The Third Circuit in Humphrey v. GlaxoSmithKline PLC, __F.3d __, 2018 U.S. App. Lexis 27433 (3d Cir. Sept. 26, 2018), adopted a multifactor analysis to determine whether a civil RICO plaintiff adequately alleged a domestic injury to business or property under the Supreme Court’s decision in RJR Nabisco v. European Community, 136 S.Ct. 2090 (2016). The Third Circuit’s decision to adopt a multifactor analysis to examine whether an injury to intangible property is domestic creates an explicit split with the approach adopted by the Seventh Circuit in Armada (Singapore) PTE Ltd. v. Amcol International, 885 F.3d 1090 (7th Cir. 2018), which looked solely at the location of plaintiff’s residence to determine where injury to intangible property had occurred. Id. at 1095. The current circuit split between the Third and Seventh Circuit regarding the proper analytical framework for the application of the domestic injury requirement in cases of intangible property may ultimately require Supreme Court intervention. The Third Circuit’s recent decision only serves to underscore that, as was highlighted in my prior article commemorating RJR Nabisco’s two-year anniversary, the law regarding the domestic injury requirement is still evolving and needs to be carefully monitored by those involved with or considering bringing RICO claims.

Third Circuit Embraces a Multifactor Test

The plaintiffs in Humphrey cofounded an investigations firm that assisted companies doing business in China with anti-bribery compliance. Humphrey, 2018 U.S. App. LEXIS 27433, at *2. The plaintiffs alleged that GlaxoSmithKline engaged in a pattern of bribery in China to obtain a commercial advantage, but that in 2011 a whistleblower informed regulators in China of a purported pattern of bribery. Id. at *2-3. The plaintiffs were engaged by GlaxoSmithKline to assist in connection with its internal investigation related to that alleged bribery. Id. at *3. The agreement between the plaintiffs and GlaxoSmithKline provided that it was governed by Chinese law and provided for any dispute to be resolved by arbitration in China. Id. at *3-4. As part of its engagement, the plaintiffs investigated certain individuals that GlaxoSmithKline believed had provided information to Chinese regulatory agencies as well as seeking information about certain Chinese government agencies that may have had involvement with the investigation. Id. at *2-4.