Divided court approves civil RICO liability for injuries from CBD product

The Racketeer Influenced and Corrupt Organizations Act provides for federal criminal and civil penalties for harms from racketeering. Wednesdays ruling in Medical Marijuana, Inc v. Horn, like so many of the courts RICO decisions, involves the civil penalties.

Douglas Horn was fired from his commercial truck driving job after he ingested a product marketed as including only CBD (cannabidiol, which is completely legal) rather than THC (tetrahydrocannabinol, which continues to be illegal in many contexts) and failed a drug test. Justice Amy Coney Barretts opinion for a sharply divided court on Wednesday upheld liability for damages to a business or property that flow from personal injury, a win for Horn at this stage. The case now will return to the lower court.

The question before the court involves the RICO clause that requires the claimant to show that it has been injured in [it]s business or property. For Barrett, it is wholly irrelevant that an injury to business or property might have been preceded by, or flowed from, a personal injury. She acknowledges that the statute does not allow recovery for all harms, because the explicit permi[ssion of] recovery for harms to business and property implicitly excludes recovery for harm to ones person. For her, though, that requirement operates with respect to the kinds of harm for which the plaintiff can recover, not the cause of the harm for which [it] seeks relief. She offers the example of the owner of a gas station [who] is beaten in a robbery. He cannot recover for his pain and suffering. But if his injuries force him to shut his doors, he can recover for the loss of his business. In other words, she writes, a plaintiff can seek damages for business or property loss regardless of whether the loss resulted from a personal injury.

Barrett presents the main argument of the defendants (led byMedical Marijuana, Inc., one of the the businesses that made the THC-laced CBD products at the center of the case) as viewing the reference to a plaintiff injured in a particular way as having a specialized meaning under which the originating injury must be an invasion of a business or property right that amounts to a business or property tort. Under that theory, because the initial invasion here was purely personal (ingestion of Medical Marijuana products), Medical Marijuana would face liability. But Barrett finds that in the contest between an ordinary and specialized meaning, the context cuts decisively in favor of ordinary meaning, largely because the specialized meaning is most common for references to a type of injury rather than to the people that are injured.

The defendants also urge the court to look to antitrust cases requiring allegations of business or property injuries to track common-law torts. Barrett rejects that argument, agreeing that the courts modern antitrust precedent forecloses recovery for certain economic harms because of the courts decision to require an injury of the type the antitrust laws were intended to prevent. Previous cases, though, have conclude that transplanting this interpretation into the RICO context would be inappropriate, so she declines to do it here.

Barrett closes with caution, emphasizing that Horns case faces many obstacles. First and foremost, she notes, RICO requires a direct relation between the injury and the racketeering conduct: The key word is direct; foreseeability does not cut it. Given the number of steps in Horns theory , this requirement may present an insurmountable obstacle in his case. Second, she points to the requirement of a pattern of racketeering activity. Here, harm resulting from a single tort is not a ticket to federal court for treble damages, so Horn will need to persuade the lower courts that there was not only a single wrongful act, but multiple acts.

Justice Clarence Thomas dissented, writing with some frustration that by the time the case came to oral argument the contentions of the parties were so far removed from those presented in the original papers that the court should have dismissed the case as improvidently granted. His comments echo the complaint of Justice Samuel Alito in Mondays argument in Rivers v. Guerrero about a mini epidemic of cert petitions that lead to arguments on the merits that are quite a bit different from what we were sold at the petition stage.

Justice Brett Kavanaugh, joined by Chief Justice John Roberts and Alito, filed a separate and vigorous dissent, expressing deep concern about the federalization of garden-variety tort litigation.

Despite the tone of the dissents, Barretts opinion seems to resolve the case on grounds that will not resonate widely in civil RICO litigation. Though only time will tell, my guess is that the case will not cause a substantial uptick in that area.