Federal courts across the United States are currently split on the question of whether a private plaintiff is entitled to injunctive relief under the federal RICO statute. As things currently stand, the fate of a private plaintiff seeking injunctive relief under the federal RICO statute depends on where they file suit. And while the Supreme Court has had an opportunity to resolve the circuit split, it has thus far opted not to do so.
In Scheidler v.National Organization for Women, 537 U.S. 393 (2003), the Supreme Court granted certiorari on this exact question, but in the end elected instead to resolve the case on other grounds. The availability of injunctive relief thus remains in the hands of the circuit courts, and disputes on this issue continue to arise with each RICO civil action that come through their doors.
The ambiguity that fuels the dispute stems from parts (a), (b), and (c) of 18 U.S.C §1964.The relevant sections provide that:
(a) The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for the rights of innocent persons.
. . .
(b) The Attorney General may institute proceedings under this section. Pending final determination thereof, the court may at any time enter such restraining orders or prohibitions, or take such other actions, including the acceptance of satisfactory performance bonds, as it shall deem proper.
. . .
(c) Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee, except that no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of section 1962. The exception contained in the preceding sentence does not apply to an action against any person that is criminally convicted in connection with the fraud, in which case the statute of limitations shall start to run on the date on which the conviction becomes final.
(emphasis added).
At the heart of the ambiguity is whether Subsection (a) merely outlines the broad equitable jurisdiction federal courts have to fashion equitable remedies or whether it also authorizes district courts to grant all remedies identified within the entirety of the statute regardless of the type of plaintiff bringing the suit. Of the circuits to speak on this ambiguity, the leading opinion comes from the Ninth Circuit in Religious Technology Center v. Wollersheim, 796 F.2d 1076 (9th Cir. 1986), which ultimately held that private civil RICO plaintiffs are not entitled to injunctive relief under the federal RICO statute. The Ninth Circuit based its ruling on the legislative history of the statute and a plain reading of subsections (b) and (c) of 18 U.S.C §1964.
In support for its conclusion, the Ninth Circuit pointed to the statute’s legislative history. First, the court observed the Senate’s decision to omit language permitting private plaintiffs to bring suit into the final version of subsection (c) despite earlier iterations expressly permitting the same, opting instead to grant treble damages as a remedy for private actions. Religious Tech. Ctr., 796 F.2d at 1084. The court also noted that the House similarly rejected an amendment that would have explicitly authorized private plaintiffs to sue for injunction relief under section 1964 (a) in support of its conclusion that Congress did not intend to authorize this remedy for private plaintiffs. Finally, the Ninth Circuit noted the failure of the Senate Judiciary Committee’s proposed bill to supplement the RICO statute and “authorize private injunctive relief from racketeering activity,” S.Rep. No. 1070, 92d Cong., 2d Sess. 10 (1972). Religious Tech. Ctr., 796 F.2d at 1087.
In essence, because Congress has had numerous opportunities to amend the RICO statute to include language expressly providing for injunctive relief to private civil RICO plaintiffs and has failed to do so, the Ninth Circuit concluded that Congress did not intend to authorize injunctive relief for private plaintiffs. Id. at 1088.
Beyond its analysis of the legislative history, the Ninth Circuit also concluded that private plaintiffs were not entitled to injunctive relief as a remedy because a plain reading of subsections (b) and (c) of Section 1964 demonstrated that Congress intended to reserve injunctive relief only for the government in RICO cases.
The Fourth Circuit has shown support for the Ninth Circuit’s view. Johnson v. Collins Entm't Co., Inc., 199 F.3d 710, 726 (4th Cir. 1999) (agreeing that injunctive relief is not available to a private party in a civil RICO action). In fact, more recently, the Fourth Circuit expressly held in Hengle v. Treppa, 19 F.4th 324, 356 (4th Cir. 2021), cert. dismissed sub nom. Asner v. Hengle, 142 S. Ct. 2093 (2022), and cert. dismissed, 142 S. Ct. 2093 (2022), that there was no private injunctive relief under RICO. In Hengle, the Fourth Circuit reached its conclusion purely through a plain reading of the statute, noting that 18 U.S.C §1964 was unambiguous, and clearly demonstrated that Congress’s intent was not to authorize private RICO plaintiffs to sue for prospective injunctive relief. Id. Indeed, the Fourth Circuit noted that because Congress did not explicitly do so in the statute—and there were more than superficial differences in similarly written statutes like the Clayton Act and Sherman Act—private plaintiffs lacked this right. Id. at 356.
The Fifth Circuit has not directly weighed in on this issue. Instead, the Fifth Circuit left this question unanswered in In re Fredeman Litig., 843 F.2d 821, 827 (5th Cir. 1988). The Fredeman court decided that the injunction exceeded the equitable powers of the lower court and resolved the issue on those grounds. However, the court did reference (and agree in dicta) with the Ninth Circuit.
The Second and Seventh circuits disagree with the Ninth Circuit, finding that private civil RICO plaintiffs are entitled to injunctive relief. See e.g., see National Organization for Women, Inc. v. Scheidler, 267 F.3d 687, 695 (7th Cir. 2001), reversed on other grounds, 537 U.S. 393, 123 S.Ct. 1057, 154 L.Ed.2d 991 (2003); Chevron Corp. v. Donziger, 833 F.3d 74, 137 (2d Cir. 2016).
The Second and Seventh Circuit state that the RICO statute does not expressly curtail a federal court’s inherent equitable powers. They interpret the RICO statute differently, finding that part (a) did not serve the function of a jurisdictional grant, but rather as a broad expression of the court’s power to issue an injunction as a remedy in civil RICO actions. They reconcile part (b) of the statute with part (a) by stating that part (b) makes available a special injunctive remedy that only the government may petition for. That injunction is one that need not meet the requirements private plaintiffs are generally required to satisfy to even be entitled to an injunction (i.e., a substantial likelihood of success on the merits). Hence, because the injunctive remedy described in part (a) is fundamentally different from the injunctive remedy described in part (b), private plaintiffs those circuits are permitted under the RICO statute to seek injunctive relief.
It remains to be seen whether this issue will reach the Supreme Court again. It is for that reason that having a lawyer on hand that understands these complex and nuanced matters is critical when considering pursuing a civil RICO claim—especially where injunctive relief is concerned.
Anel Viamontes is a senior associate attorney at Fridman Fels & Soto, PLLC.
