NEW YORK, July 13 (Reuters) - What kind of U.S. legal liability could Rupert Murdoch's News Corp face from the deepening phone-hacking scandal. Securities litigation? Likely. Anti-bribery prosecution? Possible. Anti-racketeering laws? That may be more of a stretch.
Over the past week, the global media has swarmed with allegations that journalists from Murdoch's now-shuttered News of the World tabloid hacked into voicemails of influential sources and crime victims and that they paid police officers for tips.
Because News Corp is listed on U.S. stock exchanges, prosecutors here potentially could use anti-bribery laws to go after the world-wide media company. There could also be securities cases brought. Yet in spite of speculation that prosecutions could be brought under anti-corruption laws, chances are fairly remote.
The prevailing U.S. racketeering law, Racketeer Influenced and Corrupt Organizations Act (RICO), was written to combat corrupt organizations. It allows prosecutors to string together a slew of alleged crimes to form the basis of a case. A civil RICO also law lets private plaintiffs sue under similar theories.
Over the years, RICO has evolved as a tool to pursue gangs, political activists and even law firms leaders accused of corrupt activity. On ocassion, the statute has been used in notable cases involving conduct abroad, such as the indictment of Panamanian dictator Manuel Noriega.
Its scope, however, is limited to U.S. activity where Americans are affected, as in the Noriega case. Since that element isn't present in the Murdoch affair, prosecutors hoping to use RICO to pursue News Corp will likely have limited options, said G. Robert Blakey, a University of Notre Dame law school professor who drafted the original act, passed in 1970.
"RICO does not have an extraterritorial impact," said Blakey. "When you have a drug case overseas, you are selling drugs in the U.S. Murdoch's not selling his trashy papers here."
The Justice Department declined to comment.
Even a possible U.S. nexus - Britain's Daily Mirror newspaper reported on Monday that News of the World journalists had offered a bribe to a New York police officer for phone numbers of victims of the September 11 terrorist attacks - probably wouldn't give prosecutors a RICO case.
Instead, New York prosecutors could seek an indictment for a bribery offense, said Blakey.
The one scenario where a RICO case potentially might make sense would be on the civil side. A creative set of lawyers could try to craft a civil RICO action for a competitive news organization which could claim it was injured by News of the World's activity, said Barry Pollack, an attorney at law firm Miller & Chevalier.
"The theory would be that News of the World gained an unfair competitive advantage, that it gained that advantage because they had access, and it got that access because it violated the law and engaged in a pattern of racketeering," said Pollack.
"One would need to be very creative to get around the pitfalls, but if there is enough money at stake somebody might be creative and role the dice," he said.
Civil RICO cases are tempting for plaintiffs' lawyers looking to bring civil suits because any damages won at trial can be tripled under the RICO law.
But civil plaintiffs who claimed their phones were tapped may have a hard time showing they suffered a business injury in the hacking scandal, a necessary component to a civil RICO case, said John Coffee, a professor of securities law at Columbia University Law School (For an interview with Coffee, click here).
"The invasion of privacy is a personal injury, and you can not get personal injury damages under RICO," said Coffee.
The alleged acts in the hacking scandal so far have not risen to the level of fraud that is required under RICO, said Douglas Abrams, a professor at the University of Missouri School of Law who has written a book on civil RICO cases.
"The general rule of thumb for a RICO action is if you think you have one, you don't," said Abrams.
One pitfall includes a 2010 Supreme Court ruling that curtailed U.S. lawsuits over conduct occurring abroad. In the wake of that decision, trial courts have taken a dim view of using RICO for so-called extraterritorial conduct.
"It's very hard for me to see how you can sue Murdoch when our courts have said that our law stops at the water's edge," said Coffee.
(Reporting by Carlyn Kolker, additional reporting by Jeremy Pelofsky)