By: Guest Author

The case of Horn v. Medical Marijuana, Inc.[1] has drawn significant attention for its potential impact on business law, employment law, consumer protection, and federal racketeering statutes. In this case, Douglas Horn, a commercial truck driver, purchased Dixie X, a wellness product marketed as containing CBD but no THC.[2]  CBD (cannabidiol) is a legal substance derived from hemp, while THC (tetrahydrocannabinol) is the psychoactive component of marijuana, which remains federally restricted.[3] As a truck driver subject to routine drug testing, Horn relied on the product’s claim of being THC-free.[4] However, after consuming the product, he failed a drug test, resulting in his termination, loss of benefits, and a significant impact on his livelihood.[5] In response, Horn sued the manufacturers under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), a law originally designed to combat organized crime.[6] RICO allows for civil suits where plaintiffs can recover triple damages and attorney fees if their “business or property” is harmed by criminal activities such as fraud.[7] Horn argued that the manufacturers engaged in mail and wire fraud by falsely advertising the product as THC-free, which led to his economic injury—the loss of his job, benefits, and wages.[8]

The manufacturers countered that Horn’s losses were due to a personal injury (ingesting THC) rather than damage to his “business or property,” which they argued does not fall within the scope of civil RICO.[9] This distinction is critical because civil RICO claims require that the harm suffered be economic in nature rather than purely personal.[10] If the Supreme Court sides with Horn, it could set a precedent with significant implications for consumer protection and the business community. The decision could pave the way for more civil RICO lawsuits over economic losses from false or misleading advertising, particularly in the CBD and health supplement industries which operate in a regulatory gray area.[11] These industries can be particularly vulnerable to lawsuits because they often market products that are difficult for consumers to verify independently, such as claims about the absence of THC.[12] If RICO can be invoked in cases involving alleged misrepresentations of product ingredients, businesses may face a new wave of litigation for economic harm, increasing their litigation risk and insurance costs.[13] On the other hand, Horn’s legal team argues that losing his job, benefits, and pension is precisely the type of “business or property” injury RICO was meant to address and remediate.[14] A decision in Horn’s favor would underscore the need for businesses to be extra vigilant in ensuring that their marketing claims are accurate. This is especially important when those claims directly impact livelihoods, such as for truckers, where drug testing is a routine and high-stakes reality.

The central legal question before the Supreme Court is whether Horn’s lost wages and benefits can be considered an injury to “business or property” under RICO.[15] RICO’s text specifies that a person must be “injured in his business or property” to sue for damages, and the Supreme Court has traditionally limited RICO claims to economic injuries.[16]  A ruling in Horn’s favor could provide consumers with a powerful tool to hold companies accountable for misleading claims that cause significant economic harm. However, a decision against Horn would preserve the current limitations, offering businesses some predictability in the application of RICO, especially in sectors that often face gray areas in product claims and consumer expectations.

[1] Horn v. Med. Marijuana, Inc., 80 F.4th 130, 131 (2d Cir. 2023).

[2] Ronald Mann, Supreme Court Considers Truck Driver’s RICO Case over CBD Product that Cost Him His Job, SCOTUSblog (Oct. 16, 2024, 4:37 PM), https://www.scotusblog.com/2024/10/supreme-court-considers-truck-drivers-rico-case-over-cbd-product-that-cost-him-his-job/.

[3] Kimberly Holland, CBD vs. THC: What’s the Difference?, Healthline (Feb. 12, 2024), https://www.healthline.com/health/cbd-vs-thc.

[4] Adam Liptak, Supreme Court Leans Toward Truck Driver Fired over Drug Test, N.Y. Times (Oct. 15, 2024), https://www.nytimes.com/2024/10/15/us/supreme-court-thc-truck-driver-drug-test.html.

[5] Id.

[6] Id.; 18 U.S.C.A. § 1962(c) (West 1984).

[7] 18 U.S.C. § 1962(c).

[8] Liptak, supra note 4.

[9] Lydia Wheeler, Injury Divides Supreme Court in Lawsuit over CBD Oil, Bloomberg L. (Oct. 18, 2024, 4:47 PM), https://www.bloomberglaw.com/bloomberglawnews/cannabis/BNA%2000000192a10cd6b8a9baefae257c0001.

[10] See id.

[11] Jennifer Grebow & Sebastian Krawiec, Supplement Industry to FDA on CBD Regulations: “We Can’t Wait Years”, Nutritional Outlook (May 31, 2019), https://www.nutritionaloutlook.com/view/supplement-industry-fda-cbd-regulations-we-cant-wait-years.

[12] See id.

[13] See Michael L. Zigelman et al., The Impact of RICO Lawsuits on Bodily Injury Claims: Guidance for Insurers, Reuters, Sept. 6, 2024,  https://www.reuters.com/legal/legalindustry/impact-rico-lawsuits-bodily-injury-claims-guidance-insurers-2024-09-06/; see also James C. Martin & Sarah B. Johansen, Potential Threat of Weaponizing the RICO Statute for Personal Injury Lawsuits: Will the Supreme Court Put the Brakes on Expansive Recoveries?, Reed Smith (Aug. 6, 2024), https://www.reedsmith.com/en/perspectives/2024/08/potential-rico-personal-injury-lawsuits-supreme-court-recoveries (explaining that “potential consequences include greater liability exposure, increases in defense costs, and, in all likelihood, higher prices for liability insurance”).

[14] Lydia Wheeler, Justices Weigh Case of Truck Driver Fired After CBD Oil Use (1), Bloomberg L. (Oct. 15, 2024, 2:55 PM), https://news.bloomberglaw.com/us-law-week/justices-weigh-case-of-truck-driver-fired-after-using-cbd-oil.

[15] Mann, supra note 2.

[16] 18 U.S.C. § 1964(c); see Martin & Johansen, supra note 13.