CBD Lawsuit Over Lost Job Gets Supreme Court’s Go-Ahead, Potentially Having Major Implications for Industry

The US Supreme Court voted in favour of a former truck driver’s right to use the Racketeer Influenced and Corrupt Organizations (RICO) Act to sue a company after he was sacked for testing positive for THC after taking a CBD supplement.

Its decision remains controversial, and only just passed through the court with a vote of 5-4. Some argue that the decision could set a precedent with ‘devastating consequences’ if businesses are increasingly exposed to RICO claims for labelling disputes.

This case centres around a New York truck driver Douglas Horn, who lost his job of 10 years after failing a drug test.

Horn had consumed a hemp-derived CBD product called Dixie X, sold by Medical Marijuana Inc., for pain relief following injuries from a previous crash. Crucially, the product was advertised as THC-free.

Independent lab testing later confirmed that Dixie X did contain trace levels of THC, Horn filed a federal lawsuit in 2015 accusing the company of fraud, misrepresentation, and racketeering under RICO.

RICO, originally designed to tackle organised crime in the US, would mean Horn could receive triple damages and attorney fees if he can successfully demonstrate economic injury resulting from a pattern of illegal activity.

According to the court’s majority opinion, written by Justice Amy Coney Barrett, the 2nd US Circuit Court of Appeals decision that Horn’s loss of employment constituted an injury to ‘business or property’ under RICO.

“Medical Marijuana is left fighting the most natural interpretation of the text – that ‘injured’ means ‘harmed’ – with no plausible alternative in hand. That is a battle it cannot win,” Barrett wrote.

The defendant, Medical Marijuana Inc., argued that this law was never designed to cover personal injury claims like this, however, the court ruled that his inability to earn a living was clearly economic harm.

This could not only have far wider implications for the use of RICO to litigate personal economic ‘injury’, but could also impact the US hemp and CBD sector which has faced frequent criticism over inconsistent ingredient quality and misleading claims.