US Supreme Court rejects medical marijuana firm's bid to avoid racketeering suit

By John Kruzel

WASHINGTON (Reuters) -The U.S. Supreme Court ruled on Wednesday against Medical Marijuana Inc in its bid to fend off a lawsuit by a commercial truck driver who was fired for failing a drug test after taking cannabidiol, or CBD, that he said was falsely sold as lacking the psychoactive ingredient present in marijuana.

The justices, in a 5-4 decision authored by conservative Justice Amy Coney Barrett, upheld a lower court's ruling that had allowed plaintiff Douglas Horn to bring a civil lawsuit against the San Diego-based company under the Racketeer Influenced and Corrupt Organizations Act.

This 1970 federal law, known as RICO, was designed to crack down on organized crime and its economic impact.

The RICO law's civil provisions permit triple damages for successful lawsuits by "any person injured in his business or property" as a result of certain actions by a defendant. At issue in the case was whether Horn's loss of employment was the kind of business injury Congress meant to guard against when it enacted the law.

"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 in the ruling.

Horn, who was ailing from injuries sustained in a trucking accident, in 2012 purchased a CBD tincture called Dixie X. It was advertised as a natural pain reliever containing no tetrahydrocannabinol (THC), the psychoactive ingredient in marijuana that causes a high.

After a random drug test ordered by his employer detected THC in his system, Horn was fired from his trucking job that he had held for more than a decade. Horn has said he is not a marijuana user.

Horn and his wife, Cindy, in 2015 brought a lawsuit in federal court in New York state seeking monetary damages, claiming, among other things, that Medical Marijuana and associated companies violated the RICO Act's provisions. Horn had the tincture independently tested in a laboratory, which confirmed that the product contained THC.

According to the suit, a "pattern of racketeering activity" by the companies - including violations of the federal Controlled Substances Act, as well as mail fraud and wire fraud - inflicted a business or property injury on Horn in the form of his firing.

A federal trial judge ruled against Horn's civil RICO claim. The New York-based 2nd U.S. Circuit Court of Appeals reversed the judge's decision, prompting Medical Marijuana's appeal to the Supreme Court.

The Supreme Court heard arguments in the case on Oct. 15.

(Reporting by John Kruzel in Washington; Editing by Will Dunham)