Civil RICO - The Weapon of Choice
New York State Bar Association Journal, November 2016
5 Pages Posted: 9 Nov 2016
Date Written: November 7, 2016
The purpose of this article is to provide an advance starting point on civil RICO claims. An additional purpose is to push the jurisprudential envelope forward and to inspire scholarship. Since 1985 RICO has been the weapon of choice for civil plaintiffs because of the broad and liberal construction of the statute and the potential of the litigation equivalent of terror or a thermonuclear device - the availability of treble damages.
Civil RICO can be utilized by institutions, corporations, banks, brokerage firms and a bevy of other individuals and associations as plaintiff and counterclaims by defendants. The Civil RICO cause of action is created by 18 U.S.C. Section 1984(c). Civil RICO is intended for use by general practitioners, private law firms, in house corporate law departments and government agencies.
The civil racketeering provisions of RICO involve three main sections of the statute: section 1961 provides the definitions, section 1962 describes the prohibited conduct and section 1964 details the remedies. Federal subject matter jurisdiction is conferred by section 1964(c) which creates the civil RICO cause of action. Personal jurisdiction is conferred by section 1965(a), the principal venue provision, permits a party to institute a civil RICO action in any district in which a defendant resides, is found, has an agent, or transacts his affairs. Civil RICO actions are subject to a four-year statute of limitations.
The U.S. Supreme Court 1985 decision in Sedima is the most frequently cited RICO precedent. A RICO based complaint must be drafted with the following instructions from Sedima as a guide. A violation of section 1962(c), the section on which Sedima relies, requires (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. The plaintiff must allege each of the elements to state a claim. They are all equally essential components and the complaint will fail if any one of them is not adequately pleaded. To recover damages requires proof of a concrete financial loss and not injury to a valuable intangible property right. The federal mail fraud statute is one of the frequently utilized federal criminal statutes and is also one of the predicate offenses for RICO purposes.
Because of RICO's broad definition of racketeering activity the plaintiff is only limited by his or her creativity and FRCP 11. FRCP 11 imposes an obligation on a lawyer not to assert a claim unless he or she has a good faith in the validity of the claim.
Keywords: RICO, Civil RICO, Racketeering Activity, U.S. Supreme Ct Case-Sedima, Trial Practice
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