Trucking issues don’t often make it in front of the nine justices of the U.S. Supreme Court. But on Tuesday they heard arguments in a case involving the complex legal questions surrounding truck drivers and marijuana use.
The case of Douglas Horn, a former driver with New York-based Enterprise Transportation Co., was before the court to determine whether harm he suffered as a result of his 2012 dismissal after failing a drug test – even though he did not use marijuana – qualifies for triple damages under the Racketeer Influenced and Corrupt Organizations Act (RICO).
As such, arguments by attorneys for Horn and the three companies under the banner of Medical Marijuana, makers of a CBD product called Dixie X that Horn ingested, did not center on some of the big-picture questions surrounding marijuana use and testing that have arisen in trucking as legalized recreational marijuana spreads across the U.S. But even if a failed marijuana test that cost a driver his livelihood was not the primary focus of the Supreme Court arguments, the issue came up during the hourlong session.
It started with a 2012 crash
Horn, dealing with pain that resulted from a 2012 crash, said he took Dixie X after doing research on the product, which contains cannabidiol. CBD is touted for pain relief. His decision to take Dixie X was buttressed by assurances from Medical Marijuana that the product did not contain tetrahydrocannabinol (THC), the ingredient in marijuana that is targeted in testing.
After taking Dixie X, Horn flunked a marijuana test and was fired in October 2012. His wife, Cindy, who had driven with him as a team driver, was not comfortable on the road without him so she quit her job.
A federal court in New York dismissed most of the claims filed by Horn in 2015 against Medical Marijuana and its affiliated companies. Those included the claim that Medical Marijuana’s actions touting its product as THC-free – when Horn’s positive test suggested that was false – constituted a violation of RICO law. A RICO finding would open the door to a court tripling any potential financial penalty it would impose on Medical Marijuana.
The lower court let stand the claim against Medical Marijuana of “fraudulent inducement.”
The 2nd U.S. Circuit Court of Appeals previously summed up the question of whether Horn could proceed with a RICO claim – the question that the Supreme Court is now considering. The U.S. District Court for the Western District of New York, the 2nd Circuit wrote, “held that Horn lacked RICO standing because he sued for losses – in particular, his loss of earnings – that were derivative of, or flowed from, an antecedent personal injury.” Injury is not a basis for a civil RICO action, but damages are.
The 2nd Circuit in August 2023 had overturned the District Court ruling and reinstated the RICO claim. Medical Marijuana appealed to the Supreme Court and found itself among an elite group: the less than 2% of petitioners whose appeals are heard by the highest court in the land.
Roy Mura, a Buffalo-area attorney who represents Medical Marijuana, told FreightWaves that if the Supreme Court reverses the 2nd Circuit and disallows the RICO claim, the remaining claim of fraudulent inducement would be litigated back in the District Court. If the RICO charge holds, that would be litigated there as well.
Injuries vs. damages
But on Wednesday, two attorneys before the court took on the question of whether what happened to Horn’s economic status – he lost his job, and for all intents and purposes, so did his wife – constituted an “injury” or “damages.”
It’s an important distinction. Lisa Blatt, an attorney with the legendary Washington law firm of Williams & Connolly who is representing Medical Marijuana, summed up the question in her opening remarks.
“RICO states that any person injured in his business or property by reason of racketeering can sue therefore and recover threefold the damages he sustains,” Blatt said. “Because RICO’s cause of action excludes personal injuries, RICO excludes damages resulting from personal injuries. The text differentiates the injury from racketeering and the damages sustained from that injury, thus showing that injury and damages are distinct.”
Heavyweight legal talent involved in the fight
(To illustrate how the case of a single truck driver getting fired has turned into a significant legal question, it should be noted that Blatt has argued before the Supreme Court more than any other woman in history, approximately 50 times.)
Blatt summed up Horn’s legal argument as “[alleging] the personal injury of unwanted ingestion of THC and the resulting damages of lost wages.” But, Blatt said, the “harm” caused by the ingestion of Dixie X is “a personal injury claim outside civil RICO.”
RICO claims can be brought in a criminal court – in the prosecution of organized crime, for instance – or as part of a civil action in which triple damages can be collected.
The fraudulent inducement claim that survived through the District Court and 2nd Circuit was a focus of Easha Anand, an attorney with the Stanford Law School Supreme Court Litigation Clinic, arguing on behalf of Horn.
Citing a precedent known as Sedima, Anand argued that the “fraudulent misrepresentation” that Medical Marijuana may have engaged in – a question that was never fully litigated in the lower court – is an “economic tort.”
“Sedima tells us that the legal right protected by RICO is the right not to be harmed by reason of the predicate acts,” Anand said, in this case the predicate act being the inducements of Medical Marijuana. “Here we’re trying to redress the loss of income from being fired.”
Justice Brett Kavanaugh, during questioning of Anand, appeared concerned that the Horn case could mark a transformation of what would be considered an injury – not subject to RICO – into damages, which civil RICO would cover.
“There may be a lot of false advertising cases, inadequate warning cases that can easily be made into a RICO [case] that can, under your theory, be brought in federal court under RICO for treble damages,” Kavanaugh said. “And that’s a dramatic shift in how tort suits are prosecuted. I’m not sure Congress really put that into this statute.”
The back-and-forth with the justices after Blatt’s presentation involved several theoreticals about when an incident turns into an injury (non-RICO-“eligible”) and when they are damages.
In one exchange, Justice Ketanji Brown Jackson raised a scenario in which an employer barred possession of THC. But an employee does the same type of research Horn did, concludes a CBD product doesn’t contain THC based on the manufacturer’s guarantees, buys it and puts it in his locker. But as in Horn’s case, it does contain THC and the worker is fired.
“Does he have a RICO claim or not under those circumstances?” Jackson asked Blatt.
Blatt said the only injury is for the lost purchase price. “He’s entitled to three times his purchase price,” Blatt said.
That led Justice Elena Kagan to come back to the core question: Is what happened to Horn an injury or did he suffer damages?
The law refers to damages to “business and property.” “We haven’t decided what this ‘business or property’ phrase means,” Kagan said. “Maybe ‘business or property’ doesn’t mean lost wages.”
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