Legal Intelligencer: Civil RICO Gets Personal—Supreme Court Allows Recovery of Economic Harm Deriving From Personal Injury

In the April 17, 2025 edition of The Legal Intelligencer, Edward T. Kang writes, “Civil RICO Gets Personal—Supreme Court Allows Recovery of Economic Harm Deriving From Personal Injury.”

The U.S. Supreme Court’s recent decision in Medical Marijuana v. Horn expands the reach of the Racketeer Influenced and Corrupt Organizations Act (RICO), clarifying that injuries to business or property that derive from personal injuries may, under some circumstances, constitute a compensable injury. Historically, courts have read RICO’s civil enforcement provisions narrowly, excluding economic losses deriving from personal injury. Horn reverses this trend, opening new possibilities for plaintiffs for recovery.

Case Background in ‘Horn’

Douglas Horn, a commercial truck driver, purchased a cannabidiol (CBD) product advertised by Medical Marijuana, Inc. as containing “0% THC.” Trusting the label, Horn used the product for chronic pain. After failing a random drug test where he tested positive for THC, he was terminated from his job of over ten years. Horn sued under RICO, alleging the company had engaged in a pattern of racketeering activity, namely mail and wire fraud, by knowingly mislabeling the product. The district court dismissed the case, finding that Horn’s personal injury was not redressable under RICO. The Second Circuit reversed, holding that business and property are no less injured when the injury flows from “an antecedent personal injury.” The Supreme Court affirmed, finding that business or property loss is recoverable under RICO regardless of whether the loss resulted from a personal injury. Writing for the five-justice majority, Justice Amy Coney Barrett reasoned, “the phrase ‘injured in his business or property’ does not preclude recovery for all economic harms that result from personal injuries” and that “the business or property requirement operates with respect to the kinds of harm for which the plaintiff can recover, not the cause of the harm for which he seeks relief.” The dissent, led by Justice Brett Kavanaugh, warned that the decision risks transforming RICO into a federal tort statute.

Revisiting the Divergent Interpretations of RICO’s Injury Requirement

RICO’s private right of action, codified at 18 U.S.C. Section 1964(c), allows “any person injured in his business or property by reason of a violation of section 1962” to recover treble damages and attorney fees. Before Horn, there was a sharp divide among the federal courts of appeals on whether economic losses flowing from personal injuries could qualify as RICO injuries. The divide mainly stems from the courts’ interpretations of how narrowly or expansively the phrase “injury to business or property” should be interpreted.

On one side of the split were the Sixth, Seventh, and Eleventh Circuits, which held that economic damages flowing from personal injuries do not meet RICO’s injury requirement. See, e.g., Jackson v. Sedgwick Claims Management Services, 731 F.3d 556 (6th Cir. 2013) (finding that the plaintiffs did not suffer RICO injury when the plaintiffs’ alleged losses from their inability to bring worker’s compensation claims flowed from their personal injuries and were the same losses the plaintiffs sought for their personal injuries). These courts found that allowing such claims would inappropriately extend RICO into personal injury, traditionally governed by state tort remedies. However, maintaining a clean boundary between personal injury tort remedies and RICO’s civil enforcement mechanism could produce counterintuitive outcomes where plaintiffs with demonstrably economic losses are precluded from accessing RICO’s remedies, solely because the harm originated in a bodily or emotional injury.

On the other side were the Second and Ninth Circuits, which allowed RICO claims to proceed where the economic harm was both distinct and directly caused by racketeering activity, even if the mechanism of harm involved personal injury. See Diaz v. Gates, 420 F.3d 897 (9th Cir. 2005) (finding that the plaintiff pled a RICO injury when he sought damages for lost employment and lost wages incurred when he was unjustly incarcerated, reasoning that the right to employment was a valid property interest even though the property loss derived from false imprisonment, a personal injury). The court’s decision in Horn resolved the circuit split by affirming that economic harms, even when deriving from personal injuries, can constitute injury to business or property under RICO.

Parallel Between RICO and Antitrust Provisions

To fully appreciate the significance of Horn, it is worth recalling that the civil enforcement mechanism of RICO is modeled directly on the Clayton Act’s provisions for private antitrust enforcement. Both statutes allow private plaintiffs to bring suit for injuries to “business or property,” and both authorize treble damages and attorney fees. The parallel was intentional: Congress wanted to replicate the deterrent and compensatory logic of private antitrust enforcement in the fight against organized crime and systemic fraud.

Because it is a commonplace practice in statutory interpretation to interpret identical statutory language alike, courts have looked to antitrust precedent when formulating approaches to RICO standing. At times, courts have also pulled them apart doctrinally. For example, the Supreme Court found that nothing in the RICO statute suggests that relief would only be available for a “racketeering injury.” See Sedima, S.P.R.L. v. Imrex, 473 U.S. 479 (1985) (“In borrowing its ‘racketeering injury’ requirement from antitrust standing principles, the court below created exactly the problems Congress sought to avoid.”). However, the parallel between RICO and antitrust law is easily seen. As some legal scholars have argued, RICO’s civil cause of action was designed not just to punish individual bad actors but to encourage private plaintiffs to root out unlawful economic enterprises, just as private plaintiffs do in the antitrust realm.

Horn strengthens that analogy by reaffirming that RICO’s concern is with the economic effect of racketeering, not with formalistic exclusions based on the character of the underlying injury. By moving away from categorical exclusions, the Court in Horn arguably nudges RICO doctrine to be more in line with its Clayton Act ancestry.

Conclusion

With Horn, the Supreme Court resolves a long-standing circuit split and reaffirms the potential of RICO as a tool for redressing fraud-inflicted commercial losses. For plaintiffs’ lawyers, Horn opens the door to RICO claims in cases involving deceptive marketing and other forms of economic harm where a personal injury lies upstream. But successfully pleading a RICO case requires clarity, precision, and evidentiary rigor. Attorneys must isolate business harm from personal injury by showing, for example, that a client lost income or contracts not merely because he was hurt, but because he was defrauded or targeted by racketeering activity. Damages must be concrete and traceable to predicate acts such as mail or wire fraud. Rule 9(b)’s heightened pleading standards apply. Moreover, practitioners should anticipate challenges to other RICO requirements such as causation, and a “pattern” of racketeering activity. As with antitrust, not all harm meets the standard for federal relief. Horn invites creative and disciplined use of RICO in litigation. In the right cases, it offers the chance to triple a damages award and hold commercial wrongdoers accountable.

Edward T. Kang is the managing member of Kang Haggerty. He devotes the majority of his practice to business litigation and other litigation involving business entities. Contact him at ekang@kanghaggerty.com.

Reprinted with permission from the April 17, 2025 edition of “The Legal Intelligencer” © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.