Q1: What area of law does RJR Nabisco, Inc. v. European Community primarily address?
Federal Statutory Interpretation (RICO; Extraterritoriality)
Q2: What was the central legal issue in RJR Nabisco, Inc. v. European Community?
1) Do RICO's substantive prohibitions in 18 U.S.C. § 1962 apply to conduct occurring outside the United States? 2) May a private civil RICO plaintiff recover damages under § 1964(c) for injuries to business or property suffered outside the United States?
Q3: What rule did the court apply?
Presumption against extraterritoriality: Unless Congress clearly indicates a statute's extraterritorial application, it is presumed to apply only domestically. Application proceeds in two steps: (1) ask whether the statute gives a clear, affirmative indication of extraterritoriality; if not, (2) determine whether the case involves a permissible domestic application by identifying the statute's focus. Applying this to RICO: (a) RICO's substantive prohibitions in § 1962 can apply extraterritorially to the extent the underlying predicate offenses listed in § 1961(1) themselves apply extraterritorially; RICO does not require the 'enterprise' to be domestic, and § 1962(d) conspiracy cannot extend beyond the reach of §§ 1962(a)–(c). (b) The private civil cause of action in § 1964(c) does not contain a clear indication of extraterritorial application and therefore requires a domestic injury to business or property; private plaintiffs may not recover for foreign injuries under civil RICO.
Q4: What was the court's holding?
Yes in part; no in part. The Court held that RICO's substantive provisions (§ 1962) apply extraterritorially to the extent that the alleged predicate offenses have extraterritorial reach, and the statute does not require that the RICO enterprise be domestic. However, private civil RICO plaintiffs under § 1964(c) must allege a domestic injury to business or property; civil RICO does not permit recovery for purely foreign injuries. The judgment of the Second Circuit was reversed in part, vacated in part, and remanded.
Q5: Why is RJR Nabisco, Inc. v. European Community significant?
RJR Nabisco is the Supreme Court's definitive statement on RICO's extraterritorial scope. It creates a two-track regime: the government may pursue RICO based on foreign conduct to the extent predicates apply abroad, but private civil plaintiffs must show a domestic injury. This significantly narrows the use of civil RICO in transnational disputes and has led litigants to focus on where the injury occurred and whether alleged predicates have extraterritorial reach. For law students, the case is essential for understanding the modern presumption against extraterritoriality, how courts parse multi-section statutes, the role of statutory structure (predicates and enterprise), and comity considerations in transnational litigation. Subsequent cases have applied and refined the domestic-injury requirement, including Supreme Court guidance on assessing domestic injury for intangible property interests.