supra note 47, at 348 (“Conviction under RICO requires that the prosecution must prove, not only that the defendant committed an offense, but also that he did so as a member of a group engaged in a pattern of racketeering activity.”).

[71] See 18 U.S.C. §1964(c).

[72] See Daniel Hoppe, Racketeering After Morrison: Extraterritorial Application of Civil RICO, 107 NW. U. L. Rev. 1375, 1382 (2013).

[73] Id.

[74] Id. (“The broad range of civil remedies thus allows a judge to determine the most effective way to stop the criminal activity.”).

[75] See Rotella v. Wood, 528 U.S. 549, 557 (2000).

[76] See Hoppe, supra note 72, at 1383.

[77] See United States v. Noriega, 746 F. Supp. 1506, 1512 (S.D. Fla. 1990).

[78] See United States v. Philip Morris USA, Inc., 477 F. Supp. 2d 191, 197 (D.D.C. 2007) (There is an “absence of dispositive Supreme Court case law on the subject of RICO’s extraterritoriality.”); see also Doe I v. State of Israel, 400 F. Supp. 2d 86, 115 (D.D.C. 2005) (“RICO does not indicate whether it is limited to the domestic borders of the United States.”); Poulos v. Caesars World, Inc., 379 F.3d 654, 663 (9th Cir. 2004) (“RICO itself is silent as to its extraterritorial application.”); North South Fin. Corp. v. Al-Turki, 100 F.3d 1046, 1051 (2d Cir. 1996) (“The RICO statute is silent as to any extraterritorial application.”).

[79] 746 F. Supp. 1506 (S.D. Fla. 1990).

[80] Id. at 1516.

[81] Id. at 1517.

[82] Id. at 1519.

[83] See EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991); see also United States v. Noriega, 746 F. Supp. 1506, 1515 (S.D. Fla. 1990) (“Where a statute is silent as to its extraterritorial reach, a presumption against such application normally applies.”); William S. Dodge, The Presumption Against Extraterritoriality in Two Steps, 110 Am. J. Int’l L. Unbound 45, 45 (2016).

[84] See Butte Mining PLC v. Smith, 76 F.3d 287, 291 (9th Cir. 1996) (“We do not suppose that Congress in enacting RICO had the purpose of punishing frauds by aliens abroad even if peripheral preparations were undertaken by them here.”); see also Jose v. M/V Fir Grove, 801 F. Supp. 349, 357 (D. Or. 1991) (“[T]he language and legislative history of RICO fail to demonstrate clear Congressional intent to apply the statutes beyond U.S. boundaries. . . . RICO has been broadly construed to cover a wide array of conduct in light of the expansive language found within section 1962, but geographically, the procedural mechanisms contained within section 1965 are, on their face, limited to U.S. territory.”); see also Brink’s Mat, Ltd. v. Diamond, 906 F.2d 1519, 1524 (11th Cir. 1990) (Aldisert, J., dissenting) (“It was not Congressional intent, nor would it be proper were that the case, to deter the conduct of parties unconnected to the United States, or to provide windfall civil judgments to citizens of any country who sue citizens of another country for fraudulent transactions which only casually touch upon the United States. Congress only intended to deter the conduct of individuals within the borders of this country.”).

[85] See North South Fin. Corp. v. Al-Turki, 100 F.3d 1046, 1052 (2d Cir. 1996) (“Although there is little caselaw in this Circuit regarding the extraterritorial application of RICO, guidance is furnished by precedents concerning subject matter jurisdiction for international securities transactions and antitrust matters.”).

[86] See Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326, 1334 (2d Cir. 1972) (developing the conduct test and defining it conduct within the U.S. territory sufficient to form jurisdiction in instances where “there has been significant conduct within the territory”).

[87] See Schoenbaum v. Firstbrook, 405 F.2d 200, 206 (2d Cir. 1968) (developing the effects test and allowing for extraterritorial jurisdiction “to protect domestic investors who have purchased foreign securities on American exchanges and to protect the domestic securities market”).

[88] See Poulos v. Caesars World, Inc., 379 F.3d 654, 663 (9th Cir. 2004) (“RICO itself is silent as to its extraterritorial application. Although the RICO and the securities fraud contexts are not precisely analogous, the [conduct and effects] tests used to assess the extraterritorial application of the securities laws provide useful guidelines . . . .”).

[89] See Lievsay, supra note 21, at 1747.

[90] See generally Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247 (2010).

[91] See Morrison v. Nat’l Austl. Bank Ltd., 547 F.3d 167, 172 (2d Cir. 2008) (noting that a foreign-cubed transaction involves “a set of (1) foreign plaintiffs . . . suing (2) a foreign [defendant] in an American court for violations of American . . . laws . . . in (3) foreign countries”).

[92] See Morrison, 561 U.S. at 251–52.

[93] Id. at 255.

[94] See id. at 266.

[95] See Julian Simcock, Recalibrating After Kiobel: Evaluating the Utility of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) in Litigating International Corporate Abuse, 15 CUNY L. Rev. 443, 465 (2012) (“Although the expansive scope of RICO’s ‘enterprise’ once suggested that courts might draw a wide net over players involved at the periphery of an enterprise’s activities, domestic case law has substantially curtailed this reach.”).

[96] Morrison, 561 U.S. at 265.

[97] Id. at 284.

[98] See Lievsay, supra note 21, at 1767 (“[C]ourts widely agree that RICO does not apply extraterritorially . . . .”); see also Mark, supra note 21, at 604 (“Thus far, in the post-Morrison era federal courts have applied the presumption against extraterritoriality that was endorsed by the Supreme Court in that case, and in so doing they have unanimously concluded that RICO has no extraterritorial application.”).

[99] See Safran, supra note 36, at 48–49 (“[T]hese cases all have found that Congress did not clearly express an intention for RICO to have extraterritorial reach, and, thus, that courts . . . must apply a presumption against extraterritoriality, and ascertain RICO’s ‘focus’ for purposes of determining whether a particular application of RICO is domestic or extraterritorial.”).

[100] See Franklin A. Gevurtz, Building a Wall Against Private Actions for Overseas Injuries: The Impact of RJR Nabisco v. European Community, 23 U.C. Davis J. Int’l L. & Pol’y 1, 8 (2016).

[101] Id. at 7 (“After Morrison, we are bereft of further guidance from the Supreme Court on how to determine the focus of a statute for purposes of the presumption against extraterritoriality.”).

[102] 733 F. Supp. 2d 471 (S.D.N.Y. 2010).

[103] Id. at 472.

[104] Id. at 472.

[105] Id. at 473.

[106] Id. at 474.

[107] Id.

[108] Id. (“RICO does not apply where, as here, the alleged enterprise and the impact of the predicate activity upon it are entirely foreign.”).

[109] 631 F.3d 29 (2d Cir. 2010).

[110] Id. at 31.

[111] Id. at 33 (“The slim contacts with the United States alleged by Norex are insufficient to support extraterritorial application of the RICO statute.”).

[112] Id. at 31.

[113] Id. at 33.

[114] Id. at 32.

[115] Id. at 33 (“Morrison similarly forecloses Norex’s argument that because a number of RICO’s predicate acts possess an extraterritorial reach, RICO itself possesses an extraterritorial reach.”).

[116] 2011 U.S. Dist. LEXIS 23538 (E.D.N.Y. Mar. 8, 2011).

[117] See id. at *18.

[118] 559 U.S. 77 (2010).

[119] Id. at 81–82; see also 2011 U.S. Dist. LEXIS 23538 at *18.

[120] See Hertz Corp., 599 U.S. at 78; see also 2011 U.S. Dist. LEXIS 23538 at *18.

[121] Lievsay, supra note 21, at 1769.

[122] Id. (emphasis added).

[123] Safran, supra note 36, at 56 (emphasis added).

[124] 824 F. Supp. 2d 1193 (D. Colo. 2011).

[125] Id. at 1200–03.

[126] Id. at 1209.

[127] Id. at 1209–10.

[128] Id. at 1209.

[129] Id. at 1210; see also Norex Petroleum Ltd. v. Access Indus. Inc., 631 F.3d 29 (2d Cir. 2010); Cedeño v. Intech Group Inc., 733 F. Supp. 2d 471 (S.D.N.Y. 2010).

[130] CGC Holding Co., 824 F. Supp. 2d at 1210.

[131] Id.

[132] 871 F. Supp. 2d 229 (S.D.N.Y 2012).

[133] Id. at 236.

[134] Id.

[135] Id. at 244, 254; see also CGC Holding Co., 824 F. Supp. 2d at 1210.

[136] Donziger, 871 F. Supp. 2d at 245.

[137] Id. at 246 (“Accordingly, insofar as the Donziger Defendants’ motion seeks dismissal of the RICO claims under Morrison, their motion must be denied.”).

[138] See Lievsay, supra note 21, at 1770.

[139] E.g., Gevurtz, supra note 100, at 11.

[140] See 706 F.3d 965, 975 (9th Cir. 2013) (abrogated by RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016)).

[141] Id. at 972–73.

[142] Id. at 979.

[143] Id. at 977.

[144] Id. (“Therefore, an inquiry into the application of RICO to Defendants’ conduct is best conducted by focusing on the pattern of Defendants’ racketeering activity as opposed to the geographic location of Defendants’ enterprise.”).

[145] Id. at 975–76.

[146] Id. at 977 (quoting Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 154 (1987)).

[147] 18 U.S.C. § 1962(a)-(d) (2018) (emphasis added).

[148] 706 F.3d at 977–78 (“Given this express legislative intent to punish patterns of organized criminal activity in the United States, it is highly unlikely that Congress was unconcerned with the actions of foreign enterprises where those actions violated the laws of this country while the defendants were in this country. Thus, to determine whether Defendants’ count one convictions are within RICO’s ambit, we look at the pattern of Defendants’ racketeering activity taken as a whole.”).

[149]See id. at 978, 994 (“The second part, however, bound the Defendants’ enterprise to the territorial United States. This second part involved racketeering activities conducted within the United States including the commission of RICO predicate crimes based on violations of United States immigration laws . . . .”).

[150] See RJR Nabisco, 136 S. Ct. at 2102.

[151] See United States v. Chao Fan Xu, 706 F.3d 965, 977 (9th Cir. 2013).

[152] Id.

[153] 764 F.3d 129 (2d Cir. 2014).

[154] Id. at 138.

[155] See Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 284 (2010) (Stephens, J., concurring).

[156] European Cmty., 764 F.3d at 136.

[157] Id.

[158] Id.

[159] See Lievsay, supra note 21, at 1767.

[160] Id.

[161] 6 U.S. 64 (1804).

[162] Id. at 118.

[163] 260 U.S. 94 (1922).

[164] Id. at 98.

[165] Id.

[166] Id. (emphasis added).

[167] See Mark, supra note 21, at 585.

[168] 136 S. Ct. 2090, 2090 (2016).

[169] Id. at 2098.

[170] Id. at 2112 (Ginsburg, J., concurring in part and dissenting in part).

[171] Id. at 2098 (majority opinion).

[172] Id.

[173] Id. (“The complaint alleges that RJR engaged in a pattern of racketeering activity consisting of numerous acts of money laundering, material support to foreign terrorist organizations, mail fraud, wire fraud, and violations of the Travel Act. RJR, in concert with the other participants in the scheme, allegedly formed an association in fact that was engaged in interstate and foreign commerce, and therefore constituted a RICO enterprise . . . .”).

[174] Id.

[175] Id. (“These violations allegedly harmed respondents in various ways, including through competitive harm to their state-owned cigarette businesses, lost tax revenue from black-market cigarette sales, harm to European financial institutions, currency instability, and increased law enforcement costs.”).

[176] Id. at 2099; see European Cmty. v. RJR Nabisco, Inc., No. 02-CV-5771-NGG-VVP, 2011 WL 843957, at *7 (E.D.N.Y. Mar. 8, 2011).

[177] European Cmty. v. RJR Nabisco, Inc., 764 F.3d 129, 133 (2d Cir. 2014).

[178] 18 U.S.C. § 1952 (2020).

[179] RJR Nabisco, 764 F.3d at 139–42.

[180] Id. at 150–51 (“The panel denied rehearing and issued a supplemental opinion holding that RICO does not require a domestic injury. If a foreign injury was caused by the violation of a predicate statute that applies extraterritorially, the court concluded, then the plaintiff may seek recovery for that injury under RICO.”).

[181] European Cmty. v. RJR Nabisco, Inc., 783 F.3d 123, 124 (2d Cir. 2015).

[182] RJR Nabisco, 136 S. Ct. at 2099.

[183] See id.

[184] Id. at 2103.

[185] Id. at 2106.

[186] Id. at 2100.

[187] Id. (quoting Smith v. United States, 507 U.S. 197, 204 (1993)).

[188] Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013).

[189] RJR Nabisco, 136 S. Ct. at 2101 (emphasis added).

[190] Id.

[191] Id. at 2101–03.

[192] Id. at 2102 (“To give a simple (albeit grim) example, a violation of §1962 could be premised on a pattern of killings of Americans abroad in violation of §2332(a)—a predicate that all agree applies extraterritorially—whether or not any domestic predicates are also alleged.”).

[193] Id.

[194] Id.

[195] Id.

[196] Id. at 2103 (“Congress has not expressly said that §1962(c) applies to patterns of racketeering activity in foreign countries, but it has defined ‘racketeering activity’—and by extension a ‘pattern of racketeering activity’—to encompass violations of predicate statutes that do expressly apply extraterritorially. Short of an explicit declaration, it is hard to imagine how Congress could have more clearly indicated that it intended RICO to have (some) extraterritorial effect.”).

[197] Id.

[198] Id.

[199] Id.

[200] Id. at 2104.

[201] Id. (“Congress, after all, does not usually exempt foreigners acting in the United States from U.S. legal requirements.”).

[202] Id. at 2105.

[203] Kiobel v. Royal Dutch Petrol. Co., 569 U.S. 108, 124–25 (2013).

[204] RJR Nabisco, 136 S. Ct. at 2105.

[205] Id.

[206] Id. at 2106.

[207] Id.

[208] Id.

[209] Id. at 2107.

[210] Id.

[211] Id.

[212] Id. at 2108 (“Respondents suggest that we should be reluctant to permit a foreign corporation to be sued in the courts of this country for events occurring abroad if the nation of incorporation objects, but that we should discard those reservations when a foreign state sues a U.S. entity in this country under U.S. law—instead of in its own courts and under its own laws—for conduct committed on its own soil. We refuse to adopt this double standard.”).

[213] Id.

[214] Id.

[215] Id. at 2108.

[216] Id. at 2109.

[217] Id. at 2111.

[218] Id.

[219] Id. at 2112–13 (Ginsburg, J., concurring in part and dissenting in part) (“One cannot extract such a limitation from the text of §1964(c), which affords a right of action to ‘[a]ny person injured in his business or property by reason of a violation of section 1962.’”).

[220] Id.

[221] Id. at 2113.

[222] Id. at 2114

[223] Id. at 2115 (emphasis added).

[224] Id.

[225] Id.

[226] Id.

[227] Id. at 2115–16.

[228] See id. at 2116 (Breyer, J., concurring in part and dissenting in part).

[229] Id.

[230] See generally Maggie Gardner, RJR Nabisco and the Runaway Canon, 102 Va. L. Rev. Online 134 (2016).

[231] See Safran, supra note 36, at 48.

[232] See Anthony J. Colangelo, The Frankenstein’s Monster of Extraterritoriality Law, 110 Am. J. Int’l L. Unbound 51, 54 (2016).

[233] Id. (“But as to the private right of action, the Court was not willing to look through RICO to the predicates in order to discern the statute’s geographic scope.”).

[234] Id.

[235] Id.

[236] Id.

[237] See Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 253–54 (2010); see also Hannah L. Buxbaum, The Scope and Limitations of the Presumption Against Extraterritoriality, 110 Am. J. Int’l L. Unbound 62, 64 (2016); Gevurtz, supra note 100, at 16 (“No prior decision ever suggested that the presumption separately applied both to the substantive prohibitions of a statute and any remedy provision the statute contained.”).

[238] Buxbaum, supra note 237, at 64.

[239] See Gevurtz, supra note 100, at 16–17.

[240] Id. at 17–18.

[241] Id. at 19.

[242] Pamela K. Bookman, Doubling Down on Litigation Isolationism, 110 Am. J. Int’l L. Unbound 57, 57 (2016).

[243] Id. at 57–58.

[244] See Gevurtz, supra note 100, at 19 (“The Court seems to think it mooted this issue by finding that RICO’s inclusion of predicate crimes, which can take place outside of the United States, rebutted the

presumption against extraterritoriality.”).

[245] Id. at 20 (“It could be that the pattern of racketeering activities is RICO’s focus and that the inclusion of some predicate crimes intended to have extraterritorial reach among the list of racketeering activities rebuts the presumption against extraterritoriality for a pattern of racketeering involving those predicate crimes. Alternately, however, it is equally plausible that the enterprise is RICO’s focus and Congress felt at liberty to include among the predicate crimes ones that could occur abroad, because, so long as the enterprise was in the United States, there is no extraterritoriality for RICO as a whole even when the pattern of racketeering activities occurs abroad.”).

[246] Id. at 21.

[247] Id. at 23.

[248] RJR Nabisco, 136 S. Ct. at 2101; see also Dodge, supra note 83, at 49.

[249] Dodge, supra note 83, at 49.

[250] Id.

[251] Id. at 50.

[252] Carlos M. Vázquez, Out-Beale-ing Beale, 110 Am. J. Int’l L. Unbound 68, 70 (2016).

[253] Id. at 71.

[254] Id. at 72.

[255] See Colangelo, supra note 232, at 53 (“RJR’s most significant holding is that RICO creates a private right of action only for injuries suffered on U.S. territory.”).

[256] See Gevurtz, supra note 100, at 2.

[257] Id.

[258] See Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 265 (2010).

[259] See Colangelo, supra note 232, at 56 (“Recognizing the extraterritorial scope of RICO’s private right of action would not only have comported with the statute’s text and structure, but also would have effectuated one of the presumption’s key purposes.”).

[260] Id.

[261] Id.

[262] See Gevurtz, supra note 100, at 14 (“Most critically, the injury to business or property language in RICO has nothing to do with the policy rationale behind the Court’s decision.”).

[263] Id. at 15.

[264] See Gevurtz, supra note 100, at 15.

[265] Id.

[266] See Simcock, supra note 95, at 454.

[267] Id. at 455.

[268] 18 U.S.C. § 1964(c).

[269] See, e.g., Simcock, supra note 95, at 455.

[270] Pub. L. No. 91-452, 84 Stat. 922, 947 (1970); see also Simcock, supra note 95, at 455 (noting that the injury restriction in civil RICO “sits in contrast, however, to an uncodified portion of the RICO statute in which Congress articulates its intention that RICO “be liberally construed to effectuate its remedial purposes”).

[271] See Gevurtz, supra note 100, at 16.

[272] Id. at 16, 29 (“While nominally just a decision about the scope of RICO, RJR Nabisco casts a shadow over future lawsuits to recover damages under the express or implied private causes of action for violation of numerous federal statutes when the injury occurs outside of the United States.”).

[273] RJR Nabisco, 136 S. Ct. at 2106.

[274] See Colangelo, supra note 232, at 55.

[275] Id. (“The curious wrinkle in RJR when it comes to the foreign relations rationale is that judicial application of the presumption was far more likely to cause foreign relations friction than to avoid it.”).

[276] See Gevurtz, supra note 100, at 12 n.70 (The European Community is “the collective of European nations from which the English just voted to exit. At the time this lawsuit commenced, the EC was one of the components of the European Union, a distinction that ended when the EC merged into the EU under the Lisbon Treaty.”).

[277] See Stephanie Francq, A European Story, 110 Am. J. Int’l L. Unbound 74, 74 (2016).

[278] Id.

[279] Id.

[280] Id. at 78.

[281] See Paul B. Stephan, Private Litigation as a Foreign Relations Problem, 110 Am. J. Int’l L. Unbound 40, 43 (2016) (“If a foreign sovereign embraces U.S. regulation, why does it fall to the Supreme Court to deny it?”); see also Colangelo, supra note 232, at 55 (“Thus we have affirmative evidence that the relevant foreign nations wanted RICO’s private right of action to extend into their territories.”).

[282] See Gevurtz, supra note 100, at 29 (“The essential idea behind this foreign relations rationale is that applying U.S. law to events outside the United States can upset other countries, which is a risk courts should interpret statutes to avoid absent evidence that Congress really wants to take this risk.”).

[283] See Gevurtz, supra note 100, at 25 (“Government prosecutors presumably will take into account potential foreign relations problems when exercising their discretion about bringing an action involving events outside the United States, whereas there is little incentive for private parties to do so.”); see also Stephan, supra note 281, at 42 (noting that “prosecutors must internalize the effect of their decisions on other countries and their governments,” but that “[p]laintiffs and their lawyers may have multiple interests . . . but none normally takes into account the foreign relations goals of the United States”).

[284] Stephan, supra note 281, at 42.

[285] Id. (“We may tolerate paying this price when it comes to our domestic political economy, but foreign relations costs may fall into a different category.”).

[286] Id. at 43.

[287] See Mark, supra note 21, at 590.

[288] Id.

[289] See Gevurtz, supra note 100, at 26 (“[T]he Court does not ask when a private claim with some overseas aspect will, by virtue of that aspect, potentially cause friction with other governments.”).

[290] See RJR Nabisco, 136 S. Ct. at 2107.

[291] Id. at 493 (“We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction.”).

[292] See Buxbaum, supra note 237, at 66 (noting that, in Kiobel, the ATS lacked extraterritorial reach and failed the U.S. touch and concern requirement and that, in Morrison, Section 19(b) lacked extraterritorial application and was outside the statute’s reach since it was based on foreign conduct. Similarly, she observes, in RJR Nabisco, the plaintiffs had all waived their claims to domestic injuries and thus could not assert a civil RICO claim. None of these cases resulted in the extension of U.S. law, so there was no chance to evaluate the resulting implications.).

[293] See Gevurtz, supra note 100, at 7 (“Be this as it may, it is difficult to escape the suspicion that how strict the Court is in its demands for clear evidence depends upon how much the Court desires to confine the particular statute before the Court to domestic events.”).

[294] Id. (“[T]here may be situations in which a permissible application of U.S. law to foreign conduct might nevertheless create jurisdictional conflict. The Court’s recent extraterritoriality jurisprudence has not confronted this question.”).

[295] See RJR Nabisco, 136 S. Ct. at 2096–97. Justice Alito poses a related inquiry and answer in the opinion: “[w]hat if we find at step one that a statute clearly does have extraterritorial effect? Neither Morrison nor Kiobel involved such a finding.” Id. at 2101. RJR Nabisco also was irrelevant since the claimants had waived their domestic injury damages claims.).

[296] See Buxbaum, supra note 237, at 66 (contending that “this form of territorialism is simply incompatible with the effective operation of regulatory statutes in today’s economy, and fails to capture the ways in which domestic and foreign regulatory interests coincide and overlap with each other”).

[297] See Bookman, supra note 242, at 57.

[298] See id. at 59 (noting that RJR Nabisco may seem that it serves international comity, “but it is questionable whether it does so”).

[299] Id. at 59.

[300] Id. at 61.

[301] See RJR Nabisco, 136 S. Ct. at 2102. (“If a particular statute does not apply extraterritorially, then conduct committed abroad is not ‘indictable’ under that statute and so cannot qualify as a predicate under RICO’s plain terms.”).

[302] See id. at 2106.

[303] See id. at 2102 (“Congress’s incorporation of these (and other) extraterritorial predicates into RICO gives a clear, affirmative indication that § 1962 applies to foreign racketeering activity—but only to the extent that the predicates alleged in a particular case themselves apply extraterritorially.”).

[304] See id. at 2111 (“Section 1964(c) requires a civil RICO plaintiff to allege and prove a domestic injury to business or property and does not allow recovery for foreign injuries.”).

[305] Id. at 2104 (“RICO—or at least §§1962(b) and (c)—applies abroad, and so we do not need to determine which transnational (or wholly foreign) patterns of racketeering it applies to; it applies to all of them, regardless of whether they are connected to a “foreign” or “domestic” enterprise.”).

[306] Id. at 2105.

[307] Id. at 2106 (emphasis in original).

[308] See id. at 2102.

[309] See id. at 2110–11.

[310] See id. at 2102; 2105.

[311] See id.

[312] See id. at 2102, 2111.

[313] See United States v. Noriega, 746 F. Supp. 1506, 1510 (S.D. Fla. 1990).

[314] See RJR Nabisco, 136 S. Ct. at 2105.

[315] Id. at 2094.

[316] See Noriega, 746 F. Supp. at 1517.

[317] See S. Rep. No. 91-617, at 45–46 (1969) (revealing that the President, in the Senate Report of 1969, has “authorized the Attorney General to engage in wiretapping of organized racketeers” and “establish a unique Federal-State Racket Squad in New York City,” has “asked the congress to increase the fiscal 1970 budget by $25 million” and “to approve a $300 million appropriation in the 1970 budget,” and has furthermore “directed the Attorney General to mount our Federal anti-organized crime offensive and to coordinate the Federal effort with State and local efforts where possible,” amongst other steps on the federal level).

[318] Id. at 46 (noting that state and local measures enacted to combat organized crime in the 1969 Senate Report included the “exchange [of] recent knowledge,” “technical assistance and financial help” by the Justice Department, “fostering cooperation and coordination between States and between communities,” and “providing Federal aid” to make people aware of the nature and scope of organized crime, amongst other measures identified in the Senate Report).

[319] Id.

[320] See Anthony S. Barkow & Rachel E. Barkow, Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct 1 (2011).

[321] See G. Robert Blakey, Federal Criminal Law: The Need, Not for Revised Constitutional Theory or New Congressional Statutes, But the Exercise of Responsible Prosecutorial Discretion, 46 Hastings L.J. 1175, 1179 (1995).

[322] Id.

[323] Id. (“Viewed through an ideological framework, proposals from each side are too often viewed as mutually exclusive alternatives. Debate becomes emotional and polarized. Division, deadlock, and delay are the result.”).

[324] Id. at 1184 (noting that “[t]he normal bonds of community seem to be breaking up”).

[325] Id. at 1197.

[326] Id. at 1198.

[327] Id. at 1201.

[328] Id. at 1208.

[329] Id. at 1210.

[330] Id. at 1214 (“[I]nternational organized crime is the challenge of the future for criminal justice.”).

[331] Id. at 1216.

[332] Id. at 1218 (“Every part of our systems of criminal justice is undernourished. Personnel are insufficient, poorly paid, untrained, and unorganized.”).

[333] Id. (asserting that “we must focus principally on questions of administration, not theory” and that “t is time we start asking the right questions.”).

[334] See Phil Angelides et al., The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States xvii–xxv (2011) (noting the major findings and conclusions as pertaining to the 2008 Recession:

• “We conclude this financial crisis was avoidable.”
• “We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets.”
• “We conclude dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.”
• “We conclude a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.”
• “We conclude the government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets.”
• “We conclude there was a systemic breakdown in accountability and ethics.”
• “We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.”
• “We conclude over-the-counter derivatives contributed significantly to this crisis.”
• “We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.”).

[335] See Gevurtz, supra note 100, at 25.

[336] For the Supreme Court decision and subsequent congressional amendment in Dodd-Frank reversing the holding regarding the extraterritorial reach of the anti-fraud provisions of the Exchange Act, see Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247 (2010); Dodd-Frank Wall Street Reform and Consumer Protection Act, § 929P(b), Pub. L. No. 111-203, 124 Stat. 1376 (2010). For the Supreme Court’s holding on the geographic scope of Title VII and Congress’s amendment of Title VII reversing the opinion, see EEOC v. Arabian Am. Oil Co., 499 U.S. 244 (1991); 42 U.S.C. §2000e-1(b).

[337] See Hoppe, supra note 72, at 1399.

[338] See Dodge, supra note 83, at 50.

[339] See Lievsay, supra note 21, at 1752.

[340] See Hoppe, supra note 72, at 1397.

[341] See Colangelo, supra note 232, at 55.

[342] See Lievsay, supra note 21, at 1771–72.

[343] Id. at 1772.

[344] See Colangelo, supra note 232, at 55; see also Lievsay, supra note 21, at 1771–72.

[345] See Mark, supra note 21, at 606.

[346] See 18 U.S.C. § 1962(a)–(d).

[347] See Donaher, supra note 27, at 232.

[348] Id.

[349] Id.

[350] Id. (“This will ensure fairness throughout criminal prosecutions, a more confident application by prosecutors, and better guidance for the judiciary.”).

[351] See Blakey & Gettings, supra note 27, at 1012 n.13 (“Administrative abuse is an incident of administration; it is not necessarily caused by poor statutory draftsmanship, and its cure usually lies in careful selection of administrative personnel, not more legislation.”).

[352] See Donaher, supra note 27, at 229 (“With the RICO statute, courts have engaged in a regime of impermissible judicial lawmaking in the way in which they ignore congressional intent by implementing their own views.”).

[353] See Blakey, supra note 42, at 709.