Maker of CBD products asks court to decide lawsuit

dwkl · January 15

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The Petitions of the Week column highlights a selection of cert petitions recently filed in the Supreme Court. A list of all petitions we’re watching is available here.

Organized crime, from the mafia to small-time money laundering schemes, often evades criminal prosecution.

To bolster efforts to fight organized crime, Congress passed the Racketeer Influenced and Corrupt Organizations Act, known as RICO, more than 50 years ago.

In addition to the criminal penalties for violating RICO, the law also authorizes private individuals to bring civil lawsuits for an injury to their “business or property” as a result of the defendant’s “racketeering activity,” which the law defines broadly to include a wide range of criminal offenses.

This week, we highlight petitions that ask the court to consider, among other things, whether someone can sue under RICO to recover lost earnings.

Marketed as “a revolution in medicinal hemp-powered wellness,” Dixie X is a CBD supplement that claims to offer a variety of health benefits. After learning about Dixie X in a magazine, Douglas Horn began using the supplement in 2012 to soothe pain and inflammation from a car accident. Although the ad claimed that the supplement does not contain any THC (the active ingredient in marijuana), is derived from foreign hemp obtained under an “FDA import license,” and was produced after “meticulously review[ing] state and federal statutes,” as a commercial truck driver Horn was subject to random drug testing and did not want to risk losing his job. Before purchasing Dixie X, Horn therefore reviewed the product’s FAQ page and called a customer-service hotline to confirm that it was truly THC-free.

Satisfied, Horn began using Dixie X. Shortly after, he failed a random drug test at work and was fired. Suspecting the supplement, Horn sent a batch to an independent lab, which found that the product contained THC.

Horn went to federal court in New York, arguing that the company that sold Dixie X, Medical Marijuana, Inc. – which, despite its name, deals only in hemp-based CBD products – was responsible for his termination. Part of his lawsuit alleged violations of state law, including a claim that he was fraudulently induced to purchase the supplement while unaware of its risks. But Horn also argued that the company injured his “business or property” under RICO by conspiring to commit federal mail and wire fraud that resulted in the loss of his salary.

Read the rest here at ScotusBlog