Amicus Curiae Brief — Medical Marijuana, Inc., et al., Petitioners v. Douglas J. Horn

No. 23-365

In The

Supreme Court of the United States

____________

MEDICAL MARIJUANA , INC.; DIXIE HOLDINGS, LLC

AKA DIXIE ELIXIRS ; R ED DICE H OLDINGS , LLC,

Petitioners,

v.

DOUGLAS J. HORN,

Respondent.

____________

On Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

____________

BRIEF OF WASHINGTON LEGAL FOUNDATION AS

AMICUS CURIAE SUPPORTING PETITIONERS

____________

John M. Masslon II

Counsel of Record

Cory L. Andrews

WASHINGTON LEGAL FOUNDATION

2009 Massachusetts Ave. NW

Washington, DC 20036

(202) 588-0302

jmasslon@wlf.org

July 11, 2024

QUESTION PRESENTED

Whether economic harms resulting from

personal injuries are injuries to “business or property

by reason of” the defendant’s acts for purposes of civil

RICO.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED ......................................... i

TABLE OF AUTHORITIES .......................................v

INTEREST OF AMICUS CURIAE ............................1

INTRODUCTION .......................................................1

STATEMENT ..............................................................3

SUMMARY OF ARGUMENT.....................................5

ARGUMENT ...............................................................6

I.

THIS SECOND CIRCUIT’S SUPERFLUIDITY

ANALYSIS IS WRONG ..............................................6

A. Every Predicate Offense Can Cause

Direct Injury To Business Or

Property ......................................................6

B. The Department Of Justice Often

Enforces

RICO’s

Ban

On

Racketeering Involving Murder And

Kidnapping .................................................8

iv

TABLE OF CONTENTS

(continued)

Page

II. THE SECOND CIRCUIT’S INTERPRETATION OF

RICO VIOLATED PETITIONERS’ DUEPROCESS RIGHTS ..................................................13

A. Civil RICO’s Treble Damages

Trigger Heightened Due-Process

Protections................................................13

B. RICO’s Dual Civil-Criminal Nature

Triggers Heightened Due-Process

Protections................................................16

C. The Second Circuit’s Holding Flouts

These Heightened Due-Process

Protections................................................17

CONCLUSION ..........................................................19

v

TABLE OF AUTHORITIES

Page(s)

Cases

Agency Holding Corp. v.

Malley-Duff & Assocs., Inc.,

483 U.S. 143 (1987) ..............................................14

Bridge v. Phoenix Bond & Indem. Co.,

553 U.S. 639 (2008) ................................................1

Browning-Ferris Indus. of Vt.,

Inc. v. Kelco Disposal, Inc.,

492 U.S. 257 (1989)..............................................16

City of Chicago v. Morales,

527 U.S. 41 (1999) ................................................17

Connally v. Gen. Const. Co.,

269 U.S. 385 (1926) ........................................17, 18

Cook Cnty., Ill. v. United

States ex rel. Chandler,

538 U.S. 119 (2003) ..............................................15

Genty v. Resolution Tr. Corp.,

937 F.2d 899 (3d Cir. 1991) .................................13

Int’l Harvester Co. of Am. v. Kentucky,

234 U.S. 216 (1914) ..............................................17

Lanzetta v. New Jersey,

306 U.S. 451 (1939) ..............................................17

Leocal v. Ashcroft,

543 U.S. 1 (2004)..................................................16

PacifiCare Health Sys., Inc. v. Book,

538 U.S. 401 (2003) ..............................................15

vi

TABLE OF AUTHORITIES

(continued)

Page(s)

Pizana v. SanMedica Int’l, LLC,

2023 WL 8528640

(E.D. Cal. Dec. 8, 2023)........................................13

RJR Nabisco Inc. v. European Cmty.,

579 U.S. 325 (2016) ............................................1, 3

Samantar v. Yousuf,

560 U.S. 305 (2010) ................................................8

Sedima, S.P.R.L. v. Imrex Co.,

473 U.S. 479 (1985) ............................................2, 3

Shearson/Am. Exp., Inc. v. McMahon,

482 U.S. 220 (1987) ........................................14, 15

Skilling v. United States,

561 U.S. 358 (2010) ..............................................18

St. Louis, I. M. & S. R. Co. v. Williams,

251 U.S. 63 (1919) ................................................16

United States v. Celestine,

2022 WL 3974143

(E.D.N.C. Aug. 31, 2022) .....................................12

United States v. Green,

2024 WL 2716472

(D.D.C. May 28, 2024) .........................................12

United States v. Morton,

467 U.S. 822 (1984) ................................................8

United States v. Sumler,

136 F.3d 188 (D.C. Cir. 1998) ..............................12

United States v. Thompson/Ctr.

Arms Co.,

504 U.S. 505 (1992) ..............................................16

vii

TABLE OF AUTHORITIES

(continued)

Page(s)

United States v. Tran,

2022 WL 7132195 (E.D.N.Y. 2022) .....................12

Vill. of Hoffman Estates v. Flipside,

Hoffman Estates, Inc.,

455 U.S. 489 (1982) ..............................................16

Vt. Agency of Nat. Res. v.

United States ex rel. Stevens,

529 U.S. 765 (2000) ........................................13, 14

Statutes

Racketeer Influenced and Corrupt

Organizations Act, 18 U.S.C.

§ 1961 .............................................................1, 6, 9

§ 1961(1) ................................................... 3, 7, 9, 10

§ 1961(1)(A) ............................................ 6, 9, 10, 11

§ 1961(1)(B) ............................................................9

§ 1962 ...........................................................3, 9, 10

§ 1963 ......................................... 8, 9, 10, 11, 12, 16

§ 1963(a) .................................................................9

§ 1964 ............................................... 7, 9, 10, 11, 13

§ 1964(c) .......................................................3, 6, 13

Okla. Stat. § 7255 (1921) ..........................................17

Organized Crime Control Act of 1970,

Pub. L. No. 91-452, 84 Stat. 922 ...................1, 2, 3

Other Authorities

116 Cong. Rec. 25,190

(statement of Sen. McClellan) .............................14

Antonin Scalia & Bryan A. Garner,

Reading Law: The Interpretation of

Legal Texts (2012) ..................................................8

viii

TABLE OF AUTHORITIES

(continued)

Page(s)

Claire Prechtel-Kluskens, The Supreme

Court Should Limit Civil RICO

Claims, WLF LEGAL OPINION

LETTER (Mar. 27, 1992) ..........................................1

Federal Justice Statistics Program,

Bureau of Just. Stats. (June 17,

2024) (kidnapping) ...............................................11

Federal Justice Statistics Program,

Bureau of Just. Stats. (June 17,

2024) (murder) .....................................................11

H.R. Rep. No. 91-1549, reprinted in,

1970 U.S.C.C.A.N. 4007 ....................................2, 3

Hearings on S. 30 and Related

Proposals before Subcomm. No. 5 of

the H. Comm. on the Judiciary,

91st Cong., 2d Sess. (1970) ..................................14

Ignacio Sanchez & Kevin O’Scannlain,

Foreign Governments’ Misuse of

Federal RICO: The Case for Reform,

WLF WORKING PAPER (May 2006).........................1

Jennifer Learn, Return To ‘mob City’

Arson Deaths, Firebombings Part Of

Bad Old Days, TIMES LEADER,

Feb. 11, 1996 ..........................................................7

Mozart in the Jungle: Opening Night

(Amazon Prime streaming broadcast

Dec. 23, 2014) .........................................................7

The Sopranos: Two Tonys (HBO

television broadcast Mar. 7, 2004) ........................7

1

INTEREST OF AMICUS CURIAE*

Washington Legal Foundation is a nonprofit,

public-interest law firm and policy center with

supporters nationwide. WLF promotes free

enterprise, individual rights, limited government,

and the rule of law. WLF often appears as an amicus

before this Court in key cases construing the scope of

civil liability under the Racketeer Influenced and

Corrupt Organizations Act, 18 U.S.C. § 1961 et seq.

See, e.g., RJR Nabisco Inc. v. European Cmty., 579

U.S. 325 (2016); Bridge v. Phoenix Bond & Indem. Co.,

553 U.S. 639 (2008).

WLF’s Legal Studies Division, its publishing

arm, often publishes articles by outside experts on the

proper scope of civil RICO. See, e.g., Ignacio Sanchez

& Kevin O’Scannlain, Foreign Governments’ Misuse of

Federal RICO: The Case for Reform, WLF WORKING

PAPER (May 2006); Claire Prechtel-Kluskens, The

Supreme Court Should Limit Civil RICO Claims,

WLF LEGAL OPINION LETTER (Mar. 27, 1992). WLF

believes that the Second Circuit’s decision expands

civil RICO liability beyond what its text can bear and

threatens defendants’ right to due process.

INTRODUCTION

Congress left no doubt about why it passed the

Organized Crime Control Act of 1970, Pub. L. No. 91452, 84 Stat. 922. It sought to “eradicat[e ] organized

crime in the United States by strengthening the legal

tools in the evidence-gathering process, by

* No party’s counsel authored any part of this brief. No

person or entity, other than Washington Legal Foundation and

its counsel, paid for the brief’s preparation or submission.

2

establishing new penal prohibitions, and by providing

enhanced sanctions and new remedies to deal with

the unlawful activities of those engaged in organized

crime.” 84 Stat. at 923. Of course, the drafters could

not define organized crime. Rather, “[w]hen asked

about the” term’s meaning, the statute’s authors

“explained that it was impossible to define, but

everybody knew what it was.” H.R. Rep. No. 91-1549,

reprinted in, 1970 U.S.C.C.A.N. 4007, 4091

(dissenting statement of Reps. Conyers, Jr., Mikva,

and Ryan).

Despite this Court’s recognizing that RICO was

Congress’s attempt “to strike at organized crime,” this

Court knows that “in its private civil version, RICO is

evolving into something quite different from the

original conception of its enactors.” Sedima, S.P.R.L.

v. Imrex Co., 473 U.S. 479, 494, 500 (1985). This

Court’s decisions have no doubt allowed plaintiffs’

lawyers to use RICO in a way that RICO’s authors

would recoil at.

Still, the Court has acknowledged that there

are limits to civil RICO’s reach. One key element that

limits the statute’s reach is the requirement that a

plaintiff suffer injuries to business or property before

suing. Other injuries—like those to persons—are not

cognizable under civil RICO. (Criminal RICO does not

include the injury to business or property

requirement.)

The Second Circuit’s decision, however, scoffs

at this limit. It essentially allows for disgruntled

customers “to harass innocent businessmen engaged

in interstate commerce” by authorizing private

damage suits.” H.R. Rep. No. 91-1549, 1970

3

U.S.C.C.A.N. at 4083 (dissenting statement of Reps.

Conyers, Jr., Mikva, and Ryan). The Court should

reject such baseless suits, which lack any textual

support. It can do so here by reversing the Second

Circuit’s decision and explaining that civil RICO may

not be used to recover for economic harms resulting

from personal injuries.

STATEMENT

I. In the late 1960s, “organized crime in the

United States [was] a highly sophisticated,

diversified, and widespread” problem. 84 Stat. at 922.

So Congress penalized racketeering activity, which it

defined broadly to include many state and federal

crimes. See 18 U.S.C. § 1961(1) (laundry list of crimes

that constitute racketeering). RICO makes it illegal to

receive income from racketeering enterprises and

similar actions. See id. § 1962. RICO also allows

private plaintiffs to sue to recover treble damages and

attorney fees from racketeers. Id. § 1964(c).

But not every criminal violation of RICO allows

for a civil action. This is because Congress sought,

through civil RICO, to help stop racketeering

activities from harming people’s pocketbooks. See

Sedima, S.P.R.L., 473 U.S. at 488 (citation omitted).

It accomplished this goal by allowing civil RICO

claims by only those “injured in [their] business or

property by reason of a violation of section 1962.” 18

U.S.C. § 1964(c). This provision limits “RICO’s

private cause of action to particular kinds of injury—

excluding, for example, personal injuries.” RJR

Nabisco, 579 U.S. at 350.

4

II. Hemp-based cannabidiol oil is a booming

business. To take advantage of that market, Medical

Marijuana, Inc. and Dixie Holdings, LLC formed a

joint venture, Red Dice Holdings, LLC, which sells a

hemp-based CBD supplement called Dixie X that fully

complies with federal drug laws. To create Dixie X,

Red Dice Holdings removes impurities and delta-9tetrahydrocannabinol (THC) from medicinal hemp.

Users typically dissolve Dixie X under their

tongue. One of those users was Douglas Horn, a

commercial truck driver. He suffered from chronic

pain and inflammation after an accident. Horn

alleges that he used Dixie X only because it was

advertised as 0% THC. In October 2012, Horn failed

a drug test for THC and was fired.

Horn and his wife sued, asserting nine causes

of action. They were all based on a false-advertising

theory. According to Horn, Petitioners misled him

into thinking that Dixie X had no THC. He alleges

that despite those ads, Dixie X contained THC and

caused him to be fired. The only federal claim was

violation of civil RICO. After summary judgment, only

Horn’s state-law fraudulent-inducement claim

remained.

In granting summary judgment on the civil

RICO claim, the District Court held that Horn’s claim

failed as a matter of law because he sought damages

for a personal injury—THC consumption. This

personal injury was what led to any economic

damages Horn suffered. The District Court then

granted partial final judgment on the civil RICO

claim, allowing Horn to appeal that decision.

5

The Second Circuit reversed, although on a

ground not raised by Horn. Agreeing with the Ninth

Circuit, the panel held that plaintiffs may sue under

civil RICO for injuries that “flow from, or are

derivative of, a personal injury.” Pet. App. 11a, 13a.

This, the Second Circuit said, is because “the phrase

‘business or property’ focuses on the nature of the

harm, not the source of the harm.” Pet. App. 15a. As

Horn’s loss of employment was an economic injury,

the Second Circuit held that he had RICO standing to

sue. This Court granted certiorari to resolve a circuit

split on this important issue.

SUMMARY OF ARGUMENT

I.A. The Second Circuit’s superfluidity analysis

fails to acknowledge that some crimes typically

involving only personal injuries can also injure

business or property. For example, murders and

kidnappings can cause direct injury to business and

property.

B. Horn’s arguments ignore RICO’s criminal

provisions. There is no superfluidity problem because

all the predicate offenses listed in the statute can

result in criminal prosecution. And the Department of

Justice does not hesitate to indict people who engage

in racketeering activities involving murder and

kidnapping.

II.A. Civil RICO violations carry treble

damages. Unlike ordinary or even double damages,

treble damages are punitive and trigger heightened

due-process protections for parties accused of civil

RICO violations.

6

B. RICO violations carry potential criminal

penalties. As with treble damages, the threat of

criminal penalties also triggers heightened dueprocess protections.

C. The Second Circuit’s decision ignores these

due-process protections. At the heart of due process of

law is the right to know what conduct is prohibited.

Petitioners did not have fair notice that they could

face treble damages because civil RICO’s plain

language allows actions to recover only for injuries to

business and property. The statute does not allow for

recovery of personal injuries, the type of injury that

Horn suffered here.

ARGUMENT

I.

THE SECOND CIRCUIT’S

ANALYSIS IS WRONG.

A.

SUPERFLUIDITY

Every Predicate Offense Can Cause

Direct Injury To Business Or

Property.

The Second Circuit held that civil RICO must

cover personal injuries resulting in economic harm

because otherwise the inclusion of certain predicate

offenses in 18 U.S.C. § 1961(1)(A) would be

superfluous. In its view, “because personal injuries,

including murder and kidnapping, are expressly

listed in section 1961 as racketeering conduct that can

give rise to claims under the statute, § 1964(c) cannot

be read to deny RICO standing for injuries to business

or property simply because the plaintiff suffered an

antecedent personal injury.” Pet. App. 16a (cleaned

up). This argument fails for two reasons. First, it

7

overlooks the different ways that someone can be

murdered or kidnapped. Second, it ignores how

criminal RICO can be—and is—used to prosecute

racketeers who murder or kidnap people.

There are many ways to murder someone while

directly causing injury to property or business. For

example, Tommy Gilardi and his driver were killed by

a car bomb. See The Sopranos: Two Tonys (HBO

television broadcast Mar. 7, 2004). This was a direct

injury to property caused by the murder. So the car’s

owner (or his estate) could sue under civil RICO for

the damage to property caused by the predicate

murder offense.

The same holds true for injury to business.

Imagine a mobster murders a storekeeper who

refuses to launder money using a firebomb. Cf.

Jennifer Learn, Return To ‘mob City’ Arson Deaths,

Firebombings Part Of Bad Old Days, TIMES LEADER,

Feb. 11, 1996, at 1 (describing organized crime’s

murdering of people using firebombs). The business

owner could sue for the damage to his business caused

by the firebombing.

Kidnapping is no different. Imagine a

chauffeur kidnaps a passenger and his employer is

not paid because the contract is not fulfilled. See

Mozart in the Jungle: Opening Night (Amazon Prime

streaming broadcast Dec. 23, 2014). This would be an

injury to business that the owner could recover under

civil RICO.

In short, each predicate offense listed in

Section 1961(1) can cause direct injuries to property

or business. There is no need to stretch Section 1964’s

8

plain language to include personal injuries that result

in economic harm. Yet that is what the Second Circuit

did here. It refused to apply the statute as written

because it failed to explore the different ways that

mobsters sometimes commit predicate offenses. This

is just one way in which the court’s superfluidity

analysis is flawed.

B.

The Department Of Justice Often

Enforces

RICO’s

Ban

On

Racketeering Involving Murder

And Kidnapping.

The Second Circuit’s opinion excised Section

1963 from RICO. In fact, that statutory section is not

cited once in the lower court’s opinion. See Pet. App.

1a-22a. This failure to consider the entire RICO

statute helps explain why the court’s superfluidity

analysis is so flawed.

One touchstone of statutory interpretation is

that courts “do not construe statutory phrases in

isolation; [they] read statutes as a whole.” Samantar

v. Yousuf, 560 U.S. 305, 319 (2010) (quoting United

States v. Morton, 467 U.S. 822, 828 (1984) (cleaned

up)). In other words, courts “consider the entire text,

in view of its structure and of the physical and logical

relation of its many parts.” Antonin Scalia & Bryan

A. Garner, Reading Law: The Interpretation of Legal

Texts 167 (2012).

RICO is not a long or complicated statute. It is

only eight sections long and each section is relatively

short. So it is not hard to understand how the

different parts of the statute work together to achieve

Congress’s goal. And as detailed above, RICO was

9

passed as an added tool to fight organized crime.

Nothing in the statutory text or legislative history

suggests that RICO was passed to help the plaintiffs’

bar or to punish businesses engaging in lawful

interstate commerce.

Examining the first four sections of RICO

shows just how far afield the Second Circuit’s analysis

is. Section 1961 is a list of definitions used in the

remainder of the statute. The first definition is for

“racketeering activity.” 18 U.S.C. § 1961(1). That

subsection is a laundry list of acts that constitute

racketeering activity, including “any act or threat

involving murder[ or] kidnapping.” Id. § 1961(1)(A).

Other listed acts include shaving points or

transporting stolen cars across state lines. Id.

§ 1961(1)(B). RICO’s second section generally makes

it unlawful to engage in a pattern of racketeering

activity. See id. § 1962.

RICO’s third section is the statutory provision

that the Second Circuit ignored. It allows for the

criminal prosecution of anyone engaged in a pattern

of racketeering activity and the forfeiture of a long list

of property involved in the racketeering activity. 18

U.S.C. § 1963. The maximum period of imprisonment

under Section 1963 is either 20 years or life,

depending on the maximum penalty for the predicate

offenses. See id. § 1963(a). Finally, RICO’s fourth

section creates a private right of action. See id. § 1964.

Better known as civil RICO, this is the section that

Horn sued under and that is exploited by plaintiffs’

attorneys.

In the Second Circuit’s view, personal injuries

that lead to economic harm must be cognizable under

10

Section 1964 because otherwise they would be

superfluous inclusions in Section 1961(1)(A). The

court reasoned that, under the canon against

superfluidity, civil RICO plaintiffs must be able to sue

to recover for personal injuries that lead to economic

damages. This, however, ignores Section 1963 and

RICO’s structure.

Sections 1963 and 1964 both cover activity that

Section 1962 declares illegal. Patterns of racketeering

activity, as defined in Section 1961(1), are made

illegal by Section 1962. This means there are no

separate lists of predicate offenses that trigger

criminal liability under Section 1963 and civil liability

under Section 1964.

Congress limited the reach of criminal and civil

liability not through separate lists of predicate

offenses but through separate provisions creating

criminal and civil liability. In other words, Sections

1963 and 1964 were meant to limit which cases could

be brought in different contexts. Civil RICO actions

are limited to only direct injuries to business or

property. If any predicate offense does not cause

direct injury to business or property, Congress

thought it best to leave RICO’s enforcement to the

Department of Justice.

The Department of Justice has taken that

responsibility seriously. Although the number of civil

RICO cases far outpaces the number of criminal RICO

prosecutions, most civil RICO cases involve acts that

do not threaten the health and safety of the public.

When the Department of Justice brings criminal

RICO charges, they often are based on the predicate

offenses of murder and kidnapping. This shows that

11

including these offenses in Section 1961(1)(A) is not

superfluous under Petitioners’ correct interpretation

of Section 1964.

The Department of Justice’s pursuit of those

who engaged in racketeering involving murder is a

good example. Between 2012 and 2021, 32 people

were charged under criminal RICO with a predicate

offense of first-degree murder. Federal Justice

Statistics Program, Bureau of Just. Stats. (June 17,

2024), https://perma.cc/UEX7-ZRJM. Another 12

people were charged under criminal RICO with a

predicate offense of second-degree murder. Id.

Finally, 120 people were charged under RICO with a

predicate offense of murder. Id. So over that ten-year

period, the Department of Justice charged at least 164

people under Section 1963 with murder as the

predicate offense.

These numbers, however, are likely lower than

the actual number of people charged under Section

1963 when murder was the predicate offense. This is

because the statistics rely on humans to correctly code

the charging documents and CM/ECF. The actual

number of people charged under RICO for predicate

offenses of murder and kidnapping is far higher.

The way that coding variance happens for

kidnapping is a good example. According to published

Department of Justice statistics, only one person over

the past 30 years has been charged under Section

1963 with a predicate offense of kidnapping. Federal

Justice Statistics Program, Bureau of Just. Stats.

(June 17, 2024), https://perma.cc/7Z25-9DLD. But a

cursory Westlaw search reveals that there are many

more Section 1963 cases where kidnapping was a

12

predicate offense. These cases just were not coded

correctly by the Department of Justice or in CM/ECF.

For example, in the mid-1990s, three

individuals were convicted of RICO offenses with

kidnapping as one of the predicate offenses. The three

“belong[ed] to the so-called Fern Street Crew.” United

States v. Sumler, 136 F.3d 188, 189 (D.C. Cir. 1998).

These three prosecutions alone are triple the number

reported in the Department of Justice’s statistics. But

there are many similar cases. E.g., United States v.

Green, 2024 WL 2716472, *4 (D.D.C. May 28, 2024);

United States v. Tran, 2022 WL 7132195, *1

(E.D.N.Y. 2022); United States v. Celestine, 2022 WL

3974143, *6 (E.D.N.C. Aug. 31, 2022), aff’d, 2023 WL

2625606 (4th Cir. Mar. 24, 2023) (per curiam).

These statistics and cases show that the

Department of Justice often charges people under

Section 1963 when they commit murder or

kidnapping as part of a criminal enterprise. This is

what Congress wanted to happen when it enacted

RICO. It viewed Section 1963 as the proper vehicle for

punishing racketeering activities that lead to

personal injuries.

What Congress did not want was for those who

suffer personal injuries to bring civil RICO suits.

Rather, Congress thought that private parties should

bring suits only when racketeering activity directly

injured business or property. These RICO violations

are less likely to be criminally prosecuted. Allowing

private parties to recover treble damages, costs, and

attorney fees achieves the same deterrence as the

threat of criminal penalties.

13

The Second Circuit’s superfluidity analysis

ignores how Congress structured RICO to allow for

both criminal and civil liability. This led the court to

overlook how the Department of Justice charges

people with RICO violations when they engage in

murder or kidnapping. These criminal cases show

that adopting Petitioners’ construction of Section

1964 does not lead to superfluidity. Rather, it ensures

that the statute’s plain language is followed without

allowing for any superfluidity.

II.

THE SECOND CIRCUIT’S INTERPRETATION OF

RICO VIOLATED PETITIONERS’ DUE-PROCESS

RIGHTS.

A.

Civil RICO’s Treble Damages

Trigger Heightened Due-Process

Protections.

Prevailing plaintiffs in civil RICO cases recover

treble damages. See 18 U.S.C. § 1964(c). Statutory

treble damages are often punitive. See Vt. Agency of

Nat. Res. v. United States ex rel. Stevens, 529 U.S.

765, 784 (2000). That is why some courts have viewed

RICO’s treble-damages provision as punitive. See,

e.g., Pizana v. SanMedica Int’l, LLC, 2023 WL

8528640, *8 n.7 (E.D. Cal. Dec. 8, 2023) (citation

omitted); see also Genty v. Resolution Tr. Corp., 937

F.2d 899, 910 (3d Cir. 1991) (“There is convincing

authority that Congress authorized civil RICO’s

powerful treble damages provision to serve a punitive

purpose.”).

True, this Court has said that civil RICO is

“designed to remedy economic injury by providing for

the recovery of treble damages, costs, and attorney’s

14

fees.” Agency Holding Corp. v. Malley-Duff & Assocs.,

Inc., 483 U.S. 143, 151 (1987). But this statement was

dicta comparing civil RICO to the Clayton Act. The

question the Court was resolving involved the statute

of limitations for civil RICO. See id. at 144. That is a

far different question than whether the trebledamages provision of RICO is punitive for due-process

purposes.

Agency Holding also came years before

Vermont Agency of Natural Resources. There, the

Court distinguished between double damages (which

are compensatory) and treble damages (which are

punitive). 529 U.S. at 785-86. Thus, the Court in

Agency Holding did not have the benefit of Vermont

Agency of Natural Resources and had no reason to be

more precise with its language about the nature of

civil RICO’s treble-damages provision.

A decision earlier that year confirms that

Agency Holding was imprecise in its description of

civil

RICO’s

treble-damages

provision.

In

Shearson/Am. Exp., Inc. v. McMahon, the Court

explained that civil RICO’s legislative history reveals

that Congress wanted to “give[] access to a legal

remedy” for “those who have been wronged by

organized crime.” 482 U.S. 220, 240 (1987) (quoting

Hearings on S. 30 and Related Proposals before

Subcomm. No. 5 of the H. Comm. on the Judiciary,

91st Cong., 2d Sess., 520 (1970) (statement of Rep.

Steiger)). This is what the Court in Agency Holding

meant by saying that civil RICO’s treble-damages

provision is remedial—it provides a right of action

that was previously unavailable to private actors. See

116 Cong. Rec. 25,190 (statement of Sen. McClellan)

(civil RICO “authorize[s] private civil damage suits”).

15

Although the Court highlighted Congress’s

goal in allowing private parties to sue under civil

RICO, it also recognized that civil RICO’s “policing

function” was also “important.” Shearson/Am. Exp.,

482 U.S. at 240. In other words, civil RICO is not

purely remedial. Rather, it created a private right of

action for those injured by organized crime and

punished those found liable with treble damages,

costs, and attorney fees.

Sixteen years after Agency Holding, this Court

recognized that the case law on statutory treble

damages is, at best, confusing. See PacifiCare Health

Sys., Inc. v. Book, 538 U.S. 401, 405-06 (2003). This

Court’s “cases have placed different statutory trebledamages provisions on different points along the

spectrum between purely compensatory and strictly

punitive awards.” Id. at 405. In most cases, “it is

important to realize that treble damages have a

compensatory side, serving remedial purposes in

addition to punitive objectives.” Cook Cnty., Ill. v.

United States ex rel. Chandler, 538 U.S. 119, 130

(2003) (collecting cases).

The Court’s discussion of treble-damages

provisions in PacifiCare shows that the treble

damages available under civil RICO are not purely

compensatory. They have at least some punitive

component, even if the extent of that punitive part

may be disputed. (It makes sense that two-thirds of

the treble damages are punitive because plaintiffs can

recover costs and attorney fees too.)

Because civil RICO’s damages are punitive,

there are strict constitutional limits on the notice and

proof required to succeed in a civil RICO case. The

16

“Due Process Clause places outer limits on the size of

a civil damages award made pursuant to a statutory

scheme.” Browning-Ferris Indus. of Vt., Inc. v. Kelco

Disposal, Inc., 492 U.S. 257, 276 (1989) (citing St.

Louis, I. M. & S. R. Co. v. Williams, 251 U.S. 63, 6667 (1919)). Purely compensatory damages cannot

violate substantive due-process protections if

supported by sufficient evidence. Yet civil RICO

damages can violate the Due Process Clause because

they are punitive. Besides procedural due-process

protections, then, courts should consider substantive

due-process principles.

B.

RICO’s Dual Civil-Criminal Nature

Triggers Heightened Due-Process

Protections.

Along with punitive treble damages, RICO

violations may carry criminal penalties. 18 U.S.C.

§ 1963. This also shapes the due-process protections

afforded defendants in civil RICO actions. “[T]he

relative importance of fair notice and fair

enforcement” mandated by the Due Process Clause

“depends in part on the nature of the enactment.” Vill.

of Hoffman Estates v. Flipside, Hoffman Estates, Inc.,

455 U.S. 489, 498 (1982). Although this is a civil

action, for statutes like RICO with both criminal and

civil penalties, courts apply “the rule of lenity” to both

parts of the statute. Leocal v. Ashcroft, 543 U.S. 1, 12

n.8 (2004) (citing United States v. Thompson/Ctr.

Arms Co., 504 U.S. 505, 517-18 (1992) (plurality)).

17

C.

The Second Circuit’s Holding Flouts

These

Heightened

Due-Process

Protections.

Civil RICO therefore requires heightened dueprocess protections for two reasons. Both the punitive

nature of civil RICO’s treble damages and the

criminal penalties for RICO violations require

enhanced due-process protections. Yet the Second

Circuit’s decision sidestepped these protections in

holding that plaintiffs can sue for personal injuries

that cause economic harm.

Under the Second Circuit’s holding, defendants

lack fair notice of the conduct that could lead to

punitive civil sanctions. Fair notice of what conduct is

prohibited is at the core of the Due Process Clause.

City of Chicago v. Morales, 527 U.S. 41, 58 (1999)

(citing Lanzetta v. New Jersey, 306 U.S. 451, 453

(1939)).

The Court has long recognized the importance

of fair notice under the Due Process Clause. Almost

100 years ago, the Court described the fair notice

requirement as “the first essential of due process of

law.” Connally v. Gen. Const. Co., 269 U.S. 385, 391

(1926) (citing Int’l Harvester Co. of Am. v. Kentucky,

234 U.S. 216, 221 (1914)).

General Construction Company highlights the

problems with the Second Circuit’s decision. There,

an Oklahoma statute required that firms performing

under contract with the State pay their workers “the

current rate of per diem wages in the locality where

the work is performed.” Okla. Stat. § 7255 (1921).

Finding that the statute violated the Due Process

18

Clause, the Court explained that the term “current

rate of wages” was “indeterminate[]” and obscure.

Gen. Const. Co., 269 U.S. at 394. And because the

statute was “so uncertain that” it could “reasonably

admit of different constructions,” it violated the Due

Process Clause. Id. at 393.

A recent case reveals what fair notice requires

when heightened due-process protections apply. In

Skilling v. United States, the Court held that the

defendant received fair notice that bribery and

kickbacks violated the honest-services statute. 561

U.S. 358, 412 (2010). The Court explained that this

was “as plain as a pikestaff.” Id. (quotation omitted).

But other conduct was not so clear. And because the

defendant did not receive fair notice that his conduct

violated the statute, the Court vacated the conviction.

Id. at 413-14.

Although it was “plain as a pikestaff” that

direct injuries to business or property are actionable

under civil RICO, there were no such injuries here.

Rather, Horn sued because he allegedly suffered

economic harm flowing from personal injuries caused

by Petitioners’ alleged racketeering activities. This is

like the conduct that Skilling found was not clear

enough to comply with the heightened due-process

protections.

For 150 years, this Court has repeatedly

returned to the idea of fair notice. Each time, the

Court has explained why this fair-notice requirement

is critical to due process of law. As explained above,

civil RICO’s treble damages are punitive. A RICO

violation also carries potential criminal liability. So

the Court’s heightened fair-notice requirements

19

should also govern civil RICO cases. Otherwise, civil

RICO’s constitutionality would be in doubt. Because

Petitioners’ construction of RICO avoids these

constitutional concerns, this Court should reject the

Second Circuit’s atextual reading of the statute.

CONCLUSION

This Court should reverse.

Respectfully submitted,

John M. Masslon II

Counsel of Record

Cory L. Andrews

WASHINGTON LEGAL FOUNDATION

2009 Massachusetts Ave. NW

Washington, DC 20036

(202) 588-0302

jmasslon@wlf.org

July 11, 2024