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A Guide to Civil RICO Litigation in Federal Courts

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A Guide to Civil RICO Litigation in Federal Courts Practice Series RICO A Guide to Civil RICO Litigation in Federal Courts JOHN J. HAMILL BRIAN H. ROWE KAIJA K. HUPILA EMILY BURKE BUCKLEY JENNER & BLOCK LLP OFFICES 353 North Clark Street Chicago, Illinois 60654-3456 Firm: 312 222-9350 Fax: 312 527-0484 919 Third Avenue New York, New York 10022-3908 Firm: 212 891-1600 Fax: 212 891-1699 633 West Fifth Street, Suite 3600 Los Angeles, California 90071 Firm: 213 239-5100 Fax: 213 239-5199 1099 New York Avenue, NW, Suite 900 Washington, DC 20001-900 Firm: 202 639-6000 Fax: 202 639-6066 WEBSITE: www.jenner.com © 201 Jenner & Block LLP. This publication is not intended to provide legal advice but to provide general information on legal matters. Transmission is not intended to create and receipt does not establish an attorney-client relationship. Readers should seek specific legal advice before taking any action with respect to matters mentioned in this publication. The attorney responsible for this publication is . ATTORNEY ADVERTISING A Guide to Civil RICO Litigation in Federal Courts John J. Hamill Brian H. Rowe Kaija K. Hupila Emily Burke Buckley Special thanks to former partner R. Douglas Rees TABLE OF CONTENTS I. INTRODUCTION..............................................................................................................1 § 1 Scope Note ...............................................................................................................1 II. ELEMENTS COMMON TO ALL CIVIL RICO ACTIONS .......................................4 § 2 Overview ..................................................................................................................4 § 3 The Culpable “Person” ............................................................................................6 § 4 Mental State .............................................................................................................9 § 5 Racketeering Activity ............................................................................................11 § 6 Racketeering Activity—Issues Relating to Mail and Wire Fraud .........................12 § 7 Predicates Based on Securities Fraud Generally Prohibited ..................................15 § 8 Extortion as Predicate Act .....................................................................................17 § 9 National Stolen Property Act as a Predicate Act ...................................................18 § 10 Interstate or Foreign Commerce ............................................................................19 § 11 Economic Motive ...................................................................................................20 III. PATTERN OF RACKETEERING ................................................................................23 § 12 Background ............................................................................................................23 § 13 The H.J. Inc. “Pattern” Requirement—Relatedness and Continuity .....................29 § 14 The “Pattern” Requirement After H.J. Inc.—Relatedness, Closed- Ended Continuity, and Open-Ended Continuity ....................................................31 § 15 Constitutional Challenges ......................................................................................41 i § 16 Collection of Unlawful Debt ..................................................................................42 IV. SECTION 1962(c): THE RICO ENTERPRISE ...........................................................44 § 17 Overview ................................................................................................................44 § 18 Association-in-Fact Enterprise ...............................................................................45 § 19 The Person/Enterprise Distinction .........................................................................50 § 20 Intracorporate Enterprises ......................................................................................51 § 21 Vicarious Liability .................................................................................................54 § 22 Operation or Management of the Enterprise ..........................................................58 § 23 Application of the “Operation or Management” Test to Outsiders .......................62 § 24 Liability for Aiding and Abetting ..........................................................................66 § 25 The Enterprise Under §§ 1962(a), (b), and (d) ......................................................69 V. STANDING UNDER § 1962(c) .......................................................................................71 § 26 Background ............................................................................................................71 § 27 Person .....................................................................................................................72 § 28 Injury to Business or Property ...............................................................................75 § 29 Injuries to Intangible Assets ...................................................................................76 § 30 Personal Injuries.....................................................................................................79 § 31 Predominance of the Injury to Business or Property .............................................81 § 32 Causation: “By Reason Of” ...................................................................................81 § 33 The Question of Reliance .......................................................................................85 § 34 Standing for Predicate Acts ...................................................................................88 § 35 Specific Standing/Causation Issues and Applications ...........................................90 § 36 Whistle-Blowers ....................................................................................................90 § 37 “Loss Causation” and RICO Claims by Investors .................................................91 § 38 Shareholders ...........................................................................................................92 ii § 39 Competitors ............................................................................................................94 § 40 Creditors .................................................................................................................97 § 41 Limited Partners .....................................................................................................99 § 42 Bankruptcy Trustees ..............................................................................................99 § 43 Insurance Policy Holders .....................................................................................100 § 44 Utility Customers .................................................................................................100 § 45 Union Members ...................................................................................................100 § 46 Thrift Depositors ..................................................................................................101 § 47 Taxpayers and Tax Collectors .............................................................................101 § 48 Trust Beneficiaries ...............................................................................................101 § 49 HMO Enrollees ....................................................................................................102 § 50 Tobacco Litigation ...............................................................................................103 VI. SECTION 1962(a): INVESTMENT OF RACKETEERING INCOME ..................105 § 51 Investment of Racketeering Income ....................................................................105 § 52 Standing Under § 1962(a) ....................................................................................106 VII. SECTION 1962(b): ACQUISITION OF CONTROL OF ENTERPRISE ...............110 § 53 Acquisition of an “interest in or control of” an enterprise ...................................110 § 54 Standing under § 1962(b).....................................................................................111 § 55 Rationale for Standing Requirement Under § 1962(a) and (b) ............................113 VIII. SECTION 1962(d): RICO CONSPIRACY .................................................................115 § 56 Basic Elements .....................................................................................................115 § 57 Agreement Concerning the Conspiracy ...............................................................116 § 58 The Knowledge Requirement ..............................................................................118 § 59 The Need For a Violation of § 1962(a), (b), or (c) ..............................................119 § 60 Conspiracy Among Corporate Agents .................................................................120 iii § 61 Standing Under § 1962(d) ....................................................................................121 IX. STATUTE OF LIMITATIONS ....................................................................................124 § 62 Overview ..............................................................................................................124 § 63 Accrual .................................................................................................................124 § 64 Accrual Under The Injury Discovery Rule
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