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Media Alerts - European Community v. RJR Nabisco Inc. - Second Circuit
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April 13, 2015
  European Community v. RJR Nabisco Inc. - Second Circuit
Headline: Second Circuit Denies Petition to Rehear Case in Which Panel Held that the Racketeer Influenced Corrupt Organizations Act (RICO) Applies to Extraterritorial Conduct

Area of Law: Racketeer Influenced Corrupt Organizations Act (RICO)

Issue Presented: Whether the Second Circuit should rehear a case addressing whether the Racketeer Influenced Corrupt Organizations Act (RICO) applies to extraterritorial conduct in civil actions in which RICO liability is based upon predicate racketeering acts that expressly apply to foreign conduct.

Brief Summary: The Second Circuit issued an order denying a rehearing en banc. The petition for rehearing challenged the ruling by a panel consisting of Circuit Judge Hall and Senior Judges Leval and Sack, that the Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 et seq., applies extraterritorially when liability is based on "racketeering acts" consisting of violations of predicate statutes which Congress expressly made applicable to foreign conduct. In considering the petition for panel rehearing, the court reexamined the panel decision and its compatibility with the Supreme Court's decision in Morrison v. Nat'l Australia Bank, Ltd., 561 U.S. 247 (2010), and the Second Circuit decision in Norex Petroleum Ltd. v. Access Industries, Inc., 631 F.3d 29 (2d Cir.12 2010).

Judge Hall wrote a concurring opinion, in which he supports the original panel ruling and the denial for rehearing. Judges Jacobs, Cabranes, Raggi, and Lynch each authored a dissenting opinion opposing the denial of the petition for rehearing.

The full text of the opinion may be found at: http://www.ca2.uscourts.gov/de...f6fb19e800f/1/hilite/

Extended Summary: By its petition for rehearing en banc, RJR Nabisco Inc. sought review of a panel decision, issued by Circuit Judge Hall and Senior Judges Leval and Sack, that the Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 et seq., applies extraterritorially when liability is based on "racketeering acts" consisting of violations of predicate statutes which Congress expressly made applicable to foreign conduct. Specifically, the underlying civil action alleged that RJR Nabisco was engaged in a complex multi-step racketeering scheme involving the extraterritorial sale of RJR Nabisco cigarettes. The complaint charges RJR Nabisco with the predicate acts of extraterritorial proscribed money laundering and the extraterritorial crime of providing material support for terrorism. The panel concluded that "by incorporating these statutes into RICO's predicate racketeering acts, Congress clearly communicated its intention that RICO apply to extraterritorial conduct to the extent that extraterritorial violations of those statutes serve as the basis for RICO liability." The majority did not vote in favor of en banc review, and the petition for rehearing en banc was denied, but four judges wrote individual dissenting opinions in favor of rehearing.

In his concurrence supporting the denial of the rehearing, Judge Hall reaffirmed the panel's decision as "sound," supported by Congressional intent, and consistent with the Supreme Court's decision in Morrison v. Nat'l Australia Bank, Ltd., 561 U.S. 247 (2010), and the Second Circuit's decision in Norex Petroleum Ltd. v. Access Industries, Inc., 631 F.3d 29 (2d Cir.12 2010).

In his dissent, joined by Judges Cabranes, Raggi, Livingston and Lynch, Chief Judge Jacobs, argues that the panel opinion "is in taut tension" with Norex Petroleum and will lead to "vexing questions" absent review reconciling the precedents. In a separate dissenting opinion, Circuit Judge Cabranes, joined by Judges Jacobs, Raggi and Livingston, argues strongly that the panel's holding that "RICO itself has extraterritorial reach if and when one of RICO's predicate statutes has extraterritorial reach" is "flatly inconsistent" with existing precedent. Judge Cabranes calls the panel ruling "a new and potentially far-reaching, judicial interpretation" of RICO that portends "a significant and long-term adverse impact on activities abroad" by "exposing business activities to civil claims of 'racketeering' grounded on extraterritorial activities anywhere in the world."

Judge Raggi, joined by Judges Jacobs, Cabranes, and Livingston, similarly contends that the panel's ruling on RICO's extraterritorial application conflicts with the Supreme Court's holding in Morrison, mandating a presumption against the extraterritorial application of United States statutes barring clear affirmative legislative intent, and Norex Petroleum, which she contends held RICO does not apply extraterritorially even if some predicate acts may be prosecuted extraterritorially. She argues that clarification is needed both on RICO's extraterritorial application and, additionally, to establish criteria for determining whether a RICO claim is domestic or extraterritorial. Finally, Judge Lynch joins in dissent over the denial of the rehearing en banc, arguing that the tension between the panel's holding in this case and Norex Petroleum should be resolved, but does not join the other dissenters in criticizing the panel's ultimate ruling as unsupported.

The full text of the opinion may be found at: http://www.ca2.uscourts.gov/de...f6fb19e800f/1/hilite/

Panel: En Banc

Panel Decision: European Cmty. v. RJR Nabisco, Inc., 764 F.3d 129 (2d Cir. 2014).

Date of Issued Opinion: 4/13/2015

Docket Number: 11-2475

Decided: Petition for rehearing en banc denied.

Case Alert Author: Marley Strauss

Counsel: For Plaintiffs-Appellants: John J. Halloran, Jr., John J. Halloran, Jr., P.C., White Plains, NY, Kevin A. Malone, Carlos A. Acevedo, Krupnick, Campbell, Malone, Buser Slama, Hancock, Liberman P.A., Fort Lauderdale, FL. For Defendants-Appellees: Gregory G. Katsas, John M. Gore, Jones Day, Washington, D.C., Mark R. Seiden, Jones Day, New York, NY.

Author of Opinion: Judge Hall concurs; Chief Judge Jacobs dissents, joined by Circuit Judge Cabranes, Circuit Judge Raggi, Circuit Judge Livingston and Circuit Lynch; Judge Cabranes dissents, joined by Judge Jacobs, Judge Raggi and Judge Livingston; Judge Raggi dissents, joined by Judge Jacobs, Judge Cabranes and Judge Livingston; and Judge Lynch dissents.

Case Alert Circuit Supervisor: Elyse Diamond Moskowitz

    Posted By: Elyse Diamond @ 04/13/2015 08:42 PM     2nd Circuit  

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