Personal Jurisdiction Under RICO Extends To Out-of-District Defendants Where "Ends of Justice" Require It: Third Circuit | Practical Law

Personal Jurisdiction Under RICO Extends To Out-of-District Defendants Where "Ends of Justice" Require It: Third Circuit | Practical Law

In Laurel Gardens, LLC v. McKenna, the US Court of Appeals for the Third Circuit, in a case of first impression, held that when a civil Racketeer Influenced and Corrupt Organizations Act (RICO) action is brought in a district court where personal jurisdiction can be established over at least one defendant, summonses can be served nationwide on other defendants if justice requires it.

Personal Jurisdiction Under RICO Extends To Out-of-District Defendants Where "Ends of Justice" Require It: Third Circuit

by Practical Law Litigation
Published on 21 Jan 2020USA (National/Federal)
In Laurel Gardens, LLC v. McKenna, the US Court of Appeals for the Third Circuit, in a case of first impression, held that when a civil Racketeer Influenced and Corrupt Organizations Act (RICO) action is brought in a district court where personal jurisdiction can be established over at least one defendant, summonses can be served nationwide on other defendants if justice requires it.
In Laurel Gardens, LLC v. McKenna, the US Court of Appeals for the Third Circuit, in a case of first impression, held that when a civil Racketeer Influenced and Corrupt Organizations Act (RICO) action is brought in a district court where personal jurisdiction can be established over at least one defendant, summonses can be served nationwide on other defendants if justice requires it. ( (3rd Cir. Jan. 14, 2020).)
The plaintiffs filed a RICO action in the US District Court for the Eastern District of Pennsylvania against more than 30 defendants, alleging that the defendants comprised a widespread enterprise engaged in a variety of criminal acts with the objective of impairing the plaintiffs' ability to continue working the field of landscaping and snow removal services. While most defendants resided and conducted business in Pennsylvania, the appealing defendants were residents of Delaware. The district court conducted the "minimum contacts" personal jurisdiction analysis and dismissed the suit as to the Delaware defendants because it lacked personal jurisdiction over them. The plaintiffs appealed, arguing, among other things, that the district court has personal jurisdiction over the Delaware defendants under RICO.
The Third Circuit vacated and remanded. The court first found that the district court should have considered that Federal Rule of Civil Procedure (FRCP) 4(k)(1)(C) allows personal jurisdiction over a defendant "when authorized by a federal statute." RICO's "Venue and Process" provision (18 U.S. § 1965(a)-(d)) provides for nationwide jurisdiction for certain defendants in RICO actions. The Third Circuit then noted that there is a circuit split concerning whether 18 U.S. § 1965 (b) or (d) governs personal jurisdiction in this case and sua sponte considered that question. Joining the Second, Seventh, Ninth, Tenth, and D.C. Circuits, the Third Circuit found that subsection (b) applies, allowing nationwide jurisdiction in a particular district over RICO defendants residing in other districts, if both:
  • Personal jurisdiction can be established over at least one defendant.
  • Ends of justice require it.
Finally, the court found that under the specific circumstances of this case, the "ends of justice" call for jurisdiction over the Delaware defendants.