Amicus Curiae Brief — RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 567 (2015) (No. 15-138)
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No. 15-138
IN THE
Supreme Court of the Hnited States
RJR NABISCO, INC., et al.,
Petitioners,
V.
THE EUROPEAN COMMUNITY, acting on its own behalf
and on behalf of the Member States it has
power to represent, et al.,
Respondents.
On Writ Of Certiorari
To The United States Court Of Appeals
For The Second Circuit
BRIEF OF AMICUS CURIAE
THE NATIONAL FOREIGN TRADE COUNCIL
IN SUPPORT OF PETITIONERS
TIMOTHY P. HARKNESS
Counsel of Record
LINDA H. MARTIN
ELLIOT FRIEDMAN
DAVID Y. LIVSHIZ
LEAH FRIEDMAN
JONATHAN ELSNER
FRESHFIELDS BRUCKHAUS
DERINGER US LLP
601 Lexington Avenue, 31st Floor
New York, New York 10022
(212) 277-4000
timothy. harkness@freshfields.com
Counsel for Amicus Curiae
The National Foreign Trade Council
TABLE OF CONTENTS
TABLE OF AUTHORITIES................
INTEREST OF AMICI CURIAE ...........
SUMMARY OF ARGUMENT ..............
EE he ee
I.
If.
Amicus Agrees With Petitioners That
A Cognizable RICO Claim Requires
A Showing Of A Domestic Enterprise. .
Even If The Court Finds That RICO
Does Not Require A Showing Of A
Domestic Enterprise, The Second
Circuit’s Decision Should Be Reversed
Because A Civil RICO Claim Requires
The Showing Of A Domestic Injury ....
A. The Plain Language Of Section
1964(c) Requires The Showing
Of A Domestic Injury...............
B. Section 1964(c)’s Legislative History
Confirms That Section 1964(c)
Requires A Showing Of A Domestic
Injury To Make Out A Civil RICO
eee ie a
C. Nothing Rebuts The Presumption
That In Passing Section 1964(c),
Congress Was Focused Only On
Remedying Domestic Injuries ......
i
D. RICO’s Extraterritorial Predicates
Do Not Rebut The Presumption
That A Claim Under Section 1964(c)
Requires The Showing Of A Domestic
a ete teed eedbdueeneos
III. The Second Circuit’s Holding Will
Unduly Burden U.S. Businesses
And Have Other Negative
eee een eeseesee<sees
A. The Second Circuit’s Ruling Creates
An End Run Around Kiobel and
al EE IRS Fae 1 A
B. Permitting Civil RICO To Reach
Claims Based On Foreign Injuries
Poses Significant Risks To U.S.
Businesses Doing Business Abroad
And To Foreign Businesses
Investing In The United States.....
1. The Potential For Extraterritori«e!
Civil RICO Enforcement Places
Significant Burdens On NFTC’s
ee ie lceaaddeeaes
2. The Potential Of Extraterritorial
Civil RICO Enforcement
Presents Extraordinary Risks
For Foreign Corporations
Considering Investment In
The United States...............
EE 6 dnweeuvecstheceseneresosess
PAGE
16
20
20
25
29
30
33
ill
TABLE OF AUTHORITIES
Cases PAGE(S)
Adhikari v. Daoud & Partners,
2013 U.S. Dist. LEXIS 189601
(B.D. Tom. Ame. SB, BOTS) .. oe ccccccses 26
Alexander v. Sandoval,
2 Fe fl eee 17
Argentine Republic v.
Amerada Hess Shipping Corp..,
gS 13
Bagert v. Volkswagen Grp. of Am., Inc.,
No. 2:15-cv-07174
Ges GE, Sy ED nwa wenecucaceuns 27
Blue Chip Stamps v. Manor Drug Stores,
GS Gee Cale GPE 00 nb sh bsceneuesaues 30
Cardona v. Chiquita Brands Int'l, Inc.,
760 F.3d 1185 (11th Cir. 2014) ........ 22
Cedeno v. Castillo,
457 F. App’x. 35 (2d Cir. 2012) ........ 10
Cedeno v. Intech Grp., Inc.,
733 F. Supp. 2d 471 (S.D.N.Y. 2010)... 6
CGC Holding Co. v. Broad & Cassel,
773 F.3d 1076 (10th Cir. 2014) ........ 15
Church of Scientology of Cal. v. IRS,
Ge Ws WE noc catiesscusactasases 19
City of Roncho Palos Verdes v. Abrams,
PO Wak. Re EG bv nducexveneussaages 19
Clark v. Martinez,
- £2 e 5 = ee re 10
iv
Cases PAGE(S)
Corrie v. Caterpillar, Inc.,
503 F.3d 974 (9th Cir. 2007)........... 21
Daimler AG v. Bauman,
PUNO og co vccccccccececcs 7
DelRio-Mocci v. Connolly Props.,
672 F.3d 241 (3d Cir. 2012)............ 27
DLJ Mortg. Capital, Inc. v. Kontogiannis,
726 F. Supp. 2d 225
a 28
Doe v. Unocal Corp.,
395 F.3d 932 (9th Cir. 2002)........... 21
EEOC v. Arabian Am. Oil Co.,
ee 20
European Cmty. v. RJR Nabisco, Inc.,
764 F.3d 129 (2d Cir. 2014)...... — 9
F. Hoffman-La Roche Ltd. v. Empagran S.A.,
542 U.S. 155 (2004).............. 3, 12, 31, 32
Fleet Credit Corp. v. Sion,
699 F. Supp. 368 (D.R.I. 1988)......... 27
Graham Cty. Soil & Water
Conservation Dist. v. United States,
i si ceceeeeeseceses 13
Hertz Corp. v. Friend,
i ccna 7
Holmes v. Sec. Inv’r Prot. Corp.,
a 12
Hourani v. Mirtchev,
943 F. Supp. 2d 159 (D.D.C. 2013)..... 26, 27
Cases PAGE(S)
Ixotic AG v. Kammer,
2014 U.S. Dist. LEXIS 180782
(E.D.N.Y. Sept. 30, 2014).............. 26
Jovic v. L-3 Servs., Inc.,
69 F. Supp. 3d 750 (N.D. Ill. 2014) .... 21, 22
Kiobel v. Royal Dutch Petroleum Co.,
Bs Gs SE cecccunccsnsace passim
Klehr v. A.O. Smith Corp..,
RE 8
In re LIBOR-Based Fin.
Instruments Antitrust Litig.,
935 F. Supp. 2d 666 (S.D.N.Y. 2013)... 27
Liu v. Siemens A.G.,
978 F. Supp. 2d 325 (S.D.N.Y. 2013),
aff'd, 763 F.3d 175 (2d Cir. 2014)...... 14
Lopez v. Dean Witter Reynolds, Inc.,
591 F. Supp. 581 (N.D. Cal. 1984)..... 28
Miranda v. Ponce Fed. Bank,
948 F.2d 41 (1st Cir. 1991) ............ 25
Montreal Trading Ltd. v. Amax, Inc.,
661 F.2d 864 (10th Cir. 1981),
cert. denied, 455 U.S. 1001 (1982) ..... 12
Morrison v. Nat'l Australia Bank Ltd.,
ee Sy Ss cc ccnsccocees passim
N.S. Fin. Corp. v. Al-Turki,
100 F.3d 1046 (2d Cir. 1996) .......... 5, 15
Norex Petroleum Ltd. v. Access Indus., Inc.,
540 F. Supp. 2d 438 (S.D.N.Y. 2007)... 10
vi
Cases PAGE(S)
Norex Petroleum Ltd. v. Access Indus., Inc.,
631 F.3d 29 (2d Cir. 2010)............ passim
Republic of Iraq v. ABB AG,
920 F. Supp. 2d 517
tt in ccndedeecasdewenneees 26, 27
Schwartz v. F.S.&O. Assocs., Inc.,
1991 WL 208056
(S.D.N.Y. Sept. 27, 1991).............. 17
Sec. Inv’r Prot. Corp. v.
Bernard L. Madoff Inv. Sec. Ltd.,
513 B.R. 222 (S.D.N.Y. 2014).......... 14
SEC v. Tourre,
2013 WL 2407172
Seis GU Gk, SEED covcccceecccees 24
Sedima, S.P.R.L. v. Imrex Co.,
Ee 12, 15, 23
Shearson/Am. Express, Inc. v. McMahon,
es cc nncunbaebaneewe i)
Sosa v. Alvarez-Machain,
jf 16, 23
Tellabs, Inc. v. Makor Issues & Rights, Ltd..,
eee eeupedeeede 31
Touche Ross & Co. v. Redington,
Se ey SI sv cewendceccsecccees 17
In re Toyota Motor Corp.,
785 F. Supp. 2d 883
fF 8 & 0 errr 27
vii
Cases PAGE(S)
Turedi v. Coca Cola Co.,
460 F. Supp. 2d 507 (S.D.N.Y. 2006),
aff'd, 343 F. App’x 623
Se EL ee a 29
Tymoshenko v. Firtash,
57 F. Supp. 3d 311
En ss dn cegbeedeéucces 22, 23, 26
Tymoshenko v. Firtash,
2013 WL 4564646
(S.D.N.Y. Aug. 28, 2013)........... 22, 23, 27
United States v. Ahmed,
94 F. Supp. 3d 394 (E.D.N.Y. 2015).... 28
United States v. Basciano,
599 F.3d 184 (2d Cir. 2010)............ 15
United States v. Chao Fan Xu,
706 F.3d 965 (9th Cir. 2013)........... 5, 15
United States v. Gonzales,
ee 11
United States v. Neapolitan,
791 F.2d 489 (7th Cir. 1986)........... 6
United States v. Sisal Sales Corp.,
ee SE cs coc ccuccoecececes 12
United States v. Turkette,
468 U.B. GIG CAGBDD. ... 2. cc ccccccccccs: 6
United States v. Wheeler,
535 F.3d 446 (6th Cir. 2008)........... 15
Wiwa v. Royal-Dutch Petroleum Co.,
226 F.3d 88 (2d. Cir. 2000) ............ 21
Vill
Statutes, Rules and Regulations PAGE(S)
, § . RS rE rrr rr 14
Se ccchictinencdbeheaeancaecent 14
i iid hee Aes ade da 14
ibe Ce cceakavavedaduiaedes 12
CR I ee ee 24
ee inn 0ks 6060 6eneeneeeees 28
CR ee 22
ies oe cateceeewesesenee 17
ee le Oe cn cncancneeccessdene 22
ee cdocceckennkweeentenh 5, 6, 8, 10
tn nvecddénaheonsdtskdoncenees 10
ey ee Oe EE os wd dv cdeteses dueesdaenss 10
3 8 ne 10
ie ede passim
Cg RE Ee re ere 18, 19
18 U.S.C. § 2332b(g)(5)(B) ................. 22
rn 15
Dodd-Frank Wall Street Reform and
Consumer Protection Act, Pub. L. 111-203,
124 Stat. 1376 (2010)................... 23, 24
Pub. L. No. 91-452, 84 Stat. 922 ........... 11
Securities Exchange Act of 1934
i tsb oee seedddecvesvessdas 9, 13, 14, 23
Supreme Court Rule 37.6.................. 1
USA PATRIOT Act of 2001,
Pub. L. No. 107-56, 115 Stat. 272...... 17, 18
ix
Other Authorities PAGE(S)
115 CONG. REC. 9568 (1969) ............... 11
Michael R. Bloomberg & Senator Charles
E. Schumer, Sustaining New York’s
and the US’ Global Financial
Services Leadership ii, 16 (2007)
http://www.nyc.gov/htm]/om/pdf/
ny_report_final.pdf.................... 31
Dep’t of Commerce, The U.S. Litigation
Environment and Foreign Direct
Investment: Supporting U.S.
Competitiveness by Reducing Legal
Costs and Uncertainty, International
Trade Administration, 2 (Oct. 2008),
http://trade.gov/investamerica/
Litigation_FDI.pdf .................... 31
Eric A. Engle, Extraterritorial Jurisdiction:
Can RICO Protect Human Rights?
A Computer Analysis of a Semi-
Determinate Legal Question,
3 J. High Tech. L. 1, 11 (2004)......... 21
Excessive Litigation’s Impact on America’s
Global Competitiveness: Hearing Before
the Subcomm. on the Constitution and
Civil Justice of the H. Comm. on the
Judiciary, 113th Cong. 11 (2013)
(Statement of Paul J. Hinton, NERA
Economic Consulting) ................. 31
x
Other Authorities PAGE(S)
International Chamber of Commerce,
Policy Statement: Extraterritoriality
and Business 2 (2006), http://www.
iccwbo.org/Data/Policies/2006/
Extraterritoriality-and-business/...... 20, 30
Sen. Jon Kyl, A Rare Chance to Lower
Litigation Costs: A Federal Committee
Wants to Hear Your Ideas On the
Subject. Speak Up., WALL STREET J.,
Jan. 20, 2014, http://www.wsj.com/
articles/SB100014240527023040
49704579321003417505882............ 30
INTEREST OF AMICUS CURIAE!
The National Foreign Trade Council (““NFTC”) is
the premier business organization advocating for
public policies to foster open, rules-based
international trade and investment. Founded in 1914
by a group of American companies that supported an
open-world trading system, the NFTC and _ its
affiliates mow serve more than 300 member
companies. Its fifty-member board of directors
includes some of America’s largest and most iconic
businesses, spanning all sectors of the economy—
from Google to Wal-Mart, Coca Cola to Ford, Chevron
to Pfizer.
SUMMARY OF ARGUMENT
Five years ago, in Morrison v. National Australia
Bank Lid., this Court unambiguously held that
“[w]hen a statute gives no clear indication of an
extraterritorial application, it has none.” 561 U.S.
247, 255 (2010). Three years later, this Court
reaffirmed that holding in Kiobel v. Royal Dutch
Petroleum Co., 133 S. Ct. 1659, 1664 (2013). In
Morrison and Kiobel, the Court stressed that the
presumption against the extraterritorial application
of United States law (the “Extraterritoriality
1 Pursuant to Supreme Court Rule 37.6, counsel for
Amicus states that no counsel for a party authored this brief in
whole or in part, and no party or counsel for a party made a
monetary contribution intended to fund the preparation or
submission of this brief. No person other than Amicus, its
members, or its counsel made a monetary contribution to this
briefs preparation or submission. Letters from the parties
consenting to the filing of all amici briefs have been filed with
the Clerk of the Court.
2
Presumption”) prevents the United States from
turning into a “Shangri-La” for plaintiffs’ lawyers’, by
closing the courts to claims that have little, if any,
connection to the United States. Without the
Presumption, plaintiffs’ lawyers from around the
world would be free to use the American judicial
system—with its class actions, broad and protracted
discovery, and no “loser-pays” rules—to bring claims
for injuries suffered abroad as a result of foreign
conduct, even when the conduct in question is not
actionable in the jurisdiction where it occurred.
The Second Circuit's decision below undoes much of
what Morrison and Kiobel accomplished in limiting
the extraterritorial reach of U.S. law. Permitted to
stand, the Second Circuit’s holding would, for the
first time, open U.S. courts to“claims by /oreign
plaintiffs suing for foreign injuries caused by foreign
conduct perpetrated by a foreign enterprise. That
result is precisely what Morrison and Kiobel sought
to avoid.
This is not a theoretical concern. On the contrary,
the present case proves the point. Here, rather than
bringing an action in their own courts, foreign
governments seek to sue in the United States under
United States law for injuries purportedly suffered in
Europe as a result of conduct committed in Europe by
various foreign actors. Left undisturbed, the Second
Circuit’s decision to allow this action to proceed will
task the U.S. court system with the function of
adjudicating worldwide claims of corporate
misconduct under U.S. law, even though the conduct
giving rise to the litigation may not be actionable in
the jurisdiction where it occurred. This Court has
previously rejected exactly such an extraterritorial
application of U.S. law: “to apply our remedies would
3
unjustifiably permit [foreign] citizens to bypass their
own [countries] less generous remedial schemes... .”
F. Hoffman-La Roche Ltd. v. Empagran S.A., 542
U.S. 155, 167 (2004).
Amicus respectfully submits that the Second
Circuit’s decision should be reversed for at least three
reasons. First, the Second Circuit improperly held
that the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq.
(2012), has extraterritorial application to the extent
that one of its predicate statutes has extraterritorial
reach. That holding is at odds with both this Court’s
clear holdings in Morrison and Kiobel, as well as
decades-long precedent that RICO is silent as to any
extraterritorial application. Amicus thus endorses
Petitioner’s argument that, under Morrison, RICO
lacks extraterritorial reach and can be invoked only
where, unlike here, the claim is based on the conduct
of a domestic enterprise. See infra Part I.
Second, even if the Court rejects that contention,
the Second Circuit’s decision still should be reversed
because RICO’s private right of action, codified in
Section 1964(c), requires the showing of a domestic
injury. Section 1964(c)’s plain text and legislative
history make clear that in enacting Section 1964(c),
Congress was focused on remedying injuries caused
by violations of RICO. As Section 1964 is silent as to
its extraterritorial reach, it has none. Therefore, a
viable civil RICO claim must establish a domestic
injury for which the plaintiffs seek recovery. See
infra Part II.A-B. The Second Circuit’s reasoning
that Section 1964(c)’s reach should extend to any
injury, wherever suffered, caused by a violation of
a RICO predicate that has extraterritorial reach,
is umpersuasive because this Court’s precedent
4
(i) requires that the extraterritorial reach of each
statutory provision be considered independently,
(ii) makes clear that RICO’s predicates are separate
from RICO itself, and (iii) establishes that even
where a conduct-regulating law has extraterritorial
reach, there is no private right of action in U.S.
courts for a violation of that law unless the
procedural statute creating the private right of action
also has extraterritorial application. See infra Part
II.C. Moreover, the legislative history of RICO’s
extraterritorial predicates, relied on by the Second
Circuit, also supports the rejection of the Second
Circuit’s approach. See infra Part II.D.
Third and finally, limiting Section 1964(c)’s reach
to domestic injuries is consistent with the policy
considerations endorsed by this Court in Morrison
and Kiobel. As a threshold matter, under the Second
Circuit’s ruling, many of the claims that the Supreme
Court found to be barred by the Extraterritoriality
Presumption in Morrison and Kiobel could now be
resurrected as RICO claims. Were this to happen, it
would lead to the absurd result that the
Extraterritoriality Presumption barred certain claims
but permitted civil RICO claims based on the same
foreign conduct, with the result that NFTC’s
members’ exposure to such claims would increase
threefold. This is certainly not what RICO—a statute
designed to combat the impact of organized crime in
the United States—was meant to accomplish. See
infra Part III. Nor can it be the result contemplated
by this Court in Morrison and Kiobel.
Moreover, interpreting Section 1964(c) to permit
claims based on foreign injuries would impose
significant burdens on U.S. companies doing business
abroad, as well as foreign businesses choosing to
5
invest in the United States. This is particularly
troubling here, since RICO is, on the one hand, so
broad that almost any tort claim can be asserted as a
RICO claim and, on the other hand, provides for
damages so severe as to be considered by some courts
the equivalent of a “thermonuclear device” of civil
litigation. This Court should decline Respondent’s
invitation to convert this nation’s courts into quasi-
global courts permitted to adjudicate claims that
have little, if any, connection to the United States.
ARGUMENT
I. Amicus Agrees With Petitioners That
A Cognizable RICO Claim Requires A
Showing Of A Domestic Enterprise
Amicus endorses Petitioners’ contention that
Section 1962, which contains RICO’s substantive
prohibition, does not extend to foreign enterprises.
See Pet’rs’ Br. 24-38. This conclusion is dictated by
RICO’s plain language, which numerous lower courts
have found to be “silent” as to the statute’s
extraterritorial reach. See United States v. Chao Fan
Xu, 706 F.3d 965, 974 (9th Cir. 2013) (“RICO is silent
as to its extraterritorial application. . . . [Therefore,
as o]ther Courts that have addressed the issue have
uniformly held . . . RICO does not apply
extraterritorially.”); Norex Petroleum Ltd. v. Access
Indus., Inc., 631 F.3d 29, 32 (2d Cir. 2010) (“[Second
Circuit] precedent holds that RICO is silent as to any
extraterritorial application.” (internal quotation
marks omitted)); N.S. Fin. Corp. v. Al-Turki, 100 F.3d
1046, 1051 (2d Cir. 1996) (“[RICO] is silent as to any
extraterritorial application.”). Accordingly, under
this Court’s holdings in Morrison and Kiobel, RICO
6
lacks any extraterritorial application. See Morrison,
561 U.S. at 255; Kiobel, 133 S. Ct. at 1664.
Applying Morrison’s framework, determining
whether a particular application of RICO is
appropriately domestic, or impermissibly
extraterritorial, requires identifying Congress’s
“focus” in passing Section 1962. Morrison, 561 U.S.
at 266-67. Thus, when the transaction or act that is
the object of the statute’s solicitude occurs in the
United States, the application of the statute is
appropriately domestic, even if the law suit otherwise
involves extraterritorial activity. See id. at 267.
As Petitioners have demonstrated, Pet’rs’ Br. 24-
38, Section 1962’s focus is on the corruption of an
“enterprise,” not the predicate acts by which the
corruption is achieved. Indeed, this Court has
previously observed that RICO’s “primary purpose”
was to address the corruption of businesses—i.e.
enterprises—by organized crime. United States v.
Turkette, 452 U.S. 576, 591 (1981); see also United
States v. Neapolitan, 791 F.2d 489, 500 (7th Cir.
1986) (“The central role of the concept of enterprise
under RICO cannot be overstated.”); Cederio v. Intech
Grp., Inc., 733 F. Supp. 2d 471, 473-74 (S.D.NLY.
2010) (Rakoff, J.) (“[T]he focus of RICO is on the
enterprise” and “nowhere does [RICO] evidence any
concern with foreign enterprises, let alone a concern
sufficiently clear to overcome the presumption
against extraterritoriality.”). Accordingly, a viable
RICO action requires the showing of a domestic
“enterprise.” See Morrison, 561 U.S. at 266-67.
The “enterprise” test is superior to a test focusing
on RICO’s predicates or a defendant’s pattern of
conduct because it best serves the goals of
7
determinacy and predictability. See id. at 256
(criticizing the Second Circuit’s conduct-and-effects
test as “complex in formulation and unpredictable in
application”). The usability of the “enterprise” test,
established by identifying the enterprise’s nerve
center (where the decisions to engage in the offending
conduct were made, see Hertz Corp. v. Friend, 559
U.S. 77, 92-93 (2010)), would provide courts and
litigants with a clear and definitive standard for
determining which entities are subject to RICO
claims (those with a nerve center located in the
United States) and which were not (those with a
nerve center located outside of the United States).
See id. at 95; see also Daimler AG v. Bauman, 134 S.
Ct. 746, 760 (2014) (observing that a corporation’s
primary place of business (i.e., its nerve center) is
easily ascertainable).
II. Even If The Court Finds That RICO Does
Not Require A Showing Of A Domestic
Enterprise, The Second Circuit’s Decision
Should Be Reversed Because A Civil RICO
Claim Requires The Showing Of A Domestic
Injury
Even if the Court does not construe RICO as
governing only domestic enterprises, the Second
Circuit’s decision should be reversed because
whatever the extraterritorial reach of RICO’s
criminal prohibition, recovering on a civil RICO claim
requires the showing of a domestic injury.
RICO’s Section 1964(c) permits “[a]ny person
injured in his business or property by reason” of a
RICO violation to sue “in any appropriate United
States district court” and, if the claim is successful, to
recover treble damages and attorneys’ fees. 18 U.S.C.
8
§ 1964(c). Applying Morrison to determine the
appropriate territorial reach of RICO’s private right
of action requires courts to identify Section 1964(c)’s
focus. 561 U.S. at 266-67. Each of Section 1964(c)’s
plain language, applicable precedent, and legislative
history compels the conclusion that in creating a
private right of action under RICO, Congress was
focused on remedying “injuries” caused by RICO’s
violations. Thus, because Section 1964(c), like the
rest of RICO, reflects no clear congressional intent
that it apply extraterritorially, a plaintiff cannot
sustain a civil RICO action unless it has suffered an
injury in the United States.
A. The Plain Language Of Section 1964(c)
Requires The Showing Of A Domestic
Injury
Section 1964(c)’s plain text shows that its focus is
on an “injurly]” caused by a RICO violation.
Specifically, Section 1964(c) affords “[aJny person
injured in his business or property by reason of a
violation of section 1962 of this chapter” a right of
action in United States courts. 18 U.S.C. § 1964(c).
The focus, then, is not on the substance of a RICO
violation, which is addressed by Section 1962, but on
the injury suffered as a result of that violation.
Indeed, the sole purpose (i.e., focus) of Section 1964(c)
is to provide something that Section 1962 does not
provide: an opportunity for a private party to redress
injury incurred as a result of a RICO violation. See
Klehr v. A.O. Smith Corp., 521 U.S. 179, 183 (1997)
(Section 1964 is a “special . . . provision” permitting
those “injured” by a criminal violation of RICO “to
recover treble damages and attorney's fees”). Thus,
Section 1964(c)’s plain language demonstrates that
the remedial focus of Section 1964(c) is on the injury
9
caused by a RICO violation, rather than the violation
itself. See Morrison, 561 U.S. at 266-67 (Section 10(b)
is focused not on the fraud or deception in connection
with the purchase or sale of the security, but on the
purchase or sale of the security occasioned by the
fraud).
Not surprisingly, this Court and several lower
courts have reached precisely this conclusion. For
example, in Shearson/American Express, Inc. v.
McMahon, this Court examined the purpose of
Section 1964(c) at length and found that in passing
Section 1964(c), the “focus’ of Congressional concern,”
Morrison, 561 U.S. at 266, was Section 1964(c)’s
“remedial function.” Shearson, 482 U.S. 220, 241
(1987). That is, in enacting Section 1964(c), Congress
was focused on the ability of those injured by
criminal conduct to obtain a civil remedy. Id. at 240-
41.2
Several courts considering RICO’s extraterritorial
reach appear to have reached the same conclusion.
For example, in Norex, the Second Circuit held that
even though U.S.-based actors engaged in U.S.-based
conduct, the plaintiffs civil RICO claim was barred
by the Extraterritoriality Presumption because the
alleged injury occurred outside of the United States.
2 Respondent's argument below—that a civil RICO claim
need not be based on a domestic injury because Section 1964(c)'s
focus is on the policing function of turning “victims” “into
prosecutors,” Reply Brief for Plaintiff-Appellants at 23,
European Cmty. v. KJR Nabisco, Inc., 764 F.3d 129 (2d Cir.
2014) (No. 11-2475-cv)}—is also foreclosed by Shearson, in which
the Court expressly found that this policing function “was a
secondary concern” and that Congress’ primary focus was on
providing victims a remedy for their injuries. 482 U.S. at 240-
41.
10
631 F.3d at 33. Specifically, the injury occurred in
the Russian Federation, where Norex was deprived of
its ownership stake in a Russian oil company and
certain quantities of oil owed to it by various Russian
entities. See Norex Petroleum Ltd. v. Access Indus.,
Inc., 540 F. Supp. 2d 438, 440 (S.D.N.Y. 2007).
Noting that Norex involved a “private lawsuit
pursuant to 18 U.S.C. § 1964(c),” the Second Circuit
dismissed the civil RICO claim as barred by the
Extraterritoriality Presumption. 631 F.3d at 33.
While the Second Circuit did not expressly ground its
dismissal of the complaint on the lack of a domestic
injury, it must have done so as the complaint alleges
both a domestic enterprise and a number of predicate
acts occurring in the United States. Jd. at 31.
Similarly, in Cedefio v. Castillo, in which the
plaintiffs alleged purely foreign injuries, the Second
Circuit affirmed dismissal of their civil RICO claims
as barred by the Extraterritoriality Presumption
despite plaintiffs’ express argument that the claims
were based on violations of predicate offenses that
had extraterritorial reach. 457 F. App’x. 35 (2d Cir.
2012). Section 1964(c)’s language and applicable
3 Furthermore, the Second Circuit expressly limited its
holding to civil RICO claims brought under Section 1964(c),
stating that it “expressi[ed] no opinion” on the extraterritorial
reach of RICO claims brought by the government under
Sections 1963, 1964(a) or 1964(b). Norex, 631 F.3d at 33. Like
Section 1964(c), these sections of RICO incorporate by reference
Section 1962, and, through it, the various predicate statutes.
Therefore, the Second Circuit’s decision in Norex must have
been based on a unique part of Section 1964(c) that is not
present in Sections 1963, 1964(a), or 1964(b)—the requirement
that a plaintiff show “an injury.” See Clark v. Martinez, 543
U.S. 371, 386 (2005) (Judges cannot “give the same statutory
text (here, section 1962] different meanings in different cases”).
11
precedent establish that its focus is on remedying an
injury suffered as a result of a RICO violation, and
therefore a viable civil RICO claim requires the
showing of a domestic injury.
B. Section 1964(c)’s Legislative History
Confirms That Section 1964(c) Requires
A Showing Of A Domestic Injury To
Make Out A Civil RICO Claim
Because Section 1964(c)’s plain language compels
the conclusion that a domestic injury is required,
there is no need to consider legislative history.
United States v. Gonzales, 520 U.S. 1, 6 (1997).
Nevertheless, Section 1964(c)’s legislative history
confirms the same result. As a threshold matter,
nothing in Section 1964(c)’s legislative history
suggests that Congress intended Section 1964(c)
to open U.S. courts to foreign plaintiffs seeking
redress for foreign injuries. The opposite is true.
Congressional records surrounding RICO’s enactment
consistently and exclusively focus on the impact that
organized crime had in the United States, not outside
of it. For example, RICO’s statement of findings and
purpose expressly states that “[ijt is the purpose of
this Act to seek the eradication of organized crime in
the United States.” Pub. L. No. 91-452, 84 Stat. 922,
923 (emphasis added); see also 115 CONG. REC. 9568
(1969) (discussing RICO’s immediate predecessor,
and noting that “the declared policy of the Congress
[is] to eradicate the baneful influence of organized
crime in the United States”) (emphasis added).
Limiting Section 1964(c)’s reach to encompass only
claims seeking damages for domestic injuries is also
consistent with the legislative mode] Congress used to
craft RICO’s civil-remedy provision. As this Court has
12
“repeatedly observed,” Congress modeled § 1964(c) on
the “civil-action provision of the federal antitrust
laws.” Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258,
267 (1992); Sedima, S.P.R.L. v. Imrex Co., 473 U.S.
479, 489 (1985) (“The clearest current in [RICO’s]
history is the reliance on the [antitrust] model.”).
Importantly, the antitrust civil-remedy provision, on
which Section 1964(c) was modeled, has “long” been
interpreted as only permitting claims that “redress
domestic antitrust injury.” Empagran, 542 U.S. at 165
(citing United States v. Aluminum Co. of Am., 148
F.2d 416, 443-44 (2d Cir. 1945) (L. Hand, J.)); United
States v. Sisal Sales Corp., 274 U.S. 268, 276 (1927)
(permitting antitrust claim based on foreign
anticompetitive conduct to go forward because
prohibited conduct resulted in antitrust injury in the
United States); Montreal Trading Ltd. v. Amax, Inc.,
661 F.2d 864, 869-70 (10th Cir. 1981), cert. denied, 455
U.S. 1001 (1982) (no civil antitrust remedy in United
States to redress antitrust injury suffered only in
Canada). As there is nothing in Section 1964(c)’s
legislative history to suggest that, in crafting a civil
RICO remedy, Congress intended to give Section 1964(c)
a scope far exceeding the antitrust laws on which it
was modeled, Section 1964(c) should be interpreted as
authorizing a private right of action to redress only
domestic, not foreign, injuries.
* While Empagran interpreted the Foreign Trade and
Antitrust Improvement Act of 1982, 15 U.S.C. § 6a (2012), a
statute that is sometimes described as limiting the reach of the
Sherman Act, it recognized that “no pre-1982 case provides
significant authority for [the] application” of the Sherman Act’s
private right of action to redress purely foreign injury. See
Empagran, 542 U.S. at 173.
13
C. Nothing Rebuts The Presumption That
In Passing Section 1964(c), Congress Was
Focused Only On Remedying Domestic
Injuries
In sum, Section 1964(c)’s plain language, legislative
history and applicable precedent all support limiting
Section 1964(c) to claims seeking redress for
domestic, but not foreign, injuries. The Second
Circuit’s holding to the contrary—based on the notion
that the existence of extraterritorial predicates
means that a showing of a domestic injury is not
required'—fails for at least three independent
reasons.
First, in determining which law suits fall within
the territorial scope of Section 1964(c), the proper
focus is on Section 1964(c), not on RICO as a whole,
and certainly not on the dozens of separate statutes
that make up RICO’s predicates. See, e.g., Graham
Cty. Soil & Water Conservation Dist. v. United States,
559 U.S. 280, 292 (2010) (when identifying the focus
of a statutory provision, courts should look to the
provision itself, not the statute as a “whole”). Indeed,
this Court has held that each statutory provision
should be considered separately when determining its
focus, as different statutory provisions may have
different scopes and different objectives. See, e.z.,
Morrison, 561 U.S. at 263-65 (focus of Exchange Act’s
Section 10(b) is different from that of Section 30);
Argentine Republic v. Amerada Hess Shipping Corp..,
488 U.S. 428, 441 (1989) (focus of Foreign Sovereign
Immunities Act’s commercial-activity exception is
broader than tortious-act exception).
5 Pet. App. 11a, 57a-58a.
14
Thus, in Morrison this Court noted that when
Congress gives one statutory provision
extraterritorial reach but fails to do so for a different
statutory provision, that omission supports the
conclusion that the latter provision was not intended
to apply extraterritorially. See 561 U.S. at 265
(“Subsection 30(a) contains what § 10(b) lacks: a clear
statement of extraterritorial effect.”); id. at 265 n.8
(“Congress knows how to give a statute explicit
extraterritorial effect—and how to limit that effect to
particular applications.”). Lower courts construing
other statutes have held similarly. See, e.g., Sec. Inv’r
Prot. Corp. v. Bernard L. Madoff Inv. Sec. Ltd., 513
B.R. 222, 228-30 (S.D.N.Y. 2014) (extraterritorial
reach of Section 541 of the Bankruptcy Code “cannot
supply any extraterritorial authority” that Sections 547
and 548 of the Bankruptcy Code “lack on their own”);
Liu v. Siemens A.G., 978 F. Supp. 2d 325, 328
(S.D.N.Y. 2013) (holding that even though “[t]he
Dodd-Frank Act does have some extraterritorial
application,” the provision at issue is “silent” as to
extraterritoriality and thus does not apply
extraterritorially), affd, 763 F.3d 175 (2d Cir. 2014).
Likewise, here, the fact that RICO’s predicates—
which are separate criminal statutes enacted at
different times and for different purposes than
RICO—may have extraterritorial reach does not
rebut the presumption that Section 1964(c) does not.
See Norex, 631 F.3d at 33 (“Morrison . . . forecloses
Norex’s argument that because a number of RICO’s
predicate acts possess an extraterritorial reach, RICO
itself possesses an extraterritorial reach.”); Pet. App.
79a, n.4 (Raggi, J., dissenting) (“The money
laundering and material support predicates alleged
here are proscribed by criminal statutes
that explicitly provide for extraterritoriality. . . . The
15
RICO statute, however, does not admit such a
conclusion.”).
Second, extending Section 1964(c)’s reach to cover
extraterritorial injury because certain RICO
predicates have extraterritorial reach ignores, and is
inconsistent with, years of instruction from this
Court and several courts of appeals to treat RICO as
an offense distinct from its predicate acts. See
Sedima, 473 U.S. at 491 (RICO predicates must be
established beyond a reasonable doubt, but a civil
RICO claim need only be proven by a preponderance
of the evidence); United States v. Basciano, 599 F.3d
184, 205 (2d Cir. 2010) (prosecutions for RICO and
the predicate acts are prosecutions for two separate
crimes); CGC Holding Co. v. Broad & Cassel, 773
F.3d 1076, 1097 (10th Cir. 2014) (same); United
States v. Wheeler, 535 F.3d 446, 454 n.3 (6th Cir.
2008) (same). Indeed, it is impossible to reconcile the
Second Circuit’s holding—that RICO’s predicates
with express extraterritorial reach are part and
parcel of RICO—with the longstanding jurisprudence
finding that RICO is silent on its extraterritorial
application. See, e.g., Chao Fan Xu, 706 F.3d at 974
(“RICO is silent as to its extraterritorial application.
.. . Other Courts that have addressed the issue have
uniformly held that RICO does not apply
extraterritorially.” (emphasis added)); see also Norex,
631 F.3d at 32; Al-Turki, 100 F.3d at 1051.
Third and finally, this Court’s decision in Kiobel
further supports rejecting the approach taken by the
Second Circuit. In Kiobel, this Court considered the
extraterritorial reach of the Alien Tort Statute (“ATS”),
28 U.S.C. § 1350 (2012), which, like Section 1964(c),
authorizes a plaintiff to bring a civil action for a
violation of a substantive legal norm that is
16
incorporated by reference. The ATS provides, in
pertinent part, that United States courts “shall have
original jurisdiction of any civil action . . . for a tort
only, committed in violation of the law of nations.”
Id. Even though the ATS unquestionably authorizes
claims substantively grounded in the law of nations
(which obviously applies outside of the United
States),® this Court nevertheless ruled that the ATS
itself lacked extraterritorial reach. Kiobel, 133 S. Ct.
at 1669. The Court concluded that the ATS could be
invoked in U.S. courts only when there was sufficient
nexus with the United States. Jd. Similarly, here,
while Section 1964(c) creates a private right of action
to assert claims based on the violation of laws that
are incorporated by reference, including those with
extraterritorial reach, it does so if, and only if, there
is a sufficient U.S. nexus—to wit, where the injury at
issue occurred in the United States. See id. at 1667-
69.
D. RICO’s Extraterritorial Predicates Do
Not Rebut The Presumption That A
Claim Under Section 1964(c) Requires A
Showing Of A Domestic Injury
The Second Circuit cited money laundering and
terrorism-related RICO predicates that have
extraterritorial reach to support its conclusion that
RICO itself applies extraterritorially, such that a
private plaintiff may pursue civil RICO claims based
on injuries sustained abroad. Pet. App. 17a-18a.
6 And, indeed, piracy, which is one of the prototypical
violations of the law of nations that is actionable under the ATS,
Sosa v. Alvarez-Machain, 542 U.S. 692, 715 (2004), “typically”
occurs on the high seas and so is “beyond the territorial
jurisdiction of the United States.” Kiobel, 133 S. Ct. at 1667.
17
But Section 1956, which criminalizes money
laundering, does not—itself—afford any private right
of action at all. See 18 U.S.C. § 1956. And nothing in
Section 1956(f)’s legislative history suggests that in
passing a statute criminalizing money laundering,
Congress intended to create a private right of
action—whether under Section 1956 or as part of a
RICO claim. See Schwartz v. F.S.&O. Assocs., Inc.,
No. 90 CIV. 1606 (VLB), 1991 WL 208056, at *2
(S.D.N.Y. Sept. 27, 1991) (“[T]here is no indication in
the sparse legislative history [of Section 1956] that
Congress intended these statutes to give rise to a
private civil remedy. In light of the presumption
against implying such remedies from criminal
statutes, this is hardly surprising.”). Given this Court’s
repeated admonitions that (i) “private rights of action
to enforce federal law must be created by Congress,”
Alexander v. Sandoval, 532 U.S. 275, 286 (2001); see
also Touche Ross & Co. v. Redington, 442 U.S. 560,
578 (1979); and (ii) a statute that provides fer some
extraterritorial reach must be limited to its “terms,”
Morrison, 561 U.S. at 265, the language of Section 1956,
which criminalizes certain extraterritorial conduct
but does not provide for a private right of action with
respect to such conduct, can hardly support the
extension of RICO’s private right of action to cases
involving extraterritorial injury.
Similarly, RICO’s terrorism-related predicates do
not support interpreting Section 1964(c) to authorize
claims in U.S. courts on the basis of injuries suffered
abroad. Respondents contend that the USA
PATRIOT Act of 2001 (“Patriot Act”), Pub. L. No. 107-
56, 115 Stat. 272, which added certain antiterrorism
statutes with extraterritorial reach to the list of RICO
predicates, supports interpreting Section 1964(c) to
18
permit civil RICO claims based on injuries suffered
abroad. But the Patriot Act does nothing of the sort.
Neither the plain language nor the legislative history
of the Patriot Act supports extending RICO’s private
right of action to injuries suffered outside the United
States from a terrorist attack that takes place outside
of the United States. On the contrary, the Patriot Act
was passed in response to the September 11 attacks,
which occurred in New York and Washington D.C.,
and caused injuries within the United States.
Respondent’s’ terrorism-related argument is
particularly untenable because even before the
Patriot Act was passed, Congress expressly created a
private right of action to sue for injuries sustained as
a result of a terrorist attack occurring abroad.
Antiterrorism Act of 1990 (“ATA”), 18 U.S.C. §§ 2331-
38, 2333 (2012). Like RICO, the ATA provides for
treble damages for victims of international acts of
terrorism. Id. Unlike the Second Circuit's
interpretation of RICO, however, the ATA has a clear
link to the United States—permitting only U-‘S.
citizens to bring claims under the ATA. Id. (“Any
national of the United States injured . . . by reason of
an act of international terrorism ... may sue... .”
(emphasis added)). By contrast, under the Second
Circuit’s ruling here, for example, an Australian
citizen with no connection to the United States could
sue in the United States to recover damages for
injuries suffered in Australia in a terrorist attack
that was conceived of, planned, and took place in
Australia. This takes RICO too far. Neither the
plain language nor legislative history of RICO or the
Patriot Act suggests that in making terrorism a RICO
predicate, Congress intended for U.S. courts to
19
become responsible for adjudicating all of the world’s
civil claims arising out of terrorist acts worldwide.
Had Congress intended to deviate so radically from
its previous express decision to limit terrorism-
related claims under the ATA to those brought by
U.S. citizens, one would expect to see some evidence
of that intention in either the Patriot Act’s language
or, at a minimum, in its legislative history. See
Church of Scientology of Cal. v. IRS, 484 U.S. 9, 17-
18 (1987) (applying the “dog that didn’t bark” cannon
to conclude that a statutory amendment having a
substantial effect would have been evidenced in
congressional discussions and legislative history);
City of Roncho Palos Verdes v. Abrams, 544 U.S. 113,
132 (2005) (Breyer, J., concurring) (“In a case where
the construction of legislative language such as this
makes so sweeping and so relatively unorthodox a
change as that made here, I think judges as well as
detectives may take into consideration the fact that a
watchdog did not bark in the night.” (internal
quotation marks omitted)). No such evidence exists
here.
* 7 +
For the foregoing reasons, this Court should reject
the Second Circuit’s attempt to bootstrap the
extraterritorial reach of RICO’s predicates to justify
permitting U.S. courts to adjudicate civil RICO
claims seeking redress for foreign injuries. Moreover,
even if the Court disagrees with all of the arguments
above, the Second Circuit’s reasoning still cannot
overcome the Extraterritoriality Presumption. At the
absolute most, the Second Circuit’s reasoning
suggests a possibility—and, Amicus submits, an
unlikely one—that Congress intended to give RICO’s
private right of action extraterritorial reach by giving
20
certain RICO predicate statutes extraterritorial
reach. This Court has held repeatedly, however, that
a mere possibility that Congress intended for a
statute to apply extraterritorially cannot overcome
the Extraterritoriality Presumption. See Morrison,
561 U.S. at 264; EEOC v. Arabian Am. Oil Co., 499
U.S. 244, 253 (1991).
III. The Second Circuit’s Holding Will Unduly
Burden U.S. Businesses And Have Other
Negative Consequences
If permitted to stand, the Second Circuit’s ruling
would not only create an end-run around this Court’s
holdings in Kiobel and Morrison, but would
substantially increase litigation exposure for U.S.
companies doing business abroad. Worse still,
expanding the civil RICO remedy to encompass
claims seeking redress for injuries sustained outside
the United States will impose new and substantial
burdens on foreign companies investing in the United
States. As the International Chamber of Commerce
has warned, the extraterritorial application of law
“discourages international businesses from engaging
in trade and investment.” International Chamber of
Commerce, Policy Statement: Extraterritoriality and
Business 2 (2006), http://www.iccwbo.org/Data/
Policies/2006/Extraterritoriality-and-business/ (“ICC
Report”).
A. The Second Circuit’s Ruling Creates An
End-Run Around Kiobel and Morrison
One perverse result of the Second Circuit’s ruling is
that it will likely resuscitate ATS claims that Kiobel
would have otherwise barred. There is often
significant factual overlap between ATS and RICO
actions, and before MKiobel, litigants and
21
commentators noted RICO’s potential use as a
supplement to certain ATS claims. See, e.g., Corrie v.
Caterpillar, Inc., 503 F.3d 974, 979 (9th Cir. 2007)
(alleging RICO and ATS claims based on a
corporation’s sales of military equipment to Israel);
Wiwa v. Royal-Dutch Petroleum Co., 226 F.3d 88, 93-
94 (2d. Cir. 2000) (alleging both ATS and RICO
claims based on companies’ alleged role in
perpetration of human rights abuses); Eric A. Engle,
Extraterritorial Jurisdiction: Can RICO Protect
Human Rights? A Computer Analysis of a Semi-
Determinate Legal Question, 3 J. High Tech. L. 1, 11
(2004) (discussing Doe v. Unocal Corp., 395 F.3d 932
(9th Cir. 2002) (action by residents of Myanmar
under ATS and RICO for human rights violations
allegedly committed by Myanmar government and
Unocal)).
In particular, given the breadth of terrorism-
support and money-laundering statutes, which are
RICO predicates with extraterritorial reach, many
ATS cases previously dismissed for lack of a sufficient
U.S. nexus could now, under the Second Circuit’s
reasoning, survive as extraterritorial RICO claims.
For example, in Jovic v. L-3 Servs., Inc., 69 F. Supp.
3d 750, 753, 756 (N.D. Dll. 2014), plaintiffs brought
suit under the ATS alleging, among other things, that
an American corporation aided and abetted murder
carried out by the Croatian military during the
Yugoslavian civil war. The complaint specifically
alleged that conduct relevant to the claims, including
certain meetings between the defendants and
members of the Croatian military, took place in
Virginia. Jd. at 754-55, 759. The District Court
dismissed the complaint because the “primary
conduct” giving rise to the plaintiffs’ claim occured in
22
Croatia, and thus their claims were barred by the
Extraterritoriality Presumption. Id. at 759.
Similarly, in Cardona v. Chiquita Brands Int1, Inc.,
760 F.3d 1185 (11th Cir. 2014), the Eleventh Circuit
applied Kiobel and dismissed, on extraterritoriality
grounds, ATS claims alleging that Chiquita Brands
acted in concert with Colombian paramilitary forces
to commit acts of violence, including murder, in
Colombia. Jd. at 1188-89, 1191. Under the Second
Circuit’s ruling, however, the same conduct could
support a viable claim under RICO if recast as
a violation of one of the anti-terrorism predicates
to RICO that have extraterritorial reach. See, e.g.,
18 U.S.C. § 1961(1)(G) (incorporating as RICO predicates
offenses indictable under 18 U.S.C. § 2332b(g)(5)(B)
(defining “Federal Crime of Terrorism” to include
offenses under 18 U.S.C. § 956(a)(1) (prohibiting any
act “outside the United States” that would constitute
the offense of murder or kidnapping in the United
States))).
Tymoshenko v. Firtash, a case brought by the
former prime minister of the Ukraine, also provides a
useful illustration. 57 F. Supp. 3d 311 (S.D.N.Y.
2014). In that case, Yulia Tymoshenko alleged that
the defendant, Dmytro Firtash, financed the election
of Ms. Tymoshenko’s political opponent, Viktor
Yanukovych, and bribed various Ukranian officials to
persecute Ms. Tymoshenko, resulting in her arrest
and detention. TJ'ymoshenko v. Firtash, No. 11-CV-
2794 (KMW), 2013 WL 4564646, at *1 (S.D.N.Y. Aug.
28, 2013). The complaint alleged a violation of the
ATS and a violation of RICO based on a pattern of,
among other things, money laundering conducted
through one of the largest banks in the Ukraine. Id.
at *5. The district court dismissed the ATS claim
23
because it constituted an “impermissible
extraterritorial application of the ATS.” Id. at *4.
Applying Norex, the District Court also dismissed the
RICO claim as impermissibly extraterritorial but
permitted the plaintiff to replead the RICO claim. Id.
at *5. The district court later dismissed the second
amended complaint but granted leave to replead,
noting that under the Second Circuit’s decision in
this case, the plaintiffs may have been able to allege a
viable RICO claim based on allegations that the
defendants engaged in money laundering, a predicate
act with extraterritorial reach. Tymoshenko, 57 F.
Supp. 3d at 324-25.
Thus, one of the unintended consequences of the
Second Circuit’s decision is that claims found to be
impermissibly extraterritorial, when brought under
the ATS, may now be brought as civil RICO claims.
And such claims may well capture extraterritorial
conduct that would not have been actionable under
the ATS. Indeed, while this Court has instructed
that the ATS be applied in limited circumstances,
Sosa, 542 U.S. at 720, courts have tended to interpret
RICO broadly, Sedima, 473 U.S. at 497. To permit
the Second Circuit’s decision to stand would invite
precisely the negative consequences that Kiobel was
designed to avoid.
Similarly, the Second Circuit’s decision creates at
least a partial exception to Morrison’s holding that
Section 10(b) claims can be brought only in
connection with domestic securities transactions. 561
U.S. at 267. After Morrison, Congress passed the
Dodd-Frank Wall Street Reform and Consumer
Protection Act (“Dodd-Frank”), Pub. L. 111-203, 124
Stat. 1376 (2010), which reversed Morrison’s holding,
but only with respect to claims brought by the
24
Department of Justice and the Securities and
Exchange Commission. See 15 U.S.C. § 78aa(b); SEC
v. Tourre, No. 10 Civ. 3229(KBF), 2013 WL 2407172,
at *1 n.4 (S.D.N.Y. June 4, 2013) (“[T]he Dodd-Frank
Act effectively reversed Morrison in the context of . . .
enforcement actions.”). However, Congress expressly
refused to overrule Morrison’s holding with respect to
private actions, opting instead to study the issue
further. See Dodd-Frank § 929(Y). Accordingly, in
the wake of Morrison and Dodd-Frank, the
government may bring securities-fraud actions based
on securities transactions that occur outside the
United States, but private plaintiffs may not.
The Second Circuit’s decision, if permitted to stand,
will create a partial end-run around Morrison and
Congress’s finely-tuned decision to permit only some
kinds of securities-fraud cases to be brought in U.S.
courts. The civil RICO statute expressly provides
that when the government obtains a criminal
conviction for fraud in connection with the purchase
or sale of a security, the conduct underlying the fraud
may then be used as the basis for a civil RICO claim.
See 18 U.S.C. § 1964(c). Against this background, the
Second Circuit’s ruling would permit a private
plaintiff to assert a RICO claim based on a foreign
securities transaction—even though a private
securities-fraud claim based on the same transaction
would be barred by Morrison. And, as a bonus, the
plaintiff would be able to recover three times the
damages incurred—a remedy not available for
securities fraud.
In sum, under the Second Circuit’s decision,
extraterritorial private claims—which this Court has
found unfit for adjudication in the United States—
will be permitted to proceed so long as they are
25
repackaged as a different cause of action. Amicus
respectfully submits that this Court should not
sustain such a broad interpretation of RICO’s private
right of action and should, instead, limit the private
right of action to claims brought to obtain redress for
injury suffered in the United States.
B. Permitting Civil RICO To Reach Claims
Based On Foreign Injuries Poses
Significant Risks To U.S. Businesses
Doing Business Abroad And To Foreign
Businesses Investing In The United
States
If permitted to stand, the Second Circuit’s ruling
will impose substantial burdens on U.S. companies
doing business abroad and on foreign businesses that
invest in the United States. The Second Circuit’s
ruling not only opens the door to claims of the kind
that this Court previously rejected in Morrison and
Kiobel; it goes much further. RICO’s breadth, both in
terms of the sheer number of predicate offenses and
the broad range of RICO’s conspiracy provisions,
means that under the Second Circuit’s ruling, many
claims with little if any connection to the United
States may now be brought in U.S. courts. This
exacerbates the problem identified by this Court in
Morrison and Kiobel, because civil RICO—“the
litigation equivalent of a thermonuclear device,”
Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44 (1st Cir.
1991)—offers private plaintiffs the staggering benefit
of treble damages and attorneys’ fees.
This is not a theoretical risk. Since the Second
Circuit erased decades of precedent and concluded
that RICO could have extraterritorial reach, courts
have refused to dismiss RICO claims based on
26
everything from political oppression in the Ukraine,
see Tymoshenko, 57 F. Supp. 3d at 324-25, to a
European money-laundering scheme resulting in
damage to Swiss nationals, see Ixotic AG v. Kammer,
09-CV-4345 (NG) (JO), 2014 U.S. Dist. LEXIS
180782, at *30-32 (E.D.N.Y. Sept. 30. 2014) (“At an
earlier point in the proceedings, I expressed .. .
concern that the RICO claims were defective because
they impermissibly sought to apply the RICO Act
extraterritorially. . . . Given the [European
Community Panel’s] focus on the racketeering acts
rather than on the enterprise as such, I conclude that
the plaintiffs have asserted RICO claims that are not
impermissibly extraterritorial.”).
These decisions represent a material shift in how
civil RICO claims are treated by U.S. courts. Before
the Second Circuit’s ruling, courts routinely
dismissed similar RICO claims. See Adhikari v.
Daoud & Partners, 09-cv-1237, 2013 U.S. Dist.
LEXIS 189601, at *22-26 (S.D. Tex. Aug. 23, 2013)
(dismissing RICO claims stemming from a Jordanian
entity's Middle East racketeering, which allegedly
injured citizens of Nepal); Republic of Iraq v. ABB
AG, 920 F. Supp. 2d 517, 542-46 (S.D.N.Y. 2013)
(dismissing a RICO claim arising from a money-
laundering scheme conducted in connection with the
Oil-for-Food Program, which allegedly harmed the
Republic of Iraq); Hourani v. Mirtchev, 943 F. Supp.
2d 159, 167-68 (D.D.C. 2013) (dismissing RICO
claims revolving around an extortion and money-
laundering operation conducted in Kazakhstan,
which allegedly caused harm there). As Judge
Cabranes noted, after the Panel’s decision, these
claims would likely be “welcome[]” in “federal court.”
Pet. App. 72a n.8 (Cabranes, J., dissenting).
27
Moreover, the risk that civil RICO claims seeking
redress for foreign injuries will proliferate is
particularly troublesome because anything from
product liability, see In re Toyota Motor Corp., 785 F.
Supp. 2d 883 (C.D. Cal. 2011), to antitrust claims, see
In re LIBOR-Based Fin. Instruments Antitrust Litig.,
935 F. Supp. 2d 666 (S.D.N.Y. 2013), to false
advertising claims, see Complaint, Bagert v.
Volkswagen Grp. of Am., Inc., No. 2:15-cv-07174-JLL-
JAD (D.N.J. Sept. 29, 2015), ECF. No. 1, can be
framed as civil RICO claims. That only some RICO
predicates have extraterritorial reach offers little
relief. Ordinary business disputes can be—and when
they arise in developing countries, frequently are—
repackaged as claims of money laundering, a RICO
predicate with extraterritorial application. See, e.g.
Hourani, 943 F. Supp. 2d at 162-63, 167; Iraq, 920 F.
Supp. 2d at 543; Tymoshenko, 2013 WL 4564646,
at *1.
RICO’s broad scope and the oft-noted abuse
associated with a statute that authorizes treble
damages and attorneys’ fees only underscores the
danger created by the Second Circuit’s decision.
DelRio-Mocci v. Connolly Props., 672 F.3d 241, 254
(3d Cir. 2012) (“In the criminal arena, this proclivity
for abuse is at least limited by prosecutorial
discretion, the risk of losing credibility with jurors if
the prosecution engages in ‘overkill’ or overreaching,
and the related risk of jury nullification. However,
RICO’s civil remedy is not restricted by any such
considerations. Thus, it is not surprising that we are
today faced with a claim that this landlord-tenant
dispute is really a racketeering conspiracy that
should entitle this tenant to treble damages under
RICO.”); Fleet Credit Corp. v. Sion, 699 F. Supp. 368,
28
377 (D.R.1. 1988), rev'd on other grounds, 893 F.2d
441 (lst 1990) (“[O]verbreadth is limited through
prosecutorial discretion in [RICO] cases brought by
the government, but in private actions a proper
construction of the pattern requirement is all that
constrains plaintiffs to obey Congressional intent.”);
Lopez v. Dean Witter Reynolds, Inc., 591 F. Supp. 581,
588 (N.D. Cal. 1984) (“It is incumbent upon courts,
especially in civil RICO actions where the restraint of
prosecutorial discretion is not present, to scrutinize
claims to insure that the statute is not applied to
contexts outside those intended by Congress.”); DLJ
Mortg. Capital, Inc. v. Kontogiannis, 726 F. Supp. 2d
225, 236 (E.D.N.Y. 2010) (“[P]laintiffs have often
been overzealous in pursuing RICO claims, flooding
federal courts by dressing up run-of-the-mill fraud
claims as RICO violations. In consequence, courts
must ‘strive to flush out frivolous RICO allegations at
an early stage of the litigation.”).?7 The abuse
endemic in civil RICO litigation only highlights the
risk posed by the Second Circuit’s decision, both to
U.S. companies doing business abroad and to foreign
businesses investing in the United States.
7 Even more troubling, the Panel’s reasoning has been
used not only to extend the reach of civil RICO; it has also been
used to extend the reach of other federal statutes that refer to
criminal predicates with some extraterritorial application, such
as Section 924(c) of the Firearms Act, 18 U.S.C. §§ 921-31, see
United States v. Ahmed, 94 F. Supp. 3d 394, 413 (E.D.N.Y. 2015)
(based on the Panel’s ruling, “[njeither Morrison nor Kiobel
requires Congress to employ some talismanic language to rebut
the presumption against extraterritoriality. Rather, the Court
may look to the structure of the statute and with it, its
incorporated predicate statutes, to determine whether the
presumption against extraterritoriality has been rebutted.”).
29
1. The Potential For Extraterritorial
Civil RICO Enforcement Places
Significant Burdens On NFTC’s
Members
Permitting U.S. courts to adjudicate claims based
on foreign conduct and seeking redress for foreign
injury will impose substantial burdens on NFTC’s
members. As noted above, conduct that is legal in
foreign jurisdictions may now not only be subject to
suit in the United States, but may result in U.S.
businesses’ facing class actions seeking triple
recoveries under civil RICO. The problem is
particularly acute for financial institutions and
companies doing business in developing countries,
where garden-variety business disputes often involve
allegations of money laundering, a RICO predicate
with extraterritorial reach.
Moreover, litigating cases involving foreign
plaintiffs and foreign injuries imposes unique
burdens on American businesses. Obtaining
discovery from foreign sources is_ invariably
expensive, cumbersome, and difficult, and almost
always results in a dramatic increase in the cost of
litigation. Courts have acknowledged as much,
observing that foreign discovery imposes “financial
hardships” and “significant delays” on parties and on
the courts. Turedi v. Coca Cola Co., 460 F. Supp. 2d
507, 526 (S.D.N.Y. 2006), affd, 343 F. App’x 623 (2d
Cir. 2009). And the high cost posed by international
discovery and the potential for treble damages
ensures that once a case passes the motion-to-dismiss
stage, companies will be under tremendous pressure
to settle—even if the case lacks any merit. In this
way, civil RICO litigation “presents a danger of
vexatiousness different in degree and in kind from
30
that which accompanies litigation in general.” Blue
Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 739
(1975). Faced with an ever-present risk that their
legitimate business dealings in foreign countries will
result in U.S. litigation, many companies may opt to
disengage from developing countries—yielding those
business opportunities to their foreign competitors
and undermining their competitive position.
2. The Potential Of Extraterritorial
Civil RICO Enforcement Presents
Extraordinary Risks For Foreign
Corporations Considering Investment
In The United States
Permitting civil RICO claims based on foreign
injury will also deter foreign investment in the
United States. Foreign direct investment is vital to
the U.S. economy: it creates jobs for Americans, and
increases the availability, and decreases the cost, of
capital. But the increased exposure to litigation risk
caused by the extraterritorial application of U.S. law
discourages foreign investment because corporations
are reluctant to place themselves within the
jurisdiction of U.S. courts. See ICC Report at 2.
Indeed, as Amicus can attest, and as American
policy-makers and scholarly studies have repeatedly
confirmed, potential U.S. class-action litigation is
high among the concerns of would-be investors in the
United States. See Sen. Jon Kyl, A Rare Chance
to Lower Litigation Costs: A Federal Committee
Wants to Hear Your Ideas On the Subject. Speak Up.,
WALL STREET J., (Jan. 20, 2014, 6:21 PM)
http://www.wsj.com/articles/SB1000142405270230404
9704579321003417505882 (“[E]xcessive litigation
costs ... make foreign companies reluctant to invest
31
here.”); Dep’t of Commerce, The U.S. Litigation
Environment and Foreign Direct Investment:
Supporting U.S. Competitiveness by Reducing Legal
Costs and Uncertainty, Internatinal Trade
Administration, 2 (Oct. 2008), http://trade.gov/
investamerica/Litigation_FDI.pdf (“Fear of litigation
and potential liability under the U.S. legal system are
among the more important concerns to those
interested in investing in the United Sates.”);
Excessive Litigation’s Impact on America’s Global
Competitiveness: Hearing Before the Subcomm. on
the Constitution and Civil Justice of the H. Comm. on
the Judiciary, 113th Cong. 11 (2013) (Statement
of Paul J. Hinton, NERA Economic Consulting)
(“Many foreign companies are wary of becoming
embroiled in U.S. litigation, which may deter
foreign direct investment.”); Michael R. Bloomberg &
Senator Charles E. Schumer, Sustaining New York’s
and the US’ Global Financial Services Leadership ii,
16, (2007) http://www.nyc.gov/html/om/pdf/ny_report_
final.pdf; see also Tellabs, Inc. v. Makor Issues &
Rights, Ltd., 551 U.S. 308, 313 (2007) (class actions,
‘“f not adequately contained, can be employed
abusively to impose substantial costs on companies
and individuals whose conduct conforms to the law’).
Under the Second Circuit’s holding, foreign citizens
are now able to come into U.S. courts to seek redress
for foreign injuries, even when no such cause of action
is available in their home jurisdictions. (Cf.
Empagran, 542 U.S. at 167 (“[T]o apply our remedies
would unjustifiably permit [foreign] citizens to bypass
their [countries’]) own less generous. remedial
schemes.”).
This case illustrates the litigation abuse that
businesses with contacts in the United States, which
32
are subject to the jurisdiction of U.S. courts, will now
be forced to confront. The European Commission,
and those of its member states that have joined this
action, have declined to enact legislation of the kind
at issue here. Even though the alleged misconduct
took place in Europe, Respondents are apparently
unable, or unwilling, to litigate their claims in any
European jurisdiction and so bring their claims in the
United States.* That alone points to a deep conflict
between the laws of this country and those of
Respondents’ home jurisdictions. Indeed, noting that
many European countries have made different
regulatory and policy choices from the United States,
many of the Respondents here have previously
objected to the extraterritorial application of U.S.
law. See, e.g., Brief for the Federal Republic of
Germany as Amicus Curiae in Support of
Respondents at 1, Kiobel, 133 S. Ct. 1659 (No. 10-
1491) (“The Federal Republic of Germany has
consistently maintained its opposition to overly broad
assertions of extraterritorial civil jurisdiction arising
out of aliens’ claims against foreign defendants for
alleged foreign activities that caused injury on
foreign soil.”); Brief for the Republic of France as
Amicus Curiae in Support of Respondents at 1-3,
Morrison, 561 U.S. 247 (No. 08-1191); Brief of the
Federal Republic of Germany as Amicus Curiae in
Support of Petition for a Writ of Certiorari at 1-2,
Empagran, 542 U.S. 155 (No. 03-724).
8 While in this case, the European Commission seeks to
invoke the statute for conduct that occurred abroad, any victory
would be “pyrrhic,” because “its citizens . . . are among the likely
targets of future RICO actions under the panel's interpretation
of the statute.” Pet. App. 70a (Cabranes, J., dissenting).
33
This Court has worried about the potential for U.S.
laws with extraterritorial reach to discourage foreign
investment. That concern—previously expressed in
connection with antitrust and securities laws, and in
connection with the ATS—is particularly pronounced
in the case of civil RICO claims because of the type of
liability at issue, which contemplates not only class
actions, but also class actions seeking treble
damages. The courts of this country simply cannot,
and should not, become the forum to ventilate the
whole world’s complaints, much less the complaints of
foreign sovereigns that have elected not to enact
similarly sweeping legislation at home.
CONCLUSION
For the foregoing reasons, and those in the
Petitioners’ brief, the Court should reverse the
decision below.
Respectfully submitted,
TIMOTHY P. HARKNESS
Counsel of Record
LINDA H. MARTIN
ELLIOT FRIEDMAN
DAVID Y. LIVSHIZ
LEAH FRIEDMAN
JONATHAN ELSNER
FRESHFIELDS BRUCKHAUS
DERINGER US LLP
601 Lexington Avenue, 31st Floor
New York, New York 10022
(212) 277-4000
timothy. harkness@freshfields.com
Counsel for Amicus Curiae
The National Foreign Trade Council
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.