The US Supreme Court upheld a trucker’s right under the Racketeer Influenced and Corrupt Organizations Act (RICO Act) to sue his former employer after he had been fired for testing positive after consuming a CBD-rich supplement.
This decision was controversial. It only passed the court by a margin of five to four. Some argue that the decision could set a precedent with ‘devastating consequences’ if businesses are increasingly exposed to RICO claims for labelling disputes.
The case revolves around New York trucker Douglas Horn who was fired after failing to pass a drug-test.
Horn was prescribed a CBD hemp-derived product named Dixie X by Medical Marijuana Inc. to relieve pain after a car accident. Importantly, the product’s label claimed that it was THC-free.
Horn, citing independent lab tests that confirmed Dixie X contained trace amounts of THC in its product, filed a federal suit against the company, accusing it of fraud, false representation, and racketeering, under RICO.
RICO is a law that was designed in America to fight organised crime. If Horn proves economic damage resulting from illegal behavior, he could be awarded triple damages, plus attorney fees.
According to the court’s majority opinion, written by Justice Amy Coney Barrett, the 2nd US Circuit Court of Appeals decision that Horn’s loss of employment constituted an injury to ‘business or property’ under RICO.
“Medical Marijuana is left fighting the most natural interpretation of the text – that ‘injured’ means ‘harmed’ – with no plausible alternative in hand. Barrett said that it was a fight the company could not win.
Medical Marijuana Inc. argued this law never intended to cover such personal injury claims. The court, however, found his inability earn a livelihood to be clearly an economic damage.
This could not only have far wider implications for the use of RICO to litigate personal economic ‘injury’, but could also impact the US hemp and CBD sector which has faced frequent criticism over inconsistent ingredient quality and misleading claims.