Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-07021/USCOURTS-caDC-00-07021-0/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 

---

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 28, 2000 Decided January 5, 2001

No. 00-7021

Western Associates Limited Partnership, individually and on

behalf of Avenue Associates Limited Partnership,

Appellant

v.

Market Square Associates, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 97cv02452)

Barry Wm. Levine argued the cause for appellant. With

him on the briefs was Richard J. Conway.

Paul B. Gaffney argued the cause for appellees. With him

on the brief were Paul Martin Wolff, Joseph B. Tompkins,

Jr., and Christine Liverzani Prame. James D. Miller, Michael R. Smith and Peter M. Todaro entered appearances.

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 1 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Before: Henderson, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: In this appeal the court again

addresses the continuity prong of the "pattern of racketeering activity" requirement of the Racketeer Influenced and

Corrupt Organizations Act ("RICO"), 18 U.S.C. s 1961, et

seq. Western Associates Limited Partnership ("Western")

sued various individuals and investors associated with Market

Square Associates (collectively, "Market"), its partner in the

development of a real estate project known as Market

Square. Western alleged violations under RICO and District

of Columbia law based on an accounting dispute in the

partnership. The district court, applying the multi-factor

analysis of Edmondson & Gallagher v. Alban Towers Tenants

Association, 48 F.3d 1260 (D.C. Cir. 1995), dismissed the

complaint pursuant to Fed. R. Civ. P. 12(b)(6) because Western failed to allege the requisite pattern of racketeering

activity.1 Western contends that in finding the "continuity"

element lacking, the district court erred by failing to focus on

the length of the time period during which Market's predicate

acts occurred, and misread Edmondson. We disagree, and

accordingly we affirm.

I.

Market Square is a mixed-use property in downtown Washington, D.C. that consists of office and retail space and

residential condominium units. In 1985, Western, a District

of Columbia limited partnership, formed Avenue Associates

Limited Partnership ("Avenue Associates") to "develop, own,

manage, and ultimately dispose of the Market Square Project." In 1987, Western invited Market Square Associates, a

Washington, D.C. general partnership, to join Avenue Associates. Upon completion of the construction of the project,

Western held a 30 percent limited partnership interest, and

__________

1 After dismissing the RICO claims, the district court dismissed

the remaining claims for lack of subject matter jurisdiction. See 28

U.S.C. s 1367(c)(3).

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 2 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Market Square Associates owned a 67.5 percent limited partnership interest and a 2.5 percent general partnership interest.

In October 1997, Western filed suit in the United States

District Court for the District of Columbia, alleging that

beginning in 1988 and continuing for more than eight years

thereafter, Market repeatedly violated partnership agreements, transmitted fraudulent accounting statements, and

stole the value of Western's partnership interest. At the

heart of the alleged fraud are alleged misrepresentations of

expected costs and profits that Market made in budget

projections for the Market Square project. According to the

complaint, after Western was deceived into approving a

fraudulent budget in 1989, Market covered up its misrepresentations by exaggerating the economic viability of the project in annual financial statements. Western alleged that

Market also violated the terms of the partnership agreement

regarding the priority of cash flow distribution by improperly

favoring itself over Western for cash flow disbursements, and

caused the partnership to repay loans for cost overruns that

Market alone was responsible for repaying. Western asserted that as a result of Market's violations of the RICO Act,

Western had suffered over $89 million in damages.2

The following month, in November 1997, Western filed for

an injunction to prevent Market from transferring some of its

interests in the Market Square Project. Relying on

Edmondson, the district court denied the request for an

injunction, ruling that because Western had alleged a single

scheme, a single discrete injury, and a single victim, Western

had not demonstrated the requisite "pattern of racketeering

activity" under s 1961(5) of the RICO Act, and thus, was

unlikely to succeed on the merits.

Subsequently, Western filed an amended complaint, increasing the number of schemes and victims alleged. The

__________

2 Under RICO's civil provisions, treble damages may be sought

by "any person injured in his business or property," 18 U.S.C.

s 1964(c), by one or more of four types of "prohibited activities,"

which are defined in 18 U.S.C. s 1962.

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 3 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

amended complaint alleges that Market conspired to commit

and engaged in four separate but related schemes to defraud

Avenue Associates, Western, and the general and limited

partners that make up Western. The four schemes consist

of: (1) the Revised Budget-Approval Scheme; (2) the CostShifting Scheme; (3) the Income Projection Scheme; and (4)

the Going-Concern Scheme.

The four alleged schemes are briefly summarized as follows. (1) The Revised Budget-Approval Scheme was a plot

to conceal cost overruns. According to the complaint, Market

knew as early as April 1988 that the total cost of the project

would exceed the original budget, and improperly approved

and conspired to conceal cost increases. In August 1989,

after 18 months, Market sent a revised budget to Western,

knowing that the cost projections in this budget were also

inaccurate. Western relied on the false representations in

the revised budget and approved it in December 1989. (2)

The Cost-Shifting Scheme addresses the priority of allocations and the continuing cost increases. The partnership's

budgets called for costs to be divided into "guaranteed" and

"non-guaranteed" categories, and prohibited guaranteed cost

overruns from being repaid from partnership cash flow. According to the complaint, Market circumvented these accounting restrictions by shifting guaranteed cost items into the

non-guaranteed category, used improperly authorized optional loans to cover these cost increases, and repaid these loans

out of partnership distributions. This fraudulent scheme was

concealed by annual financial statements mailed to Western

each year between 1990 and 1996. (3) The Income Projection

Scheme arises from Market's attempt to conceal the impact of

the budget overruns. According to the complaint, in 1992, in

a series of financial documents, Market falsely represented

the expected revenues from Market Square over the next 15

years, overstated the value the cost increases had added to

the project, and deceived Western regarding the partnership's debt. Due to these misrepresentations, Western refrained from suing appellees or pursuing other remedies. (4)

The Going-Concern Scheme relates to a failure to provide

honest annual accounting statements. The complaint alleges

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 4 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

that from 1994 to 1996, Market sent Western financial statements that omitted a "going-concern clause," in an effort to

conceal Avenue Associates' burdensome debt.

According to the amended complaint, Western did not

become aware that the Market Square Project's financial

health was in jeopardy until early 1997, when it received a

financial statement indicating that the partnership was having

difficulty meeting its financial obligations. This statement

also acknowledged that Market Square would not meet Market's 1992 income projections. The amended complaint alleged that the four schemes included numerous violations of

the mail and wire fraud statutes, 18 U.S.C. ss 1341 and 1343,

and that these allegedly fraudulent acts violated s 1962(c) of

the RICO Act. Western also alleged a violation of s 1962(d)

of the RICO Act, which prohibits conspiracy to violate

s 1962(c). Finally, Western alleged common law claims of

fraud, civil conspiracy to defraud, breach of fiduciary duty,

aiding and abetting a fiduciary, and breach of contract, and

requested various types of injunctive relief, including access

to the records of Avenue Associates.

The district court granted Market's motion to dismiss

under Fed. R. Civ. P. 12(b)(6), based on Western's failure to

allege a "pattern of racketeering activity," as required by

s 1961(5) of the RICO Act. Relying on similarities to

Edmondson, 48 F.3d 1260, the district court found Western's

RICO claims deficient because Western had alleged a single

fraudulent scheme, the single harm of a diminished partnership interest, and, at most, one set of victims. The district

court rejected Western's argument that because it had alleged fraudulent acts over an eight-year period of time, it had

successfully distinguished Edmondson and established a pattern of racketeering activity.

II.

On appeal, Western contends that the district court misapplied Edmondson and overlooked the importance of the eightyear time period during which the alleged fraud occurred.

Our review of the district court's order dismissing the comUSCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 5 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

plaint is de novo. The court assumes that the factual allegations in the complaint are true, but it is not bound by the

complaint's legal conclusions. See Whitacre v. Davey, 890

F.2d 1168, 1168 n.1 (D.C. Cir. 1989).

A violation of s 1962(c) of the RICO Act consists of four

elements: "(1) conduct (2) of an enterprise (3) through a

pattern (4) of racketeering activity." Pyramid Securities

Ltd. v. IB Resolution, Inc., 924 F.2d 1114, 1117 (D.C. Cir.

1991) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479,

496 (1985)). The RICO Act defines the term "pattern of

racketeering activity" as requiring the commission of at least

two predicate racketeering offenses over a ten year period.

See 18 U.S.C. s 1961(5). These predicate offenses are acts

punishable under certain state and federal criminal laws,

including mail and wire fraud. See 18 U.S.C. s 1961(1)(B).

The Supreme Court has interpreted the pattern requirement to include two additional elements: relatedness and

continuity. H.J. Inc. v. Northwestern Bell Telephone Co., 492

U.S. 229, 239 (1989). "To prove a pattern of racketeering a

plaintiff or prosecutor must show that the racketeering predicates are related, and that they amount to or pose a threat of

continued criminal activity." Id. The Court further described the relatedness element as criminal acts that share

"similar purposes, results, victims, or methods of commission,

or otherwise are interrelated by distinguishing characteristics." Id. at 240. Continuity, the most relevant prong in the

instant case, may be proved by establishing either a "closed

period of repeated conduct" or a threat of future criminal

activity. Id. at 241. Western alleged a closed period of

continuous criminal activity between 1988 and 1997.

The Supreme Court in H.J. Inc. suggested that the relatedness and continuity concepts required further development in

subsequent cases, and urged a "natural and commonsense

approach to RICO's pattern element." Id. at 237. In

Edmondson, this court provided more guidance on the nebulous issue of what constitutes a pattern of racketeering activity. Edmondson involved a real estate developer that accused

a tenants' association of illegally attempting to block the sale

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 6 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

of the building in which members of the tenants' association

lived. See Edmondson, 48 F.3d at 1263-64. The real estate

developer alleged that the tenants had "exploited [a] quiettitle action, holding the building sale hostage and thereby

attempting to force [the developer] to pay them off." Id.

Based on predicate acts such as extortion, bribery, and

perjury, the developer asserted that the association had violated RICO. The court affirmed the dismissal of the RICO

claims because "the single scheme alleged--designed to frustrate one transaction and inflicting a single, discrete injury on

a small number of victims--fail[ed] to meet RICO's requirement of a 'pattern of racketeering activity.' " Id. at 1263.

Edmondson identified six factors that a court should consider "in deciding whether a [RICO] pattern has been established." Id. at 1265. These factors are: "the number of

unlawful acts, the length of time over which the acts were

committed, the similarity of the acts, the number of victims,

the number of perpetrators, and the character of the unlawful

activity." Id. (quoting Kehr Packages, Inc. v. Fidelcor, Inc.,

926 F.2d 1406, 1411-13 (3d Cir. 1991)) (internal quotation

marks omitted). Edmondson does not establish a rigid test,

but rather presents a flexible guide for analyzing RICO

allegations on a case by case basis. The court in Edmondson

acknowledged that in some cases "some factors will weigh so

strongly in one direction as to be dispositive." Id. The court

also indicated that if a plaintiff alleges only a single scheme, a

single injury, and few victims it is "virtually impossible for

plaintiffs to state a RICO claim." Id.

Analyzing the allegations of the amended complaint

through the six-factor lens of Edmondson inexorably leads to

the conclusion that Western failed to state a legally cognizable claim under RICO. Edmondson provides a compelling

analogy because Western has alleged only a single scheme, a

single injury, and a single victim (or single set of victims).

Thus, Western has failed to satisfy the continuity prong of

RICO's "pattern of racketeering activity" requirement.

The district court properly rejected Western's notion that

numerous schemes to defraud were perpetrated by Market.

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 7 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

"The court need not accept inferences drawn by plaintiffs if

such inferences are unsupported by the facts set out in the

complaint. Nor must the court accept legal conclusions cast

in the form of factual allegations." Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994) (citing

Papasan v. Allain, 478 U.S. 265, 286 (1986)). As the district

court found, Market's conduct is more accurately characterized as a single effort to diminish the value of Western's

partnership interest, primarily by concealing cost overruns or

shifting the burden of financing them. Indeed, Western's

four-scheme division appears specious on its face. Comparing the amended complaint with the original complaint further demonstrates that Western's four purported schemes are

merely a cosmetic disguise of a single scheme. The amended

complaint simply subdivides Western's initial allegations.

Despite Western's protests that the court must focus on its

amended complaint, it is appropriate for the court to look

beyond the amended complaint to the record, which includes

the original complaint. See Philips v. Bureau of Prisons, 591

F.2d 966, 969 (D.C. Cir. 1979); 5A Charles Alan Wright and

Arthur R. Miller, Federal Practice and Procedure s 1357 (2d

ed. 1990). Thus, the district court properly observed not only

that the amended complaint merely "dress[ed] up the old

[complaint] with ... boilerplate RICO verbiage," but also

that "W[estern] appears to have distorted the allegations

against [Market] to create the appearance of multiple injuries

to multiple victims in an apparent effort to satisfy the statutory language of RICO."

It is true that depending on the specific circumstances a

single scheme may suffice for purposes of RICO. The Supreme Court in H.J. Inc. rejected the idea that multiple

schemes must be proved to establish a pattern of racketeering activity. See H.J. Inc., 492 U.S. at 240. Our holding in

Edmondson is not to the contrary. See Edmondson, 48 F.3d

at 1265. The Supreme Court also emphasized that the concept of a racketeering "scheme" does not appear in the RICO

statute, and indicated that it should be applied with caution

because it is amorphous, highly elastic, and subject to "the

level of generality at which criminal activity is viewed." H.J.

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 8 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Inc., 492 U.S. at 241 n.3. However, the number of schemes

alleged remains a useful consideration. For example, the

Supreme Court in H.J. Inc. stated that "proof that a RICO

defendant has been involved in multiple criminal schemes

would certainly be highly relevant to the inquiry into the

continuity of the defendant's racketeering activity." Id. at

240. Although the definition of "scheme" is imprecise, this

court can help to clarify how this term should be understood

by providing examples and by indicating "what lies beyond

[its] conceptual scope." Apparel Art Int'l, Inc. v. Jacobson,

967 F.2d 720, 722 (1st Cir. 1992).

The instant case serves as an example of a vain attempt to

make a RICO claim seem more viable by parsing one scheme

into multiple schemes. See Sil-Flo, Inc. v. SFHC, Inc., 917

F.2d 1507, 1516 (10th Cir. 1990). Western's subdivision of

Market's alleged fraudulent activity is unavailing because the

four schemes are so similar in nature and purpose (i.e., they

involve contested bookkeeping entries), and they resulted in a

single harm rather than separate injuries. See supra p. 4.

For the term "scheme" to retain any utility, it cannot be so

easily invoked that it allows such closely related accounting

misrepresentations involving a single project to be considered

distinct schemes. Under Western's interpretation of what

constitutes a scheme, almost any fraudulent act could be

subdivided to establish a RICO claim. Cf. Apparel Art, 967

F.2d at 722-23.

Western's allegations of multiple victims are dubious for

similar reasons. By alleging harm to each individual member

of its partnership, Western has again artificially subdivided

an aspect of its allegations in a transparent effort to make

Market's alleged fraudulent conduct seem more expansive.

For the purposes of RICO pattern analysis, this set of victims

should be viewed as a single victim. The district court

correctly noted that if "W[estern] was injured then naturally

those who have a financial interest in [Western] may be

affected." To the extent that Western's partners were injured, they were injured indirectly, which does not make

them individual victims under RICO. Cf. Wade v. Hopper,

993 F.2d 1246, 1250 (7th Cir.), cert. denied, 114 S. Ct. 193

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 9 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

(1993). For example, in Wade, the court affirmed the dismissal of a RICO claim brought by shareholders against

alleged looters of a corporation, because the shareholders

sued individually, and not on the corporation's behalf. See id.

The court held that the RICO claim belonged only to the

corporation, and thus the shareholders were not the "proper

parties to bring a RICO claim for harm done to [the corporation]." Id. The court also faulted the plaintiff-appellants for

failing to "describe how they were directly and personally

injured by the alleged RICO violations." Id.

Furthermore, the concept of a single set of victims is

distinct from a class of victims who are all similarly and

directly injured, and who should not be considered to be a

single victim. For example, in H.J. Inc. the class of victims

was thousands of customers who were each directly injured

by a telephone company accused of charging unreasonable

rates. Similarly, the single injury to Western was its diminished partnership interest, and Western does not appear to

have alleged multiple injuries.

Consequently, Western can meet the RICO pattern requirement only if it is able to effectively distinguish

Edmondson. Western's primary contention in that regard

focuses on the length of time during which Market mailed and

faxed alleged financial misrepresentations. The amended

complaint alleges dozens of predicate acts extending continually over an eight-year period, in contrast with Edmondson,

where the predicate acts extended only over three years, with

most of the acts occurring in a one-month period. Western

relies on the Supreme Court's statement that "continuity is

centrally a temporal concept," H.J. Inc., 492 U.S. at 242, in

maintaining that the time difference between the two fact

patterns is sufficient to establish a dispositive difference.

According to Western, the district court misinterpreted

Edmondson by not regarding the length of time over which

the predicate acts occurred as the most important factor in its

analysis.

This line of reasoning is unpersuasive for at least two

reasons: it distorts both Supreme Court and D.C. Circuit

precedent. First, Western misinterprets H.J. Inc. to the

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 10 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

extent that it claims that time is such an important factor that

an eight-year span must create a viable RICO action. As the

district court explained, "[t]he mere longevity of a scheme or

schemes does not necessarily mean that a 'pattern of racketeering activity' is present." H.J. Inc. requires that predicate

acts be committed over a period longer than "a few weeks or

months," but an eight-year time period, though highly relevant, is not dispositive. Even if temporal length was supposed to be the most heavily weighted factor in the multifaceted Edmondson analysis (an assumption that is not necessarily mandated by H.J. Inc.), it may be trumped by other

factors of the Edmondson analysis. Although H.J. Inc.

stresses that RICO is directed towards "long-term criminal

conduct," id., it also makes plain that a pattern can be defined

with "reference to a range of different ordering principles or

relationships between predicates, within the expansive bounds

set." Id. at 239.

Second, Western misreads Edmondson to stand for the

proposition that "sporadic criminal activity ... does not satisfy H.J. Inc.'s mandate that predicate acts occur over a

substantial period of time." Although the court took temporal length into account in Edmondson, its rationale relied

more on three other factors: "single scheme, single injury,

and few victims." Edmondson, 48 F.3d at 1265. Instead of

concluding that the predicate acts were too sporadic, the

court stated in Edmondson that even an assumption that the

acts were committed over a three year time period could not

salvage the plaintiff's RICO claims. See id.

Finally, not to be overlooked is the character of the alleged

racketeering activity. The amended complaint describes a

business dispute about cost and income projections, and the

priority of allocations, rather than a wide-ranging series of

extensive criminal schemes. Market's conduct can basically

be characterized as beginning with fraudulent budget underestimates, with the subsequent predicate acts serving as

attempts to cover up or shift the debt burden caused by cost

overruns. Additionally, many of the predicate acts consist of

mailings of annual financial reporting statements that Market

was ostensibly obligated to provide to Western. Because

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 11 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

most of the predicate acts were mailings or faxes that relate

back to an initial misrepresentation, and because the parties'

dispute appears to be more in the nature of an ordinary

business deal gone sour, the activity encompassed by Western's amended complaint is similar to that in Efron v. Embassy Suites (Puerto Rico), Inc., 223 F.3d 12, 21 (1st Cir. 2000),

where the First Circuit recently affirmed the dismissal of a

RICO claim. In Efron, a real estate deal disintegrated into a

bitter dispute between partners, and one partner alleged that

he had been defrauded by financial misrepresentations in

mailings and faxes. Affirming the dismissal of RICO claims,

the First Circuit held that "[t]aken together, the acts as

alleged comprise a single effort, over a finite period of time,

to wrest control of a particular partnership from a limited

number of its partners. This cannot be a RICO violation."

See id. at 21.

We recognize that the Supreme Court has interpreted the

RICO Act broadly, to include many "garden-variety fraud and

breach of contract cases" that might best be prosecuted

under state rather than federal law. Sedima, 473 U.S. at 525

(Powell, J., dissenting). The Court has acknowledged that

"[i]nstead of being used against mobsters and organized

criminals, RICO has become a tool for everyday fraud cases

brought against respected and legitimate enterprises." Sedima, 473 U.S. at 499. In the absence of congressional action

to narrow RICO's scope, the Supreme Court has refused to

countenance procedural limitations crafted by the courts of

appeals, and has refused to limit RICO to organized crime, or

to organizations rather than individuals. See H.J. Inc., 492

U.S. at 244.

Nevertheless, we do not understand the Supreme Court to

disparage interpreting RICO's pattern requirement to guard

"against finding continuity too easily in the context of a single

dishonest undertaking involving mail or wire fraud." See

Efron, 223 F.3d at 20. As other circuits have observed,

"RICO claims premised on mail or wire fraud must be

particularly scrutinized because of the relative ease with

which a plaintiff may mold a RICO pattern from allegations

that, upon closer scrutiny, do not support it." Id. This

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 12 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

caution stems from the fact that "[i]t will be the unusual fraud

that does not enlist the mails and wires in its service at least

twice." Al-Abood ex rel. Al-Abood v. El-Shamari, 217 F.3d

225, 238 (4th Cir. 2000); see also United States Textiles, Inc.

v. Anheuser-Bush Cos., Inc., 911 F.2d 1261, 1268 (7th Cir.

1990); cf. Tabas v. Tabas, 47 F.3d 1280, 1290 (3d Cir. 1995)

(en banc). Although a RICO claim may be based only on

predicate acts consisting exclusively of mail and wire fraud,

scrutiny of such claims is necessary, and not inconsistent with

the breadth of RICO. The pattern requirement thus helps to

prevent ordinary business disputes from becoming viable

RICO claims, with defendants subject to treble damages,

simply because the parties used the United States mails or a

fax machine to transmit contested financial documents.

Thus, in Menasco, Inc. v. Wasserman, 886 F.2d 681 (4th Cir.

1989), the Fourth Circuit declined to find a RICO pattern

where an individual allegedly defrauded two corporations in

an oil and gas prospecting venture, because the perpetrator's

"actions were narrowly directed towards a single fraudulent

goal [and] involved a limited purpose." Id. at 684. In so

ruling, the Fourth Circuit observed that "[i]f the pattern

requirement has any force whatsoever, it is to prevent ...

ordinary commercial fraud from being transformed into a

federal RICO claim.... If we were to recognize a RICO

claim based on the narrow fraud alleged here, the pattern

requirement would be rendered meaningless." Id. at 685

(citations omitted).

Neither the instant case nor Edmondson establishes a per

se rule for RICO pattern analysis. Instead, the court continues to endorse a case-by-case, fact-specific approach. The six

factors prescribed in Edmondson should be applied in a

manner that is fluid, flexible, and commonsensical, rather

than rigid or formulaic. Holding that the district court did

not err in ruling that Western failed to allege a pattern of

racketeering activity is consistent with this method of analysis.3 Accordingly, we affirm the order dismissing the complaint.

__________

3 Western makes no contention that the district court erred in

dismissing the non-RICO claims for lack of subject matter jurisdiction. In view of our disposition, we, like the district court, do not

reach Market's contention that the complaint is barred by the

statute of limitations.

USCA Case #00-7021 Document #566857 Filed: 01/05/2001 Page 13 of 13