It’s been more than two years since Jones Day’s Gregory Katsas argued European Community v. RJR Nabisco at the U.S. Court of Appeals for the Second Circuit, urging the court to affirm a ruling that a coalition of European governments can’t sue R.J. Reynolds under the Racketeer Influenced and Corrupt Organizations Act. But as the wait for a ruling dragged on, Katsas had good reason to predict a win. Most of all, that’s because the plaintiffs accused RJR of running a cigarette smuggling and money laundering scheme centered in Europe, and the Second Circuit had already signaled in another case that RICO doesn’t apply to overseas conduct.
Instead, on Wednesday a unanimous Second Circuit panel defied expectations and revived the case against RJR, concluding that RICO does indeed have extraterritorial reach. In the process, the court devised a new formula for judges to use in weighing RICO claims with a foreign dimension, ruling that the analysis should focus on individual predicate acts under the law.
