Legal Insight: U.S. Supreme Court Expands Scope of RICO to Allow Recovery for Economic Losses Derived From Personal Injuries

May 5, 2025

In a 5-4 decision issued on April 2, 2025, in Medical Marijuana, Inc., et al. v. Horn, 23-365, the U.S. Supreme Court held that “a plaintiff may seek treble damages for business or property loss even if the loss resulted from a personal injury” under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964(c). Justice Amy Coney Barrett, writing for the majority, was joined by Justices Sonia Sotomayor, Elena Kagan, Neil M. Gorsuch and Ketanji Jackson, with Justice Ketanji Jackson also filing a concurring opinion. Justice Clarence Thomas and Justice Brett M. Kavanaugh, joined by Chief Justice John G. Roberts and Justice Samuel A. Alito, filed dissenting opinions.

The plaintiff, Douglas Horn (“Horn”), had purchased and ingested “Dixie X,” a purportedly THC-free, non-psychoactive CBD tincture produced by the defendant, Medical Marijuana, Inc. (“Medical Marijuana”). Horn was later selected by his employer for random drug screening and tested positive for THC. Horn then ordered another bottle of Dixie X and sent it to a third-party lab which confirmed the presence of THC. After refusing the participate in a substance abuse program, Horn’s employer fired him. Horn then brought suit against Medical Marijuana under RICO (as well as a host of state-law claims not at issue on appeal), alleging, among other things, lost employment. 

At the trial level, the U.S. District Court for the Western District of New York granted summary judgment in favor of Medical Marijuana, reasoning that Horn’s lost employment derived from a personal injury (his ingestion of THC) and that 18 U.S.C. § 1964(c) precludes recovery for personal injuries and for business or property harms that result from a personal injury. On appeal, the U.S. Court of Appeals for the Second Circuit reversed, finding that the term “business” under RICO encompasses an individual’s employment and, thus, that Horn had been “injured in his business” under 18 U. S. C. § 1964(c), and rejected the conclusion of the District Court that 18 U.S.C. § 1964(c) precludes recovery for business or property harm that results from an antecedent personal injury (referred to as the “antecedent-personal-injury bar”). In rejecting the “antecedent-personal-injury bar,” the Second Circuit joined the U.S. Court of Appeals for the Ninth Circuit and deepened a circuit split with the U.S. Court of Appeals for the Sixth, Seventh, and Eleventh Circuits. Medical Marijuana then petitioned the U.S. Supreme Court for certiorari, which the Court granted to resolve the circuit split. 

RICO provides that “[a]ny person injured in his business or property by reason of a [criminal RICO] violation may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee….” 18 U.S.C. § 1964(c). To establish a RICO violation, a plaintiff must also establish that the defendant was a RICO “enterprise” (i.e., a group of persons associated together for a common purpose of engaging in a course of conduct) and a “pattern of racketeering activity” (i.e., by identifying two or more predicate acts within a single scheme that amounted to, or threatened the likelihood of, continued criminal activity).

At the outset, Justice Barrett noted that the Court’s decision did not address the following: (1) whether Horn’s ingestion of THC constituted a personal injury; (2) whether “business” under RICO encompasses all aspects of “employment”; and (3) the definition of “[a]ny person injured in his … property” under RICO (the last of which had been expressly reserved by the Second Circuit). For the purposes of its decision, the Court assumed that the plaintiff suffered a personal injury when he ingested THC.

The Court found that by “explicitly permitting recovery for harms to business and property, [RICO] implicitly excludes recovery for harm to one’s person,” but that the “‘business or property requirement referred to kinds of harm for which the plaintiff can recover, not the cause of the harm for which he seeks relief.” In determining the permissible causes of harm for which a plaintiff may seek relief under RICO, the Court applied the ordinary meaning of “injured” (to “cause harm or damage to” or to “hurt”), rejecting the specialized meaning of the term (“invasion of a legal right”), which the Court found would be unworkable and would require a tort-centric reading of 18 U.S.C. § 1964(c). 

The Court rejected the concern of the defendant and dissenting Justices—that plaintiffs can now “easily transform garden-variety personal-injury claims into RICO suits for treble damages”—reasoning that they understated other constraints on civil RICO claims. Specifically, the Court noted, among other things, that “by reason of” under RICO requires a direct causal relationship rather than foreseeability (the usual causation standard for ordinary tort claims). The Court noted that, “whenever the plaintiff’s theory of causation requires moving ‘well beyond the first step,’ it ‘cannot meet RICO’s direct relationship requirement’” and opined that “[g]iven the number of steps in Horn’s theory and the multiple actors involved, this requirement may present an insurmountable obstacle in his case.” Additionally, though the Court did not define “business” or “property” under RICO (issues that will be resolved by lower courts), it noted that “not every monetary harm—be it lost wages, medical expenses, or otherwise—necessarily implicates RICO.” Finally, to the extent that the Court’s interpretation of RICO leads to the undue proliferation of RICO suits, the Court noted that the “‘correction must lie with Congress.’” 

Justice Jackson’s brief concurrence noted that Congress’s directive that RICO “shall be liberally construed to effectuate its remedial purposes” further supported the Court’s decision. 

In dissent, Justice Kavanaugh (joined by Chief Justice Roberts and Justice Alito) opined that RICO does not authorize suits for personal injuries regardless of what losses or damages a victim sustains from a personal injury, relying on the tort-centric definition of “injured.” The dissent reasoned that the Court’s antitrust precedents interpreting the same “injured in his business or property” language “on which RICO was deliberately modelled confirm that RICO excludes all losses resulting solely from personal injuries,” and that “the federalism canon counsels against federalizing large swaths of ordinary state-court tort cases absent clear direction from Congress.” Justice Kavanaugh noted that, by declining to define “business” or “property” under RICO, the Court’s decision would “leave substantial confusion and litigation in its wake,” and opined that the “text, context, and history should counsel against interpreting RICO to cover classic damages like lost wages and medical expenses resulting solely from personal injuries.” The dissent agreed with the Court that “civil RICO allows for recovery any time a defendant has ‘invaded the plaintiff’s business or property rights,’ ‘even if the plaintiff also suffered a personal injury,’” and agreed with the defendant that where an act causes both personal and property injuries, civil RICO “‘allows suit for the’ ‘property injury’ but not the ‘personal injury,’ no matter which came first,” thus, rejecting the “antecedent-personal-injury bar.” 

For his dissent, Justice Thomas opined that the case was ill suited for deciding the question presented and, thus, defendant’s writ of certiorari should have been dismissed as improvidently granted because the parties disagreed whether the plaintiff had suffered a personal injury and had not adequately briefed their position on the meaning of “injured in business or property” under RICO.

The key takeaways from the Court’s decision are as follows:

1. The Court has held by a 5-4 majority that a plaintiff may sue under RICO for business and property harms that are derived from a personal injury.
   • The Court’s holding will likely increase the number and types of civil RICO suits and allows such suits where the defendant’s act causes personal injuries that result in business or property harms (though what constitutes a “business” or “property” harm has not been resolved). 
2. In dicta, at least eight Justices (the five-Justice Majority, along with Justices Kavanaugh and Alito and Chief Justice Roberts in dissent) agree that civil RICO allows for recovery any time a defendant has invaded the plaintiff’s business or property rights, even if the plaintiff also suffered a personal injury (i.e., the antecedent-personal-injury bar does not apply).
   • This is more limited than the Court’s holding and would require a showing that the defendant’s act caused some business or property injury. 
3. In dicta, at least three Justices (Justices Kavanaugh and Alito and Chief Justice Roberts in dissent) have opined that classic damages like lost wages and medical expenses resulting solely from personal injuries should not be recoverable in a RICO suit. The Majority expressly declined to define “business” or “property” under 18 U.S.C. § 1964(c) and, thus, these questions will have to be resolved by lower courts. 
4. In dicta, the Majority (five Justices) expressed reservations that the plaintiff’s job loss could ultimately be found to be directly related to the defendant’s misrepresentations under the “by reason of” language of 18 U.S.C. § 1964(c).