Retaliatory RICO and the Puzzle of Fraudulent Claiming

69 Pages Posted: 28 Mar 2017  

Nora Freeman Engstrom

Stanford Law School

Date Written: March 27, 2017

Abstract

Over the past century, the allegation that the tort liability system incentivizes legal extortion and is chock-full of fraudulent claims has dominated public discussion and prompted lawmakers to ever-more-creatively curtail individuals’ incentives and opportunities to seek redress. Unsatisfied with these conventional efforts, in recent years, at least a dozen corporate defendants have “discovered” a new fraud-fighting tool. They’ve started filing retaliatory RICO suits against plaintiffs and their lawyers and experts, alleging that the initiation of certain nonmeritorious litigation constitutes racketeering activity—while tort reform advocates have applauded these efforts and exhorted more “courageous” companies to follow suit.

Curiously, though, all of this has taken place against a virtual empirical void. Is the tort liability system actually brimming with fraudulent claims? No one knows. There has been no serious attempt to analyze when, how often, or under what conditions fraudulent claiming proliferates. Similarly, tort reformers support RICO’s use because, they say, conventional mechanisms to deter fraud fall short. But are conventional mechanisms insufficient? Hard to say, as there is no comprehensive inventory of the myriad formal and informal mechanisms already in use; nor do we have even a vague sense of how those mechanisms actually operate. Further, though courts have started to green-light retaliatory RICO actions, no one has carefully analyzed whether these suits are, on balance, beneficial. Indeed, few have so much as surfaced relevant risks. Addressing these questions, this Article attempts to bring overdue attention to a problem central to the tort system’s operation and integrity.

Keywords: Fraud, RICO, Asbestos, Tort Reform, Tort, Frivolous Claims, Rule 11

Suggested Citation

Engstrom, Nora Freeman, Retaliatory RICO and the Puzzle of Fraudulent Claiming (March 27, 2017). Michigan Law Review, Vol. 115, No. 5, 2017. Available at SSRN: https://ssrn.com/abstract=2941670

Nora Freeman Engstrom (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
6507368891 (Phone)

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