Horn v. Med. Marijuana

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Decision Date21 August 2023
Docket Number22-349-cv


DOUGLAS J. HORN, Plaintiff-Appellant,




No. 22-349-cv

United States Court of Appeals, Second Circuit

August 21, 2023

Submitted: February 22, 2023


Plaintiff-Appellant Douglas Horn appeals from an order of the United States District Court for the Western District of New York (Jonathan W. Feldman, M.J.) granting summary judgment to Defendants-Appellees on his claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). On appeal, Appellant argues that the district court erroneously held that he lacks RICO standing to sue for his lost earnings because those losses flowed from, or were derivative of, an antecedent personal injury. We agree. RICO's civil-action provision, 18 U.S.C. § 1964(c), authorizes a plaintiff to sue for injuries to "business or property." While that language implies that a plaintiff cannot sue for personal injuries, that negative implication does not bar a plaintiff from suing for injuries to business or property simply because a personal injury was antecedent to those injuries. We therefore VACATE the order granting summary judgment to Appellees on Appellant's civil RICO claim, and REMAND to the district court for further proceedings consistent with this Opinion.

Jeffrey M. Benjamin, The Linden Law Group, P.C., New York, NY, for Plaintiff-Appellant.

Roy A. Mura, Scott D. Mancuso, Mura Law Group, PLLC, Buffalo, NY, for Defendants-Appellees.

Before: WALKER, LYNCH, and ROBINSON, Circuit Judges.

GERARD E.LYNCH, Circuit Judge:

Plaintiff-Appellant Douglas J. Horn lost his job as a commercial truck driver, which he had held for more than ten years, after a random drug test


detected tetrahydrocannabinol ("THC") in his system. He maintains, however, that he ingested THC unwittingly by consuming a cannabis-derived product that was marketed as THC-free by Defendants-Appellees Medical Marijuana, Inc., Dixie Holdings, LLC, a/k/a Dixie Elixirs, and Red Dice Holdings, LLC ("Appellees"). He then brought this lawsuit in the United States District Court for the Western District of New York, asserting claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., and state law. Granting partial summary judgment to Appellees, the district court (Jonathan W. Feldman, M.J.) held that Horn lacked RICO standing[1] because he sued for losses - in particular, his loss of earnings - that were derivative of, or flowed from, an antecedent personal injury.

We disagree. RICO's civil-action provision, 18 U.S.C. § 1964(c), authorizes a plaintiff to sue for "injur[ies] in his business or property" that are proximately caused by a violation of one of RICO's substantive provisions. While § 1964(c) implicitly excludes recovery for personal injuries, nothing in § 1964(c)'s text, or


RICO's structure or history, supports an amorphous RICO standing rule that bars plaintiffs from suing simply because their otherwise recoverable economic losses happen to have been connected to or flowed from a non-recoverable personal injury. Accordingly, we VACATE the district court's order granting summary judgment to Appellees on Horn's RICO claim, and REMAND for further proceedings consistent with this Opinion.


I. Factual Background

The following facts are undisputed for purposes of this appeal.

In February 2012, Horn was in a car accident that caused injuries to his hip and right shoulder. [J.A. 31, Compl. ¶ 12] He was prescribed medicine for those injuries, but in the months following his accident, "he investigated natural medicines as an alternative to his other prescriptions." J. App'x 31. In or around September 2012, Horn discovered a magazine advertisement for Dixie X CBD Dew Drops Tincture ("Dixie X"), a product that was jointly produced, marketed, and sold by Appellees. [J.A. 30-35, Compl. ¶¶ 6, 8, 10, 13-14, 22, 30] The advertisement read as follows:

CBD for Everyone!
Using a proprietary extraction process and a strain of high-CBD hemp grown in a secret, foreign location, Colorado's Dixie Elixirs and Edibles now offers a new product line called Dixie X, which contains 0% THC and up to 500 mg of CBD. This new CBD-rich medicine will be available in several forms, including a tincture, a topical and in capsules. Promoted as "a revolution in medicinal hemp-powered wellness," the nonpsychoactive products will first roll out in Colorado MMCs (medical marijuana centers), with plans to quickly expand outside the medical-marijuana market. "It has taken a tremendous amount of time, money and effort, but finally patients here in Colorado - and ultimately all individuals who are interested in utilizing CBD for medicinal benefit - will be able to have access to it," says Tripp Keber, Dixie's managing director. "We are importing industrial hemp from outside the U.S. using an FDA import license - it's below federal guidelines for THC, which is 0.3% - and we are taking that hemp and extracting the CBD. We have meticulously reviewed state and federal statutes, and we do not believe that we're operating in conflict with any federal law as it's related to the Dixie X (hemp-derived) products."

Id. at 47. [See also J.A. 32-33, Compl. ¶¶ 13, 19]

It was important to Horn that Dixie X was free of THC and compliant with federal law. At the time, Horn and his wife, Cindy Harp-Horn, were working as a team of commercial truck drivers for Enterprise Transportation Company. [J.A. 50, Civil RICO Statement ¶ 4] As a commercial truck driver, Horn was subject to


random drug testing by his employer, as required by the U.S. Department of Transportation. [J.A. 32-33, Compl. ¶¶ 16, 19] Mindful of that restriction, Horn and his wife sought to ensure the advertisement's accuracy by watching YouTube videos, reviewing the FAQ page of Dixie X's website, and calling a customer-service line - all of which corroborated the advertisement's representation that Dixie X did not contain THC. [J.A. 90-91] Satisfied with that investigation, Horn purchased Dixie X in October 2012. [J.A. 32, Compl. ¶ 14]

To Horn's dismay, after he consumed the product, he failed his employer's random drug test and later a confirmatory drug test. [J.A. 32, Compl. ¶¶ 16-17] Consequently, he lost his job, current and future wages, and insurance and pension benefits. [J.A. 33, Compl. ¶ 20] At that time, he had twenty-nine years' experience as a commercial truck driver, including more than ten years driving for Enterprise Transportation Company. [J.A. 32, ¶ 15] At some point, Horn's wife resigned from her job, believing it was unsafe to work as a commercial truck driver without her husband. [Horn I, 383 F.Supp.3d at 122]

Suspecting that Dixie X was to blame for his positive test, Horn purchased some more and had an independent lab test the product. [J.A. 32-33, Compl. ¶ 18] Those tests confirmed that Dixie X contained THC. [Id.]


II. Procedural History

On August 6, 2015, Horn and Harp-Horn filed a nine-count complaint in the United States District Court for the Western District of New York. Count 2 asserted a claim of RICO conspiracy under 18 U.S.C. §§ 1962(d), 1964(c). [J.A. 3739] Underlying that claim were predicate acts of mail and wire fraud, 18 U.S.C. §§ 1341, 1343, and of engaging in transactions with money derived from specified unlawful activities, 18 U.S.C. § 1957. [J.A. 39, Compl. ¶ 46] The other eight counts were New York state law claims for deceptive business practices/false advertising, fraudulent inducement, products liability, breach of contract, breach of express warranty, unjust enrichment, negligence, and negligent infliction of emotional harm. [J.A. 36-43]

The district court dismissed Harp-Horn's claims and whittled Horn's claims to two: (1) the civil RICO claim, as predicated on mail and wire fraud; and (2) the state-law fraudulent inducement claim. See Horn v. Med. Marijuana, Inc. (Horn I), 383 F.Supp.3d 114, 135 (W.D.N.Y. 2019); Horn v. Med. Marijuana, Inc. (Horn II), No. 15-cv-0701, 2019 WL 11287650, at *3 n.3, *5 (W.D.N.Y. Nov. 22, 2019).


With a trial date approaching, on July 22, 2021, Dixie Holdings moved to preclude the trial testimony of Horn's damages expert, arguing that his lost earnings are not recoverable under RICO or the remaining state-law claim. [D. Ct. Dkt. No. 194; see also J.A. 24] The district court construed that motion as dispositive, agreed with Dixie Holdings as to the RICO claim but not the statelaw claim, and accordingly granted partial summary judgment to Appellees on the RICO claim. [D. Ct. Dkt. No. 202; see also J.A. 35] Horn v. Med. Marijuana, Inc. (Horn III), No. 15-cv-0701, 2021 WL 4173195 (W.D.N.Y. Sept. 14, 2021). Following out-of-circuit precedent, the district court reasoned that Horn's lost earnings "flow[] from, and [are] derivative of, a personal injury" - that is, an unconsented bodily invasion by THC - and therefore "do not constitute an injury 'to business or property' that is recoverable in a civil RICO action" brought under 18 U.S.C. § 1964(c). Id. at *5. On January 24, 2021, the district court entered final judgment on Horn's civil RICO claim, thereby certifying this appeal, pursuant to Federal Rule of Civil Procedure 54(b). Horn v. Med. Marijuana, Inc. (Horn IV), No. 15-cv-0701, 2022 WL 206235, at *4 (W.D.N.Y. Jan. 24, 2022).



Horn challenges the district court's decision to grant summary judgment to Appellees on his RICO claim. "We review de novo a district court's decision to grant summary judgment, construing the evidence in the light most favorable to the party against whom summary judgment was granted and drawing all reasonable inferences in that party's favor." Covington Specialty Ins. Co. v. Indian Lookout Country Club, Inc., 62 F.4th 748, 752 (2d...

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