The Supreme Court wants to allow a fired truck driver to use the RICO law because of a failed drug test

At oral arguments on Oct. 15, liberal-leaning U.S. Supreme Court justices appeared inclined to allow a fired truck driver to use a federal anti-racketeering law to sue a cannabis company and its brand. Other justices expressed concerns about setting a new precedent.

The driver, Douglas J. Horn, is attempting to use the Racketeer Influenced and Corrupt Organizations (RICO) Act to sue Medical Marijuana Inc. after consuming a CBD wellness product, Dixie X, manufactured by the company.

Horn and his wife filed a lawsuit against Medical Marijuana and Dixie Holdings in 2015 after he was fired following a failed drug test that returned a positive THC result, claiming that the product he consumed allegedly contained 0% THC.

While THC is the main intoxicating compound in cannabis, CBD is the main non-intoxicating compound. Companies whose employees are drivers or operators of heavy machinery conduct random drug testing for THC and other drugs to ensure workplace safety, as required by the U.S. Department of Transportation.

Horn, a truck driver for 14 years, was involved in a car accident in February 2012 in which he sustained injuries to his shoulder and hip. He sought natural wellness medications to relieve his pain as an alternative to his prescription medications, according to the lawsuit. Through a magazine ad later that year, Horn discovered a Dixie X CBD tincture that was advertised as THC-free, according to the lawsuit.

After consuming the product, Horn failed his employer’s random drug test — and later a confirmatory drug test — and as a result lost his job, current and future wages, and insurance and pension benefits, the lawsuit says.

“Horn suspected that Dixie “These tests confirmed that Dixie X contained THC.”

Under a RICO lawsuit, Horn could recover three times his lost wages and legal fees from the defendants if he can prove that their alleged racketeering activities resulted in damage to his “business or property.” The New York Times reported. Personal injuries are not covered by the RICO law.

The U.S. District Court for the Western District of New York agreed with the defense that Horn’s injury was personal and dismissed the lawsuit.

However, the U.S. Court of Appeals for the Second Circuit disagreed in 2023, finding that the implication that “RICO precludes compensation for personal injuries does not mean that a plaintiff cannot sue for personal injuries.” business or property simply because they result from or are derived from personal injury,” and that there is nothing in the RICO text to ignore damages simply because that damage “arises as a result of personal injury.”

In addition, the Court of Appeal pointed out that the phrase “enterprise or property” is what matters Nature of the damage, not that Source of damage.

Horn’s original RICO allegation was that Medical Marijuana and its portfolio company Red Dice Holdings, which owns the Dixie brand, had engaged in mail and wire fraud as well as transactions involving money derived from certain unlawful activities since the product’s launch, according to The lawsuit included the THC question.

Editor’s Note: Products containing hemp-derived THC may continue to be sold in interstate commerce as long as they contain less than 0.3% delta-9 THC on a dry weight basis, as included in the definition of industrial hemp in the 2018 Farm Bill.

However, Tuesday’s arguments before the U.S. Supreme Court were not about examining federal cannabis policies regarding the legality of product shipments, but rather about weighing whether Horn’s legal claims could meet the requirements of the RICO Act.

“The question presented in this case … is whether economic damages resulting from personal injuries are injuries to business and property,” Associate Justice Ketanji Brown Jackson said during Tuesday’s hearing. “[Horn] doesn’t say, “My injury is the result of a personal injury.” He says, ‘I’m injured because I was fired.'”

Lisa S. Blatt, an attorney on behalf of Medical Marijuana Inc., responded: “[Horn] must rely on consumption, otherwise it has no causality. Consumption is personal injury.”

Jackson later asked, “But why is this a personal injury case?” That’s the part I don’t understand. He doesn’t claim that the product made him sick. He doesn’t say he was personally hurt. He didn’t even know he had taken THC until he was tested and released. Isn’t that where his injury comes into play?”

At the start of the argument, Blatt said that lost wages and medical expenses are classic personal injury damages and are excluded from RICO claims.

Associate Justices Sonia Sotomayor and Elena Kagan joined Jackson’s questions.

“The harm is not in taking the medication. This is personal injury,” Sotomayor said. “The damage comes from the dismissal. And whether there is a connection between the predicate acts and that harm is a question of proximate cause, not a question of personal injury.”

Proximate cause considers the direct connection between an injury (e.g., lost wages) and harmful behavior (e.g., consumption of a mislabeled product). While the justices acknowledged that Medical Marijuana did not conduct drug tests or fire Horn, proximate cause was not weighed during oral arguments.

“If you are harmed by the loss of your job, then you have suffered harm in your business, right?” Kagan asked. “This legal wording…does not differentiate based on what causes the harm. It simply means that if you are harmed in a way that affects your business or property, including loss of your job, then you are entitled to three times the amount of harm you would otherwise suffer.”

Throughout the argument, Blatt said that Congress had no intention of allowing “every slip-up” to constitute a RICO violation.

Chief Justice John Roberts and Associate Justice Brett Kavanaugh — both conservatives — expressed concerns about a ruling in Horn’s favor that potentially opens the scope of the application of RICO claims to any economic loss.

Enacted in 1970, the RICO Act was intended primarily as a tool to prosecute individuals involved in organized crime. But it wasn’t until a 1981 Supreme Court decision that broadened the law’s interpretation to cover both legitimate and illegal businesses that the federal courts were flooded with RICO claims. USA today reported.

On Tuesday, Roberts asked Horn’s attorney, Easha Anand, why Horn’s case wouldn’t make “every slip-up” a RICO violation. Anand pointed to certain legal guardrails, such as RICO’s exclusion of claims involving pain and suffering and emotional distress, which make up the lion’s share of awards in most tort cases, she said.

“In an average slip-and-fall case, you will not be able to prove an act of predicate, let alone a pattern of acts of predicate, let alone a pattern perpetuated by an extortion enterprise,” Anand said.

Kavanaugh joined Roberts in questioning and said the plaintiff was trying to recharacterize personal injury cases.

“What you’re doing, even though you’ve just admitted that the law precludes damages for personal injuries, is taking lost wages and medical costs and saying, ‘Well, we can get around this limitation that the Chief Justice referred to by characterization .’ the lost wages or medical costs as separate damages to your business or property,” he said. “That’s the concern.”

Anand responded that the dismissal represented “classic business damage.” “You can no longer make a living,” she said.