SUPREME COURT, U.S. WASHINGTON, D.C. 20543 OFFICIAL TRANSCRIPT PROCEEDINGS BEFORE
THE SUPREME COURT OF THE UNITED STATES
DKT/CASE NO. 84 648
SEDIMA, S.P.R.L., Petitioner V. IMREX COMPANY, INC TITLE ET AL. PLACE Washington, D. C.
DATE April 17, 1985 PAGES 1 47
(202) 628-9300 ?0 E STREET. N.W. 1 IS THE SUPREME COURT OF THE UNITED STATES
2 ------x
3 SEDIMA, S. P. R. L., s
4 Petitioner :
5 v. 4 So. 84-648
6 IMREX COMPANY, INC., ET AL. ;
7 ------x
8 Washington, D.C.
9 Wednesday, April 17, 1985
10 The above-entitled matter came on for oral
11 argument before the Supreme Court of the United States
12 at 10458 o'clock, a. m .
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14 APPEARANCES;
15 FRANKLYN H. SNITOW, ESQ., New York, N.Y.; on behalf
16 of Petitioner.
17 RICHARD JORDAN EISENBERG, ESQ., Garden City, N.Y.;
18 on behalf of Respondents.
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ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 C 0 N T | I T S
2 ORAL ARGUMENT CF PAGE
3 FRANKLYN H. SNITOW, ESQ.,
4 on behalf of the Petitioner 3
5 RICHARD JORDAN RISENBERG, ESQ.,
6 on behalf of the Respondents 22
7 FRANKLYN H. SNITOW, ESQ.,
8 on behalf of the Petitioner - rebuttal 45
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ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 PROCEEDINGS
2 CHIEF JUSTICE BURGERs Ws will hear arguments
3 next in Seiima v. Imrex. Nr. Snitow , you may proceed I
4 think whenever you’re ready.
5 ORAL ARGUMENT OF FRANKLYN H. SNITOW, ESQ.
6 ON BEHALF OF THE PETITIONER
7 MR. SNITOW: Mr. Chief Justice, and may it
8 please the Court*
9 The matter before the Court today arises out
10 of the district court’s dismissal of Plaintiff's claim
11 under the Racketeer Influence and Corrupt Organization
12 Act, more commonly known as RICO, 18 U.S.C. 1961 through
13 *58. The district court. Judge Glasser, dismissed the
14 RICO claim on the grounds that no allegation of
15 RICQ-type injury apart from that which would occur as a
16 result of the predicate acts had been pleaded.
17 The Court of Appeals for the Second Circuit
18 held that there must be a mobster type injury and added,
19 without our having the opportunity to previously brief
20 the issue, that there must be a predicate conviction of
21 either a predicate act or a RICO conviction.
22 I suggest to the Court that if the Court of
23 Appeals’ position is upheld, then the RICO statute will
24 be for all intents and purposes no longer a viable tool
25 in the fight against systematic organized criminal
3
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 activity. And I suggest to the Court that the very
2 language of the statute clearly permits the type of
3 claim that was before the district court in this case.
4 Upon review of the Second Circuit's opinions
5 and the various briefs which have been submitted to this
6 Court, what is most striking, I believe, is the creation
7 of artificial roadblocks that have to be read into the
8 statute in order to uphold the Second Circuit's
9 decision.
10 I respectfully suggest that the reading of
11 these artificial roadblocks into the statute has a much
12 greater effect than simply the question of whether
13 Plaintiff's counsel -- whether there will be a bar of
14 RICO Plaintiff's counsel, or whether the dockets will be
15 overcrowded. I think those issues were decided by this
16 Court in the Turkette decision, where the Court
17 recognized that if Congress has the power to cast this
18 kind of legislation we cannot in fact end the
19 legislation, we cannot end this type of claim, because
20 of concern for dockets.
21 I think that what is at issue here is not only
22 the integrity cf the legislative process, where courts
23 engraft different conditions precedent that aren't found l 24 actually in the statute. That type of expansionism I
25 suggest to the Court is not proper.
4
ALJERSON REPORTING COMPANY, INC. 20 f ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 More importantly and I think the Haroco
2 decision alludes to this — I think if this Court reads
3 into the statute that which the Second Circuit read into
4 the statute, we will create a certain disrespect for
5 law. We will create status defendants, either by ethnic
6 origin as suggested by Justice Cardalone, Judge
7 Cardalone, or by class. Traditionally, I think that's
8 improper and I think that’s been rejected by the
9 courts.
10 Sore importantly. Your Honors, in terms of the
11 public perception of this type of criminality, where we
12 create two classes, where we recognize that where an
13 enterprise is operated through a pattern of
14 racketeering, but suggest that if certain people don’t
15 fit into classical groups — La Cos Nostra, Mafia — if
16 that’s not the class, then you are immune, then you are
17 not subject to this particular type of statutory
18 scheme.
19 QUESTION* What effect do you suggest this
20 would have on the criminal prosecutions under the
21 racketeering statute?
22 MR. SNITOWs I think that the effect would be
23 that criminal prosecutors would be subject to placing
24 witnesses on the stand whom defense counsel could say
25 would be interested, and their sole interest would be
5
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 creating the predicate for later civil prosecution. It
2 adds an extra burden to prosecutors being able to place
3 witnesses on the stand, who traditionally have very
4 little or do not have any legal stake in the outcome of
5 particular litigation.
6 I mentioned the Haroco decision, Your Honor,
7 fit the end of the decision, the court says that if we
8 felt that public policy was at stake here, if we felt
9 that there was some larger good to the Republic that had
10 to be served here, then we might engage in the kind of
11 pruning that the Second Circuit engaged in. Eut that’s
12 not the case.
13 I submit. Your Honor, as a former prosecutor
14 that I have seen persons who have been defendants in
15 criminal actions, who have been granted the iargesse of
16 our laws in having evidence suppressed, honestly believe
17 and create the impression that they were innocent as a
18 matter of fact, rather than having been able to take
19 advantage of procedural safeguards.
20 I suggest that’s exactly what happens in this
21 Court, and the danger to lawyers who trivialize and
22 believe that they can say to a court that the type of
23 facts that are represented here are merely a routine
24 commercial dispute — that’s what's suggested by the
25 Respondents here, that this is a routine commercial
6
ALDERSON REPORTING COMPANY, INC. 20 f ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 dispute
2 In footnote 3 of the brief, they suggest to
3 the Court that in fact there was only a technical
4 violation. If you look at that footnote, curiously,
5 they have failed to say that when the Defandant was
6 convicted of a crime by a Nassau County grand jury, they
7 failed to suggest what particular statute they were
8 convicted under.
9 The statute under New York penal lav was
10 Section 175.10, which is a felony, for which a $50,000
11 fine was collected, and which involves the falsification
12 of business records for the purposes of another crime,
13 in this case larceny. There was no technical
14 violation. This was not a mere business dispute.
15 QUESTIONS Well, counsel, it could well be
16 that that’s true here. But of course, the holding that
17 we will make will govern many other cases as well. And
18 I guess it*s possible in your view that a single
19 technical violation of the Securities Act, coupled with
20 a single mailing, with then be mail fraud or mailing
21 statutes would suffice for the pattern of activity and
22 bring the violator under the civil PICO provisions.
23 NR. SNITOWs Your Honor, I believe that
24 Congress recognized that in order to cast a wide net and
25 in order to avoid loopholes in terms of status, they
7
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 would have to create a statute which set up minimums.
2 And yes, if there were two predicate acts committed
3 within a ten-year period, someone could be accused of a
4 RICO violation .
5 Whether that RICO violation would ultimately
6 be proven at trial, whether a jury or a tryer of fact
7 would accept that as a racketeering type injury, is
8 another question. I think that the —
9 QUESTIONS Eut if that technically met the
10 statutory requirement under the Securities Act and
11 Mailing Act, although it was a single transaction, would
12 that be a pattern?
13 MR. SNITOWs If committed within ten years,
14 yes, Your Honor, that would be a pattern. But what I
15 don't understand and has never been defined is the
16 question of garden variety fraud or technical
17 violation. Your Honor, if we look in a case such as
18 this — and we've set out an extensive statement of
19 facts.
20 If one has to litigate, an individual, for
21 3175,000 as in this case or $200,000 or $300,000, and
22 one must litigate because one has been the victim of
23 criminal activity — not technical frauds, not garden
24 variety frauds, but actual proveable criminal activity
25 — if this statute is not available, the realities of
8
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 modern litigation make it impossible, make it impossible
2 to go forward.
3 If the Court reads in the brief submitted by
4 the Attorney General of Arizona and makes reference to
5 the Posner article on the effect of this type of
6 litigation, the Court, must recognize that the realities
7 are that when cne walks in and accuses someone of fraud
8 — I think Congress understood this -- fraud through the
9 operation of an enterprise, the kind of sophisticated
10 criminality we're talking about —
11 QUESTION; Counsel, wasn't this particular
12 statute kind of an afterthought in Congress?
13 MB. SNITOWi No, because I believe that there
14 has been some language -- if you ask whether
15 chronologically it came into the statute later, yes.
16 QUESTIONS But the legislative history is
17 comparatively deficient when compared with other types
18 of general statutes. You’re talking a great deal about,
19 almost as a profit cf doom here, as though Congress
20 intended these things. I just wonder where you get --
21 what you're basing your Congressional intent upon.
22 MR. SNITDWs The statements of Congressman
23 Poff, the statements of Senator McClellan, the later
24 statements where they recognized that the civil damage
25 — tney recognized that the whole concept, the whole
9
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 scheme her; would reach outside, would reach outside cf
2 mere traditional organized crime.
3 And in one instance the Congress -- there was
4 a notation in the House that they understood that the
5 civil side was an important part of this statute, that
6 in fact it was an adjunct to the criminal, in fact
7 possibly more important than the criminal section,
8 because it provided an opportunity for the private
9 litigant to act as a junior attorney general in terms of
10 searching out this type of wrongdoing, one that I must
11 candidly say prosecutors in many respects aren't
12 equipped to deal with, can't deal with, don't have the
13 resources to deal with.
14 QUESTI ON s Of course, you wouldn't — you
15 certainly couldn't regard Judge Oaks as one who is, as a
16 judge who is net sensitive to this kind of thing.
17 MR. SNITOW; Your Honor, I have read Judge
18 Oaks' decisions in various criminal matters.
19 QUESTIONi Did you read the list of the
20 corporations that have been subjected to this Act?
21 SR. SNITOS; Your Honor —
22 QUESTIONS That Judge Oaks put in there —
23 MR. SNITOW; Yes, Your Honor.
24 QUESTION; — for you to read?
25 MR. SNITOW: Your Honor, he did, and I read.
10
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 And I would rely upon Judge Pratt's language and Judge
2 Cardalone's language. Judge Pratt said that the
3 organized crime — the person who commits the kind of
4 fraud or predicate act, be he a Wall Street president,
5 president of a Wall Street brokerage firm, or be he the
6 organized crime classical hit man, he is equally
7 susceptible, because there's no difference in the Act.
8 And racketeering. Your Honor, from the days cf
9 the Dewey-Hogan office up through the FBI recent —
10 QUESTIONS Why don't you get off your soapbox
11 and come down to the statute.
12 MR. SNITOW; Then let me say this. Your
13 Honor. Going to the statute itself, if you deal with
14 the statute, the statute says at Section 1964(c) — the
15 statute makes it very clear. The statute says that "by
16 reason of any violation of this chapter, any person
17 injured in his business or property by reason of a
18 violation of Section 1962 of this chapter may sue
19 therefore."
20 le then go back to what the prohibited acts
21 are in 1962(c), ani that says that "the operation of an
22 enterprise through a pattern of racketeering"
23 constitutes a — is the proscribed conduct, be it in
24 criminal or in civil activity.
25 And then we go back to simply 1961, which
11
AIDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 defines both racketeering activity and pattern of
2 racketeering activity. And those trfo statutes, Your
3 Honor, make it very clear that there are specific
4 predicate acts and a pattern consists of two acts.
5 And as the Haroco court in the Seventh Circuit
6 said very clearly, and as this Court recognized, it was
7 a carefully drafted statute and it is broad for a very
8 important reason -- because it doesn't wish to foreclose
9 the eight to bringing all who get involved in this type
10 of activity.
11 QUESTIONS But if you prove two of these
12 predicate acts, you have proved a pattern and you have
13 proved the enterprise and you have proved the damage?
14 HR. SNITOWi That's correct.
15 QUESTIONS And so this is just a statute that
16 permits people to have a civil recovery for the damage
17 done to them by criminal acts as long as there are two
18 of them?
19 HR. SNITOUs By reason of this pattern of
20 activity, yes.
21 QUESTION; Well, Hr. Snitow, the initials
22 '’RICO’' apparently stand for Racketeer Influenced and
23 Corrupt Organizations Act, and certainly just — it
24 would be hacd to transpose that title to the kind of
25 business fraud here in the absence of very express
12
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 Congressional language.
2 MB. SNITOWi Judge Rehnquist, I don't think
3 so, and I will say why. I don't think so —
4 QUESTION* Well, do you think that the
5 Defendant in this case was either racketeer influenced
6 in the ordinary sense of that word or a corrupt
7 organization ?
8 HR. SNITOWi Yes, Your Honor, I do. I
9 absolutely do. I think that when — I think that
10 there's no difference than when someone who is a known
11 made member of a family, as the FBI may have dubbed him,
12 and someone else runs a boiler operation or a bustout
13 operation, it doesn't matter who the individual is that
14 does it .
15 QUESTION; I agree with you completely. I'm
16 not saying that any particular organization ought to be
17 above suspicion. But you know. Judge Oaks described
18 this as a case of business fraud, and you say it's
19 serious business fraud which resulted in a Nassau County
20 convict ion.
21 But it still seams to me it's something of a
22 step to say that it's racketeer influenced in the sense
23 that Congress used the word in the title.
24 MR. SNITDWs The only time they used it was in
25 the title, and the Congressional history, as we pointed
13
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 out, demonstrates that Congress, both the Senators and
2 the Congressmen, recognized that it would in fact be
3 used against others.
4 But more importantly, look, at the genesis of
5 the word "racketeering." Traditionally, Your Honor,
6 until the early sixties the FBI did not recognize the
7 traditional La Cosa Nostra family crime syndicates.
8 They are a creation — I*m not saying in fact a
9 creation, but I’m saying the concept of they as being
10 the only racketeers, they are of fairly recent vintage.
11 The question of racketeering as that's
12 traditionally been known is an act, a type of conduct.
13 QUESTION: Well, I am not sure I agree with
14 you. I'm not sure how relevant all this is, but to me
15 "racketeering" means someone who earns a living or a
16 company that makes its way by corrupt practices.
17 MR. SNITOW: Your Honor, would I have the
18 opportunity to conduct greater discovery into the files
19 of Imrex to determine whether in the conduct of their
20 business with the other suppliers, directly with our
21 Federal Government, they had the right — or they were
22 involved in other acts of a similar nature? Must I rely
23 first on the FBI taking an interest in random businesses
24 to determine whether in fact they've engaged in other
25 firms of racketeering?
14
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 In this case there were discovery orders which
2 precluded and limited cur right to documents.
3 QUESTION: Counsel, did I understand you to
4 say that in 1960 our Government didn’t know what
5 racketeering was?
6 MR. SNITOW: No, Your Honor. What you
7 understood me to say is there was a period of time that
8 the racketeering as that term has been used to suggest
9 the La Cosa Nostra, that type of activity was not
10 recognized by Hr. Hoover as the only form of
11 racketeering, nor was it recognized by the Dewey-Hogan
12 office, which started in the thirties, as the only form
13 of racketeering.
14 And I don't know that it should be.
15 QUESTION: I assume you knew Mr. Hoover very
16 well?
17 MR. SNITOW: No, Your Honor, but I have
18 reviewed this area of the law and I do know the position
19 that was taken. Your Honor.
20 QUESTION: Counsel, your client had a joint
21 venture agreement --
22 MR. SNITOW: That’s correct.
23 QUESTION: — with the Respondent, and that
24 was a contract, wasn’t it?
25 MR. SNITOW: Yes.
15
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 QUESTIONS Did you have a cause of action in
2 contract for the breach?
3 MS. SNITOWs Yes.
4 QUESTIONS Have you brought that?
5 MR. SNITOWs Yes.
6 QUESTION; The advantage of this is you get
7 triple damages if you win?
8 MR. SNITOWs And attorney's fees and costs.
9 QUESTION; Right.
10 MR. SNITOWs And — I'm sorry. Your Honor.
11 QUESTION; What about any partnership?
12 Suppose you had a partner under a partnership agreement,
13 and he cheated you with respect to the partnership
14 distribution by writing you letters, making reports to
15 you across state lines. Would that come within this
16 statute?
17 MR. SNITOWs If he committed — no. Your
18 Honor, it would not.
19 QUESTION; Why not?
20 MR. SNITOWs Because it wasn’t part of an
21 enterprise. That was individual acts. That wasn't an
22 enterprise.
23 QUESTION; Suppose you had a large partnership
24 with offices in several states.
25 MR. SNITOWs And if the enterprise was run by
16
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 means of this, that might constitute it.
2 QUESTION; Can you fairly say an enterprise is
3 being run when the only acts are two mailings, that run
4 a national partnership?
5 MR. SNITOW: Then I don’t know that it would
6 be operate! by a pattern of racketeering, through,
7 operated through a pattern of racketeering. I don’t
8 know that that would come under it.
9 QUESTION; You don’t think it would?
10 MR. SNITOW; No, I don’t think so, because I
11 think the jury would have to be charged or a court would
12 have to be charged, was it -- did it operate through a
13 pattern of racketeering?
14 QUESTION; What is the difference, really,
15 between your case and the hypothetical we've been
16 discussing?
17 NR. SNITOW; Because in this case, as far as
18 discovery has been permitted, Imrex and the Armons
19 operated that entity through a pattern of racketeering.
20 They operated in terms of the joint venture through a
21 pattern of racketeering.
22 QUESTION; All he did was cheat his partner.
23 Ha violated the joint venture agreement.
24 SR. SNITOW; So, he violated it, but not in
25 the strict — not in a contract fashion. He violated it
17
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 by going one step further by committing tortious acts of
2 ma^l fraud. He committed mail fraud. They knowingly
3 take documents, knowingly send them to my client,
4 wherein they would sit down and they would take the
5 figures that were relevant, change them after they had
6 gotten them from their enterprise, and take large sums
7 of money back.
8 QUESTION* Suppose both parties to this
9 agreement had lived in the same city, there*d been no
10 use of the mails, the reports were delivered by hand.
11 Would that be a different case?
12 MB. SNITOW* Yes, because while there might be
13 an interstate commerce question, but it would not come
14 — it may not come under the predicate acts, because
15 larceny is not a predicate act.
16 QUESTION* It wouldn't be one of the defined
17 predicate acts?
18 MB. SNITOW* That's correct, that's correct.
19 QUESTION* So the big difference is that one
20 of the parties here lived in Belgium and the other in
21 New York. It could have been New Jersey as well as
22 Belgium.
23 ME. SNITOW* Yes, it could have. But I think
24 that the real difference is, and what's really
25 symptomatic, is that the court without — the Congress,
18
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 without baing able to define, because I don't think
2 there is one way of defining what is the texture of this
3 type of activity, recognized the nature of the
4 sophisticated, organized, and systematic corruption.
5 QUESTION* Tes, but I think you stated that if
6 the cheating had occurred in the same city with no use
7 of the mails, the same degree of cheating, that you
8 could not come within the language bf RICO. You agree
9 to that, don't you?
10 MR. SNITOWi I agree with that because larceny
11 is not a predicate act.
V 12 QUESTION* Yes, and does it make any sense i 13 really as to whether or not you mail a letter across the
14 stata line because somebody lives out here in Bethesda,
15 in Maryland, rather than if you commit the same act
16 within the city of Washington?
17 MR. SNITOWs Your Honor, I believe it does
18 only in terms cf understanding the scheme of the statute
19 and what a legislature is bound to. It can only deal
20 with certain finite choices in terms of framing a
21 statuta. And recognizing that, it had to talk in terms
22 of a traditional grounds.
23 I don't know that — I think that what the
24 court was trying, the Congress was trying to say is that
25 the Congress was trying to say that when this type cf
19
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 activity occurs, that we have a right to come into the
2 court and ask for the relief . A.nd the way they tried to
3 deal with the hallmarks of sophistication are talking
4 about mail fraud as a basis, as opposed to what might be
5 just two larcenies within the State.
6 I don’t think two larcenies in terms of
7 somebody grabbing a pocketbook would necessarily be what
8 is aimed at in this statute. I think that the statutory
9 language, if looked at and if we divorce ourselves from
10 the concepts that we bring in that racketeering has to
11 be what has classically been promoted by the media, I
12 think that what is being driven at by Congress is
13 systematic and wrongdoing criminal activity. I think
14 that’s —
15 QUESTIONS May I ask one question about the
16 predicate acts. The list is so long it’s a little hard
17 to keep it all in line, but are all of them felonies?
18 MR. SNITOWs I don’t believe so.
19 QUESTION: Which ones are not?
20 MR. SNITOWs I don't know that the bankruptcy
21 — I don’t know that the bankruptcy fraud necessarily
22 has to be, but I am not sure. Your Honor. I don't know
23 that they are all felonies.
24 C P a u se .)
25 MR. SNITOWs Commercial bribery, if that was a
20
ALDERSON REPORTING COMPANY, INC.
20 f ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 state crime. In certain states commercial bribery would
2 not come within the ambit; it's not a felony.
3 QUESTIONS To the extent that federal offenses
4 would be predicate acts —
5 HR. SNITOWi I believe they --
6 QUESTION: — is it true that all the federal
7 predicate offenses are felonies?
8 MR. SNITOWs I believe they are, yes. Yes, I
9 believe they are.
10 I'd like to say that looking at the statute
11 there is or does not appear to be any support for the
12 concept of the predicate felony. Nowhere in the statute
13 is there any indication as it applies to the civil
14 provisions that a conviction is required.
15 I think the problems with creating the
16 requirement of a conviction, which we've listed briefly,
17 were not really considered by the Second Circuit when
18 they talked about this. In many cases a local
19 legislature -- a defendant who may be guilty of mail
20 fraud of the most egregious type, and who may fit within
21 all the other criteria, may be prosecuted by the state.
22 That prosecution would preclude, under the Second
23 Circuit's decision, a RICO violation, a RICO civil suit
24 action.
25 I would like to reserve my remaining time for
21
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 rebuttal. Thank you.
2 CHIEF JUSTICE BURGER; Mr Eisenberg.
3 ORAL ARGUMENT CF
4 RICHARD JORDAN EISENBERG, ESQ.,
5 ON BEHALF OF RESPONDENTS
6 MR. EISENBERG; Mr. Chief Justice, may it
7 please the Court;
8 The question here, the principal question
9 here, of course, is whether or not a civil RICC
10 plaintiff must plead and prove a so-called RICO-type
11 injury or racketeering enterprise injury to prevail
12 under Section 1964(c) of the Act.
13 Petitioner suggests that the imposition or the
14 adoption of the RICO standing requirement is merely an
15 abstraction in addition imposed on the law by various of
16 the iistrict courts simply because the courts don't like
17 the notion of the increased burden on them which would
18 occur as a result of a broad reading of the statute.
19 We say, no, contrary to Petitioner's
20 arguments, the standing requirement is essential to the
21 proper and just application of the law, and this Court
22 does have before it today what we think is a proper
23 basic definition of the term, the concept racketeering
24 enterprise injury.
25 Why do we say, first, that the racketeering
22
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 enterprise injury requirement is essential to the proper
2 enforcement of the statute as expressed by the will of
3 Congress? There are at least three significant reasons
4 why this is so.
5 First, the racketeering enterprise injury
6 staaiing requirement comports with the legislative
7 history and legislative intent as far as it can be
8 divined, an! it comports further with the stated overall
9 purposes of the entire RICO law, which is the giving to
10 the Government enhanced weapons in the fight against
11 organized crime.
12 Second, we say that the imposition of 'the
13 racketeering enterprise injury standing requirement is
14 entirely consistent with the fact that the genesis of
15 civil RICO was in the concept borrowed from the
16 antitrust laws, that concept being an antitrust standing
17 requirement.
18 Third and finally, we say that the direct
19 result of a failure to adopt the racketeering enterprise
20 injury would in fact result in the use of the law for
21 purposes entirely beyond the consideration of the
22 Congress.
23 First, if I may return to the issue of why the
24 racketeering enterprise injury requirement is consistent
25 with the stated purpose and legislative history of the
23
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 statute. It is clear from the legislative history that
2 the purpose of RICO as a whole, including the civil RICO
3 statute, was to enhance the ability of Government to
4 fight organized crime.
5 RICO as a whole, and specifically civil RICO,
6 was never intended, and there's no basis to claim this,
7 for the Congress to create a new federal fraud statute.
8 Nor was it intended as a recidivist statute, to give an
9 individual prosecutor additional sanctions against a
10 defendant who had committed two predicate acts or two
11 criminal acts, two felonies, instead of simply one.
12 The stated purpose of the Congress in enacting
13 RICO — and this has been discussed by this Court in
14 Turkatte — was to combat the infiltration of organized
15 crime into legitimate areas of the national economy and
16 to combat criminally organized entities which prey upon
17 the national economy.
18 QUESTION You say there's no basis for
19 arguing to the contrary. What about the language of the
20 statute? You're going to get to that pretty soon.
21 MR. EISENBERG; Yes, indeed, Your Honor, we
22 will. We suggest that focusing on the language of the
23 statute brings us to the point I will return to in a
24 moment, which is that if one analogizes the language
25 clearly to its antecedents in antitrust law, that the
24
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 racketeering enterprise injury comes to the fore once
2 again.
3 If I may return for just a minute to the
4 purposes and legislative background, RICO is clearly
5 principally a criminal statute. The question was asked,
6 I believe, of Mr. Snitow as to whether or not there is
7 extensive legislative history on the consideration of
8 the civil cause of action.
9 The answer, as eloquently described by Judge
10 Oaks, is absolutely not. The civil RICO cause of
11 action, 1954(c), was added to the statute very, very
12 late in the legislative consideration by the Congress
13 and without extensive debate. There had been prior
14 considerations of a civil cause of action, but there was
15 no discussion in the legislative record which would give
16 rise to the notion that the civil action can be
17 considered so broad.
18 QUESTION* Well, Mr. Eisenberg, in Turkette
19 and in Russellc the Court applied the plain language of
20 the statute, and it's a little hard to understand how,
21 looking at the plain language of the statute, a person
22 who is injured by a predicate offense that is a
23 component of a pattern of racketeering activity as
24 defined in the statute isn’t injured by reason of a
25 violation of 1 962. 25
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 NR. FISENBERG: Your Honor, there is
2 absolutely nothing inconsistent about construing the
3 criminal aspects of RICO broadly, but at the same time
4 imposing proper standing requirements on the civil cause
5 of action. We say this because the purposes and
6 background of the statute were different.
7 QUESTION: Yes, but taking your view, if a
8 pattern of the statutorily specified predicate acts were
9 committed by a known member of the Mafia — let's make
10 it the worst case -- in your view there couldn't be a
11 recovery without this separate kind of injury that the
12 statute doesn't even talk about.
13 NR. EISENBERG: With all due respect. Your
14 Honor, that is not Respondents' position. There must be
15 allegations and proof of a pattern of racketeering
16 activity, and that is the requirement in 1964(c), in
17 which it describes the civil causa of action as being by
18 virtue of a violation of the pattern of racketeering
19 activity.
20 And we say that in the appropriate factual
21 pattern, absolutely, there can be such a recovery. We
22 don't disagree, and we don't suggest that the broad view
23 of the statute in the criminal aspect is inconsistent
24 with our notion that there must be a standing
25 requirement on the civil cause of artion.
26
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 QUESTION: Yes, but if tha only damage that
2 was caused in Justice O’Connor’s example was from the
3 two criminal predicate acts, I taka it there would be no
4 recovery?
5 MR. EISENBERG* We say no, not under the civil
6 cause of action. The civil cause of action posits
7 something more than the mere recitation of predicate
8 acts, and we attempt to define that in our brief.
9 QUESTION* Well, but your problem — I think
10 you do have a problem with the language of the statute.
11 MR. EISENBERG* There is no question that,
12 viewing the language of the statute alone and applying
13 mechanically the language of the statute, the single
14 commission of the two predicate acta can be claimed to
15 be the pattern of racketeering activity and there is a
16 civil RICO suit.
17 We suggest that the legislative history and
18 the effects which such a mechanistic reading of civil
19 RICO would result in simply mitigate against that use.
20 QUESTION* You do think the statute is
21 readable to permit recovery in this case?
22 MR. EISENBERG* Readable to permit recovery in
23 this case under civil -- as a 1964 claim? No, we do
24 not.
25 QUESTION: But you think it shouldn't be read 27
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 that way because of the legislative history and the
2 purpose of the statute?
3 MS. EISENBERC: Indeed, correct.
4 The principal reason why the enterprise injury
5 recovery must be clear from the statute is the analogous
6 construction of the statute taken from the wording of
7 the Clayton Act. Section 1964(c), as we have said,
8 requires violation by reason of a violation of 1962.
9 That is, that "by reason of a violation of” language is
10 entirely consistent with antitrust doctrine.
11 This Court in the Brunswick Corporation versus
12 Puerbo Bowl-O-Mat case discussed by Judge Oaks’ in the
13 opinion below made the point that there is an antitrust
14 standing requirement, that a distinction can and must be
15 made between those injuries intended to come within the
16 rigors of antitrust law and those which are beyond it.
17 We say the analogy is clear here. There was
18 not intended tc be wholesale importation of antitrust
19 doctrine into civil BICO, but the concept that a
20 standing requirement separates the intended uses of the
21 statute from those not intended is clearly usable. It's
22 right there in the structure of the statute. We say
23 it’s applicable.
24 QUESTION* Do you think that — do you agree
25 that there was an enterprise within the meaning of the
28
ALOERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 statute in this case?
2 SR. EISENBERG: Yes, one of at least two
3 alternatives. I think, the enterprise definition is the
4 easiest, because in practical terms, as has been noted,
5 Merrill Lynch has been considered an enterprise, E.F.
6 Hutton, Lloyd’s of London.
7 QUESTION: So you don’t attack the notion that
8 — you don’t deny there was an enterprise?
9 MR. EISENBERG: No, there are several.
10 QUESTION: All right.
11 MR. EISENBERG: There’s the joint venture,
12 there’s the corporate Respondent.
13 Me are focusing on the requirement of an
14 enterprise injury as being part and parcel of the
15 pattern of racketeering requirement.
16 QUESTION: On your standing point, Mr.
17 Eisenberg, the requirement in Brunswick that there be
18 antitrust injury, injury to competition, may be a little
19 bit gauzey, but it seems to me that when you say there
20 has to be a racketeering type injury it's even gauzier ,
21 because there doesn’t seem to be the body of law that
22 tells you what it is the way there’s a body of antitrust
23 law.
24 MR. EISENBERG: With all due respect. Your
25 Honor, the reason why there is not the appropriate body
29
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 of law is I believe this is the first civil PICO case to
2 come before this Court. We do suggest, however, that
3 there is a clearly usable basic definition of the
4 racketeering enterprise injury as it relates to Section
5 1964(c), and we have described it in our brief.
6 If I may respond in a bit more detail, the
7 essence of it is as follows. Section 1962(c) separates
8 two basic patterns of conduct, conduct characteristic of
9 organized crime — and that is not the same as conduct
10 connected to organized crime associations; 1*11 return
11 to that in a moment.
12 The two basic types of conduct are: the
13 acguisition of or infiltration into a previously
14 legitimate business by criminal elements; and secondly,
15 the operation of an enterprise through a pattern of
16 racketeering activities.
17 We say that there are appropriate criteria for
18 determining what is conduct characteristic of organized
19 crime, and there are two basic criteria in this regard:
20 First, is the pattern of racketeering activity alleged
21 to include a hierarchy or internal discipline
22 characteristic of organized crime? Is there an
23 allegation that amongst those who are supposedly
24 criminal actors — and of course, we remember that we
25 must go back to the predicate acts which are themselves \ 30
ALDERSON REPOkHNG COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 crimes — amongst the criminal actors, was there an
2 internal discipline, coercion amongst them,
3 characteristic of an organized crime syndicate? We
4 suggest in this case there is none, and in the
5 over»helming majority of so-called garden variety PICO
6 cases there is no such allegation.
7 The second basic criteria which we say is at
8 the heart of the racketeering enterprise injury
9 requirement is the issue of corruption itself, and the
10 point was made, I believe by yourself. Your Honor, just
11 a few moments ago that the very title of the statute is
12 Racketeering Influenced Corrupt Organizations.
13 We say the standing requirement makes a
14 separation between ordinary commercial disputes -- and I
15 do not mean to trivialize them as a class cr to
16 trivialize the dispute here. I am, however, saying that
17 there's a distinction between ordinary commercial
18 disputes and the racketeering influenced corrupt
19 organizations which were the target both of the criminal
20 and civil aspects of this law.
21 A corrupt organization would have as part of
22 the allegations the corruptions of the institutions
23 which the Congress sought to protect. That would be
24 labor institutions, political institutions, the public
25 treasury, or civil or regulatory process. We say that's
31
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 at the heart of it.
2 If the alleged predicate acts are alleged to
3 have been part and parcel of such a corrupting activity,
4 then civil RICO is made out if in addition there are
5 claims of an internal hierarchy or internal discipline
6 amongst the criminal actors. Absent that, we have
7 nothing more than a recitation of predicate acts
8 bootstrapped into civil RICO and treble damages.
9 QUESTIONS The statute speaks of corrupt
10 organizations —
11 HR. EISEMBERG s Yes, it does.
12 QUESTIONS — in the title, not "corrupting
13 organizations.”
14 MR. EISENBERGs Well, forgive me. I don't
15 mean to mislead. If the allegations are made that the
16 pattern was conducted with the intent of corrupting,
17 then we say the enterprise, if such an enterprise is
18 properly pleaded, is a corrupt organization and one
19 which would fall within the scope of civil RICO.
20 We simply say, absent the allegations of that
21 sort — and there are absolutely none in the case at
22 bar --
23 QUESTIONS Hay I ask —
24 MR. EISENBERGs — there is no pattern
25 properly pleaded.
32
AIDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 QUESTION* — do you defend Judge Oaks*
2 requirement of a prior conviction?
3 83. EISENBEEGi I’ll speak on that briefly.
4 It has been noted just a few moments ago that neither cf
5 the parties briefed or argued the prior criminal
6 conviction matter in the district court or before the
7 Second Circuit.
8 QUESTION; Or in this Court so far.
9 HR. EISENBERGs Or in this Court so far.
10 (Laughter.)
11 MR. EISENBERGs Your Honor/ we have certainly
12 attempted to brief it. We have not yet spoken about
13 it.
14 On reflection, the prior conviction
15 requirement is we believe consistent with the policies
16 of the Act, and its purpose is to avoid extreme
17 difficulties with the operation of the law. First and
18 foremost, I believe Judge Oaks made it clear that the
19 perspective of the Second Circuit was that the civil
20 remedy is incidental to and supplemental to criminal
21 prosecutions.
22 RICO was originally a new weapon to fight
23 organized crime, and at the tail end there was added the
24 rights of private plaintiffs under certain limited
25 circumstances to proceed against those already proved to
33
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 have committed criminal acts.
2 The Petitioner does not respond to two vital
3 questions. We say first, RICO is different from all
4 other federal statutes that have been brought to our
5 attention in that proof of a RICO civil judgment must
6 part and parcel include proof of predicate crimes.
7 Criminal acts must have to be proved.
8 This Court in Addington versus Texas and
9 Herman £ KacClean versus Huddleston considered the issue
10 of what are the relative burdens between the parties in
11 determining whether or not a preponderance standard or a
12 proof beyond reasonable doubt standard should apply in
13 any given action.
14 We say where you are putting on trial the
15 defendant in a civil RICO case for crimes, criminal
16 acts, the plaintiff cannot proceed to judgment unless he
17 in fact proves crimes. He cannot, under the balancing
18 of interests test, prove crimes unless he proves them
19 beyond a reasonable doubt.
20 QUESTION: That’s not his position. His
21 position is he can’t even file his complaint until the
22 Government has proved a crime, as I understand.
23 KR. EISENBERG: Indeed, either for a predicate
24 act or for criminal RICO.
25 Now, absent this schema we raise two points
34
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 which have not been addressed. What of the civil
2 plaintiff who goes to judgment and obtains a judgment?
3 Can a local prosecuting authority or a United States
4 attorney, using the doctrine of affirmative collateral
5 estoppel, automatically obtain an indictment? Can he
6 automatically obtain a conviction, there having been
7 proof beyond a reasonable doubt of criminal acts? Can
8 he impose the sanctions?
9 QUESTION* Well, we don’t reach the guestion
10 of standard of proof in this case. As I understand it,
11 that’s not before us.
12 MR. EISENBERG: Indeed, Your Honor.
13 QUESTION* May I ask, since you give that
14 example and there’s the talk about the absence of a body
15 of law, how many of these cases have actually been
16 tried?
17 MR. EISENBERG* Only a very limited number.
18 QUESTION* These are all on the pleadings,
19 aren’t they?
20 MR. EISENBERG* Excuse me?
21 QUESTION* All the law that we have before us
22 is basically pleadina law, isn’t it?
23 MR. EISENBERG* Almost all the law. There is
24 a very egregious case now pending before the Fifth
25 Circuit which we cite in our brief, where a fraud claim
35
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 and RICO claim went to judgment. The common law fraud
2 claim was dismissed by the district court and the
3 district court, even dismissing a common law fraud
4 claim, permitted damages in the amount of $2 million
5 under civil RICO. That case is pending before the Fifth
6 Circuit.
7 There was, I am aware of, a judgment in the
8 District of New Jersey, which was reversed on grounds
9 not directly on point in the Third Circuit a short time
10 ago. But very, very few of these cases have gone to
11 trial .
12 We cite the example of one in the Fifth
13 Circuit, Armco versus SLT Warehouse, which has gone to
14 trial and resulted in the most extreme egregious
15 results, as I say, the dismissal of a common law fraud
16 claim but the finding that RICO was properly made out
17 and treble damages under the statute.
18 Your Honor indicated that the burden issue is
19 not before this Court. I respectfully submit that the
20 burden of proof issue is the flip side of whether or net
21 to affirm the Second Circuit on the prior conviction
22 issue.
23 This Court could conceivably say that a prior
24 conviction is not necessary, but that a civil RICO
25 plaintiff must move in the context of a civil case and
36
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 prove his rase, earh element of it as it relates to the
2 predicate arts, beyond a reasonable doubt. That raises
3 the same issues. It has other practical effects
4 different from the prior conviction requirement, but the
5 same process would at least protect the rights of civil
6 SICO defendants.
7 I want to return just very briefly to the
8 argument made that the holding of the Second Circuit
9 reimposes through the back, door, so to speak, the
10 organized crime connection requirement. We say it does
11 not.
12 The civil RICO plaintiff does not have to
13 plead a connection between the actors, the defendants in
14 his or her case, and identifiable organized crime
15 communities. He simply has to plead that the pattern of
16 racketeering is comprised of the events which are
17 characteristic of the conduct of organized criminal
18 syndicates -- very different.
19 On the one hand, the law might run afoul of
20 the prohibition against status offenses. We say no.
21 RICO punishes conduct, no matter who commits it. But
22 that is not the same as saying the racketeering
23 enterprise injury requirement re-imposes a need to show
24 that the civil RICO defendant is somehow a member of
25 organized crime as it is classically known. That is not
37
ALDERSON REPORTING COMPANY, INC. Ifi * 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 our position.
2 QUESTION; Well, I suppose one of the problems
3 is that organized crime is known to invest proceeds in
4 so-called legitimate businesses and launder money in
5 that fashion. So it's a little hard to read in the kind
6 of thing you're suggesting.
7 MR. EISENBERG; With all due respect. Your
8 Honor, that is not the portion of the statute that is
9 being considered at this time. Section 1962(b)
10 discusses the acquisition of legitimate business through
11 funds acquired through criminal acts. Clasically,
12 organized crime commits act, organizing prostitution,
13 gambling —
14 QUESTION; Well, yes.
15 MR. EISENBERG; — and acguires business —
16 QUESTION; Sure, but Congress has made a
17 choice, it seems to me, in selecting the offenses that
18 it wants to treat as predicate acts and in reaching out •
19 rather broadly for the purpose of deterring this kind of
20 legitimate business activity by potentially organized
21 crime figures.
22 MR. EISENBERG; We have no quarrel with that
23 basic notion. The ironic thing that I would bring to
24 the Court's attention is that the overwhelming majority
25 of these cases are brought under three predicate acts
38
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 alone: mail or wire fraud or alleged securities
2 violations.
3 An acceptance of a mechanistic reading of RICO
4 wouli wipe out overnight much of the case law of
5 securities regulation, imposed in part by statute and in
6 part by the decisions of this Court, and it would also
7 completely eliminate much of the criteria for punitive
8 damages in the state courts in commercial matters.
9 QUESTION! Why would it wipe out the
10 securities law decisions?
11 NR. EISENBERGi Over a period of many, many
12 years, Your Honor, just as one example which we state in
13 our brief, the 10(b)(5) action, the implied right of
14 action under Section 10(b) of the 1934 Act has required
15 a purchaser-seller requirement and has imposed an actual
16 damages recovery.
17 Both those issues could be sidestepped by
18 properly pleading a RICO cause of action which simply
19 says the same facts which would ordinarily be fraud in
20 the sale of securities are now mail fraud. A prospectus
21 was sent over state lines which was improperly
22 fraudulent.
23 Coming through the back, door, the actual
24 damages recovery standard under a Section 10(b) claim is
25 automatically converted into treble damages plus 39
ALDERSON REPORTING COMPANY, INC. 20 f ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 attorney’s fees. The practitioner ioesn’t have to look
2 at 10(b) any mere. He or she simply describes the RICC
3 pattern, he says there’s a violation of the securities
4 lavs, and he’s into a civil RICO claim.
5 There's a similar displacement of the state
6 lavs of punitive damages in commercial cases. Nev York,
7 just by vay of example, is one of the states vhere
8 there's a very high burden of proof for punitive damages
9 in a contract case. As has been indicated in the
10 discussion vith Hr. Snitov, yes, this is a breach of
11 contract case, breach of fiduciary duty case betveen
12 co-venturers, et cetera, et cetera, et cetera. At the
13 end, it’s a civil RICO case.
14 There is no question that the burden of
15 obtaining — the burden of proof for the Plaintiff in
16 New York courts, a federal court applying Nev York lav,
17 to obtain punitive damages is very high. That analysis
18 is unnecessary if the Plaintiff can proceed under civil
19 RICO. There is-in effect punitive damages
20 automatically.
21 QUESTION; Hay I ask you -- a comment you made
22 prompted this thought. Is it correct that if Congress
23 had not included securities fraud, securities violations
24 and mail fraud as predicate acts, most of the horrendous
25 problems vith the statute that are talked about in the
40
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 cases would have been eliminated or avoided?
2 MR. EISEHBERG: The practical results would
3 have been extremely different. I suggest that the
4 egregious —
5 QUESTION* Because all the other acts would
6 not --
7 MR. EISENBERGs — cases would not —
8 QUESTION* — be able to fit your definition
9 of whatever it is, racketeering, corruption, and so
10 forth?
11 MR. EISENBERG* We are not -- we are not — we
12 are not claiming a per se rule. We are not s'aying that
13 mail fraud, wire fraud, and securities violations were
14 erroneously put in the statute, or that they should be
15 treated differently. What we*re saying is they have tc
16 be put into context because they're so close to the run
17 of commercial disputes of all sorts.
18 QUESTION* No, but my thought is that had they
19 not been included this really would be quite a different
20 animal.
21 MR. EISENBERG* That's quite so, Your Honor,
22 because the remaining predicate offenses go directly to
23 what is classically the problems of organized crime:
24 force, coersion, and corruption; the bribery statute,
25 the labor racketeering statute, transportation of stolen
41
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 goods, narcotics, prostitution, organized gambling, and
2 offenses of coersion and force, kidnapping,
3 racke teering .
4 Those are clearly the sum and substance of
5 what the Congress was concerned about. By attempting
6 to, as Haroco says, I believe, cast the net wider, it
7 included in its wisdom, the Congress, additional
8 predicate acts which conceivably are the predicate acts
9 of racketeering, but ironically have been utilized to
10 bring this law to bear against clearly legitimate
11 enterprises and enterprises which, although they are
12 isolated events, even if criminal conduct, are clearly
13 not racketeering influenced corrupt organizations,
14 clearly not within the intended scope of the law.
15 QUESTION* I think, however, that your
16 posit ion it seem s to me would also raise some problems
17 for the civil plaintiff even if you excise the
18 securities issue from the statute. Ev^n if you had'
19 these garden variety crimes that you just spoke of, you
20 would still have to prove separately a damage from a
21 pattern of racketeering activity wholly apart from the
22 damage caused by those crimes themselves.
23 MR. EISENBER3* There ought to be no
24 difference in the analysis whether the predicate acts
25 are murder and kidnapping or two alleged acts of wire
42
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 fraud or mail fraud, as in this case or in Hiroco. The
2 analysis is the same.
3 QUESTIONS So even if the statute didn't reach
4 as far as it dees, as Justice Stevens suggested, you
5 would be here arguing the same thing.
6 MB. EISENBERGs The standing requirement is
7 still vital. It’s part and parcel of the legislative
8 intent, the borrowing from antitrust concept, and the
9 intended scope of the law to impose additional sanctions
\ 10 against actual corrupt organizations. The analysis is
11 no different.
12 We're simply saying there must be recognition
13 that in the practical sense in litigation mail and wire
14 fraud and securities violations are so close to the run
15 of all sorts of commercial disputes that the character
16 of the predicate acts must be examined. If they don't
17 — if they aren't tied with — I'm sorry, Your Honor.
18 If they aren’t tied with — forgive me — with
19 corruption, they're not racketeering. Forgive me. Your
20 Honor. You had a question.
21 QUESTIONi I did. Under your position, if a
22 Mafia figure committed two predicate acts of arson and
23 burned down the property of the complaining plaintiff,
24 you would say no recovery under the civil section
25 because there's no separate special RICO injury --
43
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 MR. FISENBERG; That is correct.
2 2UESTI0N; — unless the insurance were lost
3 or something of that kind. And you know, Congress
4 clearly intended to permit that. So while Congress
5 tried to create and cast a broad net, the net you would
6 cast would countermand some of what Congress tried to
7 reach .
8 MR. FISENBERG; With all due respect, no, Your
9 Honor. It's net enough simply to say that a civil RICC
10 plaintiff may plead two predicate acts and an allegation
11 that a person is a member of the Mafia. Almost by
12 definition structurally, if someone can claim a person
13 is a member of the Mafia he can claim that the target
14 person is involved in a syndicate which has an internal
15 criminal hierarchy and also that the predicate acts were
16 for the purpose of corrupting either a business
17 organization or in furtherance of a criminal syndicate's
18 acts.
19 So we say it is not a status offense. It is
20 hot to say predicate acts plus the status of the
21 criminal actor. But the conduct of the predicate acts
22 themselves, the nature of those acts and whether or not
23 they are tied in with a corrupting action and/or a
24 criminal organization.
25 I just want to conclude by re-emphasizing that
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 the opinion below has been sorely criticize! as an
2 aggressive jurisprudence. We submit that it is not. It
3 does not go beyond the boundaries of the power of the
4 courts, that rather, it is nothing more and nothing less
5 than the proper historical use of the court's power to
6 properly interpret the legislative intent and to
7 describe the law in such a fashion so that it can be
8 appropriately and justly administered.
9 Thank you, Your Honors.
10 CHIEF JUSTICE BURGER* Do you have anything
11 further, Mr. Snitow?
12 REBUTTAL ARGUMENT OF
13 FRANKLIN H. SNITOW, ESQ.,
14 ON BEHALF OF PETITIONER
15 MR. SNITOW* Yes, Your Hoaor.
16 Your Honor, I think that the principles of law
17 are that if the statute speaks plainly it's the statute
18 that's controlling. And although Mr. Eisenberg was
19 asked, as Mr. Justice Marshall asked me, never did we
20 hear exactly dealing with the exact words of the
21 statute.
22 The statute doesn't say what has been read
23 into it by Mr. Eisenberg and Judge Oaks. With regard to
24 the prior conviction requirement that it was suggested
25 that we hadn't mentioned, I'd like to suggest to the
45
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 Court that the prior conviction is in no way found in
2 the statute. When Congress wanted to use the word
3 "conviction," as it did in the forfeiture portions of
4 the statute, it used those words. There is nothing to
5 indicate a conviction requirement.
6 Moreover, as Judge Cardalone suggested, now
7 wth regard to the enterprise injury or the mobster type
8 injury, that's a euphemism again for racketeers, for
9 status.
10 The question of the antitrust competitive
11 injury concept has been absolutely put into disrepute by
12 every circuit, I believe, other than the Second. The
13 concept of antitrust was exactly addressed in this case
14 in the legislative history.
15 The American Bar Association submitted a
16 report, and that report I believe is quoted at pages 36
17 to 37 of our brief, and the American Bar Association
18 said that the antitrust statute should not be — should
19 not appear. This is not an antitrust statute. The aims
20 and objectives are very, very different.
21 A plain reading of this statute without
22 judicial expansion requires, mandates that the prior
23 conviction requirement be eradicated, and the status
24 question, the standing question, the question of special
25 injury, which is not found in the statute, also be
46
ALDiRSON REPORTING COMPANY, INC. 20 f ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 1 eradica ted
2 I think anything else is to engraft
3 unnecessary roadblocks and I suggest to the Court does
4 not comport with the aims and objectives of the
5 statute.
6 Thank you, lour Honor.
7 CHIEF JUSTICE BURGERs Thank you, gentlemen.
8 The case is submitted.
9 (Whereupon, at 11«54 a.m., argument in the
10 above-entitled case was submitted.)
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25 47
ALDERSON REPORTING COMPANY, INC. 20 F ST., N.W., WASHINGTON, D.C. 20001 (202) 628-9300 CERTIFICATION-
erson Reporting Company/ Inc., hereby certifies that the.' ached pages represents an accurate transcription of ictronic sound recording- of the oral argument before the >reme Court of The United States in the Matter oft
#84-648 - SEMIMA, Sl'P.R.L., Petitioner V. IMREX COMPANY. INC.. RT
£ that these attached pages constitutes the original anscript of the proceedings for the records of the court. B T
(REPORTER) 0Z'.£6 tfcHdY S8.
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