European Cmty. v. RJR Nabisco, Inc.

783 F.3d 123 (Mem)

EUROPEAN COMMUNITY, acting on its own behalf and on behalf of the Member States it has power to represent, Kingdom of Belgium, Republic of Finland, French Republic, Hellenic Republic, Federal Republic of Germany, Italian Republic, Grand Duchy of Luxembourg, Kingdom of the Netherlands, Portuguese Republic, Kingdom of Spain, Individually, Kingdom of Denmark, Czech Republic, Republic of Lithuania, Republic of Slovenia, Republic of Malta, Republic of Hungary, Republic of Ireland, Republic of Estonia, Republic of Bulgaria, Republic of Cyprus, Slovak Republic, Romania, Plaintiffs–Appellants

v.RJR NABISCO, INC., R.J. Reynolds Tobacco Company, R.J. Reynolds Tobacco International, Inc., RJR Acquisition Corp., FKA Nabisco Group Holdings Corp., RJR Nabisco Holdings Corp., R.J. Reynolds Tobacco Holdings, Inc., Nabisco Group Holdings Corp., R.J. Reynolds Global Products, Inc., Reynolds American Inc., R.J. Reynolds Tobacco Company, a North Carolina Corporation, Defendants–Appellees.

No. 11–2475.

United States Court of Appeals, Second Circuit.

April 13, 2015.

John J. Halloran, Jr., John J. Halloran, Jr., P.C., White Plains, N.Y., Kevin A. Malone, Carlos A. Acevedo, Krupnick, Campbell, Malone, Buser Slama, Hancock, Liberman P.A., Fort Lauderdale, FL, for Plaintiffs–Appellants.

Gregory G. Katsas, John M. Gore, Jones Day, Washington, D.C., Mark R. Seiden, Jones Day, New York, N.Y., for Defendants–Appellees.

PRESENT: ROBERT A. KATZMANN, Chief Judge, DENNIS JACOBS, JOSÉ A. CABRANES, ROSEMARY S. POOLER, REENA RAGGI, RICHARD C. WESLEY, PETER W. HALL, DEBRA ANN LIVINGSTON, GERARD E. LYNCH, DENNY CHIN, RAYMOND J. LOHIER, JR., SUSAN L. CARNEY, CHRISTOPHER F. DRONEY, Circuit Judges.

PETER W. HALL, Circuit Judge, concurs by opinion in the denial of rehearing en banc.

DENNIS JACOBS, Circuit Judge, joined by JOSÉ A. CABRANES, REENA RAGGI, DEBRA ANN LIVINGSTON, and GERARD E. LYNCH, dissents by opinion from the denial of rehearing en banc.

JOSÉ A. CABRANES, Circuit Judge, joined by DENNIS JACOBS, REENA RAGGI, and DEBRA ANN LIVINGSTON, Circuit Judges, dissents by opinion from the denial of rehearing en banc.

REENA RAGGI, Circuit Judge, joined by DENNIS JACOBS, JOSÉ A. CABRANES, and DEBRA ANN LIVINGSTON, Circuit Judges, dissents by opinion from the denial of rehearing en banc.

GERARD E. LYNCH, Circuit Judge, dissents by opinion from the denial of rehearing en banc.

ORDER

Following disposition of this appeal, an active judge of the Court requested a poll on whether to rehear the case en banc. A poll having been conducted and there being no majority favoring en banc review, rehearing en banc is hereby DENIED.

HALL, Circuit Judge, concurring in the order denying rehearing in banc:

This petition for rehearing in banc challenges the conclusion of the panel, consisting of senior judges Leval and Sack, and me, that the Racketeer Influenced Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961 et seq., applies to foreign conduct when liability is based on “racketeering acts” consisting of violations of predicate statutes which Congress expressly made applicable to foreign conduct. See European Cmty. v. RJR Nabisco, Inc., 764 F.3d 129 (2d Cir.2014). As Judges Leval and Sack, being senior judges, have no vote on whether to grant rehearing in banc, I write independently in support of denial of the petition.

In considering the petition for panel rehearing, our panel reexamined our initial view, as well as its compatibility with Morrison v. Nat'l Australia Bank, Ltd., 561 U.S. 247, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010), and with our court's ruling in Norex Petroleum Ltd. v. Access Industries, Inc., 631 F.3d 29 (2d Cir.2010), and reaffirmed the soundness of our conclusion.

RICO applies when the evidence shows a pattern of “racketeering activity.” 18 U.S.C. §§ 1962, 1964. “Racketeering activity” is defined as “any act ... indictable under” specified criminal statutes. Id. § 1961(1). The criminal statutes specified are colloquially referred to as RICO “predicates.” As the panel opinion noted, some of the specified predicate statutes expressly provide that extraterritorial conduct is indictable. See RJR Nabisco, 764 F.3d at 136.

Many of the predicates that apply to foreign conduct relate to international terrorism. A few weeks after the terrorist attacks of September 11, 2001, Congress passed the USA PATRIOT Act of 2001 (the “Patriot Act”), an anti-terrorism measure, which, among other provisions, amended RICO by adding to its list of predicates nearly 20 antiterrorism statutes that expressly apply to foreign conduct. Pub.L. No. 107–56, § 813, 115 Stat. 272, 382. The Patriot Act did this by adding those statutes to RICO's definition of “racketeering activity” specified in § 1961(1) as a basis of RICO liability.¹

18 U.S.C. § 1961(1). The House Report for the Patriot Act states, “[t]he RICO provisions in the bill.... enhance the civil and criminal consequences of certain crimes that have been deemed RICO predicates by Congress and provide better investigative and prosecutorial tools to identify and prove crimes.” H.R.Rep. No. 107–236, at 70 (2001). Since 2001, Congress has added additional explicitly extraterritorial crimes to RICO, for a total of nearly 30 predicate racketeering acts that expressly apply to foreign conduct, nearly all of them relating to international terrorism directed against United States interests. See, e.g., 18 U.S.C. §§ 2332g (conduct involving anti-aircraft missile systems); 2339D (terrorist military training). Some of RICO's predicate statutes indeed apply only to conduct outside the United States. See, e.g., 18 U.S.C. § 2332 (killing, and attempting to kill, “a national of the United States, while such national is outside the United States ” (emphasis added)); 18 U.S.C. § 2423(c) (engaging in illicit sexual conduct in foreign places by a U.S. citizen or permanent resident).

The panel opinion concluded that “[b]y incorporating these statutes into RICO as predicate racketeering acts, Congress has clearly communicated its intention that RICO apply to extraterritorial conduct to the extent that extraterritorial violations of those statutes serve as the basis for RICO liability.” RJR Nabisco, 764 F.3d at 137. That conclusion was sound. The RICO statute explicitly states that acts “indictable under” the specified statutes constitute “racketeering activity,” to which RICO liability attaches, and many of these predicate statutes expressly provide that foreign conduct is indictable.

This interpretation of RICO is wholly consistent with Morrison. In Morrison, the Supreme Court explained that there is a presumption against construing United States statutes as applying extraterritorially but that the presumption is overcome when the statute clearly manifests a congressional intent that it apply extraterritorially. See Morrison, 561 U.S. at 265, 130 S.Ct. 2869. Courts are not to justify extraterritorial application by speculating that Congress would have wanted that had it focused on the question. On the other hand, when Congress, acting within its powers, has explicitly provided for extraterritorial application of a statute, as it has done by incorporating statutes that apply extraterritorially into RICO as predicates, the statute must be interpreted as Congress has directed. The purpose of Morrison was to bar courts from attributing to Congress an intent that its statutes apply extraterritorially in the absence of a clear expression thereof; it was not to prevent courts from giving effect to Congress's clearly manifested intentions that certain statutes apply extraterritorially.

Finally, the panel's holding on this point is consistent with Norex. The panel disagreed with the district court's interpretation of Norex as concluding that RICO could never have extraterritorial application. To the question of whether RICO, in any of its applications, has extraterritorial reach, the Norex opinion devotes two sentences, each of which could have two meanings. The first sentence, derived from our court's prior opinion in North South Finance Corp. v. Al–Turki, 100 F.3d 1046, 1051 (2d Cir.1996), states that “the RICO statute is silent as to any extraterritorial application.” The second states that Morrison “forecloses [the Norex plaintiff's] argument that because a number of RICO's predicates possess an extraterritorial reach, RICO itself possesses an extraterritorial reach.” Norex, 631 F.3d at 33.²

The first of these sentences, noting RICO's silence on extraterritorial application, could mean that the RICO statute does not suggest that it might broadly apply in all of its provisions to extraterritorial conduct. Alternatively, the words of the sentence could also mean that RICO is “silent” as to whether any of its component provisions can ever apply to extraterritorial conduct. The first interpretation seems far more probable. First, if the statement carries the former meaning, it is indisputably correct. The RICO statute is indeed silent as to general extraterritorial application. There are no words in the statute which suggest, or even discuss, the possibility that foreign conduct might be considered violative of RICO, without regard to whether the particular predicate invoked applies to foreign conduct. On the other hand, if given the second meaning, the statement would be either flatly incorrect, or at least misleading. As explained above, RICO incorporates by reference the terms of other statutes. The Act explicitly states that racketeering activity, which serves as a basis of RICO liability, includes any act “indictable under” the incorporated predicate statutes, a number of which expressly provide that foreign conduct is indictable. Whatever ultimate conclusion one might draw, RICO certainly cannot be fairly described as “silent” on the question whether any predicate acts of racketeering can consist of foreign conduct. Furthermore, the sentence about silence, if construed to mean that RICO contains no indication whether any of its predicate acts...