Racketeering
A popular tool of business litigators is the federal racketeering law ("RICO"), 18 U.S.C. § 1961 et seq. RICO was originally passed to permit recovery for the activities of organized crime, but Congress drafted it sufficiently broadly to apply to many business disputes.
Federal judges are hostile to RICO claims because RICO permits plaintiffs relatively mundane pieces of business litigation to bring their actions in federal court. But plaintiffs love RICO because it permits recovery of three times the actual loss, and the recovery of attorneys fee. But it's one of the most intellectually difficult claims to make.
Pattern of Racketeering Activity. RICO provides a laundry list of crimes and requires that a plaintiff allege a pattern of such crimes, consisting of two or more such times within a ten-year period. Many of the crimes on the list are violent crimes, and not apt to arise in a business context. But some are white collar crimes: wire fraud, mail fraud, bank fraud, and obstruction of justice.
But RICO was meant to target ongoing criminal activity, not one-shot crimes. Thus, the courts impose a so-called durational element. Under that element, the pattern of racketeering activity must be either 1) open-ended-- i.e., extending indefinitely into the future, or 2) close-ended-- i.e., finished-- but having endured over the period of a long period of years.
The RICO Enterprise. RICO requires an enterprise, defined to be an association of two or more individuals. The enterprise need not be a criminal enterprise, but may in fact be a legitimate business.
Injury from One of the Prohibited Acts. And most importantly, the injury suffered by the plaintiff can't be from the crimes themselves. Rather, the injury has to be from the one of four enumerated acts prohibited at § 1962. For example, § 1962(a) prohibits defendants from using income derived from a pattern of racketeering activity to operate the RICO enterprise. Thus, to fall under § 1962(a), the injury must be from the use of the income, not from the acts constituting the pattern of racketeering activity.
As an illustration, the classical RICO fact pattern involves organized crime infiltrating a labor union by, for example, bribing the officials of the union. Let's say that the union, under the control of organized crime, extracts dues from union members, and uses the dues to finance a strike against a business. And let's say that strike causes the business to lose revenues.
That business may be able to bring a RICO claim because its injury isn't from the bribes constituting the pattern of racketeering activity. Rather, the injury is from the use of dues-- which are income from the payment of bribes-- to finance the strike.
Federal judges are hostile to RICO claims because RICO permits plaintiffs relatively mundane pieces of business litigation to bring their actions in federal court. But plaintiffs love RICO because it permits recovery of three times the actual loss, and the recovery of attorneys fee. But it's one of the most intellectually difficult claims to make.
Pattern of Racketeering Activity. RICO provides a laundry list of crimes and requires that a plaintiff allege a pattern of such crimes, consisting of two or more such times within a ten-year period. Many of the crimes on the list are violent crimes, and not apt to arise in a business context. But some are white collar crimes: wire fraud, mail fraud, bank fraud, and obstruction of justice.
But RICO was meant to target ongoing criminal activity, not one-shot crimes. Thus, the courts impose a so-called durational element. Under that element, the pattern of racketeering activity must be either 1) open-ended-- i.e., extending indefinitely into the future, or 2) close-ended-- i.e., finished-- but having endured over the period of a long period of years.
The RICO Enterprise. RICO requires an enterprise, defined to be an association of two or more individuals. The enterprise need not be a criminal enterprise, but may in fact be a legitimate business.
Injury from One of the Prohibited Acts. And most importantly, the injury suffered by the plaintiff can't be from the crimes themselves. Rather, the injury has to be from the one of four enumerated acts prohibited at § 1962. For example, § 1962(a) prohibits defendants from using income derived from a pattern of racketeering activity to operate the RICO enterprise. Thus, to fall under § 1962(a), the injury must be from the use of the income, not from the acts constituting the pattern of racketeering activity.
As an illustration, the classical RICO fact pattern involves organized crime infiltrating a labor union by, for example, bribing the officials of the union. Let's say that the union, under the control of organized crime, extracts dues from union members, and uses the dues to finance a strike against a business. And let's say that strike causes the business to lose revenues.
That business may be able to bring a RICO claim because its injury isn't from the bribes constituting the pattern of racketeering activity. Rather, the injury is from the use of dues-- which are income from the payment of bribes-- to finance the strike.