District Court Finds Alleged Loss of Sales in Angolan Auto Market Cannot Establish US Injury to Support RICO Claim

The World in U.S. Courts: Winter 2016 - Racketeer Influenced and Corrupt Organizations Act (RICO)

Union Commercial Services Limited v. FCA International Operations LLC, US District Court for the Eastern District of Michigan, November 10, 2016

The plaintiff, a Cayman Islands corporation owned by Angolans, had sold Fiat Chrysler vehicles in Angola since 1988.  It alleged that Fiat Chrysler entities engaged in a bribery scheme with Angolan governmental officials, the result of which was the termination of the plaintiff’s rights to distribute the vehicles.  It sued the entities on a number of theories, including civil RICO.

As relevant here, the Court first focused on the requirement that RICO plaintiffs show a “US injury,” which the Court, by analogy to the US antitrust laws, described as requiring that a defendant's conduct have intended to or produced "substantial effects" in the US.  This requirement had not been met, as the plaintiff alleged only lost sales and lost profits in the Angolan market.  The Court also rejected the plaintiff’s argument that it lost the right to buy automobiles in the US, finding that alleged injury would have been caused by an alleged breach of contract, not “by reason of” a RICO violation, as the statute requires).

[Editor’s note:  The “domestic injury” requirement for a private right of action under RICO was recently the subject of an article by editors of The World in US Courts, which may be found here.]

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