RICO Trends: From Gangsters to Class Actions
78 Pages Posted: 28 Nov 2012
Date Written: November 21, 2012
This article addresses the question: why isn’t RICO used much? RICO, the Racketeer Influenced and Corrupt Organizations Act, both a crime and a civil cause of action, was passed in 1970 with much fanfare. The fanfare was deserved. RICO was an imaginative criminal justice initiative aimed at complex, systemic crime. RICO’s civil cause of action was viewed as a robust tool for plaintiffs and a vital supplement to strained law enforcement resources.
After conducting an in-depth analysis of RICO opinions, reported and unreported, rendered by the federal appellate courts during the seven year time period from 2005-2011, this article has an answer to the question. Criminal RICO’s time has come and gone, but civil RICO’s potential has not yet been realized. This article focuses on recent developments in case law that make civil RICO with regard to class actions, and in the pharmaceutical fraud area, newly viable.
The data analyzed in this article suggests that criminal RICO is anachronistic. Simpler, more streamlined statutes are now available to achieve, far more easily than RICO, the benefits RICO used to uniquely bestow: providing context for isolated acts, linking far-flung actors, penetrating organizations to reach key players, stiff sentences, obtaining forfeiture of property used to commit crime and reaped from crime. Civil RICO, on the other hand, is an untapped resource. Used properly, civil RICO is an optimal private attorney general tool and a boon for plaintiffs. This is true for two reasons. First, RICO mandates treble damages at a time when, because of court rulings and legislative actions, many plaintiffs are limited to little more than single damages. Second, in light of recent court rulings in RICO cases, RICO’s elements dovetail with class action requirements of commonality and predominance, making RICO class actions newly viable.
This article proceeds in eight parts. Part I provides an overview of the RICO statute. Part II explains the methodology used to gather the data in this study. Part III discusses quantitative measurements from the data including how many RICO cases are decided each year and where they are brought. Part IV describes the types of RICO cases brought under both criminal and civil RICO provisions. Part V examines the issues that have dominated RICO court decisions from 2005-2011. Part V discusses how recent court decisions on issues of “enterprise,” proximate causation and “pattern” make civil RICO cases easier than ever to plead and prove. Part VI analyzes the outcome in RICO cases including who wins, who loses, and which circuits favor which side. Part VII focuses on RICO class actions discussing past and future trends, successes, and failures. Part VIII focuses on pharmaceutical fraud cases, noting why they are especially ripe for use of civil RICO.
Keywords: RICO, racketeering, class actions, fraud, white collar crime, white collar practice, pharmaceutical, pharmaceutical fraud, plaintiffs, punitive damages, business fraud, crime, gang prosecutions, organized crime, narcotics prosecutions
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