RJR Nabisco, Inc. v. European Cmty.

The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968, created four new criminal offenses involving the activities of organized criminal groups in relation to an enterprise. §§ 1962(a)-(d). RICO also created a new civil cause of action for "[a]ny person injured in his business or property by reason of a violation" of those prohibitions. § 1964(c). We are asked to decide whether RICO applies extraterritorially-that is, to events occurring and injuries suffered outside the United States.

I

A

RICO is founded on the concept of racketeering activity. The statute defines "racketeering activity" to encompass dozens of state and federal offenses, known in RICO parlance as predicates. These predicates include any act "indictable" under specified federal statutes, §§ 1961(1)(B)-(C), (E)-(G), as well as certain crimes "chargeable" under state law, § 1961(1)(A), and any offense involving bankruptcy or securities fraud or drug-related activity that is "punishable" under federal law, § 1961(1)(D). A predicate offense implicates RICO when it is part of a "pattern of racketeering activity"-a series *2097of related predicates that together demonstrate the existence or threat of continued criminal activity. H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989); see § 1961(5)(specifying that a "pattern of racketeering activity" requires at least two predicates committed within 10 years of each other).

RICO's § 1962sets forth four specific prohibitions aimed at different ways in which a pattern of racketeering activity may be used to infiltrate, control, or operate "a[n] enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce." These prohibitions can be summarized as follows. Section 1962(a)makes it unlawful to invest income derived from a pattern of racketeering activity in an enterprise. Section 1962(b)makes it unlawful to acquire or maintain an interest in an enterprise through a pattern of racketeering activity. Section 1962(c)makes it unlawful for a person employed by or associated with an enterprise to conduct the enterprise's affairs through a pattern of racketeering activity. Finally, § 1962(d)makes it unlawful to conspire to violate any of the other three prohibitions.1

Violations of § 1962are subject to criminal penalties, § 1963(a), and civil proceedings to enforce those prohibitions may be brought by the Attorney General, §§ 1964(a)-(b). Separately, RICO creates a private civil cause of action that allows "[a]ny person injured in his business or property by reason of a violation of section 1962" to sue in federal district court and recover treble damages, costs, and attorney's fees. § 1964(c).2

*2098B

This case arises from allegations that petitioners-RJR Nabisco and numerous related entities (collectively RJR)-participated in a global money-laundering scheme in association with various organized crime groups. Respondents-the European Community and 26 of its member states-first sued RJR in the Eastern District of New York in 2000, alleging that RJR had violated RICO. Over the past 16 years, the resulting litigation (spread over at least three separate actions, with this case the lone survivor) has seen multiple complaints and multiple trips up and down the federal court system. See 2011 WL 843957, *1-*2 (E.D.N.Y., Mar. 8, 2011)(tracing the procedural history through the District Court's dismissal of the present complaint). In the interest of brevity, we confine our discussion to the operative complaint and its journey to this Court.

Greatly simplified, the complaint alleges a scheme in which Colombian and Russian drug traffickers smuggled narcotics into Europe and sold the drugs for euros that-through a series of transactions involving black-market money brokers, cigarette importers, and wholesalers-were used to pay for large shipments of RJR cigarettes into Europe. In other variations of this scheme, RJR allegedly dealt directly with drug traffickers and money launderers in South America and sold cigarettes to Iraq in violation of international sanctions. RJR is also said to have acquired Brown & Williamson Tobacco Corporation for the purpose of expanding these illegal activities.

The complaint alleges that RJR engaged in a pattern of racketeering activity consisting of numerous acts of money laundering, material support to foreign terrorist organizations, mail fraud, wire fraud, and violations of the Travel Act. RJR, in concert with the other participants in the scheme, allegedly formed an association in fact that was engaged in interstate and foreign commerce, and therefore constituted a RICO enterprise that the complaint dubs the "RJR Money-Laundering Enterprise." App. to Pet. for Cert. 238a, Complaint ¶ 158; see § 1961(4)(defining an enterprise to include "any union or group of individuals associated in fact although not a legal entity").

Putting these pieces together, the complaint alleges that RJR violated each of RICO's prohibitions. RJR allegedly used income derived from the pattern of racketeering to invest in, acquire an interest in, and operate the RJR Money-Laundering Enterprise in violation of § 1962(a); acquired and maintained control of the enterprise through the pattern of racketeering in violation of § 1962(b); operated the enterprise through the pattern of racketeering in violation of § 1962(c); and conspired with other participants in the scheme in violation of § 1962(d).3 These violations allegedly harmed respondents in various ways, including through competitive harm to their state-owned cigarette businesses, lost tax revenue from black-market cigarette sales, harm to European financial institutions, currency instability, and increased law enforcement costs.4

*2099RJR moved to dismiss the complaint, arguing that RICO does not apply to racketeering activity occurring outside U.S. territory or to foreign enterprises. The District Court agreed and dismissed the RICO claims as impermissibly extraterritorial. 2011 WL 843957, at *7.

The Second Circuit reinstated the RICO claims. It concluded that, "with respect to a number of offenses that constitute predicates for RICO liability and are alleged in this case, Congress has clearly manifested an intent that they apply extraterritorially." 764 F.3d 129, 133 (2014). "By incorporating these statutes into RICO as predicate racketeering acts," the court reasoned, "Congress has clearly communicated its intention that RICO apply to extraterritorial conduct to the extent that extraterritorial violations of these statutes serve as the basis for RICO liability." Id., at 137. Turning to the predicates alleged in the complaint, the Second Circuit found that they passed muster. The court concluded that the money laundering and material support of terrorism statutes expressly apply extraterritorially in the circumstances alleged in the complaint. Id., at 139-140. The court held that the mail fraud, wire fraud, and Travel Act statutes do not apply extraterritorially. Id., at 141. But it concluded that the complaint states domestic violations of those predicates because it "allege[s] conduct in the United States that satisfies every essential element" of those offenses. Id., at 142.

RJR sought rehearing, arguing (among other things) that RICO's civil cause of action requires a plaintiff to allege a domestic injury, even if a domestic pattern of racketeering or a domestic enterprise is not necessary to make out a violation of RICO's substantive prohibitions. The panel denied rehearing and issued a supplemental opinion holding that RICO does not require a domestic injury. 764 F.3d 149 (C.A.2 2014)(per curiam ). If a foreign injury was caused by the violation of a predicate statute that applies extraterritorially, the court concluded, then the plaintiff may seek recovery for that injury under RICO. Id., at 151. The Second Circuit later denied rehearing en banc, with five judges dissenting. 783 F.3d 123 (2015).

The lower courts have come to different conclusions regarding RICO's extraterritorial application. Compare 764 F.3d 129(case below) (holding that RICO may apply extraterritorially) with United States v. Chao Fan Xu, 706 F.3d 965, 974-975 (C.A.9 2013)(holding that RICO does not apply extraterritorially; collecting cases). Because of this conflict and the importance of the issue, we granted certiorari. 576 U.S. ----, 136 S.Ct. 28, 192 L.Ed.2d 998 (2015).

II

The question of RICO's extraterritorial application really involves two questions. First, do RICO's substantive prohibitions, contained in § 1962, apply to conduct that occurs in foreign countries? Second, does RICO's private right of action, contained in § 1964(c), apply to injuries that are suffered in foreign countries? We consider *2100each of these questions in turn. To guide our inquiry, we begin by reviewing the law of extraterritoriality.

It is a basic premise of our legal system that, in general, "United States law governs domestically but does not rule the world." Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 454, 127 S.Ct. 1746, 167 L.Ed.2d 737 (2007). This principle finds expression in a canon of statutory construction known as the presumption against extraterritoriality: Absent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application. Morrison v. National Australia Bank Ltd., 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010). The question is not whether we think "Congress would have wanted" a statute to apply to foreign conduct "if it had thought of the situation before the court," but whether Congress has affirmatively and unmistakably instructed that the statute will do so. Id., at 261, 130 S.Ct. 2869. "When a statute gives no clear indication of an extraterritorial application, it has none." Id., at 255, 130 S.Ct. 2869.

There are several reasons for this presumption. Most notably, it serves to avoid the international discord that can result when U.S. law is applied to conduct in foreign countries. See, e.g., Kiobel v. Royal Dutch Petroleum Co., 569 U.S. ----, ---- - ----, 133 S.Ct. 1659, 1663-1664, 185 L.Ed.2d 671 (2013); EEOC v. Arabian American Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991)(Aramco ); Benz v. Compania Naviera Hidalgo, S.A., 353 U.S. 138, 147, 77 S.Ct. 699, 1 L.Ed.2d 709 (1957). But it also reflects the more prosaic "commonsense notion that Congress generally legislates with domestic concerns in mind." Smith v. United States, 507 U.S. 197, 204, n. 5, 113 S.Ct. 1178, 122 L.Ed.2d 548 (1993). We therefore apply the presumption across the board, "regardless of whether there is a risk of conflict between the American statute and a foreign law." Morrison, supra, at 255, 130 S.Ct. 2869.

Twice in the past six years we have considered whether a federal statute applies extraterritorially. In Morrison, we addressed the question whether § 10(b) of the Securities Exchange Act of 1934 applies to misrepresentations made in connection with the purchase or sale of securities traded only on foreign exchanges. We first examined whether § 10(b) gives any clear indication of extraterritorial effect, and found that it does not. 561 U.S., at 262-265, 130 S.Ct. 2869. We then engaged in a separate inquiry to determine whether the complaint before us involved a permissible domestic application of § 10(b) because it alleged that some of the relevant misrepresentations were made in the United States. At this second step, we considered the " 'focus' of congressional concern," asking whether § 10(b)'s focus is "the place where the deception originated" or rather "purchases and sale of securities in the United States." Id., at 266, 130 S.Ct. 2869. We concluded that the statute's focus is on domestic securities transactions, and we therefore held that the statute does not apply to frauds in connection with foreign securities transactions, even if those frauds involve domestic misrepresentations.

In Kiobel, we considered whether the Alien Tort Statute (ATS) confers federal-court jurisdiction over causes of action alleging international-law violations committed overseas. We acknowledged that the presumption against extraterritoriality is "typically" applied to statutes "regulating conduct," but we concluded that the principles supporting the presumption should "similarly constrain courts considering causes of action that may be brought under the ATS."

*2101569 U.S., at ----, 133 S.Ct., at 1664. We applied the presumption and held that the ATS lacks any clear indication that it extended to the foreign violations alleged in that case. Id., at ---- - ----, 133 S.Ct., at 1665-1669. Because "all the relevant conduct" regarding those violations "took place outside the United States," id., at ----, 133 S.Ct., at 1670, we did not need to determine, as we did in Morrison, the statute's "focus."

Morrison and Kiobel reflect a two-step framework for analyzing extraterritoriality issues. At the first step, we ask whether the presumption against extraterritoriality has been rebutted-that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially. We must ask this question regardless of whether the statute in question regulates conduct, affords relief, or merely confers jurisdiction. If the statute is not extraterritorial, then at the second step we determine whether the case involves a domestic application of the statute, and we do this by looking to the statute's "focus." If the conduct relevant to the statute's focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S. territory.

What if we find at step one that a statute clearly does have extraterritorial effect? Neither Morrison nor Kiobel involved such a finding. But we addressed this issue in Morrison, explaining that it was necessary to consider § 10(b)'s "focus" only because we found that the statute does not apply extraterritorially: "If § 10(b) did apply abroad, we would not need to determine which transnational frauds it applied to; it would apply to all of them (barring some other limitation)." 561 U.S., at 267, n. 9, 130 S.Ct. 2869. The scope of an extraterritorial statute thus turns on the limits Congress has (or has not) imposed on the statute's foreign application, and not on the statute's "focus."5

III

With these guiding principles in mind, we first consider whether RICO's substantive prohibitions in § 1962may apply to foreign conduct. Unlike in Morrison and Kiobel, we find that the presumption against extraterritoriality has been rebutted-but only with respect to certain applications of the statute.

A

The most obvious textual clue is that RICO defines racketeering activity to include a number of predicates that plainly apply to at least some foreign conduct. These predicates include the prohibition against engaging in monetary transactions in criminally derived property, which expressly applies, when "the defendant is a United States person," to offenses that "tak[e] place outside the United States." 18 U.S.C. § 1957(d)(2). Other examples include the prohibitions against the assassination of Government officials, § 351(i)( "There is extraterritorial jurisdiction over the conduct prohibited by this section"); § 1751(k) (same), and the prohibition against hostage taking, which applies to conduct that "occurred outside the United States" if either the hostage or the offender is a U.S. national, if the offender is *2102found in the United States, or if the hostage taking is done to compel action by the U.S. Government, § 1203(b). At least one predicate-the prohibition against "kill[ing] a national of the United States, while such national is outside the United States"-applies only to conduct occurring outside the United States. § 2332(a).

We agree with the Second Circuit that Congress's incorporation of these (and other) extraterritorial predicates into RICO gives a clear, affirmative indication that § 1962applies to foreign racketeering activity-but only to the extent that the predicates alleged in a particular case themselves apply extraterritorially. Put another way, a pattern of racketeering activity may include or consist of offenses committed abroad in violation of a predicate statute for which the presumption against extraterritoriality has been overcome. To give a simple (albeit grim) example, a violation of § 1962could be premised on a pattern of killings of Americans abroad in violation of § 2332(a)-a predicate that all agree applies extraterritorially-whether or not any domestic predicates are also alleged.6

We emphasize the important limitation that foreign conduct must violate "a predicate statute that manifests an unmistakable congressional intent to apply extraterritorially." 764 F.3d, at 136. Although a number of RICO predicates have extraterritorial effect, many do not. The inclusion of some extraterritorial predicates does not mean that all RICO predicates extend to foreign conduct. This is apparent for two reasons. First, "when a statute provides for some extraterritorial application, the presumption against extraterritoriality operates to limit that provision to its terms." Morrison, 561 U.S., at 265, 130 S.Ct. 2869. Second, RICO defines as racketeering activity only acts that are "indictable" (or, what amounts to the same thing, "chargeable" or "punishable") under one of the statutes identified in § 1961(1). If a particular statute does not apply extraterritorially, then conduct committed abroad is not "indictable" under that statute and so cannot qualify as a predicate under RICO's plain terms.

RJR resists the conclusion that RICO's incorporation of extraterritorial predicates gives RICO commensurate extraterritorial effect. It points out that "RICO itself" does not refer to extraterritorial application; only the underlying predicate statutes do. Brief for Petitioners 42. RJR thus argues that Congress could have intended to capture only domestic applications of extraterritorial predicates, and that any predicates that apply only abroad could have been "incorporated ... solely for when such offenses are part of a broader pattern whose overall locus is domestic." Id., at 43.

The presumption against extraterritoriality does not require us to adopt such a constricted interpretation. While the presumption can be overcome only by a clear indication of extraterritorial effect, an express statement of extraterritoriality is not essential. "Assuredly context can be consulted as well." Morrison, supra, at 265, 130 S.Ct. 2869. Context is dispositive here. Congress has not expressly said that § 1962(c)applies to patterns of racketeering activity in foreign countries, but it has defined "racketeering activity"-and by extension a "pattern of racketeering activity"-to encompass violations of predicate statutes that do expressly apply extraterritorially. Short of an explicit declaration, *2103it is hard to imagine how Congress could have more clearly indicated that it intended RICO to have (some) extraterritorial effect. This unique structure makes RICO the rare statute that clearly evidences extraterritorial effect despite lacking an express statement of extraterritoriality.

We therefore conclude that RICO applies to some foreign racketeering activity. A violation of § 1962may be based on a pattern of racketeering that includes predicate offenses committed abroad, provided that each of those offenses violates a predicate statute that is itself extraterritorial. This fact is determinative as to § 1962(b)and § 1962(c), both of which prohibit the employment of a pattern of racketeering. Although they differ as to the end for which the pattern is employed-to acquire or maintain control of an enterprise under subsection (b), or to conduct an enterprise's affairs under subsection (c)-this difference is immaterial for extraterritoriality purposes.

Section 1962(a)presents a thornier question. Unlike subsections (b) and (c), subsection (a) targets certain uses of income derived from a pattern of racketeering, not the use of the pattern itself. Cf. Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461-462, 126 S.Ct. 1991, 164 L.Ed.2d 720 (2006). While we have no difficulty concluding that this prohibition applies to income derived from foreign patterns of racketeering (within the limits we have discussed), arguably § 1962(a)extends only to domestic uses of the income. The Second Circuit did not decide this question because it found that respondents have alleged "a domestic investment of racketeering proceeds in the form of RJR's merger in the United States with Brown & Williamson and investments in other U.S. operations." 764 F.3d, at 138, n. 5. RJR does not dispute the basic soundness of the Second Circuit's reasoning, but it does contest the court's reading of the complaint. See Brief for Petitioners 57-58. Because the parties have not focused on this issue, and because it makes no difference to our resolution of this case, see infra, at 2110, we assume without deciding that respondents have pleaded a domestic investment of racketeering income in violation of § 1962(a).

Finally, although respondents' complaint alleges a violation of RICO's conspiracy provision, § 1962(d), the parties' briefs do not address whether this provision should be treated differently from the provision (§ 1962(a), (b), or (c)) that a defendant allegedly conspired to violate. We therefore decline to reach this issue, and assume without deciding that § 1962(d)'s extraterritoriality tracks that of the provision underlying the alleged conspiracy.

B

RJR contends that, even if RICO may apply to foreign patterns of racketeering, the statute does not apply to foreign enterprises . Invoking Morrison 's discussion of the Exchange Act's "focus," RJR says that the "focus" of RICO is the enterprise being corrupted-not the pattern of racketeering-and that RICO's enterprise element gives no clear indication of extraterritorial effect. Accordingly, RJR reasons, RICO requires a domestic enterprise.

This argument misunderstands Morrison . As explained above, supra, at 2100 - 2101, only at the second step of the inquiry do we consider a statute's "focus." Here, however, there is a clear indication at step one that RICO applies extraterritorially. We therefore do not proceed to the "focus" step. The Morrison Court's discussion of the statutory "focus" made this clear, stating that "[i]f § 10(b) did apply abroad, we would not need to determine which transnational frauds it applied to; it would apply *2104to all of them (barring some other limitation)." 561 U.S., at 267, n. 9, 130 S.Ct. 2869. The same is true here. RICO-or at least §§ 1962(b)and (c)-applies abroad, and so we do not need to determine which transnational (or wholly foreign) patterns of racketeering it applies to; it applies to all of them, regardless of whether they are connected to a "foreign" or "domestic" enterprise. This rule is, of course, subject to the important limitation that RICO covers foreign predicate offenses only to the extent that the underlying predicate statutes are extraterritorial. But within those bounds, the location of the affected enterprise does not impose an independent constraint.

It is easy to see why Congress did not limit RICO to domestic enterprises. A domestic enterprise requirement would lead to difficult line-drawing problems and counterintuitive results. It would exclude from RICO's reach foreign enterprises-whether corporations, crime rings, other associations, or individuals-that operate within the United States. Imagine, for example, that a foreign corporation has operations in the United States and that one of the corporation's managers in the United States conducts its U.S. affairs through a pattern of extortion and mail fraud. Such domestic conduct would seem to fall well within what Congress meant to capture in enacting RICO. Congress, after all, does not usually exempt foreigners acting in the United States from U.S. legal requirements. See 764 F.3d, at 138("Surely the presumption against extraterritorial application of United States laws does not command giving foreigners carte blanche to violate the laws of the United States in the United States"). Yet RJR's theory would insulate this scheme from RICO liability-both civil and criminal-because the enterprise at issue is a foreign, not domestic, corporation.

Seeking to avoid this result, RJR offers that any " 'emissaries' " a foreign enterprise sends to the United States-such as our hypothetical U.S.-based corporate manager-could be carved off and considered a "distinct domestic enterprise" under an association-in-fact theory. Brief for Petitioners 40. RJR's willingness to gerrymander the enterprise to get around its proposed domestic enterprise requirement is telling. It suggests that RJR is not really concerned about whether an enterprise is foreign or domestic, but whether the relevant conduct occurred here or abroad. And if that is the concern, then it is the pattern of racketeering activity that matters, not the enterprise. Even spotting RJR its "domestic emissary" theory, this approach would lead to strange gaps in RICO's coverage. If a foreign enterprise sent only a single "emissary" to engage in racketeering in the United States, there could be no RICO liability because a single person cannot be both the RICO enterprise and the RICO defendant. Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 162,