On June 20, 2016, the United States Supreme Court issued a major decision restricting the extraterritorial application of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The Court held that RICO's criminal provisions apply extraterritorially to a limited extent but that its civil cause of action applies only to domestic injuries suffered inside the United States.

RICO imposes criminal prohibitions on investing in, acquiring, or operating an enterprise through a "pattern of racketeering activity." The necessary pattern involves violations of other criminal statutes incorporated into RICO, ranging from mail fraud to money laundering to providing material support for terrorism. RICO provides a civil cause of action to any person injured by a violation of its substantive provisions.

This case involves a civil suit filed against RJR Nabisco, Inc. ("RJR") by the European Union and various of its member nations. The EU alleged that it had suffered various injuries in Europe as a result of racketeering activity allegedly conducted in Europe and South America. The Second Circuit held that these allegations stated a claim under RICO, but the Supreme Court reversed. Although the Court unanimously held that (i) RICO's substantive provisions can apply to foreign conduct as long as the "racketeering activity" at issue violates a predicate criminal statute that itself applies extraterritorially, and (ii) those provisions also apply to foreign enterprises where the racketeering activity is covered, the Court then held that (iii) RICO's private right of action extends only to domestic injuries (by a vote of 4–3, with Justice Sotomayor recused).

In construing the private right of action, the Court applied the presumption against extraterritoriality, under which federal statutes do not extend outside the United States absent a clear indication to the contrary. In holding that the presumption must be separately applied to RICO's substantive prohibitions and to its private right of action, the Court reasoned that a private right of action is not necessarily coextensive with its underlying substantive law and that claims based on foreign injuries might cause significant international friction. Because RICO contains no clear indication that its private right of action extends extraterritorially, the Court thus limited it to domestic injuries. Finally, while reserving the question of whether private plaintiffs may ever seek equitable relief under RICO, the Court held that such equitable claims, if they exist at all, must also be based on domestic injuries.

This case marks a major development in the Supreme Court's extraterritoriality jurisprudence. It squarely forecloses any civil RICO claims based on foreign injuries—a significant development given the breadth of RICO and the number of RICO predicate statutes with some extraterritorial application. Moreover, in separately applying the presumption against extraterritoriality to private rights of action—which typically contain no clear indication of their own geographic scope—it strongly suggests that many other domestic causes of action should likewise be limited to domestic injuries.