Under what circumstances can United States federal statute apply extraterritorially—that is, outside of the U.S.? And in an increasingly globalized society, where parties in a legal dispute may be located around the world, how should a court make that determination?
For decades, courts have deliberated on these questions when hearing claims brought under the Racketeer Influenced and Corrupt Organizations Act (commonly referred to as RICO). Some courts have made the determination solely based on a plaintiff’s location; others have used a multi-factor test to ascertain whether allegations involve “domestic injury” or not. Adding to the uncertainty is the issue of shareholder rights: when shareholders in a business entity plaintiff in a RICO suit reside in more than one location, questions of extraterritoriality and the scope of domestic injury are no simple matter.
In “RICO Extraterritoriality, RJR Nabisco and Shareholder Residence—A Key Consideration in Determining RICO ‘Domestic Injury,'” published in the most recent issue of RICO and Securities Fraud Law Reporter, Offit Kurman attorneys Lawrence A. Steckman and Adam J. Rader explore these legal complexities in light of the Supreme Court’s 2016 decision in RJR Nabisco, Inc. v. European Community. They write that “[n]o sound argument supports the view that courts should effectively overrule a legislature that enacted RICO remedies for any person injured in their business or property by engrafting a standing rule that would disable U.S. shareholders from maintaining a statutory action to seek a remedy Congress plainly wanted them to have.”
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