1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-13-1995

Tabas v Tabas

Precedential or Non-Precedential:

Docket 92-1495

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Recommended Citation

"Tabas v Tabas" (1995). 1995 Decisions. Paper 42.

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 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 Nos. 92-1495; 92-1529 

 

 HARRIETTE S. TABAS; RICHARD S. TABAS; 

 NANCY C. TABAS; GERALD LEVINSON, 

 As Executors of the Estate of CHARLES L. TABAS 

 

Appellants 

v. 

 DANIEL M. TABAS; JOSEPH P. CAMPBELL; 

 JAMES J. MCSWIGGAN; LEE A. TABAS; ROBERT TABAS; 

 SUSAN TABAS TEPPER; LINDA TABAS STEMPEL; 

 JOANNE TABAS WURZAK; CAROL TABAS STOFMAN; HOWARD WURZAK 

 

 

 On Appeal From the United States District Court 

 For the Eastern District of Pennsylvania 

 (D.C. Civil Action No. 91-01355) 

 

 Argued: January 26, 1993 

 Before: GREENBERG, ROTH and LEWIS, 

 Circuit Judges

 Reargued In Banc October 18, 1994 

 Before: SLOVITER, Chief Judge, BECKER, STAPLETON, 

 MANSMANN, GREENBERG, HUTCHINSON, SCIRICA, COWEN, 

 NYGAARD, ALITO, LEWIS, ROTH, MCKEE, 

 Circuit Judges

 (Opinion Filed February 13, 1995) 

 

Richard A. Sprague, Esquire (Argued) 

Daniel L. Lemisch, Esquire 
Denise Pallante, Esquire 

Sprague & Sprague 

135 South 19th Street 

Wellington Building, Suite 400 

Philadelphia, PA 19103 

Howard K. Goldstein, Esquire 

Astor, Weiss, Kaplan & Rosenblum 

Broad Street at Walnut 

The Bellevue, Sixth Floor 

Philadelphia, PA 19102 

 Attorneys for Appellants 

Harold E. Kohn, Esquire 

Robert J. LaRocca, Esquire 

Joanne Zack, Esquire (Argued) 

Kohn, Nast & Graf, P.C. 

1101 Market Street, 24th Floor 

Philadelphia, PA 19107 

 Attorneys for Appellees 

 

 OPINION OF THE COURT 

 

ROTH, Circuit Judge: 

 In this action, brought under the Racketeer Influenced 

and Corrupt Organizations Act ("RICO"), Pub. L. 91-452, Title IX, 

84 Stat. 941, as amended, 18 U.S.C. §§ 1961-1968, we are 

presented with the question whether defendants' acts, as alleged, 

constituted a "pattern of racketeering activity." Specifically, 

we must determine what showing is required for plaintiffs to meet 

the "continuity" prong of RICO's "pattern" requirement. Because 

we find that plaintiffs have alleged a series of acts sufficient 

to satisfy RICO's continuity requirement, we will reverse the 
district court's grant of summary judgment and remand this case 

for further proceedings consistent with this opinion. 

 The plaintiffs are four of the executors of the Estate 

of Charles Tabas ("the Estate"): Charles's widow, Harriette 

Tabas; Richard Tabas and Nancy Tabas, two of Charles and 

Harriette's children; and Gerald Levinson, one of Charles's 

business associates.1 In addition to Daniel Tabas, who is 

President and Chief Executive Officer of Tabas Enterprises, the 

named defendants include Joseph Campbell, the Executive Vice 

President of Tabas Enterprises; James McSwiggan, the Comptroller 

of Tabas Enterprises; Daniel's children; and one of Daniel's 

sons-in-law. 

I. 

A. 

 In 1964, brothers Charles and Daniel Tabas formed a 

partnership, Tabas Enterprises, to conduct real estate and other 

business ventures. The partnership agreement governing the 

brothers' joint property holdings required that, in the event of 

the death of either partner, the surviving partner would 

distribute partnership income equally to himself and to the 

estate of the deceased partner, regardless of any personal 

 

 1There are six heirs to the Estate, including the Charles L. 

Tabas Foundation. 
services either brother might render. See Appendix ("App.") at 

62 (Partnership Agreement ¶ 3). The partnership agreement also 

provided that: 

It is the intent of the parties that the survivor of 

them shall be free to exercise his judgment for the 

joint benefit of ownership . . . provided always, that 

the responsibility and obligation of the survivor to 

the estate of the deceased shall be that required of a 

fiduciary. 

App. at 62 (Partnership Agreement ¶ 4(b)). 

 In 1983, Charles Tabas died. Soon after Charles's 

death, John Van Der Wal, a financial advisor to Daniel and to 

Tabas Enterprises, was asked by Daniel to recommend a reasonable 

financial arrangement between Daniel and Charles's widow, 

Harriette. In response, Van Der Wal sent a letter to Harriette 

in which he recommended that Daniel receive a $180,000 annual 

management fee from Tabas Enterprises, prior to profit sharing by 

the partners. Van Der Wal further recommended that Harriette and 

Daniel each receive a $10,000 monthly draw check from Tabas 

Enterprises.2 

 Beginning in March 1983, monthly distribution checks of 

$10,000 were drawn on a Tabas Enterprises account and sent to 

Harriette through the United States mail. Daniel was also 

provided with a $10,000 monthly draw. In addition, from March 

 

 

2Prior to Charles's death, each brother received a monthly 

disbursement of $10,000 from Tabas Enterprises. In addition, the 

brothers appeared to have an arrangement under which Tabas 

Enterprises paid for many personal and business expenses. 
1983 to September 1986, Tabas Enterprises paid for various 

personal expenses incurred by Harriette and Daniel. 

 In September 1986, Tabas Enterprises stopped paying 

Harriette's personal expenses and also eliminated Harriette's 

$10,000 monthly draw. Instead, Tabas Enterprises began paying a 

$15,000 monthly draw to the Estate. At the same time, Daniel's 

monthly draw was increased to $15,000. Tabas Enterprises 

continued to pay Daniel management fees and to cover his personal 

expenses.3

 Shortly thereafter, the Estate brought suit against 

Daniel and others in the Montgomery County, Pennsylvania, Court 

of Common Pleas. The complaint alleged, inter alia, that the 

Estate was not being allocated an equal share of the partnership 

income, that Daniel used Tabas Enterprises funds for personal 

purposes, that Daniel misled the Estate by directing the 

preparation of false and misleading financial statements, and 

that Daniel had breached his fiduciary duties to the Estate. 

 

 

3The parties dispute whether plaintiffs were aware that 

Daniel was receiving substantial compensation from Tabas 

Enterprises in addition to his monthly draw check. Defendants 

argue that, soon after Charles's death, plaintiffs knew of 

Daniel's compensation and therefore could not have been deceived 

by the monthly checks which served as the basis of the mail fraud 

predicate acts. Plaintiffs acknowledge that they believed Daniel 

was taking more than he was entitled to under the partnership 

agreement; this was partly the basis for the 1986 state suit. 

They contend, however, that they did not know the extent to which 

they were being short-changed until Price Waterhouse was given 

access to Tabas Enterprises' records. Consequently, plaintiffs 

assert that they initiated this suit as soon as they discovered 

the extent of the alleged fraudulent activity. 
 On November 20, 1987, the parties settled the state 

suit and agreed that the assets of Tabas Enterprises would be 

sold. The settlement agreement established a schedule and method 

for liquidating the majority of the jointly held properties.4 In 

conjunction with the liquidation of the joint assets, the 

settlement agreement provided that "the Estate shall be given 

complete access to all properties, books and records in 

connection therewith[.]" App. at 67 (Settlement Agreement at ¶ 

4(a)(i)). The settlement agreement did not address the 

distribution of income earned after November 20, 1987, but did 

provide that: 

To the extent that the Partnership Agreement dated 

March 12, 1964 is not inconsistent with the provisions 

of this [Settlement] Agreement, the Partnership 

Agreement shall continue in full force and effect until 

the liquidation and auction [of Tabas Enterprises' 

assets] are completed. 

App. at 70 (Settlement Agreement ¶ 13). Another provision of the 

settlement agreement provided that the parties would agree to 

execute a mutual general release: 

 

 

4The settlement agreement also provided that Daniel would 

purchase the Estate's interest in Acorn Iron and Supply Company 

and $1.5 million in Royal Bank stock. In addition, the Estate's 

interest in property on City Line Avenue was transferred to 

Daniel, apparently in exchange for monies from Tabas Enterprises. 

Defendants, pointing to the $16.9 million that the Estate has 

received pursuant to the settlement agreement and liquidation of 

Tabas Enterprises, assert that plaintiffs have been treated 

equally. While plaintiffs do not appear to dispute the amount 

the Estate has received, they do assert that it has not received 

an equal one-half of the income as required under the partnership 

agreement. 
requiring the dismissal with prejudice of all parties 

in all litigation between or among Daniel, on the one 

hand, and the Estate or any of its executors, on the 

other hand, and excluding only the terms and conditions 

contained herein. 

App. at 69 (Settlement Agreement ¶ 9). 

 Lastly, the Honorable William H. Yohn, Jr.,5 was named 

to act as the arbitrator of any future disputes arising from the 

implementation of the settlement agreement that could not be 

resolved by the parties' legal representatives. The settlement 

agreement specifically provided that Judge Yohn's decisions on 

such matters "shall be final, binding, and non-appealable." App. 

at 70 (Settlement Agreement ¶ 12). 

 On May 15, 1990, Daniel and the Estate executed the 

mutual general release, which provided that, except for the 

obligations of the parties under the settlement agreement, the 

parties would release and forever discharge one another from: 

any and all actions, causes of action, demands, 

judgments, contracts, debts, dues, accounts, bonds, 

covenants, contracts, suits, claims, and demands of any 

nature whatsoever, whether in law, equity, arbitration 

or otherwise, whether know [sic] or unknown at the 

present time, which [either party] ever had, now has, 

hereinafter can, shall or may have, by reason of any 

matter, cause or thing whatsoever, from the beginning 

of the world to November 20, 1987.

App. at 293 (emphasis added). 

 

 

5At that time, Judge Yohn sat on the Pennsylvania Court of 

Common Pleas. He is now a United States District Judge for the 

Eastern District of Pennsylvania. 
 Despite the settlement agreement, plaintiffs remained 

dissatisfied with Daniel's compliance with the partnership 

agreement. On July 25, 1990, Judge Yohn held a hearing to 

consider whether the settlement agreement barred the Estate from 

asserting claims for breach of the partnership agreement stemming 

from Daniel's management of Tabas Enterprises subsequent to 

November 20, 1987. Finding that "[t]he provision of the 

partnership agreement of March 12, 1964 concerning distribution 

of income is not inconsistent with the provisions of the 

settlement agreement . . . as the settlement agreement contains 

no provisions concerning the distribution of income after 

November 20, 1987," Judge Yohn held that the Estate could "pursue 

any claims" against Daniel arising from the distribution of Tabas 

Enterprises' income after November 20, 1987. App. at 1187 

(Arbitration Award No. 8).6

 Following this decision, Daniel's counsel requested 

that Judge Yohn mediate the issues raised by plaintiffs' proposed 

RICO complaint. Judge Yohn held two conferences with counsel to 

discuss, among other topics, the proposed RICO claims. During 

oral argument on February 1, 1991, Daniel's counsel asserted 

that, because plaintiffs' proposed RICO complaint sought damages 

 

 

6These rulings were premised upon Judge Yohn's finding that: 

"By agreement of the parties and with the concurrence of the 

arbitrator, the arbitrator has jurisdiction to rule upon the 

issue of whether the Estate may make claims against Daniel M. 

Tabas concerning his management of Tabas Enterprises subsequent 

to November 20, 1987." App. at 1185. 
against defendants not named in the settlement agreement, the 

proposed RICO complaint was outside the scope of arbitration and 

therefore could not be decided by Judge Yohn in his role as 

arbitrator. Nevertheless, Daniel's counsel expressed interest in 

having Judge Yohn serve as a mediator in an attempt to resolve 

the claims set forth in the proposed RICO complaint. 

 On February 20, 1991, Judge Yohn formally denied 

Daniel's request to mediate the dispute. Instead, Judge Yohn 

ordered that: "By agreement of the parties, and with the 

concurrence of the undersigned, the proposed 'RICO Complaint' may 

be filed in the United States District Court for the Eastern 

District of Pennsylvania and the issues raised therein will not 

be the subject of this procedure under the [Settlement] Agreement 

of November 20, 1987." App. at 1282 (Arbitration Award No. 10). 

 Soon thereafter, plaintiffs brought the instant action, 

alleging violations of RICO §§ 1962(a), (b), (c), and (d), as 

well as several state law claims stemming from defendants' 

handling and distribution of Tabas Enterprises assets. The 

initial complaint was filed on March 4, 1991. The amended 

complaint was filed on May 20, 1991.7

 

 

7On May 29, 1991, the district court entered a scheduling 

order. This schedule provided, inter alia, that discovery be 

completed by December 2, 1991. The schedule also provided that 

defendants' motion for summary judgment had to be filed on or 

before October 21, 1991, and that plaintiffs' response was due by 

November 4, 1991. Because this schedule required plaintiffs to 

respond prior to the completion of discovery, and because the 

parties had further disagreements about discovery, the factual 

record is not fully developed. Nonetheless, the record is 
 Plaintiffs have appealed the district court's grant of 

defendants' motion for summary judgment. On appeal, we are 

required to base our review of the district court's decision on 

the evidence of record. Accordingly, before we turn to the 

merits of the parties' assertions, we will summarize the record 

submitted to this court. 

 Most significantly, the record contains two financial 

reports by Price Waterhouse, analyzing Tabas Enterprises' 

financial and operational records. Plaintiffs' counsel retained 

Price Waterhouse to determine whether these records reflected the 

equal distribution of income to the Estate as required under ¶ 3 

of the partnership agreement. 

 The first Price Waterhouse report analyzed Tabas 

Enterprises' financial records dating from Charles's death in 

1983 through early 1990, focusing on the period after November 

20, 1987. Then, in late 1991, after the amended complaint was 

filed, Price Waterhouse completed a supplemental report, 

analyzing Tabas Enterprises' records from October 1989 through 

July 1991. In total, the Price Waterhouse reports documented 

more than three and one-half years of activity subsequent to the 

November 1987 settlement agreement. In both reports, Price 

Waterhouse concluded that "the books and records of Tabas 

 

sufficient to support our conclusion that the requisites for RICO 

continuity have been met. 
Enterprises do not reflect the equal distribution of income," and 

that "indications of fraud exist."8 App. at 352, 460-61. 

 The Price Waterhouse reports revealed a continuing 

series of transactions to divert Tabas Enterprises' income for 

the personal use of Daniel and his family, through direct 

monetary benefits as well as other types of benefits. In its 

first report, for instance, Price Waterhouse itemized a 

substantial number of items, purchased with Tabas Enterprises' 

income, for which there was no adequate documentation or 

explanation substantiating an ordinary and necessary business 

purpose for the expense. The report noted that, to the extent 

that Daniel purchased these items using Tabas Enterprises' 

income, such expenses "would inappropriately reduce the Estate's 

interest in Tabas Enterprises by reducing income available for 

distribution to the Estate." App. at 354. According to the 

Price Waterhouse report, these purchases included personal 

apparel, homeowner's dues for Daniel's vacation home in Vermont, 

meals and other purchases in cities where Daniel had vacation 

homes, meals and other purchases in ten foreign countries, 

 

 

8Price Waterhouse noted that its formal "opinion" was subject 

to scope limitations as discussed within each report. Our review 

of these limitations indicates that most were caused by Tabas 

Enterprises' failure to cooperate with the Price Waterhouse 

auditors. In addition, Price Waterhouse described Tabas 

Enterprises' major records depository as in a "state of 

disarray." In considering these reports, we will weigh the 

effect of the scope limitations in light of our conclusion that 

most limitations to the analysis were a result of Tabas 

Enterprises' efforts to hinder the Price Waterhouse audits. 
prescription medicine, and a pool heater installed at Daniel's 

home in Pennsylvania. The total cost of these and other similar 

expenses was approximated at $140,000. 

 Other problem areas cited in the first report were 

Tabas Enterprises' payment of $67,000 in compensation for the 

provision of home services, such as maid, gardening, and handyman 

services, for Daniel and his family; the assignment of 24 

automobiles owned by Tabas Enterprises to Daniel and his family, 

including family members who were not employed by Tabas 

Enterprises; Tabas Enterprises' payment of the automobile 

insurance, repairs and maintenance, gasoline,9 car phones, auto 

club membership, registration fees, tags, and title fees for all 

24 cars; Tabas Enterprises' payment of telephone bills for 

Daniel's primary and vacation residences; and Tabas Enterprises' 

payment of insurance coverage for non-partnership assets, 

including Daniel's six antique automobiles. 

 Price Waterhouse's second report noted that, between 

the completion of the first and second reports, Daniel had 

reimbursed Tabas Enterprises for only a small portion of these 

expenses.10 The second report also noted that many of the 

 

 

9The report found these gasoline charges, in excess of 

$18,000, especially problematic, since the relevant documents 

revealed routine submissions of multiple requests for 

reimbursement arising from a single receipt. 

 

10In his deposition, Daniel testified that all unreimbursed 

expenses represented legitimate business expenses. For most of 

these expenses, however, Daniel could not provide any specific 

recollection of the business purpose involved. 
questionable expenses detailed in the first report continued to 

occur. For instance, the second report identified an additional 

$78,000 in payments for personal services and an additional 

$35,000 in phone bills for Daniel's private residences and mobile 

telephones. The second report also noted that Daniel and his 

family continued to charge personal items to Tabas Enterprises, 

including personal apparel, homeowner's dues for his vacation 

home in Vermont, and meals. 

 In addition to investigating nonmonetary benefits, the 

Price Waterhouse reports also examined the direct monetary 

benefits received by Daniel and his family from Tabas 

Enterprises. The reports found that between November 1987 and 

November 1989, Daniel received $1,502,000 in salary partnership 

distributions, management fees and incentives, gratuities, and 

bonuses from Tabas Enterprises, and that for the period between 

November 1989 and June 1991, he received $1,166,000. The reports 

also found that, during this period, in which Daniel was paid a 

total of $2,668,000, the Estate received partnership 

distributions totalling $660,000.11

 According to the Price Waterhouse reports, the monetary 

payments to Daniel's family during this time also eclipsed those 

 

 

11Price Waterhouse also noted that, in addition to his Tabas 

Enterprises income, Daniel received compensation as Chairman of 

the Board of Royal Bank. At his deposition, Daniel testified 

that he worked 60-70 hours per week for Tabas Enterprises, app. 

at 1683, and that his Royal Bank time commitment consisted of 

Thursday morning executive staff meetings and a board meeting one 

evening each month. App. at 614. 
received by the Estate. The reports documented that between 

November 1987 and June 1991, Daniel's family, including his six 

children and one son-in-law, received $1,363,000 from Tabas 

Enterprises in the form of salaries, management fees and 

incentives, gratuities, bonuses, and consulting fees. The 

amended complaint alleges that payments to Daniel's children and 

son-in-law "do not constitute reasonable salaries for work which 

they actually performed and that some of those children and/or 

their spouses were 'phantom' or 'ghost' employees who performed 

little or no work at all." App. at 21 (Amended Complaint ("AC") 

¶ 25). 

 The first Price Waterhouse report also noted that, in 

addition to receiving compensation from Tabas Enterprises, 

certain members of Daniel's family also worked for and received 

compensation from Royal Bank. For instance, Lee Tabas served as 

President of Royal Bank, Robert Tabas served as Vice President, 

and Susan Tabas Tepper served as Director of Marketing. 

 Finally, in addition to the above findings, both Price 

Waterhouse reports noted that "the Estate may also have been 

subjected to the risk of additional taxes, interest, and 

penalties" due to apparent Internal Revenue Service reporting 

violations by Tabas Enterprises. App. at 362, 467. 

B. 

 Count I of the amended complaint alleges that, in 

violation of 18 U.S.C. § 1962(a), (b), and (c), the defendants 
conspired to defraud the Estate of its equal share of Tabas 

Enterprises' income, to which it was entitled under the 

partnership agreement, through a pattern of racketeering activity 

including mail fraud in violation of 18 U.S.C. § 1341.12 

Specifically, plaintiffs allege that defendants conducted a 

scheme to defraud the Estate of its equal share of the 

partnership's income by wrongfully diverting Tabas Enterprises 

funds to pay for the personal expenses of Daniel and his family 

and by understating the Estate's share of the income. Plaintiffs 

assert that, from the time of Charles's death through the period 

in which the amended complaint was filed, Daniel "continuously 

made false representations to the Estate by mail and fraudulently 

distributed millions of dollars of Tabas Enterprises' funds to 

himself and to members of his family in a scheme to defraud the 

Estate of income to which it was entitled." App. at 20 (AC ¶ 

24). 

 Plaintiffs specifically allege that Daniel, Campbell, 

and McSwiggan committed forty-one acts of mail fraud between 

December 1987 and February 1991 for "the purpose of executing the 

 

 

12Count II of the amended complaint alleges that defendants 

violated § 1962(d) by conspiring to violate subsections (a), (b), 

and (c). 

 Counts III-VI of the amended complaint allege state law 

claims that are not central to this appeal, including breach of 

fiduciary duty, breach of contract, fraud, and conversion. The 

district court dismissed these state law claims without 

prejudice. Because we find that the district court erred in 

dismissing Counts I and II, we will instruct the district court 

to vacate the dismissal of plaintiffs' supplemental state law 

claims. 
scheme to defraud the Estate of its equal share of income." App. 

at 43 (AC ¶ 49).13 Thirty-nine of these forty-one acts 

represented monthly disbursements of $15,000 from Tabas Brothers 

(a holding of Tabas Enterprises) to the Estate. The remaining 

two acts involve the mailing of various IRS forms from Tabas 

Enterprises to the Estate reflecting income earned and business 

expenses incurred by certain Tabas Enterprises entities. 

Plaintiffs contend that the mailing of the monthly checks by 

defendants "constituted an intentional misrepresentation" that 

one-half of the income of Tabas Enterprises was being paid to the 

Estate pursuant to the partnership agreement. App. at 46 (AC ¶ 

50). 

 Finding that the dispute did not present a sufficient 

threat to satisfy RICO's "continuity" requirement, the district 

court granted defendants' summary judgment motion. The district 

court reasoned that: 

 Plaintiffs' claims essentially allege one fraudulent 

scheme perpetrated against one victim by one 

perpetrator. The gist of plaintiffs' complaint is that 

Daniel Tabas has failed to abide by the partnership 

agreement made with his brother, Charles, and that 

Daniel has employed various methods of trickery to 

 

 

13Plaintiffs also allege as predicate acts defendants' use of 

the United States mails to send checks to Daniel's children and 

son-in-law for work not performed. We do not rely on these 

allegations, however, because plaintiffs have not produced any 

evidence to counter McSwiggan's deposition testimony that these 

checks were delivered by courier. See, e.g., Utz v. Correa, 631 

F.Supp. 592, 596 (S.D.N.Y., 1986) (delivery of letter by 

messenger did not violate the mail fraud statute since the United 

States mails were not used). 
cheat Charles's heirs of their fifty percent share of 

the business that Charles and Daniel built. The sole 

victim of this scheme is Charles Tabas's estate. The 

sole perpetrator is Daniel Tabas or individuals under 

his control. No one else is affected. There is no 

threat to the community at large. This is not a case 

where the predicate acts are "part of an entity's 

regular way of doing business," such as would affect 

others doing business with the entity. 

 The partnership between Charles and Daniel is 

currently in the process of liquidation. All of the 

fraudulent activity alleged in this suit will cease 

once the liquidation process is complete. Given the 

Court of Appeals' admonition that "[i]t remains an open 

question whether RICO liability is ever appropriate for 

a single-scheme, single-victim conduct threatening no 

future harm," we simply do not find that the 

defendants' alleged conduct in this case "pose[s] a 

societal threat worthy of the draconian penalties and 

remedies available under RICO." 

District Court opinion at 8-10; App. at 1376-78 (citations 

omitted) (footnotes omitted). Plaintiffs filed a timely notice 

of appeal of the district court's grant of summary judgment to 

defendants. Defendants also filed an appeal, seeking review of 

the district court's decision to dismiss the state claims without 

prejudice. Following the filing of the panel's decision, we 

granted appellants' petition for rehearing in banc and vacated 

the panel opinion. 

II. 

 The district court had subject matter jurisdiction over 

this civil action pursuant to 28 U.S.C. §§ 1331 and 1367. The 

district court's federal question jurisdiction was invoked 

because Counts I and II of the amended complaint raise claims 

under RICO, 18 U.S.C. §§ 1961 and 1962. The district court's 
supplemental jurisdiction was invoked because Counts III through 

VI of the amended complaint raise claims that are so related to 

the claims in Count I and II that they form part of the same case 

or controversy under Article III of the United States 

Constitution. The district court's supplemental jurisdiction 

was invoked because Counts III through VI of the amended 

complaint raise claims that are so related to the claims in Count 

I and II that they form part of the same case or controversy 

under Article III of the United States Constitution. Under 28 

U.S.C. § 1291, this Court has appellate jurisdiction over the 

final orders of the district court.14

 This Court has plenary review over the district court's 

grant of summary judgment. See Northern Ins. Co. v. Aardvark 

Assocs., 942 F.2d 189, 194 n.5 (3d Cir. 1991). On review of the 

district court's order for summary judgment, "we 'apply the same 

test the district court should have utilized initially.'" Erie 

Telecommunications v. Erie, 853 F.2d 1084, 1093 (3d Cir. 1988) 

(citation omitted). "In reviewing a grant of summary judgment, 

we must be convinced 'that the prevailing party has successfully 

demonstrated that there is no genuine issue as to any material 

fact and that the moving party is entitled to judgment as a 

 

 

14The district court's first order, dated May 26, 1993, 

granted defendants' motion for summary judgment on Counts I and 

II, and dismissed Counts III, IV, and V pursuant to 28 U.S.C. § 

1367(c)(3). The district court's second order, dated June 2, 

1993, amended the first order to include dismissal of Count VI 

pursuant to § 1367(c)(3). 
matter of law.'" Id. (citing Anderson v. Liberty Lobby, Inc., 

477 U.S. 242, 250 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 

322 (1986)). 

 In determining whether summary judgment is appropriate, 

"[t]he evidence of the non-movant is to be believed, and all 

justifiable inferences are to be drawn in his favor." Anderson, 

477 U.S. at 255. The inquiry is "whether the evidence presents a 

sufficient disagreement to require submission to the jury or 

whether it is so one-sided that one party must prevail as a 

matter of law." Id. at 251-52. 

III. 

 The first issue we must address is defendants' 

contention that this lawsuit is precluded by the 1987 settlement 

agreement and the 1990 mutual release. This question was 

considered by the panel only. We find defendants' argument to be 

without merit. 

 First, binding arbitration by Judge Yohn holds the 

present claims viable. The settlement agreement provides for 

final, binding arbitration of any dispute "as to the provisions 

of this Agreement or as to the implementation or operation of the 

provisions of this Agreement" between Daniel and the Estate. 

App. at 70 (Settlement Agreement ¶ 12). The very issue of 

whether claims such as this lawsuit could be brought was 

submitted to Judge Yohn, the arbitrator, who determined initially 

that "the arbitrator has jurisdiction to rule upon the issue of 
whether the Estate may make claims against Daniel M. Tabas 

concerning his management of Tabas Enterprises subsequent to 

November 20, 1987." App. at 1185 (Arbitration Award No. 8). On 

the merits, Judge Yohn held that the Estate could pursue any 

claims which it might have against Daniel "for an alleged breach 

of his fiduciary duty [to the Estate] after November 20, 1987," 

and "for the unequal distribution of the income of Tabas 

Enterprises subsequent to November 20, 1987." Id. at 1187. 

 Under the settlement agreement, Judge Yohn's decision 

is "final, binding, and non-appealable," app. at 70 (Settlement 

Agreement ¶ 12), and we must adhere to it under federal and 

Pennsylvania law. See Apex Fountain Sales v. Kleinfeld, 818 F.2d 

1089, 1094-95 & n.4 (3d Cir. 1987) (an arbitrator's decision is 

binding under federal law unless "an arbitrator 'manifests an 

infidelity'" to her obligation to interpret the agreement at 

issue, or there is "corruption, fraud or partiality," or a party 

was denied a "fundamentally fair hearing") (citations omitted); 

International Brotherhood of Firemen & Oilers v. School Dist., 

350 A.2d 804, 808 (Pa. 1976) (an arbitrator's decision shall not 

be set aside "unless it is alleged and proven by clear, precise 

and convincing evidence that the parties were denied a hearing or 

that there was fraud, misconduct, corruption or some other 

irregularity of this nature on the part of the Arbitrator which 

caused him to render an unjust, inequitable or unconscionable 

finding"). Defendants have not alleged any action on the part of 
Judge Yohn amounting to corruption, fraud, or partiality. In 

addition, defendants have presented no evidence that Judge Yohn 

failed to provide a hearing to consider each party's views prior 

to his decision. In fact, the record clearly indicates that 

Judge Yohn held a hearing on this question and considered 

numerous exchanges of correspondence before ruling on this 

matter. 

 Second, even if we were to make our own evaluation of 

whether the 1987 settlement agreement and the 1990 release 

precluded this lawsuit, we would conclude that it does not. 

Defendants' reliance on Main Line Theatres, Inc. v. Paramount 

Film Distrib. Corp., 298 F.2d 801 (3d Cir.), cert. denied, 370 

U.S. 939 (1962), is misplaced. Defendants assert that Main Line

stands for the proposition that where "the initial lawsuit 

contained prayers for injunctive relief, the execution of a 

general release releases and extinguishes complaints for future 

conduct." Defendants-appellees' Brief at 21. Consequently, 

defendants contend, plaintiffs' suit is barred by the settlement 

agreement and the mutual release signed by the Estate and Daniel. 

 In Main Line, plaintiffs demanded injunctive relief and 

treble damages in a civil antitrust suit stemming from 

Paramount's distribution of motion pictures. The district court 

dismissed the suit, holding that the case had been settled during 

pre-trial negotiations by an "oral agreement" between the 

parties. The oral agreement provided that Main Line would drop 
its suit in exchange for $10,000. Main Line refused to comply 

with the oral agreement, however, complaining that Paramount 

attempted to add language to the agreement when it was 

memorialized in writing. Specifically, Main Line rejected 

language that required it to acknowledge that the complained of 

distribution procedures were reasonable. 

 Main Line appealed the dismissal to this court. We 

then considered whether the initial oral agreement included a 

release to the effect that Paramount could continue to distribute 

films in the same manner it had prior to Main Line's suit for 

injunctive relief. We noted: 

Had this been an action for damages only, without a 

prayer that the defendants be restrained from 

continuing or repeating the licensing practices of 

which the plaintiff complained, the essential feature 

of any understanding to settle the suit for a stated 

sum would have been the plaintiffs' promise to forego a 

money claim, the only matter in controversy. Here, the 

suit contained a demand for injunctive prohibition of 

future wrongful conduct as well as a claim for money 

damages for alleged past misconduct. In such 

circumstances a reasonable person agreeing, without any 

expression of limitation, to accept a sum in settlement 

of the litigation should and reasonably would 

understand that both aspects of the suit were covered 

by the settlement. 

298 F.2d at 803 (emphasis added). 

 In Main Line, plaintiffs could point to no limitations, 

expressed or implied, in their oral agreement with defendants. 

Accordingly, their settlement agreement covered their prayers for 

both injunctive relief and money damages. In the present case, 
however, the mutual release signed by plaintiffs and Daniel 

expressly limits the applicability of the release to any claims 

arising "from the beginning of the world to November 20, 1987." 

App. at 294. This express limitation distinguishes the instant 

case from the facts presented in Main Line. 

 Defendants also draw the Court's attention to our 

statement in Main Line that "[c]ertainly, a defendant offering a 

sum in settlement of a suit asking, among other things, for an 

injunction against similar conduct, would not understand that a 

similar demand could be asserted the day after settlement." 298 

F.2d at 803 (emphasis added). The Estate's state suit here, 

however, although denominated a "Complaint in Equity," did not 

seek broad injunctive relief. The holding in Main Line relies on 

the fact that the plaintiff specifically sought to enjoin 

Paramount from distributing motion pictures using methods that 

plaintiff alleged violated the civil antitrust laws. In the 

instant case, the plaintiffs' state suit asked that Daniel be 

removed from any position at Tabas Enterprises and that its 

businesses and properties be liquidated. Rather than controlling 

future conduct, the state suit primarily sought a dissolution of 

Tabas Enterprises and redress for the alleged past wrongs 

committed against the Estate's interest in the partnership. It 

follows, therefore, that the subsequent federal action did not 

constitute an effort to enjoin conduct that the settlement of the 

first suit had resolved. This determination, together with our 
earlier finding that the settlement agreement bars only claims 

existing up to November 20, 1987, would lead us to conclude that 

defendants' reliance upon Main Line is misplaced. 

IV. 

 Having found that plaintiffs' lawsuit is not precluded 

by the 1987 settlement agreement and the 1990 mutual release, we 

now turn to the district court's decision that plaintiffs failed 

to allege a course of conduct sufficient to establish a RICO 

"pattern of racketeering conduct" because plaintiffs failed to 

satisfy RICO's "continuity" requirement. 

 The RICO statute provides for civil damages for "any 

person injured in his business or property by reason of a 

violation of [18 U.S.C. § 1962]." 18 U.S.C. § 1964(c). A common 

thread running throughout § 1962 is that an injured party must 

demonstrate that the defendant was engaged in a "pattern of 

racketeering activity." Section 1962(a) prohibits "any person 

who has received any income derived . . . from a pattern of 

racketeering activity" from using that money to acquire or 

operate any enterprise engaged in interstate commerce. Section 

1962(b) prohibits any person from acquiring, maintaining an 

interest in, or controlling any such enterprise "through a 

pattern of racketeering activity." Section 1962(c) prohibits any 

person employed by or associated with an enterprise engaged in 

interstate commerce from conducting or participating in the 

affairs of the enterprise through "a pattern of racketeering 
activity." Finally, section 1962(d) prohibits any person from 

conspiring to violate subsections (a), (b), or (c). 

 Central to the dispute in this case is the question 

whether defendants participated in "a pattern of racketeering 

activity." The RICO statute defines a "pattern" of racketeering 

activity as requiring "at least two acts of racketeering 

activity" within a ten year period. 18 U.S.C. § 1961(5). The 

statute also enumerates the offenses which constitute 

"racketeering activity," including crimes that have traditionally 

been associated with the transgressions of racketeers: murder, 

kidnapping, gambling, arson, robbery, bribery, extortion, dealing 

in obscene matter, and dealing in narcotic or other dangerous 

drugs. 18 U.S.C. § 1961(1). The statutory enumeration is, 

however, expansive and goes on to include specific federal 

offenses which, although they may often be committed by those 

whom we would categorize as "racketeers," also fall into the 

category of common law or "garden variety" fraud and which would, 

in the past, have been the subject of commercial litigation under 

state law. Among these broadly delineated federal offenses are 

mail fraud and wire fraud.15 These offenses are the ones that 

 

 

15Mail fraud, 18 U.S.C. § 1341, is the racketeering activity 

involved in the case before us. Section 1341 provides in 

pertinent part: 

 Whoever, having devised . . . any scheme or 

artifice to defraud, or for obtaining money 

or property by means of false or fraudulent 

pretenses, representations, or promises, . . 

. for the purpose of executing such scheme or 

artifice . . . places in any post office or 

authorized depository for mail matter, any 
many consider to be the most troublesome as RICO predicate acts. 

 The inclusion within the scope of civil RICO of these 

types of fraud, more prevalent in the commercial world than in 

the world of racketeers, has caused concern that RICO sweeps too 

broad a swathe. See, e.g., Note, Civil RICO: The Temptation and 

Impropriety of Judicial Restriction, 95 Harv. L. Rev. 1101, 1105 

(1982) ("Given the prevalence of mail and wire use in commercial 

transactions, RICO's provision for a private cause of action 

predicated on violations of the mail and wire fraud statutes 

virtually federalizes common law fraud"). 

 

matter or thing whatever to be sent or 

delivered by the Postal Service, . . . shall 

be fined not more than $1,000 or imprisoned 

not more than five years, or both. 

 

 The federal offense of mail fraud was originally 

enacted by Congress in 1872 as a part of the recodification of 

the postal laws. The Supreme Court in its first review of the 

mail fraud statute made clear that its scope was broad. The 

Court held that the statute reached beyond the common law 

definition of "false pretences" to encompass "everything designed 

to defraud by representations as to the past or present, or 

suggestions and promises as to the future." Durland v. United 

States, 161 U.S. 306, 313 (1896). Fraud, involving the use of 

the postal system to carry it out, was made a federal offense by 

Congress with the "purpose of protecting the public against all 

such intentional efforts to despoil, and to prevent the post 

office from being used to carry them into effect . . .." Id. at 

314. 

 Judge Greenberg, in his dissent, queries whether 

Congress intended RICO to be applied to a defendant, 

participating in a scheme to defraud, who mails substantial 

payments but not to a similar defendant who delivers the payments 

by hand. See [typescript at 14]. The clear answer to this 

question is "yes" because, first, the former example constitutes 

mail fraud and the latter does not and, second, Congress has 

chosen to include mail fraud as a RICO predicate act. 
 If we examine the language of the statute itself, in an 

attempt to discern the scope of civil RICO, we find ourselves 

lost in a land with few signposts. Section 1961(5) defines 

"pattern" as requiring "at least two acts of racketeering 

activity." The breadth of the predicate acts, described in § 

1961(1), combined with § 1961(5)'s loose definition of pattern, 

has led many courts to recoil from the inclusion within RICO of 

offenses which were not considered to be the crimes of gangsters. 

Such court-imposed limitations on the scope of civil RICO were 

first reviewed by the Supreme Court in Sedima, S.P.R.L. v. Imrex 

Co., 473 U.S. 479 (1985). In Sedima, the Supreme Court set out 

an expansive definition of the concept of "pattern" in civil 

RICO. 

 Sedima arose from an action filed in the Eastern 

District of New York by a Belgian corporation, based on § 1964(c) 

and (d) and predicate acts of mail fraud and wire fraud, charging 

that Imrex, Sedima's partner in a joint venture, had presented 

inflated bills and had cheated Sedima out of a portion of its 

proceeds by collecting for nonexistent expenses. The district 

court dismissed the RICO counts for failure to state a claim, 

holding that a RICO-type injury must be based on allegations of 

some sort of distinct "racketeering injury" or "competitive 

injury." 574 F.Supp. 963, 965 (1983). The dismissal was 

affirmed by a divided panel of the Second Circuit Court of 

Appeals. 741 F.2d 482 (1984). The court of appeals clarified 
the type of injury which it required to be alleged, finding that 

"it is better to identify the RICO standing requirement as a 

'racketeering injury' requirement rather than a 'competitive 

injury' requirement . . .." Id. at 496. The court of appeals 

further required that, before a private civil RICO action could 

be brought, the plaintiff must show that the defendants had been 

criminally convicted of the predicate acts. Id. at 503. The 

Supreme Court rejected both of these holdings. 

 Justice White, writing for the majority in Sedima, 

stated "we can find no support in the statute's history, its 

language, or considerations of policy for a requirement that a 

private treble-damages action under § 1964(c) can proceed only 

against a defendant who has already been criminally convicted." 

473 U.S. at 493. Concerning the requirement of racketeering 

injury, Justice White stated that 

 [W]e perceive no distinct "racketeering 

injury" requirement. Given that 

"racketeering activity" consists of no more 

and no less than commission of a predicate 

act, § 1961(1), we are initially doubtful 

about a requirement of a "racketeering 

injury" separate from the harm from the 

predicate acts. A reading of the statute 

belies any such requirement. . . . If the 

defendant engages in a pattern of 

racketeering activity in a manner forbidden 

by these provisions [§ 1962(a)-(c)], and the 

racketeering activities injure the plaintiff 

in his business or property, the plaintiff 

has a claim under § 1964(c). There is no 

room in the statutory language for an 

additional, amorphous "racketeering injury" 

requirement. 
Id. at 495. 

 Justice White based this less restrictive reading of 

the statute on prior case law and the general principles 

surrounding the statute: "RICO is to be read broadly. This is 

the lesson not only of Congress' self-consciously expansive 

language and overall approach, but also of its express admonition 

that RICO is to 'be liberally construed to effectuate its 

remedial purposes.'" Id. at 497-98 (citations omitted). 

 The Court recognized that this interpretation of the 

statute would permit its use not only against mobsters and 

organized criminals but also against "respected and legitimate 

'enterprises.'" Id. at 499. Nevertheless, the Court found that 

Congress "wanted to reach both 'legitimate' and 'illegitimate' 

enterprises. "The former enjoy neither an inherent incapacity 

for criminal activity nor immunity from its consequences." Id.

(citation omitted). The Court concluded: 

 It is true that private civil actions 

under the statute are being brought almost 

solely against such defendants, rather than 

against the archetypal, intimidating mobster. 

Yet this defect--if defect it is--is inherent 

in the statute as written, and its correction 

must lie with Congress. It is not for the 

judiciary to eliminate the private action in 

situations where Congress has provided it 

simply because plaintiffs are not taking 

advantage of it in its more difficult 

applications. 

Id. at 499-500 (footnote omitted). 
 Justice White then suggested that Congress and the 

courts develop a meaningful concept of "pattern" in order to 

narrow the scope of civil RICO: 

 The "extraordinary" uses to which civil RICO 

has been put appear to be primarily the 

result of the breadth of the predicate 

offenses, in particular the inclusion of 

wire, mail, and securities fraud, and the 

failure of Congress and the courts to develop 

a meaningful concept of "pattern." 

Id. at 500. 

 Despite this invitation from the Court, Congress to 

date has not chosen to enact legislation which would narrow the 

scope of civil RICO or to define more exactly what is "pattern." 

Moreover, the efforts of the courts to do so have not been 

entirely successful. Our attempts to design a meaningful concept 

of pattern have continued to collide with the broad language of 

the statute. In response, however, to Sedima, the various 

circuits began to structure guidelines for determining whether a 

RICO pattern had been established. In the Third Circuit, for 

instance, in Barticheck v. Fidelity Union Bank/First Nat'l State, 

832 F.2d 36 (3d Cir. 1987), we rejected the district court's 

requirement in that case that there be two or more unlawful 

schemes, and we then set forth six factors to be used in 

determining whether a pattern of racketeering activity has been 

established in a given case. These factors are: (1) the number 

of unlawful acts; (2) the length of time over which the acts were 

committed; (3) the similarity of the acts; (4) the number of 
victims; (5) the number of perpetrators; and (6) the character of 

the unlawful activity. Id. at 39. 

 Other circuits established other criteria. In the 

Eighth Circuit, the test for a pattern of racketeering activity 

was much more restrictive: proof of multiple illegal schemes was 

required. See, e.g., Superior Oil Co. v. Fulmer, 785 F.2d 252 

(8th Cir. 1986). Following this precedent, the Eighth Circuit 

Court of Appeals affirmed the district's court's dismissal of 

petitioners' complaint in H.J. Inc. v. Northwestern Bell Tel. 

Co., 829 F.2d 648 (8th Cir. 1987). The Supreme Court granted 

certiorari to resolve the conflict between the circuits over 

whether single or multiple schemes were required to demonstrate a 

RICO pattern. 

 In its opinion in H.J. Inc. v. Northwestern Bell Tel. 

Co., 492 U.S. 229 (1989), the Court set out its second analysis 

of the requirements of civil RICO. First, as to single versus 

multiple schemes, the Court noted that the word "scheme" is not 

found in the RICO statute and indeed that what constitutes a 

"scheme" is to be found "in the eye of the beholder, since 

whether a scheme exists depends on the level of generality at 

which criminal activity is viewed." 492 U.S. at 241 and n.3. 

The Court then examined the statute and its legislative history 

in an attempt to determine the elements of the pattern 

requirement. From this review, the Court concluded that "to 

prove a pattern of racketeering activity a plaintiff must show 
that the racketeering predicates are related, and that they 

amount to or pose a threat of continued criminal activity." Id.

at 239. 

 Under the first, or "relatedness," requirement of the 

RICO statute, as interpreted in H.J. Inc., predicate acts are 

related if they "have the same or similar purposes, results, 

participants, victims, or methods of commission, or otherwise are 

interrelated by distinguishing characteristics and are not 

isolated events." Id. at 240 (quoting the partially repealed 

Title X of the Organized Crime Control Act of 1970, 18 U.S.C. § 

3575, et seq.).16 

 As for the second, or "continuity," prong of the 

analysis, the Court in H.J. Inc. attempted to promulgate a 

somewhat flexible approach, based upon a "commonsense, everyday 

understanding of RICO's language and Congress' gloss on it." Id. 

at 241. With this analytical approach in mind, the Court decided 

that "[w]hat a plaintiff or prosecutor must prove is continuity 

of racketeering activity, or its threat, simpliciter." Id. 

 In explicating how a plaintiff could make this 

continuity showing, the Court described continuity as "both a 

closed- and open-ended concept, referring either to a closed 

period of repeated conduct, or to past conduct that by its nature 

projects into the future with a threat of repetition." Id. "It 

 

 

16The parties do not dispute that the relatedness prong has 

been met in the present case. 
is, in either case, centrally a temporal concept," id. at 241-

42, so that a party may establish continuity as a closed-ended 

concept by "proving a series of related predicates extending over 

a substantial period of time." Id. at 242 (emphasis added). 

 Thus, H.J. Inc. makes clear that the continuity 

requirement can be met by establishing long-term criminal conduct 

but does not define what length of time qualifies as 

"substantial" for this purpose. The Court in H.J. Inc. also gave 

examples of how the threat of continued racketeering activity 

might be demonstrated. One example is that of a hoodlum who 

sells "insurance" to storekeepers to prevent the breaking of 

their shop windows. Id. Another example is that of an ongoing 

entity which commits the predicate acts or offenses as its 

regular way of doing business. Id. In giving this last example, 

the Court noted that such a business may be either a criminal or 

a legitimate enterprise and concluded: 

 The continuity requirement is likewise 

satisfied where it is shown that the 

predicates are a regular way of conducting 

defendant's ongoing legitimate business (in 

the sense that it is not a business that 

exists for criminal purposes), or of 

conducting or participating in an ongoing and 

legitimate RICO "enterprise." 

Id. at 243 (footnote omitted). The clear implication of this 

language is that the ambit of RICO may encompass a "legitimate" 

businessman who regularly conducts his business through 

illegitimate means, that is, who repeatedly defrauds those with 

whom he deals and in the process commits predicate acts, for 
instance by using the postal service as a means of accomplishing 

his scheme. 

 The Court went on in H.J. Inc., at the urging of 

various amici, to consider, and to reject, a requirement that "a 

defendant's racketeering activities form a pattern only if they 

are characteristic either of organized crime in the traditional 

sense, or of an organized-crime-type perpetrator, that is, of an 

association dedicated to the repeated commission of criminal 

offenses." Id. at 243-44. The Court found that there was no 

textual support in the statute for such a requirement and that 

the statutory language did not support the limitation that 

racketeering acts be the work of an association or group rather 

than of an individual. Id. at 244. 

 These determinations in H.J. Inc., that the predicate 

acts may be the regular way in which a legitimate business 

operates and that the racketeering activities may form a pattern 

even though they are the acts of an individual rather than of a 

group or of an association, enforce the Court's holding in Sedima

that RICO reaches both "legitimate" and "illegitimate" 

enterprises. The Court in H.J. Inc. also rejected the employment 

of a definitional device, such as "scheme," to delineate 

racketeering activity, when the device employed, like "scheme," 

may be manipulated to satisfy the necessary criterion. See id.

at 241 and n.3. 
 Whatever view we may have of Congress's original intent 

in enacting the RICO statute, we feel constrained, in applying 

the statute today, to follow the directives given by the Court in 

Sedima and H.J. Inc.

 Since H.J. Inc., this court has faced the question of 

continued racketeering activity in several cases, each time 

finding that conduct lasting no more than twelve months did not 

meet the standard for closed-ended continuity. See Hughes v.

Consol-Pennsylvania Coal Co., 945 F.2d 594, 610-11 (3d Cir. 1991) 

(fraudulent conduct lasting twelve months does not establish 

closed-ended continuity); Hindes v. Castle, 937 F.2d 868, 875 (3d 

Cir. 1991) (eight month period of predicate acts without a threat 

of future criminal conduct does not satisfy continuity 

requirement); Kehr Packages v. Fidelcor, Inc., 926 F.2d 1406, 

1413 (3d Cir. 1991) (same); Banks v. Wolk, 918 F.2d 418, 422-23 

(3d Cir. 1990) (same); Marshall-Silver Constr. Co. v. Mendel, 894 

F.2d 593 (3d Cir. 1990) (seven month single-victim, single-injury 

scheme does not satisfy continuity requirement).17 In Hughes, we 

 

 

17In Marshall-Silver, we considered whether Congress intended 

RICO to apply in the situation of an extended scheme which posed 

no "significant societal threat" beyond its extended duration. 

894 F.2d at 597. Because the scheme there lasted only seven 

months and posed no threat of recurrence, we stated that we would 

not resolve the "societal threat" issue. In view, however, of 

the Court's refusal in Sedima and H.J. Inc. to require 

racketeering injury, or prior conviction of the predicate acts, 

or multiple schemes, or racketeering acts by an association or 

group rather than by an individual, we cannot conclude that, in 

order to satisfy the RICO continuity requirement, the Court would 

require the existence of a "societal threat," whatever exactly 

that may be, beyond the commission of the criminal predicate 
distinguished cases in other circuits in which closed-ended 

continuity had been established, noting that those cases involved 

conduct lasting "years, sometimes over a decade." Hughes, 945 

F.2d at 611. 

 In evaluating the present case in accord with this 

precedent, we will first consider whether closed-ended continuity 

has been established. At the outset, we note that in civil RICO 

complaints based on predicate acts of mail fraud 

the continuity test requires us to look beyond the 

mailings and examine the underlying scheme or artifice. 

Although the mailing is the actual criminal act, the 

instances of deceit constituting the underlying 

fraudulent scheme are more relevant to the continuity 

analysis. 

 

acts. To the extent that Marshall-Silver can be read to hold 

otherwise, it is overruled. 
Kehr Packages, 926 F.2d at 1414.18 Consequently, in determining 

 

 

18Defendants' assertion that the mailings involved must 

themselves be relied upon by the victim of the fraud in order for 

a RICO claim to be established is inaccurate. As this Court 

stated in Kehr Packages, "completely 'innocent' mailings can 

satisfy the mailing element." 926 F.2d at 1415 (citing Schmuck 

v. United States, 489 U.S. 705, 715 (1989)). Indeed, mailings 

"designed to lull [fraud] victims into a false sense of security, 

postpone their ultimate complaint to the authorities, and 

therefore make the apprehension of the defendants less likely 

than if no mailings had taken place" have been found to 

constitute actionable mail fraud. Kehr Packages, 926 F.2d at 

1416 n.3 (quoting United States v. Lebovitz, 669 F.2d 894, 896 

(3d Cir.), cert. denied, 456 U.S. 929 (1982)). 

 Additionally, the use of the mails need not be an 

essential element of the fraudulent scheme. Rather, so long as 

the mailings are "incident to an essential part of the scheme," 

Pereira v. United States, 347 U.S. 1, 8 (1954), the mailing 

element is satisfied. This principle is elucidated by a review 

of the facts in Schmuck v. United States, 489 U.S. 705 (1989). 

In that case, Wayne Schmuck was engaged in a fraudulent scheme in 

which he would purchase used cars, roll back their odometers, and 

sell the cars to retailers for a price higher than their actual 

worth. After purchasing an automobile from Schmuck and selling 

it to a customer, the dealers, in order to complete the resale of 

each automobile, would submit a title application form to the 

Wisconsin Department of Transportation. The mailing of these 

forms constituted the mailing element of Schmuck's indictment on 

12 counts of mail fraud. The Supreme Court found that those 

mailing were sufficient to sustain Schmuck's indictment on mail 

fraud charges, reasoning that 

Schmuck's scheme would have come to an abrupt halt if 

the dealers either had lost faith in Schmuck or had not 

been able to resell the cars obtained from him. These 

resales and Schmuck's relationship with the retail 

dealers naturally depended on the successful passage of 

title among the various parties. Thus, although the 

registration-form mailings may not have contributed 

directly to the duping of either the retail dealers or 

the customers, they were necessary to the passage of 

title, which in turn was essential to the perpetuation 

of Schmuck's scheme. 

Id. at 712. 
whether or not continuity has been established in the present 

case, we must focus on the duration of the underlying scheme. 

Just as the mailings are an element of the federal offense of 

mail fraud, so too is the scheme or artifice to defraud. See 18 

U.S.C. § 1341, set out in footnote 15 supra. Each time 

defendants misrepresented the business nature of an expense, made 

a questionable charge, or received compensation to which they 

were not entitled, they lessened the income available to the 

Estate. Plaintiffs have provided evidence that these activities, 

which implemented defendants' purported scheme to defraud the 

Estate, lasted more than three and a half years, from November 

10, 1987, to July 1991. We conclude that a scheme lasting over 

three years extends over a "substantial" period of time and 

therefore constitutes the type of "long-term criminal conduct" 

that RICO was enacted to address. See United States v. Pelullo, 

964 F.2d 193, 209 (3d Cir. 1992) (holding that a jury could find 

a nineteen month period of racketeering activity sufficient to 

 

 In the instant case, it is clear that the mailings were 

incident to an essential part of the scheme. Had the defendants 

failed to mail disbursement checks to plaintiffs, plaintiffs 

would have immediately been alerted to defendants' alleged 

scheme. Consequently, by virtue of the disbursements mailed to 

plaintiffs, defendants were allegedly able to delay discovery of 

their scheme to misappropriate an excessive share of the 

partnership's profits. The scheme could not have continued 

unless the checks were delivered by one means or another. As 

long as the method of delivery was through the United States 

Postal Service, defendants' alleged scheme satisfied the elements 

of the federal offense of mail fraud. 
satisfy continuity requirement); Swistock v. Jones, 884 F.2d 755, 

759 (3d Cir. 1989) (fourteen month period of conduct may be 

sufficient to establish closed-ended continuity). Accordingly, 

we find, from the strictly durational aspect of the scheme, that 

plaintiffs in the present case have made a sufficient showing to 

survive summary judgment on the "continuity" prong of the pattern 

analysis. 

 The Supreme Court cautions us, however, in H.J. Inc., 

that the existence of continuity may not always be apparent. 492 

U.S. at 243. For example, the statutory definition of pattern is 

"at least two acts of racketeering activity" within a ten year 

period. 18 U.S.C. § 1961(5). It is clear that ten years is a 

period of long duration. Yet, would two related predicate acts, 

one committed in February 1982 and one committed in January 1992, 

be sufficient to form a pattern? It would seem unlikely. 

Indeed, Justice White noted in a footnote that, while § 1961(5) 

defines a pattern of racketeering activity as requiring at least 

two acts of racketeering activity, two acts may not be 

sufficient. Id. at 496 n.14. 

 The question remains, then, what more is required in 

order to evaluate whether continuity has been established when 

predicate acts have occurred over a period of several years. One 

helpful consideration can be found in the Court's requirements 

for open-ended continuity. In H.J. Inc. the Court states that 

open-ended continuity is established when the commission of the 
predicate acts is "a regular way of conducting defendant's 

ongoing legitimate business." 492 U.S. at 243. It would seem a 

valid analogy that, if the predicate acts have been a regular way 

of conducting defendant's legitimate business over a long period 

in the past, the RICO pattern has been satisfied.19 In such a 

case, the relatedness and the frequency of the predicate acts 

would have created the pattern of racketeering activity. From 

our review of the record in the present case, we find that the 

allegations made by plaintiffs concerning defendants' manner of 

doing business over this period satisfy such a RICO continuity 

requirement.20 

 

 

19In making this analogy, we in no way imply that the 

predicate acts must constitute a "regular way" of a defendant's 

doing business. We merely give one example of the manner in 

which "pattern" may be demonstrated. 

 

20The district court, in granting summary judgment to 

defendants, found that "[t]his is not a case where the predicate 

acts are 'part of an entity's regular way of doing business,' 

such as would affect others doing business with the entity." 

App. at 1377. (citing H.J. Inc., 492 U.S. at 242). See supra at 

page [typescript at 16]. 

 To the extent that the district court suggests that 

effects upon others doing business with the entity are relevant 

to a finding of "continuity," we are not certain if the district 

court is requiring that those affected be outsiders doing 

business with the entity, as opposed to investors or partners in 

or beneficiaries of the entity. If so, we find no support in 

H.J. Inc. for such a requirement. The implication of the cited 

passage in H.J. Inc. does not limit its holding to require that 

the effect be on those who are doing business with the entity. 

 If, on the other hand, the district court was making a 

finding of fact on the scope of the defendants' regular way of 

doing business, i.e., that the alleged scheme to defraud the 

Estate and its beneficiaries, through the repeated actions 

described by Price Waterhouse, did not constitute defendants' 

regular way of doing business, then in view of the facts of 
 Moreover, even if we were not to have found that 

conduct lasting three and one-half years was sufficient to 

establish closed-ended continuity, we conclude that continuity 

still would have been established for the purposes of summary 

judgment in the present case under an "open-ended" continuity 

analysis. Under H.J. Inc., if a RICO action is brought before a 

plaintiff can establish long-term criminal conduct, the 

"continuity" prong may still be met if a plaintiff can prove a 

threat of continued racketeering activity. Whether the predicate 

acts constitute a threat of continued racketeering activity 

depends on "the specific facts of each case," id. at 242, but 

H.J. Inc. suggests that open-ended continuity may be satisfied 

"where it is shown that the predicates are a regular way of 

conducting defendant's ongoing legitimate business . . . or of 

conducting or participating in an ongoing and legitimate RICO 

'enterprise.'" Id. at 243. 

 Mindful that Kehr Packages instructs us, in determining 

continuity, to focus on the mail fraud element of the underlying 

fraudulent activity as well as on the element of the mailings, we 

are persuaded that the evidence here meets the standard for openended continuity. Plaintiffs have presented evidence that 

defendants continuously took questionable expenses, which 

directly affected the partnership income available to the Estate. 

 

record, we must conclude that such a finding of fact is clearly 

erroneous. 
Both Price Waterhouse reports are replete with examples of 

expense charges taken by defendants for which there is not 

adequate documentation or explanation to substantiate an ordinary 

and necessary business purpose. These included trips, meals, 

home services, cars, gasoline, insurance expenditures, and 

telephone bills. 

 At this stage of the litigation, we must view the facts 

in the light most favorable to plaintiffs, the non-movants, i.e., 

that as a regular way of doing business, defendants were 

fraudulently misrepresenting expenditures to benefit themselves 

and to deprive the Estate and its beneficiaries of their 

legitimate share of the profits of Tabas Enterprises. The 

evidence in the record is clear that these practices, defendants' 

regular way of doing business, continued even after plaintiffs' 

complaint was filed. As a consequence, plaintiffs have 

established a threat of continuing fraudulent conduct as required 

under an "open-ended" continuity analysis. 

 Because we have found a pattern of racketeering 

activity in both the duration of and the on-going threat implicit 

in defendants' regular way of doing business, we will not go on 

to analyze this case under the six Barticheck factors. The fact 

that we do not employ the Barticheck factors in our analysis here 

does not, however, mean that they might not be relevant in a 

different case in determining if continuity exists. As the Court 

noted in H.J. Inc., in those cases where relatedness and 
continuity are in doubt, other factors should be examined to 

discern if there is a "pattern of racketeering activity" under 

RICO: 

The limits of the relationship and continuity concepts 

that combine to define a RICO pattern, and the precise 

methods by which relatedness and continuity or its 

threat may be proved, cannot be fixed in advance with 

such clarity that it will always be apparent whether in 

a particular case a "pattern of racketeering activity" 

exists. 

492 U.S. at 243. It is helpful, therefore, when determining 

whether "relatedness" or "continuity" has been proven, to use a 

fact-oriented, case-by-case approach to determine whether there 

is a "pattern of racketeering activity."21 

 

 

21Although we decided Barticheck before H.J. Inc., we have 

since noted that the six Barticheck factors are still relevant in 

determining whether a pattern exists. See Hindes v. Castle, 937 

F.2d 868, 873 n.3 (3d Cir. 1991) ("[T]he Barticheck factors, such 

as the number of acts, victims, and perpetrators and the 

character of the unlawful activity, may be relevant in some cases 

in assessing the threat of continuing criminal conduct by 

throwing light on whether the illegal activity was part of a 

legitimate business' regular way of conducting business, or 

whether the predicates were attributable to a 'long-term 

association that exists for criminal purposes.'") (citation 

omitted). 

 It remains clear, however, that "duration is the sine 

qua non of continuity." Hindes, 937 F.2d at 873. For this 

reason, the Barticheck factors are best viewed as analytical 

tools available to courts when the issue of continuity cannot be 

clearly determined under either a closed- or open-ended analysis. 

 It should also be noted that the H.J. Inc. decision 

cites the Third Circuit's holding in Barticheck for two narrow 

propositions only: (1) that continuity is both a closed- and 

open-ended concept, 492 U.S. at 238, and (2) that "scheme" is not 

a self-defining term, 492 U.S. at 241 n.3. Nowhere in H.J. Inc.

does the Supreme Court expressly adopt the Barticheck factors as 

being required elements in the "continuity" analysis. 
 In the present case, we find that plaintiffs have 

clearly presented evidence that is legally sufficient to survive 

summary judgment on the issue of continuity through the 

defendants' alleged commission of the predicate acts and of the 

underlying fraudulent activity as an ongoing way of doing 

business. Accordingly, we do not need to concern ourselves with 

the applicability of the Barticheck factors to the specific facts 

of this case. 

 We recognize that our ruling means that RICO, with its 

severe penalties, may be applicable to many "garden-variety" 

fraud cases, see Marshall-Silver, 894 F.2d at 597, particularly 

considering the judiciary's broad interpretation of the mail 

fraud statute. See Kehr Packages, 926 F.2d at 1413-14. We are 

bound, however, by the language of RICO itself and the Supreme 

Court's instruction that "RICO is to be read broadly." Sedima, 

473 U.S. at 497. Indeed, the Supreme Court has consistently 

struck down efforts by the courts of appeals to narrow RICO's 

scope. See NOW v. Scheidler, 114 S. Ct. 798, 806 (1994) 

(rejecting Seventh Circuit holding that RICO requires proof that 

either the racketeering enterprise or the predicate acts of 

racketeering were motivated by an economic purpose); H.J. Inc., 

492 U.S. at 250 (rejecting Eighth Circuit holding that RICO 

requires proof of multiple "schemes"); Sedima, 473 U.S. at 495 

(rejecting Second Circuit holding that RICO requires proof of 
prior conviction on predicate act and that plaintiff must 

demonstrate specific "racketeering injury"). 

 We share the Supreme Court's concern over the broad 

application of the civil RICO statute. We are nonetheless bound 

by the language of the statute and the Supreme Court's 

interpretation of it. Accordingly, it is for Congress to decide 

whether to narrow the scope of RICO; we are not in a position to 

do so by requiring that parties prove elements of a threat or of 

an injury, presented by predicate racketeering activity, beyond 

what is expressed in the language of the statute itself.22

V. 

 Defendants have raised a number of alternative grounds 

for summary judgment claiming that insufficient causation and 

injury have been pleaded and that some of the defendants are not 

 

 

22The dissent relies upon our recent holding in Jordan v. 

Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250 (3d Cir. 1994) 

for the proposition that civil RICO should not be applicable in 

cases lacking a significant societal threat. But see footnote 17 

in regard to our position that there is no requirement in civil 

RICO that the predicate acts pose a "societal threat." We find 

several significant differences, however, between Jordan and the 

dispute here. First, the duration and continuing nature of the 

underlying fraudulent activity alleged here is much greater. In 

addition, the district court in Jordan questioned the 

"relatedness" of the predicate acts, see Jordan v. Berman, 792 F. 

Supp. 380, 385-86 (E.D. Pa. 1992), and further held that 

plaintiffs had failed to establish that they had sustained any 

injury from the purported predicate acts. Id. at 388. Finally, 

and perhaps most importantly, the district court in Jordan found 

that there was no evidence presented that would lead a jury to 

believe that mail fraud had been committed. Id. at 387. As 

discussed above, we have come to a different conclusion in the 

present dispute. 
potentially liable under RICO. Because discovery has not been 

completed, we find that it would be premature to address these 

alternative grounds. Plaintiffs have sought to take additional 

depositions that could have substantial bearing upon these 

issues. Additionally, the district court did not rule on any of 

the alternative grounds, and, as a consequence, it would be 

inappropriate for us to consider them at this stage.23

VI. 

 For the foregoing reasons, we will reverse the district 

court's decision granting summary judgment against plaintiffs on 

their RICO claims, we will vacate the dismissal of plaintiffs' 

supplemental state claim, and we will remand this case to the 

district court for further proceedings consistent with this 

opinion.24

BECKER, Circuit Judge, Concurring. 

I 

 I join in almost all of Judge Roth's lead opinion 

(including Parts I, II, V, and VI in their entirety), and I 

 

 

23We note that on remand the court should consider whether 

the decision in Reves v. Ernst & Young, 113 S. Ct. 1163 (1993) 

has any bearing on this case. In Reves, the Supreme Court held 

that only defendants who participate in the operation or 

management of an enterprise can be held liable for violating 18 

U.S.C. § 1962(c). 

 

24In view of our vacatur of the dismissal of plaintiffs' 

supplemental state claims, we do not need to rule on defendants' 

cross-appeal. 
concur in the judgment. I write separately, however, because I 

believe that the opinion has "stopped short," and not carried the 

logic of its argument to its ultimate conclusion. More 

specifically, while Judge Roth's opinion makes clear that the 

"Barticheck factors" cannot be the sine qua non of the continuity 

determination, and its opinion undoubtedly erodes Barticheck's 

precedential value, the court's logic -- as Judge Greenberg's 

dissent recognizes, see Dissenting Op. at page 7, especially 

lines 6-10 -- compels the conclusion that Barticheck should be 

abandoned. Yet Judge Roth leaves it breathing and thereby will, 

I fear, cause mischief by engendering confusion in the district 

courts, in addition to a round of further appeals. 

 I recognize that Judge Roth's opinion does not in terms 

rest on application of the six Barticheck factors. It is a fact, 

however, that these factors have been at the heart of this 

court's civil RICO jurisprudence for the past seven years, and 

most district court opinions struggling with the existence vel

non of civil RICO continuity use Barticheck as their polestar. 

In my view, now that we are in banc on a civil RICO case, it is 

incumbent upon us to clarify the status of Barticheck, and the 

lead opinion's avoidance of the issue is not grounds for putting 

it off to another day. I therefore write separately in order to 

set forth my understanding of the implications of this court's 

decision. 
II 

 Perhaps the most serious example of the uncertainty 

needlessly sown by the jurisprudential reticence of Judge Roth's 

opinion concerns Barticheck factor #6, the "character of the 

unlawful activity." In my view, the opinion can be read as 

leaving open the possibility that this factor, along with the 

other Barticheck factors, survives today's decision. See Lead 

Op. at page 40 ("The fact that we do not employ the Barticheck

factors in our analysis here does not, however, mean that they 

might not be relevant in a different case in determining if 

continuity exists.") (emphasis supplied); id. at 41 n.21 ("The 

Barticheck factors . . . may be relevant in some cases in 

assessing the threat of continuing criminal conduct . . . .") 

(internal quotation marks omitted, emphases supplied). This is 

apparently the conclusion drawn by Judge Greenberg, whose dissent 

treats "character of the unlawful activity" as the most important 

of the factors. See Dissenting Op. at pages 12, 15. But Judge 

Roth's opinion does not explain how to distinguish this factor 

from "societal threat," which, she properly holds (if less 

emphatically than is warranted), cannot survive Sedima and H.J., 

Inc. See Lead Op. at page 34 n.17. 

 This reluctance to overrule Barticheck thus has the 

unfortunate potential for contributing to doctrinal confusion, 

for as Judge Greenberg argues in dissent, see Dissenting Op. at 

page 7, a given factor either is or is not relevant to the 
existence of a "pattern" of racketeering activity. The RICO 

statute does not have one provision for cases where relatedness 

and continuity (or their absence) are clear and another for 

"those cases where relatedness and continuity are in doubt." 

Lead Op. at page 40. Accordingly, I believe that we should inter 

Barticheck as a whole, and should forthrightly announce which, if 

any, Barticheck factors remain relevant to the continuity 

analysis and which do not. 

A.

 As I read Judge Roth's opinion, it properly treats the 

length of time over which the predicate acts were committed 

(Barticheck factor #2), the number of unlawful acts (factor #1), 

and the routineness or customariness of the acts (which in my 

view is, as I explain below, the only permissible interpretation 

of factor #6, the character of the unlawful activity) as relevant 

for the continuity inquiry. Although Judge Roth does not discuss 

Barticheck factors #3-#5 (similarity of acts, number of victims, 

and number of perpetrators), I believe that its analysis shows 

that these factors are irrelevant to the continuity inquiry. 

 As Judge Roth notes, continuity is "centrally a 

temporal concept." Lead Op. at page 31 (quoting H.J., Inc., 492 

U.S. at 242). It simply "refer[s] either to a closed period of 

repeated conduct [closed-ended continuity], or to past conduct 

that by its nature projects into the future with a threat of 

repetition [open-ended continuity]." Id. (quoting H.J., Inc., 
492 U.S. at 241) (alterations supplied here). Thus duration, 

whether established duration or likely duration, is central to 

the "continuity" aspect of a RICO "pattern." As a result, the 

length of time over which the predicate acts occurred (Barticheck

factor #2) is of primary significance. 

 I agree with Judge Roth's view that something more is 

needed to make out a "pattern," and that two related predicate 

acts almost ten years apart are unlikely to suffice. See Lead 

Op. at page 37. But the number of predicate acts (Barticheck

factor #1), on which her opinion properly relies in finding 

continuity here, provides all that is needed for closed-ended 

continuity. In conjunction with duration, the number of acts 

suffices to show frequency -- a concept that, as Judge Roth's 

opinion agrees, see Lead Op. at 6, provides an adequate 

interpretation of "pattern" where completed, related acts are 

concerned. 

 As the Supreme Court has explained, the definition of a 

RICO "pattern" should accord with the plain meaning of that term. 

In particular, 

 [a] "pattern" is an "arrangement or order of things or 

activity," and the mere fact that there are a number of 

predicates is no guarantee that they fall into any 

arrangement or order. It is not the number of 

predicates but the relationship that they bear to each 

other or to some external organizing principle that 

renders them "ordered" or "arranged." 

H.J., Inc., 492 U.S. at 238, 109 S. Ct. at 2900 (citation 

omitted). 
 As I see it, the continuity prong of pattern analysis 

should be explicitly directed toward ruling out RICO liability 

premised on two or more predicate acts that are related but 

nonetheless "isolated" or "sporadic." See H.J., Inc., 492 U.S. 

at 239, 109 S. Ct. at 2900 (discussing legislative history of the 

"pattern" requirement). Courts then would be in a better 

position to engage in reasonably meaningful discussions of 

whether -- in the concrete circumstances of the case -- 

continuing racketeering activity had been adequately alleged. 

 But the Barticheck factors fail to provide the needed 

guidance, and any attempt to use all six in continuity analysis, 

in my view, is destined for failure, in part because these 

factors were not originally intended to govern the continuity 

inquiry. Rather, they originated as an attempt to distill our 

case law on the RICO pattern requirement, simpliciter, not as an 

explication of separate relatedness and continuity requirements. 

See Barticheck, 832 F.2d at 38-39 ("Those cases . . . recognized 

that the existence of a RICO pattern . . . turn[s] on . . . " a 

combination of specific factors . . . .") (emphasis supplied). 

Some of the Barticheck factors are relevant to this general 

notion of pattern.25 Once "pattern" is analytically severed into 

"relatedness" and "continuity," however, there is no reason to 

 

 

25I do not mean to suggest that the number of perpetrators or 

victims, while irrelevant to continuity, is relevant to 

relatedness, for it is not. The identity or other defining 

characteristics of the victims and perpetrators, however, may 

help establish relatedness of predicate acts. 
insist that all six of the factors will logically bear on both 

continuity and relatedness. Barticheck did not do so. Rather, 

it discussed the various factors and concluded simply that the 

plaintiffs had adequately alleged a RICO pattern. See id. at 39. 

 What Barticheck did do, however, was recognize that 

continuity might be either open-ended or closed-ended, rejecting 

the defendants' argument that RICO reached only conduct that was 

potentially ongoing. See id. at 39-40. Furthermore -- and this 

accords with my view that the factors should be analyzed as they 

bear on screening out isolated or sporadic activity -- the 

Barticheck panel said that the "continuity" language in the 

legislative history cited in Sedima

 simply call[ed] for an inquiry into the extent of the 

racketeering activity. Although temporal openendedness may be one measure of extent, it is not the 

only one. We decline to adopt a verbal formula for 

determining when unlawful activity is sufficiently 

extensive to be "continuous." 

832 F.2d at 40. I would explicitly hold, therefore, that 

although the duration of the predicate acts does not without more 

show continuity, if the acts occurred (as shown by the number of 

acts) or establish a threat of occurring (as shown by also 

considering whether they are repetitive in nature) with some 

frequency, they satisfy the continuity requirement, and, provided 

they are related, a pattern is shown. 

 "A party alleging a RICO violation may demonstrate 

continuity over a closed period by proving a series of related 

predicates extending over a substantial period of time." H.J., 
Inc., 492 U.S. at 242, 109 S. Ct. at 2902. What constitutes a 

"substantial" period of time for these purposes (as long as in 

excess of "a few weeks or months," see infra) should vary with 

the number of acts in "the series" of predicates. As the number 

of acts in a given period of time increases, the predicates begin 

to look less sporadic and a pattern begins to emerge. The only 

(relative) absolute here should be that the predicates must 

stretch out at least for more than three or four months to 

establish closed-ended continuity in light of the Court's 

instruction that "[p]redicate acts extending over a few weeks or 

months and threatening no future criminal conduct do not satisfy" 

the continuity requirement. Id. at 242, 109 S. Ct. at 2902. 

 For open-ended continuity, in contrast, we are looking 

for "conduct that by its nature projects into the future with a 

threat of repetition." Thus, while I agree with Judge Roth that 

the two types of continuity are cognate, I believe that to see 

whether open-ended continuity is established, what we should ask 

is simply whether the activity threatens to demonstrate closeended continuity at some future time. This, I believe, is the 

point of the three examples of open-ended continuity in the H.J., 

Inc. opinion, including the scenario where the defendant's 

commission of predicate acts is "a regular way of conducting 

defendant's ongoing legitimate business." 492 U.S. at 242-43, 

109 S. Ct. at 2902. 
 To return to Barticheck factor #6, in my view, threat 

of recurrence is also the only respect in which the "character" 

of the predicate acts is relevant to the continuity inquiry. As 

the Supreme Court and Judge Roth's opinion have explained, openended continuity merely refers to "past conduct that by its 

nature projects into the future with a threat of repetition." 

Majority Op. at page 31 (quoting H.J., Inc., 492 U.S. at 241, 109 

S. Ct. at 2902) (emphasis supplied here). For example, if 

extortion is a defendant's regular way of conducting business, 

then the nature or character of the conduct in the sense of its 

routineness or literal open-endedness makes it likely to continue 

into the future. That is the sense in which the character of the 

activity is relevant to continuity.

26

 As Judge Roth's opinion correctly holds, "character of 

the unlawful activity" may not refer to some notion of "societal 

threat." Lead Op. at page 34 n.17. Because the opinion does not 

clarify the extremely limited sense in which "character" of the 

 

 

26This interpretation of "character" of the unlawful activity 

as "repetitive character" also makes sense of the admonition in 

Kehr Packages to consider the underlying scheme in mail fraud 

cases. To the extent that the underlying scheme indicates a 

likelihood of a defendant's continuing to commit predicate acts, 

it may be relevant to open-ended continuity. (Of course, the 

underlying scheme also may supply an "organizing principle" that 

establishes relatedness. See supra at page 50 (quoting H.J., 

Inc. 492 U.S. at 238, 109 S. Ct. at 2900).) In all cases, 

however, we are looking for a pattern (and thus continuity and 

relatedness) of the predicate acts of racketeering activity, see

H.J., Inc., 492 U.S. at 237-40, 109 S. Ct. at 2900-01; id. at 

242, 109 S. Ct. at 2902. 
predicate acts is relevant to the continuity inquiry, the dissent 

unfortunately devotes great energy to arguing that the 

"character" of the predicate acts, meaning the species of act 

involved, weighs against a finding of continuity. See Dissenting 

Op. at pages 12-18. I believe that this effort is fundamentally 

at odds with the RICO statute and Supreme Court precedent 

interpreting it. 

B.

 The "societal threat" requirement can be traced back to 

this court's opinion in the first Marshall-Silver case, 835 F.2d 

63 (3d Cir. 1987). There, we reasoned that "the target of RICO 

. . . is criminal activity that, because of its organization, 

duration, and objectives poses, or during its existence posed, a 

threat of a series of injuries over a significant period of 

time." Id. at 66-67 (emphases supplied). The panel dismissed 

the case in part because it involved "a single victim, a single 

injury, and a single short-lived scheme with only two active 

perpetrators," id. at 67, and thus did not pose the appropriate 

sort of threat. This was an eminently prudent attempt to make 

sense of the RICO pattern requirement. It appears to be an 

effort to get at the ongoing or potentially ongoing criminal 

activity that concerned Congress. It was essentially an extent 

requirement. 

 In the cases after H.J., Inc., however, the concern 

over extent of injury was transmogrified to a focus on societal
injury. Rather than worry about a "series of injuries," we have 

come to focus on a normative evaluation of the injuries alleged 

in a civil RICO case. Such focus is the basis for Judge 

Greenberg's dissent in this case, but with all due respect, given 

what Congress and the Supreme Court have said about the RICO 

statute, see Lead Op. at page 34 n.17, I believe that the focus 

is inappropriate in this context. 

 Congress in the RICO statute specified an extensive 

laundry list of serious and arguably less serious acts that all 

constitute racketeering activity, and so it strikes me as 

improper to maintain that the statute's "pattern" requirement 

builds in a normative evaluation of the seriousness of the 

predicate acts. The concern about federalizing and attaching 

drastic penalties to "garden variety fraud," see Dissenting Op. 

at pages 20-21, is a legitimate one, but one that must be 

addressed by Congress rather than the courts. And Congress has 

told us what sorts of acts to worry about. Our concern with the 

pattern requirement is simply to insure that RICO liability is 

not attached to "isolated" or "sporadic" predicate acts. That 

task requires no inquiry into the seriousness of the acts. The 

"threat" for which we are looking is the threat of repeated 

prohibited conduct, not the threat of grievous harm. 

 With this in mind, I believe that this court should 

plainly state that the number of victims (factor #4) and number 

of perpetrators (factor #5) do not bear on the continuity 
inquiry. Certainly, neither the number of victims nor the number 

of perpetrators should affect the analysis of duration which, as 

the majority explains, the Supreme Court has rendered the 

centerpiece of the continuity jurisprudence. Indeed, these 

factors seem to inform the notion of societal threat, and hence 

are out of bounds. 

 Nor does the number of victims or perpetrators go to 

making out a pattern. For example, one office-tower bomb 

triggered during business hours could result in a tragically 

large number of victims, but just because the bombing happened 

during the day instead of at night when few people were there 

does not make it more likely that the bombing reflects nonisolated or non-sporadic activity. Similarly, three bombings by 

several conspirators trying to eliminate one target would not (if 

successful) reflect a greater threat of continuing racketeering 

activity than would three bombings by the Unabomber, because it 

is only the repetitive nature of the activity and not the number 

of victims or perpetrators that helps establish a threat of 

continuity. 

 The number of predicate acts could indicate an extent 

of activity that would bear on whether the activity is sporadic 

or frequent, and extent of the predicate activity is therefore 

relevant to continuity, as Judge Roth seems to recognize. See

Lead Op. at page 38 ("[If] the predicate acts have been a regular 

way of conducting defendant's legitimate business over a long 
period in the past, the RICO pattern been satisfied."). But 

number of victims is not relevant, for, under the present 

congressional scheme, we are looking for continuity in order to 

show a pattern of racketeering acts, not harm from the acts. See

supra page 54 n.26. 

C.

 We have previously held that "similarity" (factor #3) 

does not bear on continuity, see, e.g., Marshall-Silver, 894 F.2d 

at 595 n.1, and Judge Roth has already made length of time 

(factor #2) and number of unlawful acts (factor #1) part of her 

core analysis, irrespective of Barticheck. In my view, the lead 

opinion leaves virtually nothing of Barticheck and I believe -- 

along with Judge Greenberg in dissent, see Dissenting Op. at page 

7, especially lines 6-10 -- that we should say so. While I share 

Judge Roth's uneasiness as to where this leaves the law, I can 

only hope that its eloquent and clarion call will not be ignored 

by Congress. 

 Judges Stapleton and McKee join in this concurrence. 

ALITO, Circuit Judge, concurring: 

 I concur in the judgment, and I join parts I, II, V, 

and VI of the opinion of the court While the discussion of the 

"continuity" requirement in part IV of Judge Roth's opinion is a 

welcome step away from the approach taken in some of this court's 

prior decisions, I do not agree with certain portions of that 
discussion. I set out my understanding of the concept of 

"continuity" in Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 

1406, 1419-26 (3d Cir. 1991) (Alito, J., concurring and 

dissenting), and pursuant to that analysis, I think that closedended continuity was sufficiently established here to defeat 

summary judgment. My principal points of disagreement with the 

discussion in part IV of Judge Roth's opinion are as follows. 

 First, I do not agree with the intimation (Typescript 

at 34) that closed-ended continuity requires activity lasting 

years. See Kehr Packages, Inc., 926 F.2d at 1421-22 (Alito, J., 

concurring and dissenting). 

 Second, I do not agree with the suggestion (Typescript 

at 36-37) that a plaintiff who establishes "closed-ended 

continuity" may also be required to show that the predicate acts 

were part of the defendant's regular way of conducting its 

business. I see no support for this requirement in the language 

of the RICO statute or relevant Supreme Court decisions. 

 Third, I do not agree that, in a RICO case based on 

mail fraud predicates, we must "focus on the underlying 

fraudulent activity, rather that on the otherwise innocent 

mailings, in determining continuity." (Typescript at 38.) In my 

view, we must focus on the duration of the predicate violations. 

See Kehr Packages, Inc., 926 F.2d at 1422-23 (Alito, J., 

concurring and dissenting). 
 Finally, I do not think that the Barticheck factors 

should be considered except to the extent that they have some 

logical bearing on "relatedness" or "continuity." See Kehr 

Packages, 926 F.2d at 1421 (Alito, J., concurring and 

dissenting). 
GREENBERG, Circuit Judge, dissenting. 

 In its amended complaint, the Estate of Charles L. 

Tabas seeks to transform its state-law dispute with the 

defendants over the proper allocation of a partnership's profits 

into a federal RICO case simply by alleging that the defendants 

used the United States mail to communicate with it over a 

substantial period of time. While we have not considered 

directly whether a plaintiff can bring a RICO action in such 

circumstances, our precedents clearly forbid such alchemy. See

Hughes v. Consol-Pennsylvania Coal Co., 945 F.2d 594, 609-11 (3d 

Cir. 1991), cert. denied, 501 U.S. 1222, 112 S.Ct. 2300 (1992); 

Hindes v. Castle, 937 F.2d 868 (3d Cir. 1991); Kehr Packages, 

Inc. v. Fidelcor, Inc., 926 F.2d 1406 (3d Cir.), cert. denied, 

111 S.Ct. 2839 (1991); Banks v. Wolk, 918 F.2d 418 (3d Cir. 

1990); Marshall-Silver Constr. Co. v. Mendel, 894 F.2d 593 (3d 

Cir. 1990); Swistock v. Jones, 884 F.2d 755 (3d Cir. 1989). 

Therefore, I would affirm the grant of summary judgment in favor 

of the defendants, and I respectfully dissent.27 

 I agree with the majority that the central issue in 

this appeal is whether the Estate has alleged that the defendants 

engaged in a "pattern of racketeering activity" as defined in 18 

 

 

27The Estate may have valid claims under state law, but I 

would hold that the district court did not abuse its discretion 

in dismissing these claims pursuant to 28 U.S.C. § 1367. 
U.S.C. § 1961(5).28 Majority typescript at 24. As noted by the 

majority, to establish a pattern of racketeering activity, a 

plaintiff "must show that the racketeering predicates are 

related, and that they amount to or pose a threat of continued 

criminal activity." H.J. Inc. v. Northwestern Bell Tel. Co., 492 

U.S. 229, 239, 109 S.Ct. 2893, 2900 (1989) (emphasis in 

original). Thus, a plaintiff seeking to bring a RICO claim must 

allege, among other things, relatedness and continuity. 

 As the majority states, the predicate acts are 41 

instances of alleged mail fraud. Of these, 39 were the mailing 

of $15,000 checks to the Estate, totalling $585,000, representing 

monthly distributions from Tabas Enterprises. The remaining two 

were the mailing of yearly tax forms to the Estate. Amended 

Complaint ¶ 49, App. at 43-46. According to the amended 

complaint, the checks were sent from December 22, 1987, to 

February 19, 1991, a period of over three years.29 The Estate 

also alleges as predicate acts that the defendants used the 

United States mail to send checks to members of Daniel Tabas's 

family for work not performed. Amended Complaint ¶ 51, App. at 

 

 

28I also agree with the majority that the 1987 settlement and 

the subsequent mutual release do not preclude the Estate from 

bringing this case. I mention this point because, as the 

majority notes, this issue was considered by the panel only and I 

was a member of the panel. 

 

29The amended complaint recites that the last two checks were 

sent on January 18, 1990, and February 19, 1990. Amended 

Complaint at 34. However, these dates appear to be typographical 

errors because they are listed in an otherwise chronological 

sequence in which the next preceding date was December 14, 1990. 
46-47.30 The majority, however, does not rely on these 

allegations as the Estate did not provide evidence that these 

checks were mailed, and the evidence on the motion for summary 

judgment established that a courier delivered them. I agree with 

this disposition and thus conclude that we are concerned only 

with the mailing of the $15,000 checks and the tax forms. 

 I would hold that these mailings are related.31 See

Kehr Packages, 926 F.2d at 1414 (noting that relatedness test 

almost always will be satisfied "in cases alleging at least two 

acts of mail fraud stemming from the same fraudulent 

transaction"). However, in my view these mailings do not satisfy 

the continuity requirement as defined by the Supreme Court's and 

our precedents. In H.J. Inc., the Supreme Court stated that 

continuity "is both a closed- and open-ended concept, referring 

either to a closed period of repeated conduct, or to past conduct 

that by its nature projects into the future with a threat of 

repetition." 492 U.S. at 241, 109 S.Ct. at 2902 (citing 

Barticheck v. Fidelity Union Bank/First Nat'l State, 832 F.2d 36, 

 

 

30In their brief, the defendants maintain that this 

allegation does not satisfy the pleading requirements of Fed. R. 

Civ. P. 9(b). Brief at 30 n.6; see Banks v. Wolk, 918 F.2d at 

422 n.1 (noting that allegations of mail fraud must be plead with 

specificity required by Fed. R. Civ. P. 9(b)). I do not address 

this contention because even assuming that the pleading 

requirement is met, the allegations were refuted and, in any 

event, the Estate's allegations as a whole do not state a claim 

under RICO. 

 

31While the majority does not hold explicitly that they are 

related, it implicitly reaches this conclusion. 
39 (3d Cir. 1987)). If a plaintiff does not allege that the 

predicate acts lasted over a "substantial period of time," then 

it must allege a threat of continued criminal activity. Id. at 

242, 109 S.Ct. at 2902; Marshall-Silver, 894 F.2d at 596. 

Conversely, if a plaintiff alleges that the predicate acts lasted 

a substantial period of time, then it need not allege a threat of 

future criminal conduct. Therefore, a plaintiff alleging a 

closed-ended scheme has both a lesser burden in that it does not 

have to demonstrate a threat of future harm, and a greater burden 

in that it must establish that the predicate acts continued over 

a substantial period of time. 

 Although we do not have a bright-line rule establishing 

how long the predicate acts must last to constitute a 

"substantial period of time," I will assume that the period of 

over three years in this case would satisfy any such 

definition.32 Yet, simply by clearing this duration hurdle the 

Estate does not establish continuity for we have stated clearly 

and repeatedly that duration is a necessary but not sufficient 

condition to proving continuity. In Hindes v. Castle, for 

example, we stated: 

 The post-H.J. Inc. cases decided by this 

court which have focused on pattern all make 

clear that duration is the sine qua non of 

continuity. While it is not in itself 

sufficient to establish a pattern, a 

determination that must be made in light of 

 

 

32While I treat this case as a closed-ended case, obviously 

if I considered it as open-ended my result would be the same. 
all of the Barticheck factors, no pattern can 

be shown without the required duration. 

937 F.2d at 873 (emphasis added). Likewise, in Marshall-Silver

we recognized: 

 [I]f the Court in H.J. Inc. intended that the 

duration of the predicate acts or the threat 

arising therefrom should be determinative 

 . . . we would not have expected the Court to 

eschew providing a specific standard in favor 

of a fact oriented, case-by-case development. 

894 F.2d at 597 (emphasis in original) (dicta); see also Kehr 

Packages, 926 F.2d at 1412 (noting that "the length of time over 

which the criminal activity occurs or threatens to occur is an 

important factor," but not stating that it is dispositive). 

Accordingly, a more detailed analysis of the complaint is 

required.33

 

 

33Our rule that duration is a necessary but not sufficient 

condition to establish continuity is consistent with the Supreme 

Court's statement in H.J. Inc.: "petitioners claim that the 

racketeering predicates occurred with some frequency over at 

least a 6-year period, which may be sufficient to satisfy the 

continuity requirement." 492 U.S. at 250, 109 S.Ct. at 2906 

(emphasis added). By using the word "may," the Court implicitly 

rejected the notion that duration alone establishes continuity. 

 Precedents in other circuits could be read to suggest 

that duration alone can satisfy continuity. See, e.g., Dana 

Corp. v. Blue Cross & Blue Shield Mutual, 900 F.2d 882, 886-87 

(6th Cir. 1990) (stating that in a single-scheme, single-victim 

case "the allegations of fraud occurring for a period of 

seventeen years, along with the specific mailings evidencing such 

a scheme, are sufficient to state a claim of a pattern of 

racketeering activity"); Fleet Credit Corp. v. Sion, 893 F.2d 

441, 446-47 (1st Cir. 1990) (finding that 95 fraudulent mailings 

sent over a four and one-half year period are sufficient to 

establish continuity); Walk v. Baltimore & Ohio & R., 890 F.2d 

688, 690 (4th Cir. 1989) (reversing dismissal where complaint 

alleged 10-year scheme to defraud plaintiffs); Jacobson v. 
 In Barticheck v. Fidelity Union Bank/First Nat'l State, 

832 F.2d 36, we set forth six factors that a court should address 

in considering whether the plaintiff has alleged a pattern of 

racketeering: (1) the number of unlawful acts; (2) the length of 

time over which the acts were committed (duration); (3) the 

similarity of the acts; (4) the number of the victims; (5) the 

number of perpetrators; and (6) the character of the unlawful 

activity. Id. at 39. The majority nevertheless concludes that 

having "found a pattern of racketeering activity in both the 

duration of and the on-going threat implicit in defendants' 

regular way of doing business [it] will not go on to analyze this 

case under the six Barticheck factors." Majority typescript at 

40. The majority then indicates that its decision not to employ 

the Barticheck factors does not mean that they are irrelevant in 

determining where there is continuity, as a court may consider 

the factors if relatedness and continuity are in doubt. 

 

Cooper, 882 F.2d 717, 720 (2d Cir. 1989) (stating that continuity 

existed because predicate acts alleged occurred over "a matter of 

years"). However, it is not clear that in any of these cases, 

the courts of appeals faced a factual situation analogous to the 

one presented here, i.e., a dispute over the profits of a 

partnership. This case most similar to this one is Jacobson. In 

Jacobson, the plaintiff alleged that the two defendants, one of 

which was his son, attempted to defraud him out of real estate 

holdings that he owned. While the nature of the dispute is 

somewhat similar, the alleged predicate acts went beyond mail 

fraud and included extortion, larceny, offering false instruments 

for filing, and usury. 882 F.2d at 719. Thus, the character of 

the unlawful activity in Jacobson is vastly different than that 

alleged here. In any event, we are not bound by Jacobson. 
 I reject the majority's approach. To start with, 

continuity is in doubt here. But quite aside from that 

consideration it seems to me that the majority's approach 

inevitably leads to analytical looseness in determining whether 

there has been a pattern of racketeering activity. While I do 

not doubt that in practice the Barticheck factors cannot be 

applied with mathematical precision, at least the factors are 

guidelines in determining whether the plaintiff has demonstrated 

continuity and relatedness. 

 The majority opinion would be more justifiable if it 

were to say that after H.J., Inc., the earlier explicated 

Bartichek factors are no longer relevant in any continuity 

analysis. While I would disagree with that holding, such a 

result would have some analytical consistency. But by saying the 

Bartichek factors are relevant in some cases but not in others, 

see majority typescript at 40-41 & n.21, the majority winds up 

saying that the Bartichek factors -- which are designed to answer 

the broader question of whether particular facts fairly can be 

characterized as a RICO case -- may shed light on whether a 

three-month long scheme constitutes a pattern of racketeering 

activity but not on whether a three-year long scheme constitutes 

such a pattern. It seems to me self-evident that there are 

three-month long schemes that clearly fall within RICO's purview 

and three-year schemes that clearly do not. Thus, if the 

Bartichek factors are relevant at all, they are relevant in 
shedding light on all cases. The majority's approach to the 

complex statute does injustice to the Supreme Court's admonitions 

to courts to take a "flexible approach" when interpreting the 

"continuity" prong of the statute and to develop the concepts 

behind "pattern of racketeering activity" on a case by case 

basis. See H.J. Inc., 492 U.S. at 238, 243, 109 S.Ct. at 2900, 

2902-03. See also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 

500, 105 S.Ct. 3275, 3287 (1985) (Congress "and the courts" 

should "develop a meaningful concept of 'pattern.'") (emphasis 

added). 

 Of course, as I have indicated, we decided Barticheck

before the Supreme Court's decision in H.J. Inc. Nevertheless, 

we have noted in post-H.J. Inc. cases that the Barticheck factors 

are still relevant and must be considered "'as they bear upon the 

separate questions of continuity and relatedness.'" Hindes, 937 

F.2d at 873 (quoting Banks, 918 F.2d at 423); accord Midwest 

Grinding Co., Inc. v. Spitz, 976 F.2d 1016, 1023-25 (7th Cir. 

1992) (noting that factors set forth in Morgan v. Bank of 

Waukegan, 804 F.2d 970, 975 (7th Cir. 1986), which are similar to 

Barticheck factors, apply even after H.J. Inc.). In MarshallSilver, we recognized that all of the Barticheck factors except 

the third, the similarity of criminal acts, are relevant to the 

question of continuity. 894 F.2d at 595 n.1; see also Hindes, 

937 F.2d at 873 (reaffirming this view). Thus, the question of 

continuity is an "'inquiry into the extent of the [defendant's] 
racketeering activity,'" Marshall-Silver, 894 F.2d at 595 

(quoting Barticheck, 822 F.2d at 40), and requires an examination 

of the five Barticheck factors relevant to continuity. Moreover, 

in applying these factors, we must take a "natural and common 

sense approach" to continuity. H.J. Inc., 492 U.S. at 237, 109 

S.Ct. at 2899. In view of these precedents in which so many of 

the judges of this court have joined, I am perplexed at the 

majority's subordination of Barticheck. 

 Inasmuch as I would apply Barticheck in this case I 

will now make an analysis of the factors it set forth. The first 

factor, the number of unlawful acts, might appear to weigh in 

favor of continuity as the Estate alleged that the defendants 

engaged in over 40 predicate acts. However, as we stated in Kehr 

Packages, "the continuity question should not be affected by the 

fact that a particular fraudulent scheme involved numerous 

otherwise 'innocent' mailings, rather than only a few." 926 F.2d 

at 1414. Rather, what needs to be considered is the underlying 

scheme: "Although the mailing is the actual criminal act, the 

instances of deceit constituting the underlying fraudulent scheme 

are more relevant to the continuity analysis." Id.; see also

Midwest Grinding Co., 976 F.2d at 1024 ("Although the sheer 

number of predicate acts might appear at first glance to prove 

continuity, when it comes to a pattern premised on acts of mail 

or wire fraud, the volume of mailings is not dispositive."). 
 In this case, the alleged underlying scheme was an 

attempt to defraud the Estate out of its rightful share of the 

partnership income. Thus, the allegations of fraud relate to a 

discrete dispute, rather than to numerous distinct attempts to 

defraud. To paraphrase Kehr Packages, "[i]t should not be 

relevant . . . that [the defendants] sent [checks] on a monthly 

basis, rather than quarterly or yearly." 926 F.2d at 1414. 

Thus, "the sizable number of mailings does not show that the 

defendants operated a long-term criminal operation." Midwest 

Grinding Co., 976 F.2d at 1025. Accordingly, this factor weighs 

against a finding of continuity. 

 The second factor is duration. As I noted above, the 

alleged fraudulent activity lasted for at least three years. 

However, the significance of the length of the alleged scheme is 

diminished by the nature of the scheme itself. In this regard, I 

reiterate that the defendants repeated the same allegedly 

fraudulent act over three years. Thus, this is not a case in 

which each mailing constituted a new fraudulent act. See Kehr 

Packages, 926 F.2d at 1415 (distinguishing Fleet Credit Corp. v. 

Sion, 893 F.2d 441 (lst Cir. 1990), because in Fleet Credit "each 

mailing constituted a new fraudulent act"). As we noted in 

Marshall-Silver: 

 Where such a fraudulent scheme inflicts or 

threatens only a single injury, we continue 

to doubt that Congress intended to make the 

availability of treble damages and augmented 

criminal sanctions dependent solely on 

whether the fraudulent scheme is well enough 
conceived to enjoy prompt success or requires 

pursuit for an extended period of time. 

894 F.2d at 597. Therefore, while the second factor, duration, 

does weigh in favor of continuity, it is not a heavy weight on 

the scale. I will not discuss the third factor, the similarity 

of the alleged criminal acts, as that factor concerns 

relatedness, which I have found in this case. 

 The fourth factor, number of victims, weighs against a 

finding of continuity for, as the district court correctly 

indicated, this is a single-victim case. The Estate disputes 

this conclusion, contending that all six of the beneficiaries of 

the Estate are victims, including a charitable foundation that 

ultimately benefits hundreds, if not thousands, of people. Brief 

at 27 n.18. Yet, this argument is supported neither by the case 

law nor the amended complaint itself. In Kehr Packages, we 

addressed an analogous situation and found that the only victim 

of the defendants' alleged criminal activity was the company and 

not its shareholders or its guarantors. We reached this 

conclusion because "Kehr's individual shareholders and 

guarantors, and the holders of pledged collateral, were affected 

only indirectly." 926 F.2d at 1418-19; see also Hughes, 945 F.2d 

at 611 (noting that alleged scheme affected single victim, 

"albeit a class of victims," in rejecting RICO claim). 

Similarly, here the scheme affected the beneficiaries of the 

Estate only indirectly. 
 Additionally, throughout its amended complaint, the 

Estate maintains that the fraudulent conduct deprived it, the 

Estate, of its rightful share of the income. Indeed, according 

to the 1964 Partnership Agreement, the deceased party's share of 

the income is payable to his estate, not to his heirs. App. at 

155. While it is true that the presence of only one victim, like 

the existence of only one scheme, does not necessarily preclude 

the finding of a RICO pattern, this fact clearly weighs against 

the finding of continuity. See United States Textiles, Inc. v. 

Anheuser-Busch Cos., 911 F.2d 1261, 1268 (7th Cir. 1990). 

Indeed, when there is only one victim and that victim is engaged 

in a business relationship with the defendant, the dispute 

between the parties may be nothing more than a civil controversy. 

 The fifth factor, the number of perpetrators, does 

appear to weigh in the Estate's favor. The district court stated 

that there was only one perpetrator, "Daniel Tabas or individuals 

under his control." Opin. at 8-9. But this conclusion is 

inherently contradictory for even if the other perpetrators are 

under Daniel's control, they still existed. In fact, the 

district court's description could be used to describe an 

organized crime family, yet clearly Congress meant RICO to cover 

organized crime. Nonetheless, this error is not significant, for 

even if the number were as large as the Estate argues, the fact 

that more than one person was involved in a scheme to defraud 

that lasted a substantial period of time cannot without more 
establish continuity. Indeed, in some ways this is the least 

important factor. Cf. Wade v. Hopper, 993 F.2d 1246, 1251 (7th 

Cir.) (per curiam) (listing factors relevant for continuity 

determination similar to those listed in Barticheck but not 

including number of perpetrators), cert. denied, 114 S.Ct. 193 

(1993); Morgan v. Bank of Waukegan, 804 F.2d at 975 (listing same 

factors in pre-H.J. Inc. case). Thus, this factor does not place 

a heavy weight on the continuity side of the scale. 

 The final factor, the character of the unlawful 

activity, is perhaps most important in assuring that RICO is 

applied in a manner consistent with congressional intent. 

Congress aimed to prevent long-term criminal activity, but not to 

federalize every garden-variety claim of fraud. "The concept of 

'continuity' plays an important constraining role in the 

operation of the RICO statute" by requiring a court to examine 

not only the "period of time over which the predicate acts 

occurred or . . . during which any threatened criminal activity 

would be likely to last," but also the character of the predicate 

acts and the extent of the injury generated by the acts. 

Marshall-Silver, 894 F.2d at 596-97. In this case the character 

of the alleged acts of mail fraud and the confined extent of the 

injury weigh heavily against the Estate. "Repeated mailings in 

furtherance of a single scheme to inflict one fraudulent injury 

may be no indication of the underlying fraud's continuity." 
Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1295 

(7th Cir. 1992). 

 As I already have noted, this case evolves from an 

ongoing dispute regarding the appropriate split of a 

partnership's profits. The allegations of fraud do not pertain 

to how Tabas Enterprises conducts its business, but only to its 

internal functioning. Moreover, unlike other conduct which can 

constitute racketeering activity, such as extortion, robbery, or 

murder, there is nothing inherently criminal in mailing a letter 

containing a check or a tax form. See 18 U.S.C. § 1961(1). 

Indeed, the vast majority of mailings undoubtedly are lawful. 

Thus, in this case the mailings could be regarded as racketeering 

activity only by reference to matters beyond the letters and 

their contents. 

 The unreasonableness of regarding the mailing of the 

thirty-nine $15,000 checks as RICO predicate acts in this case is 

demonstrated by considering what would have happened if the 

defendants had delivered the checks rather than mailed them. In 

that case, they could not have committed mail fraud and the 

Estate could not have pleaded a RICO case, as there would have 

been no predicate acts on which to base the complaint. Rather 

than seeking threefold damages under RICO, 18 U.S.C. § 1964(c), 

the Estate would have been limited to a state law claim -- even 

though at bottom the unlawful activity in both that hypothetical 
case and this case involves conduct of precisely the same 

character. I thus ask the following question: is it conceivable 

that Congress intended that RICO could be applied to a defendant 

who mails substantial payments to the plaintiff, but not to the 

same defendant if it delivers the payments?34 The question 

answers itself. Thus, the fact that this case involves mail

fraud rather than some other type of fraud is entirely 

fortuitous, and that fortuity should not result in a windfall to 

the plaintiffs. But by ignoring the Bartichek factors, and 

therefore failing to inquire into the character of the unlawful 

activity, the majority endorses just that counterintuitive 

result. 

 I recognize that the complaint is rife with contentions 

that the defendants' activity defrauded the Estate out of its 

fair share of the partnership's income. Yet the Estate does not 

allege that the defendants' conduct has ramifications outside the 

confines of the immediate dispute regarding the division of the 

partnership's profits. Thus, the broader threat is minimal at 

most. See Meade v. Meade, 1991 WL 243539, *5 (E.D. Pa. Nov. 18, 

1991) ("This is a dispute between a small number of parties, and 

 

 

34While the majority answers that Congress did intend to 

distinguish between mailings and hand deliveries as the former 

but not the latter could be mail fraud, this answer misses my 

point. My point is that in considering the character of the 

unlawful acts in accordance with the sixth Barticheck factor, the 

use of the mails was purely fortuitous in this particular case 

and it was the alleged fraud and not how the checks were 

delivered which injured the Estate. 
neither directly affects nor has wider implications for a large 

number of people. Actual and threatened societal injury is 

little, if any. Finally, each alleged act of mail and wire fraud 

forms part of one, extended scheme, reinforcing the essentially 

isolated nature of the alleged racketeering activity."), 

reconsideration denied, 1992 WL 6929 (E.D. Pa. 1992), aff'd, 998 

F.2d 1004 (3d Cir. 1993) (table); Rumbaugh v. Chandler, 1991 WL 

169046, *4 (E.D. Pa. Aug. 27, 1991) (App. at 1893-900) ("This 

action does not concern an extensive criminal enterprise whose 

long-standing, repeated conduct has caused and will continue to 

cause a severe injury to the community. Rather, it is a private 

dispute between two ex-partners that has continued over twelve 

years in various forms."). 

 I make one final but critical point with respect to the 

character of the unlawful activity in this case. I focus on this 

point because I regard the character of the activity as the most 

significant Barticheck factor in this case. As the majority 

points out, 39 of the predicate acts consist of the mailing of 

$15,000 checks to the Estate and the other two concern mailing 

tax forms. Reliance on such predicate acts is problematic 

because the Estate is pleading in essence that the defendants 

committed "mail fraud" by sending it money. I can conceive of 

cases in which a defendant's act of sending money may constitute 

fraud; perhaps, even, the defendants' activities (as alleged in 

this case) theoretically could be prosecuted under the mail fraud 
statute,35 although it must be remembered that "not every use of 

the mails . . . in connection with a scheme is punishable" as 

mail fraud. United States v. Frey, 42 F.3d 795 (3d Cir. 1994), 

slip op. at 3 (3d Cir. Dec. 13, 1994). But three undisputed 

facts belie the conclusion that this is therefore a RICO case. 

First, between March 1983 and September 1986, "Tabas Enterprises 

paid for various personal expenses incurred by Harriette [as well 

as] Daniel." Majority typescript at 4. Second, "[p]rior to 

Charles's death . . . the brothers appeared to have an 

arrangement under which Tabas Enterprises paid for many personal

and business expenses." Majority typescript at 4 n.2 (emphasis 

added). Finally, as the majority indicates, plaintiffs 

acknowledge that as of the time of the state court lawsuit, "they 

believed Daniel was taking more than he was entitled to under the 

partnership agreement . . . They contend [only] that they did not 

know the extent to which they were being short-changed . . . ." 

Majority typescript at 5 n.3 (emphasis added). 

 These facts make difficult to accept the majority's 

conclusion that the "mailings [were] 'designed to lull [the 

Estate] into a false sense of security, postpone [its] ultimate 

complaint to the authorities, and therefore make the apprehension 

 

 

35See Schmuck v. United States, 489 U.S. 705, 714-15, 109 

S.Ct. 1443, 1450 (1989) ("To the extent that Schmuck would draw 

from these previous cases a general rule that routine mailings 

that are innocent in themselves cannot supply the mailing element 

of the mail fraud offense, he misapprehends this Court's 

precedents."). 
of the defendants less likely than if no mailings had taken 

place.'" Majority typescript at 35 n.18 (citation omitted). In 

any event, no matter how the Estate characterizes this case, and 

even if there were some fraudulent acts, this suit is first and 

last a dispute about how the partnership income should have been 

distributed. Seen in this context, the mailing of the checks was 

so benign an act that it is a thin foundation on which to build 

the continuity element. At bottom, regardless of the pejorative 

words which the Estate uses to characterize the defendants' 

conduct, this case involves a commercial dispute over a discrete 

issue, the amount due to the Estate in its monthly draws. Such a 

dispute is simply not a RICO controversy.36

 I recognize that the majority has listed numerous 

questionable expenses charged against Tabas Enterprises and I 

further acknowledge that the defendants may have state law 

liability for some of these expenses. But it is important in 

considering this case to keep in mind that the incurring of these 

expenses is not the predicate criminal conduct charged in this 

case. Rather, the predicate acts to establish RICO jurisdiction 

are the use of the mails to disburse checks and to distribute 

forms. Overall, therefore, after consideration of the character 

 

 

36Keeping in mind that this case is really about who gets to 

use the partnership income for what purpose, consider what would 

have happened if the defendants had paid nothing to the Estate 

over the three-year period in which they actually paid $585,000. 

The Estate would have gotten nothing and there would not be a 

RICO case. 
of the unlawful activity, together with the other relevant 

Barticheck factors, both qualitatively and quantitatively, I 

conclude that the Estate has failed to establish a genuine issue 

of material fact over continuity and that this case is yet 

another attempt by a plaintiff "to fit a square peg in a round 

hole by squeezing garden-variety business disputes into civil 

RICO actions." Midwest Grounding Co., 976 F.2d at 1025. 

 In reaching my conclusions, I have taken particular 

note of our opinion in Jordan v. Fox, Rothschild, O'Brien & 

Frankel, 20 F.3d 1250 (3d Cir. 1994), which affirmed the district 

court's judgment granting certain of the defendants "summary 

judgment on the RICO claim against them for failure to show 

relatedness and continuity . . . essentially for the reasons 

given by the district court." Id. at 1254. The district court 

opinion is reported as Jordan v. Berman, 792 F. Supp. 380 (E.D. 

Pa. 1992). Jordan is a complex case involving a controversy 

between tenants and a landlord, the details of which I need not 

discuss. Germane here is the district court's conclusion that 

the plaintiffs had not adduced "evidence from which one could 

reasonably find a pattern of racketeering activity under 

prevailing case law." Id. at 388. The district court explained 

the basis for its decision as follows: 

 Few relationships in our society seem to 

engender more conflict than that of landlord 

and tenant. The aggressive landlord and the 

disgruntled tenant have almost become 

stereotypical. The instant case involves a 

typical landlord-tenant dispute about the 

construction of a lease and what sums or 
services the respective parties are entitled 

to. Permitting trash to accumulate for a 

day, disrupting utility service for half a 

day and vigorously pursuing a plausible 

contract interpretation are generally not the 

kind of things from which RICO cases are 

made. The actions of defendants and their 

agents, however characterized, do not pose 

the type of significant societal threat that 

RICO was designed to deter or penalize. 

Id. (emphasis added). By affirming "essentially for the reasons 

given by the district court," we approved the foregoing 

statement, even though the case involved the use of the mails and 

thus, in theory, could have been a RICO case. 

 If we substituted the relationship between partners for 

the landlord-tenant relationship, the underscored language in the 

above quotation would describe this case. Certainly the 

partnership relationship, like the landlord-tenant relationship, 

is a frequent source of disputes. The dispute in this case, to 

quote from and to paraphrase Jordan v. Berman: 

 involves a typical [partnership] dispute 

about the construction of a [partnership 

agreement] and what sums . . . the respective 

parties are entitled to. . . . The actions 

of defendants and their agents, however 

characterized, do not pose the type of 

significant societal threat that RICO was 

designed to deter or penalize. 

Thus, this case is no more a RICO case than was Jordan. 

 In coming to my conclusions I also have found it useful 

to consider United States v. Pelullo, 964 F.2d 193 (3d Cir. 

1992), a case which the majority cites and on which the Estate 

relies. Pelullo is a post-H.J. Inc. case in which we found that 
a RICO violation could be proved based on a closed-ended scheme 

that lasted 19 months. In Pelullo, the defendant was a chief 

executive officer of The Royale Group, Ltd., a publicly held 

corporation which through subsidiaries acquired six hotels in 

Miami Beach. In June 1984, the hotels obtained a $13.5 million 

loan from a subsidiary of American Savings and Loan Association. 

Under the terms of the loan, $6.2 million was to be used for 

renovation, with American retaining this portion and disbursing 

the funds as renovation costs were incurred. To obtain a 

disbursement, Royale was required to submit draw requests which 

set forth a certified itemization of the costs. 

 The indictment charged Pelullo with three fraudulent 

schemes: (1) defrauding American, Royale, and Royale's 

shareholders by submitting false documents in connection with 

certain draw requests; (2) defrauding Royale of $114,000 by 

diverting cash from one of its subsidiaries to repay a debt 

Pelullo owed; and (3) defrauding Royale of approximately $500,000 

by diverting money for uses other than for the purposes of the 

loans. Accordingly, the alleged number of schemes in Pelullo was 

larger than the one scheme alleged here. And while the number of 

victims in Pelullo could be characterized as small, the nature of 

the unlawful activity had a different ring to it, because in 

Pelullo the alleged perpetrator was an officer in a public 

company and the main victims (American and Royale) were public 

entities. Moreover, the alleged fraud was not confined to 
Royale's internal operations, but took place in the context of 

its normal external business operations. Thus, even though the 

Estate relies on Pelullo, that case involved much more than a 

dispute between partners and does not support the Estate's 

position. Pelullo nevertheless is instructive to illustrate the 

contrast between a real RICO case and the Tabas's dispute. 

 While I do not suggest that a plaintiff alleging a 

single fraudulent scheme injuring a single victim in the context 

of a private dispute never can maintain a RICO claim, it would be 

unusual for such a case to be covered by RICO, especially where 

the alleged predicate acts are mail fraud. In reaching this 

conclusion, I am cognizant that "RICO's pattern requirement does 

not require the existence of more than one 'scheme,'" MarshallSilver, 894 F.2d at 596, and that the Supreme Court has declared 

that the RICO statute should be read broadly "to reach both 

'legitimate' and 'illegitimate' enterprises," Sedima, S.P.R.L. 

v. Imrex Co., 473 U.S. 479, 499, 105 S.Ct. 3275, 3286 (1985). 

Furthermore, I recognize that the Court has noted that civil RICO 

appears to be "evolving into something quite different from the 

original conception of its enactors," and that this problem is 

for Congress, not the courts, to correct. Id. at 499-500, 105 

S.Ct. at 3287. See also NOW v. Scheidler, 114 S.Ct. 798, 806 

(1994). 

 Yet our precedents clearly establish that Congress did 

not intend RICO to cover every garden-variety fraud. See
Marshall-Silver, 894 F.2d at 597; accord Midwest Grinding Co., 

976 F.2d at 1025 ("[I]t is equally evident that RICO has not 

federalized every state common-law cause of action available to 

remedy business deals gone sour."). Rather, the Supreme Court, 

"by refocusing the pattern requirement on the sort of long-term 

criminal activity that carries some quantum of threat to 

society," Midwest Grinding Co., 976 F.2d at 1025, has attempted 

"to prevent RICO from becoming a surrogate for garden-variety 

fraud actions properly brought under state law," id, at 1022; see

also Marshall-Silver, 894 F.2d at 596-97 (noting that continuity 

plays an important role in constraining operation of RICO statute 

to only those activities which threaten societal injury). 

Moreover, the Supreme Court has confined the scope of RICO by 

limiting the persons who can be liable under 18 U.S.C. § 1962(c). 

See Reves v. Ernst & Young, 113 S.Ct. 1163 (1993). 

 In my view, the majority's opinion inexorably will 

result in federalizing numerous internal business disputes in a 

way that Congress never could have intended. The opinion as 

applied in this circuit will lead attorneys to repackage as RICO 

actions ordinary commercial controversies in which the parties 

have communicated by mail or wire. Indeed, it seems obvious that 

the principles of this case could be applied to routine 

commercial disputes in many situations in which the parties have 

been in an ongoing relationship, e.g., partnerships, tenancies, 

employer-employee, service contracts, supply contracts, equipment 
rentals, brokerage accounts, and others as well. A party in such 

a relationship, dissatisfied with the other party's performance, 

will be able to establish RICO jurisdiction by alleging fraud and 

pointing to the other party's numerous mailings in furtherance of 

its understanding of the terms of the relationship. For the 

foregoing reasons, I dissent. Chief Judge Sloviter,37 and Judges 

Hutchinson, Scirica, Cowen, and Nygaard38 join in this dissent. 

 

 

 

37Judge Sloviter joins with the following statement. 

Although I do not agree with every detail of Judge Greenberg's 

dissent, I join it because it comes closest to expressing my 

frustration that the analytic litany that the courts must now 

conduct in civil RICO cases leads to a result, the federalization 

of garden variety fraud, that is directly contrary to Congress's 

expressed intent. 

 

38Judge Nygaard joins in the dissent, believing that the 

district court properly granted summary judgment in favor of the 

defendants. He bases his conclusion that summary judgment was 

proper, however, upon plaintiffs' failure to show facts giving 

rise to mail fraud under RICO rather than upon a failure to 

establish a pattern of racketeering activity. Under Judge 

Nygaard's analysis, the mailings here were, as in United States 

v. Maze, 414 U.S. 395, 94 S.Ct. 645 (1974), merely post-fraud 

means of transmitting matter from one place to another. Judge 

Nygaard believes that inasmuch as the fraud "had reached 

fruition," at the time of the mailing, it cannot be said that the 

mailings in question were for the purpose of executing the 

scheme, as required by the statute. Kann v. United States, 323 

U.S. 88, 65 S.Ct. 148 (1944). Hence, it was not "an essential 

step" in the success of the fraud. Schmuck v. United States, 489 

U.S. 705, 714, 109 S.Ct. 1443, 1450 (1989).