U.S. Department of JusticeCriminal DivisionOrganized Crime and Racketeering Section

Civil RICO:A Manual for

Federal Attorneys

October 2007

RICO ManForFedAtt Cover  10/11/07  2:08 PM  Page 1

Civil RICO:18 U.S.C. §§ 1961-1968

A Manual forFederal Attorneys

October 2007

Prepared by the Staff of the Organized Crime and Racketeering Section United States Department of Justice, Washington, DC 20005

Douglas E. Crow, Principal Deputy ChiefAmy Chang Lee, Assistant Chief(202) 514-3594

Written By:Frank J. Marine, ConsultantPatrice M. Mulkern

The assistance of the following is acknowledged and greatly appreciated:David M. BrinkGregory C.J. LisaJames Francis McKenzieMelissa Marquez-OliverMelvin OteyGerald TonerCatherine M. Weinstock

Cover Design by Linda M. Baer

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TABLE OF CONTENTS

PAGEPREFACE i

TABLE OF CONTENTS ii

I. INTRODUCTION AND APPROVAL PROCESS 1

A. Introduction 1

1. Overview 1

2. Guidelines for Bringing Civil RICO Lawsuits 3

B. Prior Approval by the Organized Crime and Racketeering Sectionof All Government Civil RICO Lawsuits is Required 6

1. Approval Authority and Process 6

2. Post-Complaint Duties 8

II. OVERVIEW OF EQUITABLE RELIEF, CIVIL RICO, AND ITSLEGISLATIVE HISTORY 10

A. Origins and General Nature of Courts’ Equitable Authority 10

1. Origins of Court’s Equitable Authority 10

2. Courts Are Vested With Broad Equitable Powers To RemedyUnlawful Conduct, Including Ordering Intrusive, StructuralChanges in Wrongdoers’ Entities and Practices 13

B. Congressional Findings and Purposes Regarding Civil RICO 16

C. Congress Designed 18 U.S.C. § 1964 (a) to Authorize District CourtsTo Impose the Full Panoply of Equitable Relief 18

1. Injunctions 21

2. Divestiture, Dissolution and Reorganization 21

3. Disgorgement 22

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PAGE4. Limitations on Future Activities and Removal from Positions

in an Entity 25

5. Appointment of Court Officers 26

D. Civil RICO, 18 U.S.C. § 1964, is Patterned After Antitrust Laws,and Hence Vests the Attorney General of the United States With theExclusive Authority to Obtain Equitable Relief, and Vests PrivateLitigants, But Not the United States, With the Authority to Sue forTreble Damages 26

E. Equitable Relief Available Under Civil RICO is at Least As Broad AsEquitable Relief Under the Antitrust Laws, If Not Broader 33

III. ELEMENTS OF GOVERNMENT CIVIL RICO LAWSUITS ANDDEFENSES 38

A. Standards For Obtaining Equitable Relief 38

1. The Government Must Establish a Reasonable Likelihood ofFuture Violations By a Preponderance of the Evidence 38

2. Making Due Provision for the Rights of Innocent Persons 41

B. Substantive Issues In Proving Government Civil RICO Claims 43

1. A Defendant’s Liability For A Racketeering Act May Be BasedOn “Aiding and Abetting” 43

2. Principles of Respondeat Superior 47

3. A Corporation’s or Labor Union’s Scienter May Be EstablishedBy The Collective Knowledge of The Corporation’s or LaborUnion’s Employees and Representatives 52

4. The Prohibition Against Intracorporate Conspiracies UnderThe Antitrust Laws Does Not Apply To Government CivilRICO Lawsuits 59

C. Certain Defenses Do Not Apply to Government Civil RICO ActionsFor Equitable Relief 61

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PAGE1. Laches and Statute of Limitations 61

2. United States’ Civil RICO Claims Cannot Be Implicitly Waived 64

3. Equitable Estoppel Can Not Lie Against the United States, IfEver, Absent Affirmative Misconduct 66

4. The United States Is Not Subject to the Defenses of UncleanHands or In Pari Delicto 69

D. Collateral Estoppel 71

IV. JURISDICTION AND VENUE 75

A. Serving the Summons 75

B. General Principles Governing Subject Matter and Personal Jurisdiction 79

1. Subject Matter Jurisdiction 79

2. Due Processing Requirements for State Courts’ Exercise of InPersonam Jurisdiction Under the Fourteenth Amendment as toState Claims 79

3. Due Process Requirements Under the Fifth Amendment forFederal Courts’ Exercising In Personam Jurisdiction OverFederal Causes of Action 85

C. Civil RICO’s Jurisdiction and Venue Provision 87

1. Overview of Civil RICO’s Jurisdiction and Venue Provision 88

2. The Bases for Venue Under Section 1965(a) 91

a. The District In Which Such Person “Resides” 91b. “Found” 91c. “Has an Agent” 92d. “Transacts His Affairs” 92

3. Nationwide Service of Process Under Section 1965(b) 93

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PAGE4. Transfer of Venue - Forum Non-Conveniens 95

V. PROCEDURAL MATTERS 96

A. Expedition of Actions 96

B. Adequacy of the Pleading and Drafting the Complaint 96

1. Adequacy of the Pleading 96

a. General Principles 96b. Application of Civil Rule 9(b) 100

2. Drafting the Complaint 102

C. There is No Right to a Jury Trial on Claims for Equitable Relief 104

D. Standards Governing Motions for Summary Judgment 109

1. General Principles 109

2. Issues of Intent Generally are Ill-Suited for Summary Judgment 113

VI. DISCOVERY 114

A. Civil Investigative Demands (CID) 114

1. RICO’s CID Provisions 114

2. Background 117

3. Issuance of a CID 120

4. Content of a CID 122

5. Proper Service of a CID 123

6. Racketeering Documents Custodians 124

7. Enforcement and Litigation of CIDs 126

a. Petitions by the Attorney General 126

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b. Petitions by the CID Recipient 127c. Powers of the District Court 129

B. Discovery in General 130

C. Privileges 137

1. Deliberative Process, Presidential Communications andInvestigatory Files Privileges 137

a. The Deliberative Process Privilege 138b. The Presidential Communications Privilege 139c. The Investigatory Files Privilege 143

2. Confidential Informant Privilege 145

3. Fifth Amendment Privilege 153

VII. JUDGMENTS, CONSENT DECREES,  AND ENFORCEMENT 157

A. Judgments and Consent Decree 157

1. The General Nature of Consent Decrees and Rules of TheirConstruction 157

2. Courts Have Authority to Modify Judgments and ConsentDecrees Under Some Circumstances 162

B. Default Judgments 164

C. Scope Of Injunctions, Requisite Specifity, And Their ApplicationTo Non-Parties 166

1. Scope of Injunctions and Requisite Specifity 166

2. An Injunction May Apply to Non-Parties in VariousCircumstances 172

D. Removal Orders and Prohibition of Future Activities MayImplicate Property Rights Protected By Due Process 177

E. Court-Appointed Officers in General 186

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PAGE1. Courts Have Inherent Authority to Appoint Officers to Assist

Them in Executing Their Duties 186

2. Court-Appointed Officers Perform Varied Functions 190

a. Devising Remedies 190

b. Administering Operations 192

c. Monitoring Compliance and Adjudicatory Functions 192

3. Article III Considerations 193

F. Contempt 198

1. Determining Whether Contempt is Civil or Criminal in Nature 198

a. The Bagwell Decision 199b. Decisions Following Bagwell 202

2. Different Elements and Procedures Apply to Criminal andCivil Contempt 205

a. Principles Governing Criminal Contempt 206b. Principles Governing Civil Contempt 207

3. A Jury Trial for Criminal Contempt is Required When theSanction Involves A “Serious Fine” or Imprisonment of MoreThan Six Months 211

VIII. GOVERNMENT CIVIL RICO CASES INVOLVING LABOR UNIONS 213

A. Overview of Government Civil RICO Cases Involving Labor Unions 213

1. Overview of Labor Racketeering 213

2. Congress Designed Civil RICO to Combat the LCN’s CorruptInfluence Over Labor Unions 216

3. The United States Department of Justice Adopted A Strategyto Eliminate the LCN’s Corrupt Influence Over Labor Unions 217

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PAGE4. Overview of Essential Relief 219

B. Specific Relief Obtained in Government Civil RICO Cases InvolvingLabor Unions 221

1. Injunctions 221

2. Dissolution, Divestiture and Reorganization 223

3. Court-Appointed Officers 224

(a) Officers to Administer the Affairs of a Union 224(b) Adjudication Officers 228

(i) General Powers 228(ii) Review Authority 229(iii) Disciplinary Powers 229

4. Imposition of Ethical Practices Codes and DisciplinaryProcedures 231

a. Disciplinary Procedures 231b. Due Process and Article III Considerations 234

5. Election Reform 238

6. Removal of Persons From Union Office and Membership,and Prohibitions on Holding Union Office or Membership 240

7. Disgorgement 242

8. Relief Against Non-Parties 243

C. Relief Obtained In Contested Civil RICO Cases Involving Labor Unions 245

1. The IBT Local 560 Case 245

2. The Local 30, Roofers Union Case 247

3. The ILA Local 1804-1 Case 250

4. The IBT Local 295 Case 251

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PAGE5. The IBT Local 282 Case 253

6. The Mason Tenders District Council of LIUNA Case 256

7. The Private Sanitation Industry Ass’n Case 258

8. The LIUNA Local 6A Case 261

D. Union Officials and Entities As Nominal Defendants 262

1. Evidence of Wrongdoing is Not Required to Obtain ReliefAgainst a Nominal Defendant 262

2. Nominal Defendants in Government Civil RICO CasesInvolving Labor Unions 264

E. Specific Issues in Government Civil RICO Cases Involving LaborUnions 267

1. State Action and Due Process Considerations 267

2. First Amendment Issues 270

3. Equitable Relief in Government Civil RICO Cases Does NotViolate, And Is Not-Pre-empted By, The NLRA, The LMRDAor Other Labor Laws 272

a. General Procedures 272b. The NLRA Does Not Pre-empt Government Civil

RICO Lawsuits 274c. The LMRDA Does Not Pre-empt Government Civil

RICO Lawsuits 277d. Other Labor Laws Do Not Pre-empt Government Civil

RICO Lawsuits 281

F. Extortion Of Union Members’ Rights To Free Speech and ToParticipate In Internal Union Democracy Guaranteed By The LMRDA 282

1. Union Members’ Rights Under the LMRDA Constitute IntangibleProperty Within The Meaning of the Hobbs Act 282

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PAGE2. A Defendant “Obtains” or Seeks to “Obtain” Intangible

Property Rights From A Victim Within The Scope of theHobbs Act When He Uses Extortionate Means In Order toExercise Those Rights For Himself or a Third Party in a WayThat Would Profit Them Financially 290

IX. GOVERNMENT CIVIL RICO CASES NOT INVOLVING LABORUNIONS 299

X. MISCELLANEOUS ISSUES 308

A. Prior or Parallel Criminal Proceeding 308

B. Use of Court-Ordered Electronic Surveillance 309

C. Federal Rule of Criminal Procedure 6(e) 313

1. A Government Attorney May Not Disclose “A MatterOccurring Before the Grand Jury” Unless It Falls Within AnException Set Forth in Rule 6(e)(3) 313

2. A Government Attorney Who Has Had Lawful Access to aMatter Occurring Before a Grand Jury May Use Such Matterin Handling a Civil RICO Action, But May Not Disclose SuchMatter, Without a Court-Disclosure Order, to Another Personto Assist in Handling a Civil Action 315

3. A District Court May Order Disclosure of a Grand Jury MatterPreliminary to or in Connection With a Judicial Proceeding 321

APPENDICES

A. United States Attorneys’ Manual Sections on Review and Approval

B. Summary of Each Government Civil RICO Case Involving Labor Unions

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PREFACE

This manual is intended to assist federal attorneys in the preparation and litigation of

cases involving the civil provisions of the Racketeer Influenced & Corrupt Organization Act, 18

U.S.C. §§ 1961-1968.  Federal attorneys are encouraged to contact the Organized Crime and

Racketeering Section of the United States Department of Justice (“OCRS”) early in the

preparation of their case for advice and assistance.

 All Government civil RICO complaints, RICO Civil Investigative Demands and all

proposed settlements of Government civil RICO suits must be submitted, with a supporting

prosecution memorandum,  to OCRS for review and approval before being issued or filed with

the court.  The submission should be approved by the Government attorney’s office before being

submitted to OCRS.  Due to the volume of submissions received by OCRS, Government

attorneys should submit the proposal three weeks prior to the date final approval is needed. 

Government attorneys should contact OCRS regarding the status of pending submissions and

must refrain from finalizing any settlement agreement concerning a proposed civil RICO lawsuit

before final approval has been obtained from OCRS.

The policies and procedures set forth in this manual and elsewhere relating to 18 U.S.C. 

§§ 1961-1968 are internal Department of Justice policies and guidance only.  They are not

intended to, do not, and may not be relied upon to, create any right, substantive or procedural,

enforceable at law by any party in any matter civil or criminal.  Nor are any limitations hereby

placed on otherwise lawful litigative prerogatives of the Department of Justice.

  Pub. L. No. 91-452, 84 Stat. 941 (1970).1

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I

INTRODUCTION AND APPROVAL PROCESS

A. Introduction

1. Overview

RICO was enacted October 15, 1970, as Title IX of the Organized Crime Control Act of

1970  and is codified at 18 U.S.C. §§ 1961-1968.  RICO provides for both criminal and civil1

remedies.  RICO’s civil remedies are set forth in 18 U.S.C. § 1964(a), (b) and (c), which provide

as follows:

(a) The district courts of the United States shall have jurisdiction toprevent and restrain violations of section 1962 of this chapter byissuing appropriate orders, including, but not limited to: orderingany person to divest himself of any interest, direct or indirect, inany enterprise; imposing reasonable restrictions on the futureactivities or investments of any person, including, but not limitedto, prohibiting any person from engaging in the same type ofendeavor as the enterprise engaged in, the activities of which affectinterstate or foreign commerce; or ordering dissolution orreorganization of any enterprise, making due provision for therights of innocent persons.

(b) The Attorney General may institute proceedings under thissection.  Pending final determination thereof, the court may at anytime enter such restraining order or prohibitions, or take such otheractions, including the acceptance of satisfactory performancebonds, as it shall deem proper. 

(c) Any person injured in his business or property by reason of aviolation of Section 1962 of this chapter may sue therefor in anyappropriate United States district court and shall recover threefoldthe damages he sustains and the cost of the suit, including areasonable attorney’s fee, except that no person may rely upon anyconduct that would have been actionable as fraud in the purchaseor sale of securities to establish a violation of section 1962.  The

  To obtain relief under Section 1964(c), a plaintiff must establish that a defendant2

committed a violation of the RICO statute, and that such RICO violation was the proximatecause of injury to the plaintiff’s business or property.  See, e.g., Anza v. Ideal Steel Supply Corp.,547 U.S. ____, _____, 126 S.Ct. 1991, 1996 (2006); Beck v. Prupis, 529 U.S. 494, 496-503(2000); Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992).

2

exception contained in the preceding sentence does not apply to anaction against any person that is criminally convicted in connectionwith the fraud, in which case the statute of limitations shall start torun on the date on which the conviction becomes final.

Section 1964(a) vests the Attorney General of the United States with the exclusive

authority to sue for equitable relief, whereas Section 1964(c) vests private litigants, but

not the United States, with authority to sue for treble damages for injury to their business

or property.  See Section II (D) below.  Because the United States may not sue for treble

damages under Section 1964(c), this Manual does not address such suits for treble

damages.2

To obtain civil equitable relief under 18 U.S.C. § 1964(a), the United States must

prove by a preponderance of the evidence that: (1) a defendant committed or intended to

commit a RICO violation by establishing the same elements as in a criminal RICO case,

except that criminal intent is not required; and (2) that there is a reasonable likelihood

that the defendant will commit a violation in the future.  See Section III (A) below. 

However, this Manual does not address the elements of a criminal RICO violation or the

substantial body of law interpreting criminal RICO because those matters are addressed in

the Organized Crime and Racketeering Section (“OCRS”) manual entitled: Racketeer

Influenced and Corrupt Organizations: A Manual for Federal Prosecutors (4  Ed. Julyth

  (Available at 3 www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/rico.pdf).  3

2000) (“Criminal RICO Manual”).   Therefore, Government attorneys handling civil3

RICO lawsuits should consult OCRS’ Criminal RICO Manual in addition to this Manual.

This Manual first discusses the origins and general nature of courts’ equitable

authority and then addresses the specific equitable relief Congress intended civil RICO to

authorize.  This Manual also includes an analysis of: (1) the elements of Government

civil RICO lawsuits; (2) principles of liability and certain defenses; (3) various procedural

and discovery issues that are likely to arise in Government civil RICO lawsuits; and (4)

analysis of the law governing judgments, consent decrees, enforcement,  injunctions,

contempt and the authority of court-appointed officers.  This Manual also includes

detailed analyses of the Government’s civil RICO lawsuits involving labor unions and

issues likely to arise in such lawsuits as well as other matters.

2. Guidelines for Bringing Civil RICO Lawsuits

Civil RICO, 18 U.S.C. § 1964(a), authorizes potentially intrusive remedies,

including injunctive relief, reasonable restrictions on defendants’ future activities,

disgorgement of unlawful proceeds, divestiture, dissolution, reorganization, removal from

positions in an entity, and appointment of court officers to administer and supervise the

affairs and operations of defendants’ entities and to assist courts in monitoring

compliance with courts’ orders and in imposing sanctions for violations of  courts’ orders. 

See Sections II (C), VII (C), (D) and (E), and VIII (A), (B), and (C) below.  Because such

civil RICO remedies may be powerful and intrusive, the Government should bring a civil

RICO lawsuit only when the totality of the circumstances clearly justify imposition of

http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/rico.pdf

4

such remedies, and not in a routine case where there has been a RICO violation.

Moreover, Government civil RICO lawsuits typically are brought against

defendants that are collective entities such as corporations and labor unions, and hence

such suits may affect innocent third parties such as union members and corporate

shareholders.  See Sections III(A)(2) and (B)(2) and (3) below.  Therefore, the

Government should consider the adverse effects, if any, of a civil RICO lawsuit upon

innocent third parties.  Generally, Government attorneys should apply the same factors in

determining whether to bring a civil RICO lawsuit against a collective entity as they do

with respect to individual defendants.  Thus, Government attorneys must weigh the

sufficiency of the evidence, the likelihood of success at trial and the consequences of a

finding of liability.  

In addition, Government attorneys should consider the following factors, among

others, in determining whether to bring a civil RICO lawsuit against an individual and/or

a collective entity:

(1) the nature and seriousness of the predicate racketeering offenses;

(2) whether the predicate racketeering offenses were committed over asubstantial period of time, and/or pose a threat of continuingunlawful activity;

(3) whether an organized crime group participated in any of thepredicate racketeering offenses or exercised corrupt influence overany proposed enterprise, defendant or related entity;

(4) whether there is a reasonable likelihood that the defendant willcommit unlawful activity in the future;

(5) the pervasiveness of wrongdoing within a collective entity that is aproposed defendant, including the complicity in, or condonation of,the wrongdoing by the collective entity’s officers and management;

  The factors listed are similar to the factors to be considered in determining whether to4

bring criminal charges against a corporation.  See Department of Justice Memorandum from PaulJ. McNulty, Deputy Attorney General on Principles of Federal Prosecution of BusinessOrganizations (December 12, 2006).

5

(6) the defendant’s history of similar unlawful conduct, including priorcriminal, civil or regulatory enforcement actions against it;

(7) whether the defendant has derived unlawful proceeds from hisRICO violation that are subject to disgorgement;

(8) the defendant’s timely and voluntary disclosure of wrongdoing andhis/her or its willingness to cooperate with the authorities toeliminate corruption involving the defendant or related entities;

(9) the existence and adequacy of a collective entity’s complianceprogram and other remedial actions;

(10) collateral consequences, including harm, if any, to innocent thirdparties, including a collective entity’s shareholders, employees, orunion members;

(11) whether and to what extent the sought remedies are likely to beeffective; and 

(12) the availability and adequacy of other remedies.4

No single factor is dispositive.  Rather, these factors must be considered under the totality

of the circumstances.  Moreover, the factors listed are intended to be illustrative of those

that should be considered and not a complete or exhaustive list.

For example, it may be especially appropriate to bring a Government civil RICO

lawsuit where injunctive relief and structural reform is necessary to eliminate extensive

and prolonged corruption in an entity and to cure its ill effects, such as in the cases

involving Government civil RICO lawsuits against labor unions.  In these labor union-

related civil RICO cases, La Cosa Nostra figures and corrupt union officials had exercised

corrupt control and influence over the labor unions involved for many years, and

6

successful criminal prosecution of many of those wrongdoers was not sufficient to

eliminate such systemic corruption from those unions.  In such circumstances, civil

RICO’s equitable remedies, especially injunctive relief, removal of corrupt union officers

and members from the unions, and appointment of court officers to administer and

oversee aspects of the unions’ operations, achieved substantial success in eliminating and

reducing such corruption within the unions involved and related businesses.  See Section

VIII below.

B. Prior Approval by the Organized Crime and Racketeering Section of AllGovernment Civil RICO Lawsuits is Required

1. Approval Authority and Process

The Code of Federal Regulations, 28 C.F.R. § 0.55, provides, in relevant part, as

follows:

§ 0.55 General Function

The following functions are assigned to and shall beconducted, handled or supervised by, the Assistant AttorneyGeneral, Criminal Division

. . . (d) Civil or criminal forfeiture or civil penalty actions(including petitions for remission or mitigation of forfeitureand civil penalties, offers in compromise, and relatedproceedings under the . . . Organized Crime Control Act of1970 . . . [i.e., RICO, 18 U.S.C. § 1961 et. seq.].

. . .(g) Coordination of enforcement activities directed againstorganized crime and racketeering.

Pursuant to USAM § 9-110.010, such authority has been delegated to the

Organized Crime and Racketeering Section of the Criminal Division.  Accordingly, the

following procedures must be followed in all civil RICO lawsuits brought by or against

7

the United States:

(1) No civil RICO complaint shall be filed, and no RICO investigative

demand shall be issued, without the prior approval of OCRS.

(2) No civil RICO complaint shall be settled or dismissed, in whole or

in part, without prior approval of OCRS.

(3) No remedy in any civil RICO lawsuit brought by the United States

shall be sought without prior approval by OCRS.

(4) In any civil RICO lawsuit brought by, or against, the United States,

any adverse decision on an issue involving an interpretation of the RICO statute from any

District Court or any Circuit Court of Appeals shall be timely reported to OCRS, in

addition to reporting to the Solicitor General’s Office and the appropriate Appellate

Section of the Civil or Criminal Divisions, to enable OCRS to submit a recommendation

to the Solicitor General’s Office whether to seek further review of the decision.

(5) In any civil RICO lawsuit brought by, or against, the United States,

any brief submitted in any appeal to any Circuit Court of Appeals involving an issue of an

interpretation of the RICO statute must be timely submitted to OCRS for review prior to

filing the brief in the Court of Appeals.

These requirements are necessary to enable OCRS to carry out its supervisory

authority over all Government uses of the RICO statute and to promote consistent,

uniform interpretations of the RICO statute.  See, e.g., USAM § 110.300 “RICO

Guidelines Policy”, which provides that “[i]t is the purpose of these guidelines to

centralize the RICO review and policy implementation functions in the section of the

8

Criminal Division having supervisory responsibility for this statute,” i.e., OCRS.  

The review process for authorization of all Government civil and criminal suits

pursuant to the RICO statute is set forth in the United States Attorneys Manual.  See

USAM §§ 9-110.010 -- 9-110.400, which provisions are attached as Appendix A.  To

commence the formal review process, submit a final draft of the proposed complaint,

including the remedies sought, and a detailed prosecution memorandum to OCRS.  The

prosecution memorandum should be similar, in organization and types of information

provided, to a RICO criminal prosecution memorandum, which is described in the

Criminal Resource Manual at section 2071 et seq.  The prosecution memorandum should

also address the factors to be considered in determining whether to bring a civil RICO

lawsuit set forth in Section I (A)(2) above.  Before the formal review process begins,

Government attorneys are encouraged to consult with OCRS in order to obtain

preliminary guidance and suggestions.

The review process can be time-consuming, especially in light of the complexity

of Government civil RICO lawsuits and the sensitive remedies involved; and also because

of the likelihood that modifications will be made to the complaint, and the heavy

workload of the reviewing attorneys.  Therefore, unless extraordinary circumstances

justify a shorter time frame, a period of at least 15 working days must be allowed for the

review process.

2. Post-Complaint Duties

Once a civil RICO complaint has been approved and filed, it is the duty of the

Government’s attorney handling the matter to submit to OCRS a copy of the complaint,

9

including all attachments, bearing the seal of the clerk of the district court.  In addition,

the Government’s attorney should send OCRS copies of the Government’s filings for pre-

trial motions and should keep OCRS informed of adverse decisions as noted above and

legal problems that arise in the course of the case to enable OCRS to provide assistance

and carry out its supervisory functions.

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II

OVERVIEW OF EQUITABLE RELIEF,CIVIL RICO, AND ITS LEGISLATIVE HISTORY

A. Origins and General Nature of Courts’ Equitable Authority

1. Origins of Courts’ Equitable Authority

Article III, Section 2 of the United States Constitution provides, in relevant part,

that A[t]he judicial Power shall extend to all Cases, in Law and Equity, arising under this

Constitution, the Laws of the United States, and Treaties Made, or which shall be made,

under their Authority.@  A[E]quity is that portion of the law which was developed by the

English and American courts of chancery to remedy defects in the common law.@ 

Howard L. Oleck, Historical Nature of Equity Jurisprudence, 20 FORDHAM L. REV. 23, 24

(1951) (AEquity Jurisprudence@).

At the time the United States Constitution was adopted and continuing for a

considerable period thereafter, various states had separate equity courts, and federal

courts recognized separate causes of action for equity that were distinguished from suits

at common law.  See generally Parsons v. Bedford, 28 U.S. 433, 446 (1830); Equity

Jurisprudence, 20 FORDHAM L. REV. at 23-26, 40-43; Leonard J. Emmerglick, J.

Emmerglick, A Century of the New Equity, 23 Tex. L. Rev.  244 (1944-45) (AThe New

Equity@).  However, commencing in 1845, states began to abandon their separate equity

courts, and in 1938, federal courts adopted new Federal Rules of Civil Procedure for all

civil matters, wherein a single form of civil action is provided for all civil suits.  See

Equity Jurisprudence, 20 FORDHAM L. REV. at 41-43; The New Equity, 

23 Tex. L. Rev. at 244-250.

  See, e.g., Mertens v. Hewitt Assocs., 508 U.S. 248, 255 (1993); Tull, 481 U.S. at 423;5

(continued...)11

Classification of a cause of action as to whether it seeks a remedy Aat law@ or Ain

equity@ remains important for several reasons of general significance: (1) Aequitable

remedies are generally enforceable by contempt while legal remedies are not”; (2)

generally, litigants do not have a right to a jury trial to obtain equitable relief, whereas in

many cases a right to a jury trial attaches to the suits Aat law”; and (3) Aequitable relief is

discretionary.@  DAN B. DOBBS, DOBBS LAW OF REMEDIES, Vol. One at 11-12, 56-57

(West Publ’g Co. 2d ed. 1993) (ADOBBS@).

However, determining whether a particular cause of action seeks remedies Aat

law@ or Ain equity@ is not an easy task.  As one commentator perceptively observed, A[t]he

description of equity as that law which was administered by the old English Courts of

Chancery, of course, is hardly a definition.@  Equity Jurisprudence, 20 FORDHAM L. REV.

at 24.  To determine Awhether [a cause of] action is more similar to suits tried in courts of

law,” the Supreme Court examines Aboth the nature of the action and of the remedy

sought.@  Tull v. United States, 412 U.S. 412, 417 (1987).  First, the Court compares the

action at issue Ato 18  Century actions brought in the courts of England prior to theth

merger of the courts of equity,@ and second, the Court examines Athe remedy sought and

determine[s] whether it is legal or equitable in nature.@  Tull, 481 U.S. at 417-418.  See

also Section V (C) below, which addresses whether an action is equitable, and hence does

not carry a right to a jury trial.

Under these principles, courts have ruled that a wide variety of causes of actions

constitute actions for equitable relief, including injunctions,  disgorgement of5

(...continued)5

Mitchell v. Robert De Mario Jewelry, Inc., 361 U.S. 288, 291-92 (1960); United Steelworkers ofAmerica v. United States, 361 U.S. 39, 40-41 (1959); Porter v. Warner Holding Co., 328 U.S.395, 399 (1946); Barton v. Barbour, 104 U.S. 126, 133-34 (1881).

  See, e.g., Harris Trust & Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238,6

250 (2000); Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 352 (1998); TeamstersLocal No. 391 v. Terry, 494 U.S. 558, 570 (1990); Tull, 481 U.S. at 424; FTC v. GemMerchandising Corp., 87 F.3d 464, 468-70 (11th Cir. 1996); SEC v. Rind, 991 F.2d 1486, 1493(9th Cir. 1993); SEC v. Tome, 833 F.2d 1086, 1096 & n. 7 (2d Cir. 1987); SEC v.Commonwealth Chem. Securities, 574 F.2d 90, 94-96 (2d Cir. 1978); Bradford v. SEC, 278 F.2d566, 567 (9th Cir. 1960); United States v. Philip Morris, 273 F. Supp. 2d 3, 8 (D.D.C. 2002); SEC v. Asset Mgmt. Corp., 456 F. Supp. 998, 999-1000 (S.D. Ind. 1978); SEC v. Petrofunds,Inc., 420 F. Supp. 958, 959 (S.D.N.Y. 1976); SEC v. Associated Minerals, Inc., 75 F.R.D. 724, 726 (E.D. Mich. 1977).  Cf. SEC v. Blavin, 760 F.2d 706, 713 (6th Cir. 1985)(“the district court possesses the equitable power to grant disgorgement”); SEC v. Williams, 884 F. Supp. 28, 30-31 (D. Mass. 1995).

See, e.g., Porter v. Warner Holding Co., 328 U.S. 399, 402 (1946).7  

  See, e.g., California v. American Stores Co., 495 U.S. 271, 281-95 (1990); United8

States v. E.I. DuPont de Nemours & Co., 366 U.S. 316, 326-27 (1961); Schine Chain Theatres v.United States, 334 U.S. 110, 128 (1948).

  See Gordon v. Washington, 295 U.S. 30, 37 (1935).  See also cases cited in Sections9

VII (E) and VIII (B)(3) below.

  See DOBBS, Vol. One at 157.10

12

wrongdoers= ill-gotten gains,  restitution of illegally obtained profits,  divestiture or6 7

dissolution,  appointment of a receiver and others to assist the court in executing its8

duties,  and constructive trusts.9 10

Moreover, “[g]enerally, an action for money damages@ is a remedy Aat law.” 

Teamsters Local No. 391 v. Terry, 494 U.S. 558, 570 (1990).  However, an award of

monetary relief is not necessarily legal relief.  Id. at 570.  The Supreme Court has

Acharacterized damages as equitable where they are restitutionary, such as in >actions for

  For a comprehensive discussion of equitable remedies, see DOBBS, Vol. One at 55-81,11

148-275, 586-655.

13

disgorgement of improper profits.’” or when Aa monetary award [is] >incidental to or

intertwined with injunctive relief.=@  Id. at 570-71 (citations omitted).  Generally speaking,

Aa claim could be deemed equitable if it sought a coercive remedy like injunction,” or Aif

the plaintiff sought to enforce a right that was originally created in the equity courts, or a

right that was traditionally decided according to equitable principles.@  DOBBS, Vol. One

at 155.  11

2. Courts Are Vested With Broad Equitable Powers To RemedyUnlawful Conduct, Including Ordering Intrusive, Structural Changesin Wrongdoers’ Entities and Practices

The Supreme Court has repeatedly emphasized that courts are vested with

extensive equitable powers to fashion appropriate remedies to redress unlawful conduct. 

For example, in Swann v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 1 (1971), the

Supreme Court stated:

Once a right and a violation have been shown, the scope ofa district court’s equitable powers to remedy past wrongs isbroad, for breadth and flexibility are inherent in equitableremedies.

“The essence of equity jurisdiction has been the power ofthe Chancellor to do equity and to mould each decree to thenecessities of the particular case.  Flexibility rather thanrigidity has distinguished it.  The qualities of mercy andpracticality have made equity the instrument for niceadjustment and reconciliation between the public interestand private needs as well as between competing privateclaims.”  Hecht Co. v. Bowles, 321 U.S. 321, 329-330(1944).

  See also Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 291-92 (1960) 12

(“When Congress entrusts to an equity court the enforcement of prohibitions contained in aregulatory enactment, it must be taken to have acted cognizant of the historic power of equity toprovide complete relief in light of the statutory purpose.  As this Court has long ago recognized,‘there is inherent in the Courts of Equity a jurisdiction to. . . give effect to the policy oflegislature.’  Clark v. Smith, 38 U.S. (13 Pet. ) 195, 203, 10 L. Ed. 123.”).

  See generally DOBBS, Vol. Two at 349-353 (“Some civil rights injunctions. . . [seek] to13

halt a group of wrongful practices by restructuring a social institution such as a mental hospital,school or prison.  Structural injunctions are not limited to civil rights cases; one might restructurea private corporation in an effort [to] make its compliance with legal rules more likely.”) (id. at349).  See also Special Project: The Remedial Process in Institutional Reform Litigation, 78 COLUM. L. REV. 784 (1978) (hereinafter “Special Project”); William Fletcher TheDiscretionary Constitution: Institutional Remedies and Judicial Legitimacy, 91 YALE L.J. 635(1982). 

14

Swann, 402 U.S. at 15.  Accord California v. American Stores, Co., 495 U.S. 271, 284

(1990).

Moreover, the Supreme Court has pointedly ruled that where “the public interest

is involved. . . those equitable powers assume an even broader and more flexible

character than when only a private controversy is at stake.”  Porter v. Warner Holding,

Co., 328 U.S. 395, 398 (1946).  Accord Virginian Ry. Co. v. Sys. Fed’n. No. 40, 300 U.S.

515, 552 (1937) (“Courts of equity may, and frequently do, go much farther both to give

and withhold relief in furtherance of the public interest than they are accustomed to go

when only private interests are involved.”) (collecting cases); Golden State Bottling Co.

v. NLRB, 414 U.S. 168, 179-80 (1973) (same).12

In accordance with these principles, courts have imposed a wide variety of highly

intrusive equitable remedies in institutional reform litigation to remedy constitutional

violations and to foster paramount public interests, including various structural reforms.  13

Typically in such cases, the equitable relief afforded exceeds an injunction enjoining the

15

proscribed conduct, and also encompasses compelled changes in practices, structural

changes and prolonged court-supervision over implementation of the equitable relief.  See

generally, DOBBS, Vol. Two at 348-353.

For example, in Brown v. Bd. of Educ., 349 U.S. 294, 300-01 (1955), the

Supreme Court ruled that courts had very broad equitable powers to order structural

changes in school systems to desegregate schools, including “ordering the immediate

admission of plaintiffs to schools previously attended only by white children.”  Similarly,

in Swann, 402 U.S. at 9-10, 18-32, the Supreme Court upheld a district court’s equitable

authority to order a school district to implement a comprehensive plan to desegregate a

school system, including various structural changes such as re-zoning, busing of students,

and re-assignment of teachers to different schools.  Moreover, in Milliken v. Bradley, 433

U.S. 267, 279-91 (1977), the Supreme Court upheld the equitable powers of a district

court, as part of a desegregation decree, to “order compensatory or remedial educational

programs for schoolchildren who have been subjected to past acts of de jure

segregation.”  Id. at 267.

Similarly, in Local 28 of the Sheet Metal Worker’s Int’l Assoc. v. EEOC, 478

U.S. 421 (1986), the district court found that Union Local 28 discriminated against non-

white workers in recruitment, selection, training and admission to the union.  The

Supreme Court upheld the district court’s imposition of an affirmative action program

requiring Local 28 to adopt various changes its practices and policies, including requiring

Local 28 “to offer annual, nondiscriminatory journeyman and apprentice examinations,

select members according to a white-non-white ratio to be negotiated by the parties,

  Courts have upheld similar intrusive equitable relief in other cases to remedy racial14

discrimination in schools and other institutions and entities.  See, e.g., EEOC v. Local 638, 565F.2d 31, 33-35 (2d Cir. 1977); Evans v. Buchanan, 555 F.2d 373, 378-82 (3d Cir. 1977); Morganv. McDonough, 540 F.2d 527, 533-35 (1st Cir. 1976); EEOC v. Local 638, 532 F.2d 821, 829-31(2d Cir. 1976); Hart v. Cmty. School Bd. of Ed., N.Y. Sch. Dist. #21, 512 F.2d 37, 52-55 (2d Cir.1975).

  For similar expansive equitable relief in cases involving unconstitutional prison15

conditions, see Miller v. Carson, 563 F.2d 741, 748-52 (5th Cir. 1977); Rhem v. Malcom, 507 F.2d 333, 340-41 (2d Cir. 1974) (collecting cases); Gates v. Collier, 501 F.2d 1291, 1303-05,1309-10 (5th Cir. 1974); Hamilton v. Landrieu, 351 F. Supp. 549 (E.D.La. 1972); Jones v.Wittenberg, 330 F. Supp. 707 (N.D. Oh. 1971), aff’d, 456 F.2d 854 (6th Cir. 1972).

  See, e.g., Sharp v. Weston, 233 F.3d 1166, 1173-74 (9th Cir. 2000); New York State16

Ass’n for Retarded Children, Inc. v. Carey, 706 F.2d 956, 962-66 (2d Cir. 1983); Davis v.Watkins, 384 F. Supp. 1196 (N.D. Ohio 1974).

16

conduct extensive recruitment and publicity campaigns aimed at minorities, secure the

[court-appointed] administrator’s consent before issuing temporary work permits, and

maintain detailed membership records.”  Id. at 432-33.14

The Supreme Court has, likewise, recognized courts’ expansive equitable

authority to order structural changes and other intrusive remedies to redress

unconstitutional prison conditions.  See, e.g., Hutto v. Finney, 437 U.S. 678, 683 (1978)

(describing district court’s orders to change various prisons practices and policies to

remedy constitutional violations).   Courts, likewise, have afforded similar equitable15

relief to compel changes in conditions and policies to remedy unconstitutional treatment

of mental patients.16

B. Congressional Findings and Purposes Regarding Civil RICO

Congress found that organized crime, particularly La Cosa Nostra (ALCN@), had

extensively infiltrated and exercised corrupt influence over numerous legitimate

businesses and labor unions throughout the United States, and hence posed Aa new threat

17

to the American economic system.”  See S. REP. NO. 617, 91st Cong., 1  Sess. at 76-78st

(1969) (“S. REP. NO. 91-617”); see also Organized Crime Control Act of 1970,

Congressional Statement of Findings and Purpose, Section 904(a) of PUB. L. NO. 91-452,

84 Stat. 922, 947.

The Senate Report regarding RICO further found that existing remedies Aare

inadequate to remove criminal influences from legitimate endeavor organizations.@ 

S. REP. NO. 91-617 at 78.  In that respect, the Senate Report stated:

The arrest, conviction, and imprisonment of a Mafia lieutenant cancurtail operations, but does not put the syndicate out of business. As long as the property of organized crime remains, new leaderswill step forward to take the place of those we jail.

S. REP. NO. 91-617 at 78 (quoting H.R. Doc. No. 91-105, at 6; the President’s message on

“Organized Crime” (1969)).

Accordingly, the Senate Report concluded that:

What is needed here. . .  are new approaches that will deal not onlywith individuals, but also with the economic base through whichthose individuals constitute such a serious threat to the economicwell-being of the Nation.  In short, an attack must be made on theirsource of economic power itself, and the attack must take place onall available fronts.

. . .What is ultimately at stake is not only the security of individualsand their property, but also the viability of our free enterprisesystem itself.  The committee feels, therefore, that much can beaccomplished here by adopting the civil remedies developed in theantitrust field to the problem of organized crime.

S. REP. NO. 91-617 at 79, 80-81.

  See United States v. Cappetto, 502 F.2d 1351, 1357 (7th Cir. 1974) (ASection 196417

provides for a civil action in which only equitable relief can be granted.  The relief authorized bythe section is remedial not punitive and is of a type traditionally granted by courts of equity.”);NSC Int’l Corp. v. Ryan, 531 F. Supp. 362, 363 (N. D. Ill. 1981) (“§ 1964 (a) . . .  authorizesonly equitable relief.”). 

18

C. Congress Designed 18 U.S.C. § 1964 (a) To Authorize Courts To Impose the FullPanoply of Equitable Relief

In accordance with the above-referenced legislative history regarding civil RICO, 

18 U.S.C. ' 1964 vests district courts with authority to impose extensive equitable relief and

provides, in relevant part, as follows:

(a) The district courts of the United States shall have jurisdiction toprevent and restrain violations of section 1962 of this chapter byissuing appropriate orders, including, but not limited to: orderingany person to divest himself of any interest, direct or indirect, inany enterprise; imposing reasonable restrictions on the futureactivities or investments of any person, including, but not limitedto, prohibiting any person from engaging in the same type ofendeavor as the enterprise engaged in, the activities of which affectinterstate or foreign commerce; or ordering dissolution orreorganization of any enterprise, making due provision for therights of innocent persons.

(b) The Attorney General may institute proceedings under thissection.  Pending final determination thereof, the court may at anytime enter such restraining order or prohibitions, or take such otheractions, including the acceptance of satisfactory performancebonds, as it shall deem proper. (emphasis added).  17

Thus, to remedy a civil RICO violation, the plain language of ' 1964(a) explicitly

authorizes district courts to impose intrusive, structural reforms including, but not limited to,

divestiture, Adissolution or reorganization of any enterprise,@ Areasonable restrictions on the

future activities or investments of any person” and Aprohibiting any person from engaging in

  RICO, 18 U.S.C. ' 1961(3), provides that “‘person’ includes any individual or entity18

capable of holding a legal or beneficial interest in property,” which includes a corporation, union,partnership and a sole proprietorship.  See, e.g., United States v. Goldin Indus., Inc., 219 F.3d1268, 1270-71 (11th Cir. 2000) (en banc); 219 F.3d 1271, 1275-77 (11th Cir. 2000); LivingDesigns, Inc. v. E.I. DuPont De Nemours & Co., 431 F.3d 353, 362-62 (9th Cir. 2005); Nat’lElec. Benefit Fund v. Heary Bros.  Lightning Prot. Co. Inc., 931 F. Supp. 169, 186-87 (W.D.N.Y.1965); C& W Constr. Co. v. Bhd. of Carpenters and Joiners of America, Local 745, 687 F. Supp.1453, 1466 (D. Hawaii 1988).  

Moreover, RICO=s definition of Aenterprise@ (18 U.S.C. ' 1961(4)) Aincludes anyindividual, partnership, corporation, association, or other legal entity, and any union or group ofindividuals associated in fact although not a legal entity.”

19

the same type of endeavor as the enterprise engaged in.”(emphasis added).18

Indeed, the Senate Committee Report regarding RICO emphasized the expansive and

flexible nature of the equitable relief authorized under ' 1964(a), stating:

The use of such remedies as prohibitory injunctions and the issuingof orders of divestment or dissolution is explicitly authorized. Nevertheless, it must be emphasized that these remedies are notexclusive, and that [RICO] seeks essentially an economic, not apunitive goal.  However remedies may be fashioned, it is necessaryto free the channels of commerce from predatory activities, butthere is no intent to visit punishment on any individual; the purposeis civil.

. . . Although certain remedies are set out, the list is not exhaustive,and the only limit on remedies is that they accomplish the aim setout of removing the corrupting influence and make due provisionsfor the rights of innocent persons.

S. REP. NO. 91-617 at 81 and 160.  Accord H.R. REP. No. 1549, 91st Cong., 2d Sess. at

57(1970).  Moreover, the Senate Committee Report noted that to achieve RICO=s remedial

purposes, courts would need broad equitable powers:

Where an organization is acquired or run by defined racketeeringmethods, then the persons involved can be legally separated fromthe organization, either by the criminal law approach . . . orthrough a civil law approach of equitable relief broad enough to doall that is necessary to free the channels of commerce from illicit

  In accordance with this legislative history, the Supreme Court has repeatedly stated19

that RICO’s civil remedies provision, 18 U.S.C. § 1964, was patterned after the equitable reliefprovisions of the antitrust laws.  See e.g., Klehr v. A.O. Smith Corp., 521 U.S. 179, 189 (1997);Holmes v. Sec.  Investor Prot. Corp, 503 U.S. 258, 267-68 (1992); Agency Holding Corp. v.Malley-Duff & Assoc., 483 U.S. 143, 150-52 (1987); Sedima, S.P.R.L. v. Imrex, 473 U.S. 479,486-90 (1985).

20

activity.

S. REP. NO. 91-617 at 79.

The Senate Report regarding RICO also quoted approvingly the Department of Justice=s

view that Athese equitable remedies would also seem to have a greater potential than that of the

penal sanctions for actually removing the criminal figure from a particular organization and

enjoining him from engaging in similar activity,@ and that Athese remedies are flexible, allowing

of several alternate courses of action for dealing with a particular type of predatory activity, and

they may also be effectively monitored by the court to insure that its decrees are not violated.@  

S. REP. NO. 91-617 at 82-83.  The Senate Report further stated that civil RICO was patterned

after the equitable relief available under the antitrust laws, and hence “brings to bear. . .  the full

panoply of civil remedies . . . now available in the antitrust arena.”  S. REP. NO. 91-617 at 81.  19

Moreover, as noted above, Congress stated that the purpose of RICO=s remedial

provisions was to afford Aenhanced sanctions and new remedies,” and accordingly mandated that

RICO Ashall be liberally construed to effectuate its remedial purposes.@  Section 904(a) of PUB. L.

NO. 91-452, 84 Stat. 922, 923, 947.  The Supreme Court has similarly characterized Section 1964

as a Afar-reaching civil enforcement scheme,” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 483

(1985), and has explained that Aif Congress= liberal-construction mandate is to be applied

anywhere, it is in ' 1964, where RICO=s remedial purposes are most evident.@ Id. at 491 n.10. 

See also Russello v. United States, 464 U.S. 16, 27 (1983); United States v. Turkette, 452 U.S.

21

576, 587 & n. 10 (1981).

Thus, Section 1964 ’s legislative history demonstrates that Congress intended Section

1964(a) to vest district courts with powerful new weapons to eliminate and prevent corruption in

organizations, and accordingly authorized district courts to impose the full panoply of equitable

relief, including, but not limited to, the intrusive remedies discussed below:

1. Injunctions - An injunction is the quintiessential equitable order designed “to

prevent and restrain” violations of law under 18 U.S.C. § 1964(a).  An injunction is a “coercive

remedy” whereby the “defendant is enjoined by a prohibitory injunction to refrain from doing

specific acts; or he is commanded by a mandatory injunction to carry out specified acts.”  DOBBS,

Vol. One at 59; see also id. at 223-277.  See Section VIII(B)(1) below, which discusses

injunctions obtained in civil RICO cases involving labor unions.

2. Divestiture, Dissolution and Reorganization - Section 1964(a) explicitly

includes the equitable remedies of divestiture, dissolution and “reorganization of any enterprise.” 

“‘[D]issolution’ refers to a . . . judgment which dissolves or terminates an illegal combination or

association - putting it out of business, so to speak.  ‘Divestiture’ is used to refer to situations

where the defendants are required to divest or dispossess themselves of specified property in

physical facilities, securities, or other assets.”  California v. American Stores Co., 495 U.S. 271,

290 n.16 (1990).  Divestiture “deprives a defendant of the gains from his wrongful conduct” and

“is an equitable remedy designed in the public interest to undo what could have been prevented

had the defendants not outdistanced the government in their unlawful project.”  Schine Chain

Theaters v. United States, 334 U.S. 110, 128 (1948).  Both dissolution and divestiture serve to

put “an end to the [unlawful] combination or conspiracy” and to “deprive . . . defendants of the

  “Divestiture has been called the most important of antitrust remedies.”  United States20

v. E.I. DuPont DeNemours & Co., 366 U.S. 316, 330-31 (1961).

  Accord SEC v. Bilzerian, 29 F.3d 689, 697 (D.C. Cir. 1994) (“The primary purpose of21

disgorgement is not to refund others for losses suffered but rather ‘to deprive the wrongdoer ofhis ill-gotten gain.’” (citation omitted)); SEC v. Banner Fund Int’l, 211 F.3d 602, 617 (D.C. Cir.2000); SEC v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998); SEC v. Palmisano, 135 F.3d 860, 865-66 (2d Cir. 1998); SEC v. Hughes Capital Corp., 124 F.3d 449, 455 (3d Cir.1997); SEC v. First Jersey Sec., Inc., 101 F.3d 1450, 1475 (2d Cir. 1996);  FTC v. Gem Merch.Corp., 87 F.3d 466, 470 (11th Cir. 1996); SEC v. Tome, 833 F.2d 1086, 1096 (2d Cir. 1987);SEC v. Blavin, 760 F.2d 706, 713 (6th Cir. 1985); CFTC v. Hunt, 591 F.2d 1211, 1222 (7th Cir.1979); SEC v. Blatt, 583 F.2d 1325, 1335 (5th Cir. 1978); SEC v. Manor Nursing Ctr., Inc., 458F.2d 1082, 1104 (2d Cir. 1972); SEC v. Texas Gulf Sulphur Co., 446 F.2d 1301, 1308 (2d Cir.1971).

22

benefits of their conspiracy.”  Id. at 129.20

The Government has obtained divestiture, dissolution and reorganization of an enterprise

in various civil RICO cases involving labor unions.  See Sections VIII (B) (2) and (5) below.  See

also United States v. Cappetto, 502 F.2d 1351, 1358-59 (7th Cir. 1974) (noting that divestiture

under 18 U.S.C. § 1964 is an equitable remedy); United States v. Ianniello, 646 F. Supp. 1289,

1297-1300 (S.D.N.Y. 1986) (appointing a receiver for a restaurant that was subject to divestiture

for a violation of civil RICO).

3. Disgorgement - Although “disgorgement” is not explicitly listed in the remedies

set forth in 18 U.S.C. § 1964, it is well established that “disgorgement” is a traditional equitable

remedy.  See Sections II(A)(1) above and V(C) below.  In particular, disgorgement requires a

wrongdoer to yield the proceeds derived from his unlawful conduct, and “is an equitable remedy

designed to deprive a wrongdoer of his unjust enrichment and to deter others from violating the

 . . . laws.”  SEC v. First City Financial Corp., 890 F.2d 1215, 1230 (D.C. Cir. 1989).21

  Moreover, because “[r]ules for calculating disgorgement must recognize that22

separating legal from illegal profits exactly may at times be a near-impossible task . . .disgorgement need only be a reasonable approximation of profits causally connected to theviolation,” and that once the plaintiff establishes such a “reasonable approximation,” the burdenshifts to the defendants “clearly to demonstrate that the disgorgement figure was not a reasonableapproximation.”  First City Fin. Corp., 890 F.2d at 1231-32.  Accord SEC v. Bilzerian, 29 F.3d 689, 697 (D.C. Cir. 1994) (“Calculations of [the causal nexus] are often imprecise – it isimpossible to say with certainty what portion of [the defendant’s] profits is attributable to hissecurities violations. [The Defendant], however, bears the burden of establishing” that theapproximation of his unlawful profits was not reasonable.).  See also SEC v. First Jersey Sec.,101 F.3d 1450, 1475 (2d Cir. 1996); United States Dep’t of Housing & Urban Dev. v. CostControl Mktg. & Sales Mgt. of Va., Inc., 64 F.3d 920, 927 (4th Cir. 1995);  SEC v. Patel, 61 F.3d 137, 140 (2d Cir. 1995); SEC v. Kenton Capital, Ltd., 69 F. Supp. 2d 1, 16 (D.D.C.1998).  Moreover, “the causal connection required is between the amount by which the defendantwas unjustly enriched and the amount he can be required to disgorge,” not merely the actualmoney that he wrongfully obtained.  SEC v. Banner Fund Int’l, 211 F.3d 602, 617 (D.C. Cir.2000).  Furthermore,  “the risk of uncertainty should fall on the wrongdoer whose illegal conductcreated that uncertainty.”  First City Fin. Corp., 890 F.2d at 1232.  Accord SEC v. HughesCapital Corp., 124 F.3d 449, 455 (3d Cir. 1997); First Jersey Sec., 101 F.3d at 1475; SEC v.Lorin, 76 F.3d 458, 462 (2d Cir. 1996); Patel, 61 F.3d at 140.  See also Bigelow v. RKO RadioPictures, 327 U.S. 251, 265 (1946) (“The most elementary conceptions of justice and publicpolicy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong hascreated.”).

23

Because disgorgement of unlawful proceeds merely requires the wrongdoer to “give up

only his ill-gotten gains” to which he has no right, such disgorgement is entirely remedial and “is

not punishment.”  Bilzerian, 29 F.3d at 696.  Accord First City Financial Corp., 890 F.2d at

1230-31; SEC v. Tome, 833 F.2d 1086, 1096 (2d Cir. 1987); CFTC v. Hunt, 

591 F.2d 1211, 1222 (7th Cir. 1979); see also Mitchell v. Robert DeMario Jewelry, Inc., 

361 U.S. 288, 293 (1960)(equitable remedy of restitution of lost wages for violation of statute is

not “punitive”).22

 As of this writing, there is a conflict among the circuits as to whether disgorgement is a

remedy available under 18 U.S.C. § 1964.  In United States v. Carson, 52 F.3d 1173, 1181 (2d

Cir. 1995), the Second Circuit held that “disgorgement is among the equitable powers available

  See Section VIII(B)(7) below, which discusses disgorgement in Government civil23

RICO cases involving labor unions.

  The Government’s petition for a writ of certiorari is available at24

http://www.supremecourtus.gov/opinions/opinions.html  In its petition for a writ of certiorari, theGovernment argued, among other matters, that the limitations imposed upon RICO disgorgementin Carson, supra, and the majority decision in Philip Morris, supra, were inconsistent with: (1)decisions of the Supreme Court and other courts of appeals holding that when a statute confersequitable jurisdiction upon district courts, as does 18 U.S.C. § 1964, it is presumed that allinherent equitable powers of the district courts are granted, unless otherwise provided by statute;(2) decisions of the Supreme Court and lower courts holding that disgorgement serves a crucial

(continued...)24

to the district court by virtue of 18 U.S.C. § 1964.”  However, the Second Circuit also held that

since § 1964(a) authorizes district courts “to prevent and restrain violations” of RICO, it creates

remedies that are “forward looking, and calculated to prevent RICO violations in the future.” 

Therefore, the Second Circuit concluded that disgorgement must be limited to the amount

designed “solely to ‘prevent and restrain’ future RICO violations,” and hence must be limited to

unlawful proceeds that “are being used to fund or promote the illegal conduct, or constitute

capital available for that purpose.” Id. at 1182.23

In United States v. Philip Morris USA Inc., 396 F.3d 1190 (D.C. Cir. 2005), the panel

majority ruled that RICO’s grant of judicial authority under 18 U.S.C. § 1964 (a) to “prevent and

restrain” statutory violations does not include the power to order equitable disgorgement.  Philip

Morris, 396 F.3d at 1197-1202.  The majority opinion declared that “[t]his language indicates

that the jurisdiction is limited to forward looking remedies that are aimed at future violations,”

whereas disgorgement, in the majority’s view, “is a quintessentially backward-looking remedy

focused on remedying the effects of past conduct to restore the status quo.”  Id. at 1198.

The United States filed an interlocutory petition for a writ of certiorari, which was denied. 

See United States v. Philip Morris USA Inc., 126 S. Ct. 478 (2005).   Subsequently, the United24

http://www.supremecourtus.gov/opinions/opinions.html

(...continued)24

deterrent, and hence forward-looking, function; and (3) the text of Section 1964 (a) and itslegislative history establishing that Section 1964 (a) is not limited to the relief explicitly listedtherein.

25

States District Court for the District of Columbia found defendants liable for RICO violations

after a nine-month bench trial.  See United States v. Philip Morris USA Inc., 449 F. Supp. 2d 1,

851-52, 867-73, 901-07 (D.D.C. 2006).  See also Section IX below.  As of this writing, that

decision is pending appeals to the District of Columbia Circuit.  See United States v. Philip

Morris USA Inc., Appeal Nos. 06-5267-5272.

4. Limitations on Future Activities and Removal From Positions In An Entity -

18 U.S.C. § 1964 (a) explicitly authorizes district courts to impose “reasonable restrictions on the

future activities. . . of any person, including, but not limited to, prohibiting any person from

engaging in the same type of endeavor as the enterprise engaged in.”  Courts have held that this

provision empowers courts to remove persons found liable for RICO violations or for violating

courts’ judgment orders in Government civil RICO cases from positions in an entity and to

prohibit them from holding such positions in the future.  See Sections VII (D) and VIII(B)(6)

below.

Section 1964 (a)’s legislative history confirms that Congress intended Section 1964 (a) to

authorize district courts to impose such relief.  For example, the Senate Report regarding civil

RICO states:

Where an organization is acquired or run by defined racketeeringmethods, then the persons involved can be legally separated fromthe organization, either by the criminal law approach of fine,imprisonment and forfeiture, or through a civil law approach ofequitable relief broad enough to do all that is necessary to free thechannels of commerce from all illicit activity.

. . . 

26

Through this new approach, it should be possible to remove theleaders of organized crime from their sources of economic power.

S. REP. NO. 91-617 at 79-80.  The Senate Report also quoted with approval the Department of

Justice’s statement that:

The relief offered by these equitable remedies would also seem tohave a greater potential than that of the penal sanctions for actuallyremoving the criminal figure from a particular organization andenjoining him from engaging in similar activity.

S. REP. No. 91-617 at 82.

5. Appointment of Court Officers - Courts have long had the inherent authority to

appoint non-judicial persons to assist them in the performance of their judicial duties. 

Accordingly, in Government civil RICO cases involving labor unions, courts have appointed

“officers” to, among other matters, administer the affairs and operations of corrupted unions and

related entities, and assist the courts in monitoring compliance with the courts’ orders and in

imposing sanctions for violations of the courts’ orders.  See Sections VII(E) and VIII(B), (3), (4),

(5), and (6) below.

D. Civil RICO, 18 U.S.C. § 1964, is Patterned After Antitrust Laws, and Hence Veststhe Attorney General of the United States with the Exclusive Authority to ObtainEquitable Relief, and Vests Private Litigants, But Not the United States, With theAuthority to Sue For Treble Damages

RICO’s civil remedies provision, 18 U.S.C. § 1964, authorizes two causes of action: a

public enforcement action for equitable relief by the Attorney General and a treble damages

action by private parties.  The Attorney General’s right to sue for equitable relief derives from

Sections 1964(a) and (b), and those provisions, in combination, make the Attorney General’s

right exclusive.  

27

Section 1964(a) grants district courts “jurisdiction to prevent and restrain violations” of

RICO by issuing the full range of “appropriate orders” available to courts of equity, 18 U.S.C. 

§ 1964(a).  Section 1964(a) does not identify who can seek such relief, but Section 1964(b) does.

That provision states that “[t]he Attorney General may institute proceedings under this section”

and that, “[p]ending final determination thereof,” the court may enter interim restraining orders

or take such other actions as it shall deem proper. 18 U.S.C. § 1964(b).

By empowering the Attorney General to institute proceedings “under this section,”

Congress signaled its intent that the district court’s equitable jurisdiction under Section § 1964(a)

must be invoked by the Attorney General.  Congress further manifested its intent that the

Attorney General alone may seek equitable relief by providing in subsection (b) that temporary

equitable relief may be awarded “[p]ending final determination” of a proceeding instituted by the

Attorney General for permanent equitable relief.  There is no corresponding provision that

authorizes a private party to institute proceedings “under this section” or to seek temporary

equitable relief pending final disposition of a claim.  Under Sections 1964(a) and (b), therefore,

the sole power to seek final and interim equitable relief against racketeering activities and

enterprises is reposed in the Attorney General.

Rather than authorize private civil RICO plaintiffs to seek equitable remedies, Congress

in Section 1964(c) granted private parties the right to bring suit to recover treble damages and

attorney’s fees.  Section 1964(c) provides that “(a)ny person injured in his business or property

by reason of a [RICO] violation . . .  may sue . . . and shall recover threefold the damages he

sustains and the cost of the suit, including a reasonable attorney’s fee.” 18 U.S.C. § 1964(c). 

That provision has been construed to authorize private parties, and not the Government, to seek

  See, e.g., Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 267-68 (1992); Klehr v.25

A.O. Smith Corp., 521 U.S. 179, 189 (1997); Agency Holding Corp. v. Malley-Duff & Assocs.Inc., 483 U.S. 143, 150-152 (1987); Sedima, S.P.R.L. v. Imrex, 473 U.S. 479, 486-90 (1985).See also S. REP. No. 91-617 at 81 (RICO’s Section 1964 “brings to bear. . . the full panoply ofcivil remedies . . .  now available in the antitrust area.”).

28

treble damages.  See United States v.  Bonnano, 879 F.2d 20, 22-24 (2d Cir. 1989) (reasoning

that the United States is not a “person” under Section 1964(c), and therefore may not sue for

treble damages); see also Sedima, S.P.R.L. v.  Imrex Co. Inc., 473 U.S. 479, 487 (1985)

(observing that Section 1964(c) creates “a private treble-damages action”).

Section 1964’s “inclusion of a single statutory reference to private plaintiffs, and the

identification of a damages and fees remedy for such plaintiffs in [Section 1964(c)], logically

carries the negative implication that no other remedy was intended to be conferred on private

plaintiffs.”  Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076, 1083 (9th Cir. 1986), cert.

denied, 479 U.S. 1103 (1987). Coupled with the fact that Congress in Section 1964(b) explicitly

authorized the Attorney General to initiate proceedings to obtain equitable relief under Section

1964(a), but did not similarly grant private parties that right, the statute makes it clear that

Congress did not authorize private parties to bring actions for equitable relief.

2. Section 1964 ’s legislative history confirms that it vests the Attorney General of

the United States with the exclusive authority to bring suits for equitable relief, and authorizes

private litigants to bring suits for treble damages.  The Supreme Court has repeatedly observed

that RICO’s civil remedies provision, 18 U.S.C. § 1964, was patterned after virtually identical

provisions of the antitrust laws.   In that regard, at a time when Congress had provided no25

express authority for private antitrust plaintiffs to seek equitable relief, the antitrust laws were

construed to preclude such relief.  The parallels between the antitrust laws at that time and the

  Section 7 of the Sherman Act provided that “(a)ny person who shall be injured in his26

business or property . . . by reason of anything forbidden or declared to be unlawful by this actmay sue therefor . . . and shall recover three fold the damages by him sustained, and the cost ofsuit, including a reasonable attorney’s fee.” 26 Stat. 210.

  Section 4 of the Sherman Act provided:27

The several circuit courts of the United States are hereby investedwith jurisdiction to prevent and restrain violations of this act; and itshall be the duty of the several district attorneys of the UnitedStates, in their respective districts, under the direction of theAttorney-General, to institute proceedings in equity to prevent andrestrain such violations. . . . (P)ending [a] petition and before finaldecree, the court may at any time make such temporary restrainingorder or prohibition as shall be deemed just in the premises.”

26 Stat. 209-10.

  See General Inv. Co. v. Lake Shore & Mich. S. Ry. Co., 260 U.S. 261, 286 (1922);28

Geddes v. Anaconda Copper Mining Co., 254 U.S. 590, 593 (1921); Paine Lumber Co. v. Neal,244 U.S. 459, 471 (1917); D.R. Wilder Mfg. Co. v. Corn Prods. Ref. Co., 236 U.S. 165, 174(1915); Minnesota v. Northern Sec. Co., 194 U.S. 48, 70-71 (1904).

29

language of RICO support the same conclusion for RICO — particularly since RICO lacks the

explicit provision for private injunctive relief that Congress added to the antitrust laws.

As the Supreme Court has explained, “[a] treble-damages remedy for persons injured by

antitrust violations was first provided in § 7 of the Sherman Act and was re-enacted in 1914

without substantial change as § 4 of the Clayton Act.”  Pfizer, Inc. v. India, 434 U.S. 308, 311

(1978); accord Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 267 n.13 (1992);

Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 644 n.16 (1981).   Section 4 of the26

Sherman Act also authorized courts to issue equitable relief in actions brought by the United

States. 26 Stat. 209-10.   The Supreme Court repeatedly recognized that those provisions of the27

Sherman Act did not authorize private parties to bring suit for injunctive relief.   Private parties28

30

were not authorized to seek injunctive relief for violations of the antitrust laws until Congress

passed Section 16 of the Clayton Act (15 U.S.C. § 26) explicitly authorizing such a right.

California v. American Stores Co., 495 U.S. 271, 287 (1990) (“§ 4 of the Sherman Act, which

authorizes equitable relief in actions brought by the United States, was reenacted as § 15 of the

Clayton Act, while § 16 filled a gap in the Sherman Act by authorizing equitable relief in private

actions.”); accord General Inv. Co. v. Lake Shore & Mich. S. Ry., 260 U.S. 261, 287 (1922).

 The Sherman Act thus “envisaged two classes of actions,— those made available only to

the Government, . . . and, in addition, a right of action for treble damages granted to redress

private injury.”  United States v. Cooper Corp., 312 U.S. 600, 608 (1941) (holding that the

United States may not recover treble damages under the Sherman Act).  The Court reached that

conclusion despite the fact “that there are no words of express exclusion of the right of

individuals to act in the enforcement of the statute, or of courts generally to entertain complaints

on that subject.”  D.R. Wilder Mfg. Co. v. Corn Prods. Ref. Co., 236 U.S. 165, 174 (1915).  The

Court explained that “such exclusion must be implied . . . because of the familiar doctrine that

‘where a statute creates a new offense and denounces the penalty, or gives a new right and

declares the remedy, the punishment or the remedy can be only that which that statute

prescribes.’”  Id. at 174-75 (quoting Farmers’ & Mechs. Nat’l Bank v. Dearing, 91 U.S. 29, 35

(1875)).

Although the Sherman Act authorizes suits in equity in one paragraph (Section 4), while

RICO does so in two paragraphs (Section 1964(a) and (b)), the statutes are parallel in the critical

respects here.  First, both confer on courts “jurisdiction” to prevent and restrain violations

through permanent and preliminary equitable relief, but expressly authorize only the Attorney

31

General to seek such relief.  Second, both provide private parties a separate right to recover treble

damages and attorney’s fees, but no other forms of relief.  In light of the Supreme Court’s

precedents construing the Sherman Act, Congress is presumed to be aware when it enacted RICO

that, absent inclusion of an express private right to obtain injunctive relief, the language it

selected would be construed to exclude such a right.  Holmes, 503 U.S. at 268 (construing the

term “by reason of ” in Section 1964(c) and observing that the Court “may fairly credit the 91st

Congress, which enacted RICO, with knowing the interpretation federal courts had given the

words earlier Congresses had used first in § 7 of the Sherman Act, and later in the Clayton Act’s

§ 4”).

Indeed, to authorize private antitrust plaintiffs to seek equitable relief, Congress enacted a

separate section of the Clayton Act, Section 16.  RICO, however, lacks any provision comparable

to Section 16 of the Clayton Act.   Section 16 expressly provides that private persons “shall be

entitled to sue for and have injunctive relief.” 15 U.S.C. § 26.  Juxtaposed with Congress’s

explicit modeling of RICO’s private treble damages provision “on the civil-action provision of

the federal antitrust laws, § 4 of the Clayton Act,” Holmes, 503 U.S. at 267, the absence of a

counterpart to Section 16 makes clear that Congress did not intend to create a private right to

equitable relief under RICO. 

3. The legislative history of RICO confirms that Congress made a deliberate choice

in omitting authority for a private injunctive action.  “The civil remedies in the bill passed by the

Senate, S.30, were limited to injunctive actions by the United States and became §§ 1964(a), (b),

and (d).”  Sedima, 473 U.S. at 486-487; Agency Holding Corp. v. Malley-Duff & Assocs., Inc.,

483 U.S. 143, 152 (1987) (same).  “During hearings on S. 30 before the House Judiciary

32

Committee, Representative Steiger proposed the addition of a private-treble damages action” that

was modeled after Section 4 of the Clayton Act. Sedima, 473 U.S. at 487.   That Amendment

also would have authorized private parties to seek injunctive relief and the government to seek

damages, as well as making other procedural changes.  116 CONG. REC. 27,739 (1970).  When

the Judiciary Committee responded by passing only the private treble damages provision,

Representative Steiger complained that the bill did “not do the whole job,” since it “fail[ed] to

provide . . . two important substantive remedies included in the Clayton Act: compensatory

damages to the United States when it is injured in its business or property, and equitable relief

in suits brought by private citizens.” Id. at 35,227, 35,228 (emphasis added). 

Representative Steiger subsequently offered another amendment, again to authorize a

private injunctive action and a public damages action.  Sedima, 473 U.S. at 487; 116 CONG. REC.

35,228; 35,346 (1970). Concerned about “the potential consequences that this new remedy might

have,” Representative Poff asked Representative Steiger to withdraw the amendment for further

study by the Judiciary Committee, and Representative Steiger agreed.  Agency Holding Corp.,

483 U.S. at 154-55 (citing 116 CONG. REC. at 35,346).

Shortly after RICO was enacted, Senators Hruska and McClellan, RICO’s sponsors,

introduced S. 16, a bill that again would have authorized damage actions by the United States

and injunctive actions by private persons.  Agency Holding Corp., 483 U.S. at 155 (“[T]he

purpose of [S. 16] was to broaden even further the remedies available under RICO.  In particular,

. . . it would have further permitted private actions for injunctive relief.”).  The Senate, but not

the House, passed S. 16, and therefore it never became law.  Wollersheim, 796 F.2d at 1086.

  As of this writing, there is a conflict among the circuit courts of appeals as to whether29

18 U.S.C. § 1964 vests the Attorney General of the United States with the exclusive authority toseek equitable relief.  The majority of courts to decide this issue have held that private partiesmay not obtain equitable relief under 18 U.S.C. § 1964.  See Conkling v. Turner, 18 F.3d 1285,1296 (5th Cir. 1994) (collecting cases); Lincoln House, Inc. v. Dupre, 903 F.2d 845, 848 (1st Cir.1990); Religious Tech. Ctr. v. Wollersheim, 796 F.2d 1076, 1080-89 (9th Cir. 1986), cert.denied, 479 U.S. 1103 (1987); Sterling Suffolk Racecourse v. Burrillville Racing Ass’n, 802 F.Supp. 662, 671 (D.R.I. 1992), aff’d, 989 F.2d 1266 (1st Cir.), cert. denied, 510 U.S. 1024 (1993);Vietnam Veterans of America v. Guerdon Indus., 644 F. Supp. 951, 960-61 (D. Del. 1986);Volkmann v. Edwards, 642 F. Supp. 109, 115 (N.D. Cal. 1986).  Cf. Tran Co. v. O’Connor Secs.,718 F.2d 26, 28-29 (2d Cir. 1983); Dan River, Inc. v. Icahn, 701 F.2d 278, 290 (4th Cir. 1983);Kaushal v. State Bank of India, 556 F. Supp. 576, 583 (N.D. Ill. 1983).

In Nat. Org. for Women, Inc. v. Scheidler, 267 F.3d 687 (7th Cir. 2001), reversed onother grounds, 537 U.S. 393 (2003), the Seventh Circuit held that Section 1964 authorizesprivate litigants to sue for equitable relief.  In the course of the Scheidler litigation, the UnitedStates filed two Amicus Curiae briefs, before the United States Supreme Court, arguing thatprivate litigants lacked such authority and that Section 1964 vests the Attorney General with theexclusive authority to obtain equitable relief.  On both occasions, the Supreme Court explicitlyrefused to decide that issue, and instead reversed the decisions of the Seventh Circuit on othergrounds.  See Scheidler v. Nat. Org. for Women, Inc., 547 U.S. 9, 16 (2006); Scheidler v. Nat.Org. for Women, Inc., 537 U.S. 393, 411 (2003).  The foregoing analysis is derived from theGovernment’s Amicus briefs in the Scheidler litigation.

33

Congress thus passed RICO without authorizing private injunctive actions despite

repeated attempts to do so, and despite Congress’s explicit grant of such a right in Section 16 of

the Clayton Act.  Congress shortly thereafter rejected an amendment to RICO that would have

added such a right.  The clear conclusion to be drawn from the legislative history is that,

consistent with RICO’s text, Congress intended to create a private right of action only for treble

damages.29

E. Equitable Relief Available Under Civil RICO is at Least As Broad as EquitableRelief Under the Antitrust Laws, If Not Broader

It is clear that civil RICO, 18 U.S.C. § 1964, was patterned after the equitable relief

provisions under the antitrust laws.  See Section II (C), fn. 19 and Section II (D) above.  Indeed,

  Compare Section 4 of the Sherman Act as originally enacted -- “Courts are hereby30

invested with jurisdiction to prevent and restrain violations of this act.”  (see Section II (D), fn.27, above) with Section 1964(a) - - courts “shall have jurisdiction to prevent and restrainviolations of Section 1962.”  (see Section II (C) above).

34

the “prevent and restrain” language under the antitrust laws is virtually identical to the “prevent

and restrain” language under RICO’s Section 1964(a).   As the Supreme Court has observed,30

when Congress has used the same words in RICO’s Section 1964 as in the corresponding relief

provision of the Sherman Act that later was enacted in the Clayton Act, “we can only assume it

intended them to have the same meaning that courts had already given them.” Holmes, 503 U.S.

at 268.  Therefore, the scope of a district court’s equitable authority under RICO is at least as

broad as the scope of its equitable authority under the antitrust laws. Indeed, Congress indicated

that it intended the scope of RICO’s equitable relief to be even broader than that available under

the antitrust laws.  In that respect, Senator McClellan, RICO’s principal sponsor, stressed that the

references to antitrust precedents were not meant to “limit the remedies available [under RICO]

to those which have already been established.  The ability of our chancery courts to formulate a

remedy to fit the wrong is one of the great benefits of our system of justice. This ability is not

hindered by the bill.” 115 CONG. REC. 9567 (1969).

The Supreme Court and lower courts have repeatedly interpreted the “prevent and

restrain” language of the antitrust laws to not only authorize injunctions, dissolution and

divestiture, but also to broadly encompass orders designed to ameliorate ongoing and future ill

effects of defendants’ past violations. For example, in United States v. United States Gypsum

Co., 340 U.S. 76 (1950), the Supreme Court ruled that:

A trial court upon a finding of a conspiracy in restraint oftrade and a monopoly has the duty to compel action by theconspirators that will, so far as practicable, cure the ill effects

  See also United States v. Glaxo Group Ltd., 410 U.S. 52, 64 (1973) (“The purpose of31

relief in an antitrust case is ‘so far as practicable, [to] cure the ill effects of the illegal conduct,and assure the public freedom from its continuance’”) (citation omitted); Ford Motor Co. v.United States, 405 U.S. 562, 573 n.8 (1972) (“The suggestion that antitrust ‘violators may not berequired to do more than return the market to the status quo ante.’. . . is not a correct statement ofthe law. . . Rather, the relief must be directed to that which is ‘necessary and appropriate in thepublic interest to eliminate the effects of the acquisitions offensive to the statute.’”) (citationomitted); United States v. Ward Baking Co., 376 U.S. 327, 331-34 (1964) (holding that theGovernment should not be foreclosed from offering evidence at trial justifying its request forrelief to “cure the ill effects of the illegal conduct” that violated antitrust laws where the soughtrelief was “‘connected’ with and ‘related’ to practices which the companies may in the past havefollowed.”);  United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 326, 334 (1961)(“courts are. . .  required to decree relief effective to redress the [antitrust] violations, whateverthe adverse effect of such a decree on private interests,” and may include “completedivestiture.”); Int’l Boxing Club v. United States, 358 U.S. 242, 262 (1959) (holding thatantitrust “relief to be effective, must go beyond the narrow limits of the proven violations” andhence may prohibit certain contracts “until the effects of the conspiracy are fully dissipated”)(citation omitted); United States v. E.I. du Pont de Nemours & Co., 353 U.S. 586, 607 (1957)(antitrust relief must “eliminate the effects” of the unlawful acquisition); United States v. UnitedLiquors Corp., 352 U.S. 126 (1956) (“The defendants have been found to have violated theantitrust laws and the decree has been framed by the judge of the trial court to correct the evilswhich resulted from the acts found unlawful.”); Schine Chain Theatres v. United States, 334 U.S.110, 128 (1948) (Divestiture and dissolution “deprives the antitrust defendants of the benefits oftheir conspiracy”); United States v. Crescent Amusement Co., 323 U.S. 173, 188-89 (1944) (“theGovernment should not be confined to an injunction against further violations”, and accordingly

(continued...)35

of the illegal conduct, and assure the public freedom from itscontinuance. Such action is not limited to prohibition of theproven means by which the evil was accomplished, but may rangebroadly through practices connected with acts actually found to beillegal. Acts entirely proper when viewed alone may be prohibited.The conspirators should, so far as practicable, be denied futurebenefits from their forbidden conduct.

Id. at 88-89 (emphasis added) (footnote omitted).

Accordingly, in that case the Supreme Court sanctioned a variety of equitable relief that

went “beyond the narrow limits of the proven violation,” including ordering the defendants to

undertake actions in the future that would cure the ill effects arising from the defendants’ past

proven violations.   Consistent with the Supreme Court’s decisions in this area, the Eighth31

(...continued)31

the court ordered “each corporate exhibitor to divest itself of the ownership of any stock or otherinterest in any other corporate defendant or affiliated corporation.”); United States v. Bausch &Lomb Optical Co., 321 U.S. 707, 724, 726 (1944) (“Equity has power to eradicate the evils of acondemned scheme by prohibition of the use of admittedly valid parts of an invalid whole. . .[this Court’s precedents] ‘uphold equity’s authority to use quite drastic measures to achievefreedom from the influence of the unlawful restraint of trade. . . . The test is whether or not therequired action reasonably tends to dissipate the restraints and prevent evasions. Doubts are to‘be resolved in favor of the government and against the conspirators.’”) (citations omitted).

  See also Wilk v. American Med. Ass’n, 895 F.2d 352, 367-70 (7th Cir. 1990)32

(affirming district court’s grant of injunction against antitrust defendant on several grounds,including “lingering effects” of unlawful conduct); In re Multidistrict Vehicle Air Pollution, 538 F.2d 231, 236 (9th Cir. 1976) (“affirmative equitable remedies may be granted to eliminatethe harmful residual effects of past [antitrust] violations . . . .”); United States v. Coca-ColaBottling Co. of Los Angeles, 575 F.2d 222, 229, 231 (9th Cir. 1978).

36

Circuit has stated:

Upon finding an antitrust defendant guilty of a violation of theSherman Act, a district court is “empowered to fashionappropriate restraints on [the defendant’s] future activitiesboth to avoid a recurrence of the violation and to eliminate itsconsequences.”   National Soc. of Professional Engineers v.United States, 435 U.S. 679, 697 (1978). In fashioning a remedy, adistrict court should endeavor to ensure that the conspirators “sofar as practicable, be denied future benefits from their forbiddenconduct” [quoting Gypsum]. Thus, the district court mayconsider both the “continuing effects of past illegal conduct,”[citation omitted], and the possibility of “lingering efforts” by theconspirators to capitalize on the benefits of their past illegalconduct. [citation omitted].

ES Dev., Inc. v. RWM Enters., 939 F.2d 547, 557 (8th Cir. 1991) (emphasis added).32

The foregoing antitrust cases establish that equitable relief to prevent and restrain future

violations is not limited to relief prohibiting future conduct, but also broadly encompasses relief

designed to cure the ill effects of violators’ past and/or ongoing misconduct and to deprive them

of the fruits of their misconduct.  For the reasons stated above, RICO’s equitable relief must be

interpreted to be at least as broad as antitrust equitable relief.  Moreover, it is important to bear in

37

mind that the Supreme Court has admonished that “once the Government” has established a

violation of law, “all doubts as to the remedy are to be resolved in its favor.”  United States v. E.

I. du Pont de Nemours & Co., 366 U.S. 316, 334 (1961).  Accord United States v. Bausch &

Lomb Optical Co., 321 U.S. 707, 726 (1944).

  See United States v. Local 560 of Int’l Bhd. of Teamsters, 780 F.2d 267, 279 n.12 (3d33

Cir. 1985); United States v. Philip Morris USA, Inc., 449 F. Supp. 2d at 851; United States Local1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp. 1303, 1311-12 (S.D.N.Y. 1993); United Statesv. Local 295 of Int’l Bhd. of Teamsters, 784 F. Supp. 15, 19 (E.D.N.Y. 1992); United States v.Local 359, 705 F. Supp. 894, 897 (S.D.N.Y.), aff’d in part and rev’d in part, 899 F.2d 1232 (2dCir. 1989); United States v. Local 30, United Slate, Tile, etc., 686 F. Supp. 1139, 1165 (E.D. Pa.1988), aff’d, 871 F. 2d 401 (3d Cir.), cert. denied, 493 U.S. 953 (1989); United States v. Local560, Int’l Bhd. of Teamsters, 581 F. Supp. 279, 329-30 (D.N.J. 1984) (collecting cases).   Seealso S. Rep. No. 91-617 at 82.  Cf., Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 491 (1985)(stating that under Section 1964, “[t]here is no indication that Congress sought to depart from[the] general principle” that the “preponderance standard” applies to civil suits).

  See cases cited n. 33 above and notes 35 and 36 below.34

38

III

ELEMENTS OF GOVERNMENT CIVIL RICO LAWSUITS AND DEFENSES

A. Standards For Obtaining Equitable Relief

1. The Government Must Establish a Reasonable Likelihood of FutureViolations By a Preponderance of the Evidence

In Government civil RICO suits to obtain equitable relief, the United States need only

prove the same elements as in a RICO criminal case, except that criminal intent is not required. 

See, e.g., United States v. Local 560, Int’l Bhd. of Teamsters, 780 F. 2d 267, 284 (3d Cir. 1985);

United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp. 1303, 1309 (S.D.N.Y.

1993), modified on other grounds, 831 F. Supp. 167 (S.D.N.Y. 1993), aff’d sub nom.  United

States v. Carson, 52 F.3d 1173 (2d Cir. 1995).  Moreover, the burden of proof in Government

civil RICO lawsuits for equitable relief is a preponderance of the evidence.   Therefore, to obtain33

equitable relief, the United States must establish by a preponderance of the evidence that unless

relief is granted there is a reasonable likelihood of a future violation by the defendant.  34

Typically, the Government has carried its burden in that regard by, inter alia, proving a pattern of

past violations, although such proof of past violations is not necessarily required.  Thus, federal

  SEC v. First City Financial Corp., Ltd., 890 F.2d 1215, 1228-29 (D.C. Cir. 1989). 35

Accord SEC v. Bilzerian, 29 F.3d 689, 695 (D.C. Cir. 1994); SEC v. Gruenberg, 989 F.2d 977,978 (8th Cir. 1993); CFTC v. Hunt, 591 F.2d 1211, 1220-21 (7th Cir. 1979); SEC v. SavoyIndus., Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978);  SEC v. Commonwealth Chemical SecuritiesInc., 574 F.2d 90, 98-100 (2d Cir. 1978); SEC v. Management Dyn. Inc., 515 F.2d 801, 807-08(2d Cir. 1975); SEC v. Advance Growth Capital Corp., 470 F.2d 40, 53 (7th Cir. 1972); SECv.Manor Nursing Ctrs., Inc., 458 F.2d 1082, 1100-01 (2d Cir. 1972); Pullum v. Greene, 396 F.2d251, 256-57 (5th Cir. 1968); United States v. Philip Morris USA, Inc., 449 F. Supp. 2d at 909-10;United States v. Philip Morris USA, 316 F. Supp. 2d 6, 10 n. 3 (D.C. Cir. 2004) (collectingcases); United States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 148-49 (D.D.C. 2000).

  Hecht Co. Bowles, 321 U.S. 327 (1944); SEC v. Management Dyn., Inc., 515 F.2d36

801, 807-08 (2d Cir. 1975).  Accord City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283,289 and n.10 (1982); United States v. Parke, Davis & Co., 362 U.S. 29, 47-49 (1960); UnitedStates v. Odessa Union Warehouse Co-Op., 833 F.2d 172, 176 (9th Cir. 1987); Campbell v.McGruder, 580 F.2d 521, 540 (D.C. Cir. 1978); SEC v. Commonwealth Chem. Sec., Inc., 574F.2d 90, 98-99 (2d Cir. 1978); Pullum v. Greene, 396 F.2d 251, 256-57 (5th Cir. 1968).

39

courts have held that evidence of past violations may establish the requisite reasonable likelihood

of future violations in view of the totality of the circumstances, particularly where the

defendant’s past violations were: (1) “part of a pattern” and not isolated; (2) were “deliberate”

and not “merely technical in nature”; and (3) “the defendant’s business will present opportunities

to violate the law in the future.”35

The Supreme Court and other federal courts also have emphasized that mere “cessation of

violations. . . is no bar to the issuance of an injunction” because past violations are “highly

suggestive of the likelihood of future violations.”36

In accordance with these principles, courts have granted the United States injunctive and

other equitable relief in many civil RICO cases based on past violations and have rejected

arguments that injunctive relief was not necessary because the unlawful activity had supposedly

ceased.  In these cases, courts ordered injunctive relief even though many of the wrongdoers had

been convicted of crimes and were not in a position to continue their unlawful conduct because

  See United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995); United States v.37

Private Sanitation Indus. Ass’n, 995 F.2d 373, 377-78 (2d Cir. 1993); United States Local 30,United Slate, Tile, 871 F.2d 401, 405-09 (3d Cir. 1989); United States v. Local 295 of Int’l Bhd.of Teamsters, 784 F. Supp. 15, 18, 21-22 (E.D.N.Y. 1992); United States v. Local 30, UnitedSlate, Tile, et al., 686 F. Supp. 1239, 1262-74 (E.D. Pa. 1988), aff’d, 871 F.2d 401 (3d Cir.1989); United States v. Ianniello, 646 F. Supp. 1289, 1299-1300 (S.D.N.Y. 1986); United Statesv. Local 560, Int’l Bhd. of Teamsters, 581 F. Supp. 279, 319-26 (D.N.J. 1984), aff’d, 780 F.2d269, 292-94 (3d Cir. 1986); United States v. Mason Tenders Dist.Council, 1995 WL 679245, at *7-13 (S.D.N.Y. Nov. 15, 1995).

40

they were imprisoned or removed from office in the corrupt enterprise.   Many of these courts37

found it particularly significant that these cases involved the corrupt influence of organized crime

because the threat of future violations “may virtually be presumed” from such organized crime

involvement.  See United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp.

1303, 1316 (S.D.N.Y. 1993) (citing cases).

Moreover, where the United States seeks equitable relief to protect the public against

wrongdoing, as is the case in Government civil RICO suits for equitable relief, the United States

need not show an inadequate remedy at law, irreparable injury, or that the harm suffered in the

absence of injunctive relief outweighs the harm the defendant will suffer if the injunction is

granted, as is required for a private litigant to obtain equitable relief.  The Seventh Circuit

explained in United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), cert. denied, 429 U.S. 

925 (1975): 

It was plainly the intention of Congress in adopting Section 1964to provide for injunctive relief against violations of Section 1962without any requirement of a showing of irreparable injury otherthan that injury to the public which Congress found to be inherentin the conduct made unlawful by Section 1962. It is also obviousthat Congress did not intend to require a showing of inadequacy ofthe remedy at law. If as defendants contend the existence of thecriminal remedy at law under Section 1963 would defeat an actionin equity under Section 1964, the latter Section would be a nullity.

. . .

  It is well established that different standards than apply to private litigants’ request for38

injunctive relief govern the Government’s request for injunctive relief to enforce laws to protectthe public’s interests, and that accordingly the Government is entitled to injunctive relief when itdemonstrates a reasonable likelihood that the defendants and/or their cohorts will commitwrongful acts in the future, without any showing of an inadequate remedy at law or of irreparableinjury beyond the injury inherent in the unlawful conduct. See generally United States v. City ofSan Francisco, 310 U.S. 16, 30-31 (1940); Hunt, 591 F.2d at 1220; United States v. Fed. DepositIns. Corp., 881 F.2d 207, 210 (5th Cir. 1989); United States v. Odessa Union Warehouse Co-op,833 F.2d 172, 175-76 (9th Cir. 1987); Gov. of V.1., Dept. of Conservation v. V.1. Paving, 714F.2d 283, 286 (3d Cir. 1983) (and cases cited thereat); United States V. Siemens Corp., 621 F.2d 499, 505-06 (2d Cir. 1980); SEC v. Management Dyn., Inc., 515 F.2d 801, 808 (2d Cir.1975); United States v. Diapulse Corp. of America, 457 F.2d 25, 27-28 (2d Cir. 1972); Shafer v.United States, 229 F.2d 124, 128 (4th Cir.), cert. denied, 351 U.S. 931 (1956); SEC v. StrattonOakmont, Inc., 878 F. Supp. 250, 255 (D.D.C. 1998); F.T.C. v. Virginia Homes Mfg. Corp., 509F. Supp. 51, 59 (D. Md. 1981); United States v. Ingersoll-Rand Co., 218 F. Supp. 530, 544-45(W.D. Pa.), aff’d, 320 F.2d 509 (3d Cir. 1963).

41

[Therefore] whether equitable relief is appropriate depends, as itdoes in other cases in equity, on whether a preponderance of theevidence shows a likelihood that the defendants will commitwrongful acts in the future, a likelihood which is frequentlyestablished by inferences drawn from past conduct.

Id. at 1358-59.   Also, there is no requirement that before a civil RICO action can be brought,38

the defendant must have been previously convicted of a RICO violation or a RICO predicate act. 

Sedima, 479 U.S. at 488-93.

2. Making Due Provision for the Rights of Innocent Persons

Section 1964(a) of RICO provides, in relevant part, that “district courts of the United

States shall have jurisdiction” to impose various equitable remedies “making due provision for

the rights of innocent persons.”  The legislative history to RICO’s Section 1964(a) contains only

a passing reference that “due provision for the rights of innocent persons be made.” See S. REP.

No. 91-617 at 160; H.R. Rep. No. 91-1549, at 2 (1970).  This provision has not been the subject

  The forfeiture provision under RICO’s Section 1963(c), which was enacted at the same39

time as § 1964(a), similarly provided that “[t]he United States shall dispose of all [forfeited]property as soon as commercially feasible, making due provision for the rights of innocentpersons.”  See S. REP. NO. 91-617, at 23-24 (emphasis added).  Under interpretations of theoriginal Section 1963(c), the Attorney General had the exclusive authority to make “dueprovision for the rights of innocent persons” and provide relief, if any, in a petition for remissionor mitigation.  However, in 1984, RICO’s Section 1963, but not Section 1964(a), was amendedto authorize the district court to make due provision for the rights of innocent persons in ancillaryproceedings.  See United States v. Gilbert, 244 F.3d 888, 909 (11th Cir. 2001); United States v.BCCI Holdings (Luxembourg), S.A. (Petition of Chawla), 46 F.3d 1185, 1190 (D.C. Cir. 1995);S. Rep. No. 98-225 at 205-09 (1990), reprinted in 1984 U.S.C.C.A.N. 3182, 3388-92.  Therefore,it may be that under § 1964(a) the Attorney General retains the authority to make “due provisionfor the rights of innocent persons” via a petition for remission or mitigation.  

  See also Ashland Oil, Inc. v. Gleave, 540 F. Supp. 81, 85 (W.D.N.Y. 1982) (holding40

(continued...)42

of extensive litigation, and therefore courts have not fully explicated its meaning.39

For example, in United States v. Sasso, 215 F.3d 283, 291-92 (2d Cir. 2000), the Second

Circuit ruled that requiring a corrupt former union official to contribute toward the cost of a

court-authorized monitorship of the union to rid it of corruption was within the district court’s

discretion under Section 1964(a), because, inter alia, it reduced the cost of monitorship to be

borne by “innocent” union members.  Similarly, in United States v. Local 560 (I.B.T.), 

974 F.2d 315, 347-48 (3d Cir. 1992), the Third Circuit held that removing a corrupt union

official from a union, and preventing him from associating with union members, made “due

provision for the rights of innocent” union members because such relief would help eliminate

corruption within the union.  Accord United States v. Local 30, United Slate Tile, 871 F.2d 401,

407-08 (3d Cir. 1989) (rejecting the argument that the district court’s removal of 13 union

officers and members found to have violated RICO did not protect the rights of innocent third

parties because it stripped control of the union from its members, because such relief was

necessary to eliminate corruption within the union).40

(...continued)40

that the “concern expressed for the rights of innocent persons cannot be stretched to include” aprivate litigant’s right to sue for an order of attachment under section 1964(a) since section1964(a) confers a right only on the Attorney General to bring actions for equitable relief, notprivate litigants.).

  See, e.g., United States v. Coon, 187 F.3d 888, 896 (8th Cir. 1999); United States v.41

Shifman, 124 F.3d 31, 36-37 (1st Cir. 1997); United States v. Darden, 70 F.3d 1507, 1526 (8thCir. 1995); United States v. Pungitore, 910 F.2d 1084, 1131-32 (3d Cir. 1990); United States v.Hobson, 893 F.2d 1267, 1269 (11th Cir. 1990); United States v. Hogan, 886 F.2d 1497, 1501-02(7th Cir. 1989); United States v. Rastelli, 870 F.2d 822, 832 (2d Cir. 1989); United States v.Wyatt, 807 F.2d 1480, 1482-83 (9th Cir. 1987); United States v. Qaoud, 777 F.2d 1105, 1117-18(6th Cir. 1985); United States v. Cauble, 706 F.2d 1322, 1339-40 (5th Cir. 1983); United Statesv. Phillips, 664 F.2d 971, 1039 (5th Cir. 1981).

  See, e.g., Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1560 (1st Cir. 1994); 42

Cox v. Admin. U.S. Steel & Carnegie, 17 F.3d 1386, 1410 (11th Cir. 1994); McLaughlin v.Anderson, 962 F.2d 187, 192-93 (2d Cir. 1992); Petro-Tech, Inc. v. Western Co. of N. Am., 824F.2d 1349, 1356-57 (3d Cir. 1987); Armco Indus. Credit Corp. v. SLT Warehouse Co., 782 F.2d475, 485 (5th Cir. 1986); Local 560, 780 F.2d at 283-86.   See also Baumer v. Pachl, 8 F.3d1341, 1347 (9th Cir. 1993); In re American Honda Motor Co. Dealerships Relations Litig., 958F. Supp. 1045, 1057-59 (D. Md. 1997); Park v. Jack’s Food Systems, Inc., 907 F. Supp. 914,918-19 (D. Md. 1995); Downing v. Halliburton & Assocs., Inc., 812 F. Supp. 1175, 1182 (M.D.Ala. 1993); Wait Radio by Rosenfield v. Price Waterhouse, 691 F. Supp. 102, 108 (N.D. Ill.1988);.  Cf. First Am. Corp. v. Al-Nahyan, 17 F. Supp. 2d 10, 23-4 (D.D.C. 1998) (stating,without deciding, that “with respect to RICO, Congress intended there to be aiding and abettingliability in civil actions”).

(continued...)43

B. Substantive Issues In Proving Government Civil RICO Claims

1. A Defendant’s Liability For A Racketeering Act May Be Based On “Aidingand Abetting”

To establish the commission of a pattern of racketeering activity, 18 U.S.C. §§ 1961(5)

and 1962(c) require that each defendant commit at least two acts of racketeering, “the last of

which occurred within ten years . . . after the commission of a prior” racketeering act.  See H.J.

Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 237 (1989).  The federal circuits have

repeatedly held in both criminal  and civil  RICO cases that a defendant’s liability for41 42

(...continued)42

“To prove aiding and abetting, the evidence must show that the defendant in some wayassociated himself with the criminal venture as something he wished to bring about and that hesought by his actions to make it succeed.”  Pungitore, 910 F.2d at 1132 (internal quotations andcitation omitted).

44

personally committing a predicate racketeering act may be established by proof that the defendant

aided and abetted the commission of the racketeering act.

Moreover, such imposition of aiding and abetting liability for racketeering acts does not

conflict with Third Circuit’s ruling that in a civil action for treble damages brought by “a private

plaintiff,” a defendant’s liability for an entire RICO violation may not be based upon aiding

and abetting the RICO violations.  See, e.g., Pennsylvania Ass’n of Edwards Heirs v. Rightenour,

235 F.3d 839, 841-44 (3d Cir. 2000); Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644,

656-57 (3d Cir. 1998), abrogation on other grounds recognized, Forbes v. Eagleson, 228 F.3d

471 (3d Cir. 2000).  The rationale of those cases is that “Congress has not enacted a general civil

aiding and abetting statute . . . under which a person may sue and recover damages from a private

defendant,” and that 18 U.S.C. § 2 “has no application to private causes of action.”  Rolo, 155 F.

3d at 656-57 (quoting Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511

U.S. 164, 181 (1994)).  However, a Government civil RICO suit for equitable relief, in contrast,

is not a private action for damages.  The Third Circuit itself, and other courts as well, has held

that in such Government civil RICO suits, liability for predicate acts may be established by

aiding and abetting under 18 U.S.C. § 2.  See Local 560, 780 F.2d at 283-89.  Accord Local

1804-1, 812 F. Supp. at 1338-39; United States v. District Council, 778 F. Supp. 738, 748-49

(S.D.N.Y. 1991).  See also cases cited in notes 41 & 42 above.  As the court stated in Local 1804,

812 F. Supp. at 1347:  “In a civil RICO suit [brought by the United States] the Court applies the

  Indeed, thus far the cases holding that aiding and abetting liability does not apply in43

civil RICO cases have involved suits for treble damages by private plaintiffs seeking toimpose aiding and abetting liability for the entire alleged RICO violations, and not just thepredicate racketeering acts.  See, e.g., Rightenour, 235 F.3d at 841 (“a private plaintiff could notmaintain a claim of aiding and abetting an alleged RICO violation”) (emphasis added); Rolo, 155 F.3d at 656-57 (same); In re Mastercard Int’l Inc., Internet Gambling Litig., 132 F. Supp. 2d468, 493 (E.D. La. 2001) (“it is doubtful that an aiding and abetting liability cause of actionexists” for private plaintiffs seeking treble damages); Jubelirer v. Mastercard Int’l, Inc., 68 F.Supp. 2d 1049, 1054 (W.D. Wis. 1999) (“Central Bank’s analysis is controlling and requiresdismissal of [private] plaintiff’s claim for aiding and abetting a RICO violation.”); Touhy v.Northern Trust Bank, No. 98-6302, 1999 WL 342700, at *4 (N.D. Ill. May 17, 1999) (same);Soranno v. N.Y. Life Ins. Co., No. 96-1882, 1999 WL 104403, at *7-8 (N.D. Ill. Feb. 24, 1999)(same); Ross v. Patrusky, Mintz & Semel, No. 90-1356, 1997 WL 214957, at *11 (S.D.N.Y.April 29, 1997) (same); Hayden v. Paul, Weiss, Rifkind, Wharton & Garrison, 955 F. Supp. 248,256 (S.D.N.Y. 1997) (“Following the reasoning in Central Bank, this Court declines to create aprivate right of action for aiding and abetting a RICO violation”) (citation deleted) (emphasisadded); La Salle Nat. Bank v. Duff & Phelps Credit Rating Co., 951 F. Supp. 1071, 1088-89(S.D.N.Y. 1996); Department of Econ. Dev. v. Arthur Anderson & Co., 924 F. Supp. 449, 475(S.D.N.Y. 1996) (the private plaintiff’s “claim for aiding and abetting a RICO violation must bedismissed because there is no such tort”).

Moreover, Bowdoin Constr. Corp. v. Rhode Island Hosp. Trust Nat. Bank, 869 F. Supp.1004, 1009 (D. Mass. 1994), does not support preclusion of aiding and abetting liability forracketeering acts in Government civil RICO suits because Bowdoin’s preclusion of aiding andabetting liability was limited to racketeering acts under Section 10(b) of the Securities andExchange Act of 1934 under a private civil RICO claim for treble damages because “[t]o holdotherwise would enable [private] plaintiffs to use RICO to circumvent the interpreted intent ofthe Securities Act.”

45

criminal standard in determining aiding and abetting liability.”  Accord Local 560, 780 F.2d at

284.  

Furthermore, Rightenour and Rolo, turned on whether a defendant’s liability for all the

elements of a RICO violation could be based entirely on an aiding and abetting ground.  That

issue is significantly different from the issue of whether a defendant’s liability for only the

element involving the commission of racketeering acts may be based on aiding and abetting.  43

As stated above, every court to decide that narrow issue has held in the affirmative.  For example,

  Moreover, aiding and abetting liability for racketeering acts is not inconsistent with the44

requirement for a substantive RICO claim that the defendant personally commit at least tworacketeering acts.  Pursuant to 18 U.S.C. § 2, aiding and abetting racketeering activity “makesone punishable as a principal and amounts to [personally] engaging in that racketeering activity”;it does not constitute vicarious liability.  See Shifman, 124 F.3d at 36.  Accord Pungitore, 910 F.2d at 1131-32; Rastelli, 870 F.2d at 832.  If aiding and abetting racketeering acts did notconstitute personally committing racketeering acts, then such aiding and abetting liability wouldnot apply in criminal RICO cases.  However, numerous decisions have held that aiding andabetting liability applies to racketeering acts in criminal cases.  See cases cited above in n. 41.

46

in Department of Economic Development, the court stated:

[O]ne can commit a primary civil violation of § 1962(a) if one hasaided and abetted racketeering activity.  But this does not meanthat someone who aids and abets another person’s violation of §1962(a) is liable to private parties for damages.

924 F. Supp. at 475.44

Furthermore, imposition of aiding and abetting liability for only the commission of

racketeering acts does not run afoul of the Supreme Court’s decision in Reves v. Ernst & Young,

507 U.S. 170, 185 (1993), which held that a defendant is not liable for a substantive RICO

violation under 18 U.S.C. § 1962(c) unless the defendant “participate[s] in the operation or

management of the enterprise itself.”  Imposition of aiding and abetting liability for racketeering

acts does not eliminate Reves’ requirement for proving a substantive RICO offense that the

defendant participate in the operation or management of the enterprise.  See, e.g., 131 Main

Street Associates v. Manko, 897 F. Supp. 1507, 1528 n.17 (S.D.N.Y. 1995) (“We do not read the

operation-or-management rule enunciated in Reves as changing the rule that ‘[c]ivil RICO

liability can be predicated on aiding and abetting the commission of the predicate acts by the

primary offender.’ . . .  Clearly, a person can operate or manage an enterprise and yet, through

delegation, avoid directly committing predicate acts.” (citation omitted)); Fidelity Federal Sav. &

Loan Ass’n v. Felicetti, 830 F. Supp. 257, 261 (E.D. Pa. 1993) (aider and abettor liability for

  See also Oki Semiconductor Co. v. Wells Fargo Bank, 298 F.3d 768, 775-76 (9th Cir.45

2002) (“This possibility of respondeat superior liability for an employee’s RICO violationsencourages employers to monitor closely the activities of their employees to ensure that thoseemployees are not engaged in racketeering.  It also serves to compensate the victims ofracketeering activity.  Vicarious liability based on the doctrine of respondeat superior therebyfosters RICO’s deterrent and compensatory goals.”) (citations omitted).

47

RICO predicate acts is not inconsistent with Reves’ requirement for operation or management of

the RICO enterprise).

2. Principles of Respondeat Superior 

Government civil RICO suits typically are brought against collective entities such as

corporations and labor unions.  It is well established that a collective entity, such as a corporation

or labor union, may act only through its agents, and hence may be held liable for the acts of its

officers, employees, and other agents.  This is true in both criminal prosecutions, see United

States v. Wise, 370 U.S. 405 (1962); United States v. Najjar, 300 F.3d 466, 483 (4th Cir. 2002);

United States v. Sun-Diamond Growers of California, 138 F.3d 961, 970 (D.C. Cir. 1998), aff’d,

526 U.S. 398 (1999), as well as in civil cases.  See United States v. Brothers Constr. Co. of Ohio,

219 F.3d 300, 310-311 (4th Cir. 2000).  See also Davis v. Mutual Life Ins. Co. of New York, 6

F.3d 367, 378-80 (6th Cir. 1993) (respondeat superior liability in RICO cases permissible, since

“corporate principals may act only through their agents.”).  Accord, United States v. Philip

Morris USA, Inc., 449 F. Supp. 2d at 892-93.   Therefore, a collective entity may be held liable45

for the statements or wrongful acts of its agents or employees when they are acting within the

scope of their authority or the course of their employment, see Burlington Indus., Inc. v. Ellerth,

524 U.S. 742, 756 (1998); Restatement (Second) of Agency § 219 et seq. (1958), so long as the

action is motivated, at least in part, to benefit the principal.  See Sun-Diamond Growers, 138

F.3d at 970; Local 1814, Int’l Longshoremen’s Ass’n v. NLRB, 735 F.2d 1384, 1395 (D.C. Cir.

  For instance, in United States v. Gold, 743 F.2d 800 (11th Cir. 1984), the defendant (a46

corporate medical center) was prosecuted for violations of 18 U.S.C. § 1001 and § 371 fordefrauding, and conspiring to defraud, the Government through the corporation’s employees.  Onappeal, the corporation argued that, because the employees were acting primarily for their ownbenefit, rather than that of the corporation, the company could not be found liable.  Rejecting thisargument, the court noted that the motivations were not mutually exclusive, and that, in fact, theemployees had acted to benefit themselves (via larger bonuses) as well as the corporation (viaincreased revenue).  Moreover, the court reasoned, so long as the employees were acting in partfor the benefit of the corporation, the corporation may be held liable for their acts.  Id. at 823(citing United States v. Beusch, 596 F.2d 871, 877-78 & n.7 (9th Cir. 1979); United States v.Demauro, 581 F.2d 50, 54 & n.3 (2d Cir. 1978); and Prosser, Torts, § 70 at 461 (4th Ed. 1971)). See also Curtis, Collins & Holbrook Co. v. United States, 262 U.S. 215, 223-24 (1923); UnitedStates v. Cincotta, 689 F.2d 238, 241-42 (1st Cir. 1982) (agent must be “performing acts of thekind which he is authorized to perform, and those acts must be motivated – at least in part – byan intent to benefit the corporation” (emphasis added)); United States v. Automated MedicalLabs., Inc., 770 F.2d 399, 407 (4th Cir. 1985) (“It would seem entirely possible, therefore, for anagent to have acted for his own benefit while also acting for the benefit of the corporation.”). Likewise, in United States v. 141  Street Corp., 911 F.2d 870 (2d Cir. 1990), the Governmentst

sought forfeiture from the defendant, 141  Street Realty Corporation, of an apartment buildingst

that had been used to facilitate narcotics trafficking.  At trial, the Government established that thebuilding superintendent, Nahmias, accepted bribes and collected exorbitant rents from drugdealers in exchange for their use of the building for drug-related activities.  On appeal, thecorporation argued that the agent acted adversely to its interests “and therefore any knowledgethat Nahmias may have had of the narcotics trafficking cannot be imputed to the corporation.” Id. at 876.  The Court of Appeals for the Second Circuit rejected the corporation’s argument,noting that “Nahmias’ actions were adverse to the corporation only in the sense that his actionscontributed to the imputation of knowledge to Realty Corp.,” and that, under the corporation’sfaulty logic, imputation of knowledge could never be used to impose liability “because the veryactions of the agent that cause an imputation of knowledge are ‘adverse’ to the principal.”  Id.

48

1984); Restatement (Second) of Agency § 228 (1958).  However, a plaintiff need not show that

the agent was acting exclusively for the Defendant collective entity; it is enough that the

employee was acting in part for the benefit of the collective entity.   Likewise, “it is not46

necessary for agent’s actions to have actually benefited the corporate entity.”  Automated

Medical Labs., Inc., 770 F.2d at 407 (citing Old Monastery Co. v. United States, 147 F.2d 905,

908 (4th Cir. 1945)); United States v. Carter, 311 F.2d 934, 942 (6th Cir. 1963); United States v.

Sun-Diamond Growers of California, 964 F. Supp. 486, 490 (D.D.C. 1997) (citing cases).

  United States v. American Radiator and Standard Sanitary Corp., 433 F.2d at 204-05;47

United States v. Automated Medical Labs., 770 F.2d 399, 407 (4th Cir. 1985); Egan v. UnitedStates, 137 F.2d 369, 379 (8th Cir. 1943).

   Automated Medical Labs., 770 F.2d at 407; United States v. Beusch, 596 F.2d 871,48

877 (9th Cir. 1979); United States v. Hilton Hotels Corp., 467 F.2d 1000, 1004 (9th Cir. 1972);United States v. Harry L. Young & Sons, Inc., 464 F.2d 1295, 1296-97 (10th Cir. 1972); Egan,137 F.2d at 379.

49

Moreover, in civil actions, “there may be no need to show that the agent acted to further

the principal’s interests – a showing of ‘apparent authority’ is often enough.”  Sun-Diamond

Growers, 138 F.3d at 970 n.9 (D.C. Cir. 1998) (citing American Soc’y of Mech. Eng’rs v.

Hydrolevel Corp., 456 U.S. 556, 573-74 (1982)).  And, even where the agent’s action is beyond

the original express, implied, or apparent authority, an act may be attributed to the principal if it

is later ratified, either explicitly or by implication.  See Cox v. Administrator U.S. Steel &

Carnegie, 17 F.3d 1386, 1409 (11th Cir. 1994); IBJ Schroder Bank & Trust Co. v. Resolution

Trust Corp., 26 F.3d 370, 375 (2d Cir. 1994); Yellow Bus Lines, Inc. v. Drivers, Chauffeurs, &

Helpers Local Union 639, 883 F.2d 132, 136 (D.C. Cir. 1989), rev’d in part on other grounds,

913 F.2d 948 (D.C. Cir. 1990) (en banc).  Indeed, if the act is done within the course of

employment and with intent to benefit the collective entity, the collective entity is liable even if

the act was unlawful,  or was done contrary to instructions or policies.47 48

Furthermore, it is well-established that “the knowledge of the employees is the

knowledge of the corporation.”  Apex Oil Co. v. United States, 530 F.2d 1291, 1295 (8th Cir.

1976).  See, e.g., United States v. Investment Enters., Inc., 10 F.3d 263, 266 (5th Cir. 1993)

(corporation liable for offenses arising from interstate transportation of obscenity based on

president’s actions); In re Adams Labs. Inc., 3 B.R. 495, 499 & n.2 (Bankr. E.D. Va. 1980) (“The

knowledge acquired by a secretary and treasurer who conducts negotiations with a third party

  See also United States v. Josleyn, 206 F.3d 144, 159 (1st Cir. 2000) (there is no49

requirement that a person be a “central figure” at a corporation in order for that person’sknowledge to be imputed to the corporation); Askanase v. Fatjo, 130 F.3d 657, 666 (5th Cir.1997) (imputing corporate officer’s knowledge to corporations for statute of limitationspurposes); St. Paul Fire and Marine Ins. Co. v. FDIC, 968 F.2d 695, 700-701 (8th Cir. 1992) (“ingeneral, an agent’s actual notice or knowledge may be imputed to the agent’s principal.”); Nat’lPetrochemical Co. of Iran v. M/T Stolt Sheaf, 930 F.2d 240, 243-44 (2d Cir. 1991) (corporationowned by Iranian government imputed with knowledge of its agent, United Arab Emiratesintermediary, and therefore had imputed knowledge of illegal nature of shipment of chemicalsfrom United States to Iran); Mallis v. Bankers Trust Co., 717 F.2d 683, 689 & n.9 (2d Cir. 1983)(“It is a basic tenet of the law of agency that the knowledge of an agent, or for that matter apartner or joint venturer, is imputed to the principal.” (citing cases)); Wyle v. R.J. ReynoldsIndus., Inc., 709 F.2d 585, 590 (9th Cir. 1983) (knowledge of four senior officers of corporationthat corporation’s agent had rebated was imputable to corporation; thus, record supported districtcourt’s finding that corporation’s denial that it had engaged in rebating was knowingly false);Am. Standard Credit, Inc. v. Nat’l Cement Co., 643 F.2d 248, 270-71 (5th Cir. 1981) (imputationof joint venturer’s knowledge to entire corporation); Delbrueck & Co. v. Mfrs. Hanover TrustCo., 609 F.2d 1047, 1051-52 (2d Cir. 1979) (notice to bank’s paying and receiving agent imputedto bank); Eitel v. Schmidlapp, 459 F.2d 609, 614-16 (4th Cir. 1972) (where defendant’s agentfraudulently conveyed property to defendant, agent’s knowledge of fraud would be imputed toprincipal even where no evidence of actual knowledge on part of principal: “the principal cannotclaim the fruits of the agent’s acts and still repudiate what the agent knew.”); Ritchie Grocer Co.v. Aetna Cas. & Sur. Co., 426 F.2d 499, 500 (8th Cir. 1970) (knowledge possessed by branchmanager for one of corporate insured’s stores that employee had previously committed tire theftwas fully attributable to insured within exclusion provision of employee fidelity policyprecluding coverage after insured or officer of insured discovers or has knowledge or informationthat employee has committed any fraudulent or dishonest act in service of insured or otherwise); Bergeson v. Life Ins. Corp. of Am., 265 F.2d 227, 232 (10th Cir. 1959) (corporation necessarilyacts vicariously and can acquire knowledge only through its officers and agents and theirknowledge is knowledge of corporation); Mollohan v. Masters, 45 App. D.C. 414, 421-22 (D.C.App. 1916) (where promissory notes infected with usury come into the possession of a

(continued...)50

with authority from the corporation to do so will be imputed to the corporation.”); Duplex

Envelope Co. v. Denominational Envelope Co., 80 F.2d 179, 182 (4th Cir. 1935) (corporation

affected with constructive knowledge “of all material facts of which an officer acquires

knowledge while acting in the course of his employment and within the scope of his authority.”);

United States v. Josleyn, 206 F.3d 144, 159 (1st Cir. 2000) (citing cases for agent’s knowledge

being imputed to the company).49

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(...continued)49

corporation through its agents, who had notice of the usury, the corporation is not in a position toclaim that it is an innocent purchaser; notice to the agents being notice to the principal). 

  See also Bowen v. Mount Vernon Sav. Bank, 105 F.2d 796, 799 (D.C. Cir. 1939)50

(presumption that a principal knows what his agent knows is irrebuttable, and cannot be avoidedby showing that the agent did not in fact communicate his knowledge nor by showing that theagent had such an adverse interest that he would not likely communicate his knowledge); Hand& Johnson Tug Line v. Canada S.S. Lines, 281 F. 779, 783 (6th Cir. 1922) (corporation cannotavoid responsibility by showing that, when a written notice by mail was received in its generaloffice, it was sent to the wrong department).

51

Furthermore, a principal is attributed with the knowledge acquired by its agent even if the

information is never communicated to it, see, e.g., New York University v. First Fin. Ins. Co.,

322 F.3d 750, 753-54 & n.2 (2d Cir. 2003),  or even after termination of the services of that50

officer, employee, or agent.  See Acme Precision Prods., Inc. v. Am. Alloys Corp., 422 F.2d

1395, 1398 (8th Cir. 1970) (knowledge by a corporation, obtained by and through its officers and

key employees, of facts of continuing importance to business of the corporation, even after

termination of services of that officer or employee, is conclusive upon the corporation).

In affirming corporate criminal liability, the Supreme Court has noted that:

[w]e see no valid objection in law, and every reason in public policy, whythe corporation, which profits by the transaction, and can only act throughits agents and officers, shall be held punishable by fine because of theknowledge and intent of its agents to whom it has intrusted authority to actin the subject-matter of making and fixing rates of transportation, andwhose knowledge and purposes may well be attributed to the corporationfor which the agents act.

New York Cent. & Hudson River R.R. Co. v. United States, 212 U.S. 481, 495 (1909).

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52

3. A Corporation’s or Labor Union’s Scienter May Be Established By TheCollective Knowledge of The Corporation’s or Labor Union’s Employees andRepresentatives

Insofar as a principal can be attributed with the knowledge of a single agent or employee,

see Section III (B)(2) above, a corporation, or a labor union, as a collection of employees and

agents, “is considered to have acquired the collective knowledge of its employees and is held

responsible for their failure to act accordingly.”  United States v. T.I.M.E.-D.C. Inc., 381 F.

Supp. 730, 738-39 (W.D. Va. 1974).  Therefore, such collective entities are liable for the

aggregate knowledge of all employees and agents within (and acting on behalf of) the collective

entity, and cannot “plead ignorance” by claiming that the representative making the fraudulent

statement, or obtaining the knowledge of its falsity, somehow was insulated from the rest of the

corporation or labor union.

The seminal case on the “collective knowledge” doctrine is United States v. Bank of New

England, N.A., 821 F.2d 844 (1st Cir. 1987).  In that case, the bank was convicted of violating

the Currency Transaction Reporting Act for failing to report various financial transactions.  At

trial, the district court stressed that, unlike a natural person, the jury must consider the bank “as

an institution.”  The trial court instructed the jury as follows:

In addition, however, you have to look at the bank as an institution. As such, its knowledge is the sum of the knowledge of all of theemployees.  That is, the bank’s knowledge is the totality of whatall of the employees know within the scope of theiremployment.  So, if Employee A knows one facet of the currencyreporting requirement, B knows another facet of it, and C a thirdfacet of it, the bank knows them all.  So if you find that anemployee within the scope of his employment knew that CTRs hadto be filed, even if multiple checks are used, the bank is deemed toknow it.  The bank is also deemed to know it if each of severalemployees knew a part of that requirement and the sum of what theseparate employees knew amounted to knowledge that such a

53

requirement existed.

Id. at 855 (emphasis added).  After conviction, the bank on appeal challenged the trial court’s

instructions regarding the bank’s knowledge and intent, by allowing the jury to consider the

aggregate knowledge of various employees, including the tellers at the bank window (who

participated in the withdrawals) and the other employees (who might not have even known of the

withdrawals).  The individual making the withdrawals was acquitted on all counts, and none of

the bank employees had been charged with a crime.  Id. at 847.  Therefore, the bank contended,

“it is error to find that a corporation possesses a particular item of knowledge if one part of the

corporation has half the information making up the item, and another part of the entity has the

other half.”  Id. at 856.

The First Circuit rejected the bank’s argument, noting that “[a] collective knowledge

instruction is entirely appropriate in the context of corporate criminal liability. . . .  [T]he

knowledge obtained by corporate employees acting within the scope of their employment is

imputed to the corporation.”  Id. at 856.  In addition, the court stressed that it would be unjust to

allow a corporation to avoid liability merely because it chose to divide its knowledge, thus

allowing it to “plead ignorance”:

Corporations compartmentalize knowledge, subdividing theelements of specific duties and operations into smallercomponents.  The aggregate of these components constitutes thecorporation’s knowledge of a particular operation.  It is irrelevantwhether employees administering one component of an operationknow the specific activities of employees administering anotheraspect of the operation . . . .  Since the Bank had thecompartmentalized structure common to all large corporations, thecourt’s collective knowledge instruction was not only proper butnecessary.

Id. at 856.

  See also Matter of Pubs., Inc., 618 F.2d 432, 438 (7th Cir. 1980) (collective knowledge51

of all employees and departments within the corporation is generally imputed to the corporation);Steere Tank Lines, Inc. v. United States, 330 F.2d 719, 721-22 (5th Cir. 1963) (“It is now beyonddoubt that a corporation may be held criminally liable. [citing cases].  These cases also settle theproposition that knowledge of employees and agents of the corporation is attributable to thecorporation, and that their acts may amount to wilfulness on the part of the corporation.”); UnitedStates v. U.S. Cartridge Co., 198 F.2d 456, 464 (8th Cir. 1952) (collective knowledge doctrinecase in False Claims Act context); Camacho v. Bowling, 562 F. Supp. 1012, 1025 (N.D. Ill.1983) (“Other organizations, such as private corporations or partnerships, are held to haveconstructive notice of the collective knowledge of all the employees and departments within theorganization.”); United States v. Sawyer Transport, Inc., 337 F. Supp. 29, 31 (D. Minn. 1971),aff’d, 463 F.2d 175 (8th Cir. 1972) (knowledge of employees may be joined and imputed to thecorporation); United States v. E. Brooke Matlack, Inc., 149 F. Supp. 814, 819-20 (D. Md. 1957)(corporation liable for knowingly and wilfully violating ICC regulations even where main officein Philadelphia did not know or suspect that branch agents in Baltimore were violating duties);People v. Amer.  Med. Ctrs., 324 N.W.2d 782, 793 (Mich. App. 1982) (“The combinedknowledge of those employees may be imputed to the corporation to find it liable for fraudulent

(continued...)54

Earlier cases also demonstrate that corporate knowledge should be aggregated, and

accordingly notice and knowledge of a fact by an employee-representative is imputed to the

corporation-principal.  For instance, in Inland Freight Lines v. United States, 191 F.2d 313, 315

(10th Cir. 1951), the court ruled that a corporation could be held responsible for the mistakes and

falsification by its drivers in preparation of drivers’ logs even where no individual agent or

employee was shown to have actual knowledge of discrepancies between the business logs and

reports.  The court explained:

The logs and the reports did not find their way into the hands of asingle agent or representative of the company after they were filed. No single agent or representative in the offices of the company hadactual knowledge of their conflicts and falsities.  But one agent orrepresentative had knowledge of the material contents of the logsand another had knowledge of the material contents of the reports. And the knowledge of both agents or representatives was attributedto the company.

Id. at 315.51

(...continued)51

acts.”);  Gem City Motors Inc. v. Minton, 137 S.E.2d 522, 525 (Ga. App. 1964) (corporation“chargeable with the composite knowledge acquired by its officers and agents” (emphasisadded)).

55

Moreover, in United States v. Shortt Accountancy Corp., 785 F.2d 1448 (9th Cir. 1986),

an accounting firm was convicted for making and subscribing false tax returns, in violation of 26

U.S.C. § 7206(1), for preparing and submitting tax returns claiming deductions for illegal

“straddle” investments.  The firm’s chief operating officer, Ashida, advised the customer about

the investment, and provided information to another employee of the firm, Whatley, for the

actual preparation of the customer’s return.  Id. at 1450-51.  At trial, the firm contended that a

corporation cannot be guilty of a § 7206 offense “when the person who actually subscribes the

false return believes it to be true and correct.”  Id. at 1451.  The district court denied the motion,

and the jury ultimately convicted the firm.

On appeal, the defendant claimed that six of the convictions should be overturned

because there was no evidence that Whatley, the preparer and subscriber of these six tax returns,

possessed the requite intent to wilfully make and subscribe a false tax return.  The firm conceded

that “Ashida, who supplied Whatley with all of his information regarding the straddle losses, did

have the requisite intent,” but pointed out that Ashida did not physically subscribe to the return. 

After considering the argument, the court of appeals concluded that it was “completely

meritless”:

If it were accepted by the courts, any tax return preparer couldescape prosecution for perjury by arranging for an innocentemployee to complete the proscribed act of subscribing a falsereturn.  This interpretation of section 7206(1) defies logic and hasno support in the case law.  A corporation will be held liable undersection 7206(1) when its agent deliberately causes it to make andsubscribe to a false income tax return.

56

Id. at 1454.

Likewise, since Bank of New England, several other courts have allowed such agents’

knowledge to be aggregated and imputed to the corporation as a whole.  For example, in United

States v. Philip Morris USA, Inc., 449 F. Supp. 2d at 893-98, the district court held in a

Government civil RICO lawsuit that the defendants-corporations’ knowledge and specific intent

to commit fraud were properly established by the collective knowledge of their officers,

employees and agents.  The district court explained:

There is “every reason in public policy” why a corporation, whichcan only act through its agents and officers, and which profits bytheir actions, should be held liable when the totality ofcircumstances demonstrate that such corporation collectively knewwhat it was doing or saying was false, by did it or said itnevertheless, even if it is impossible to determine the state of mindof the individual agent or officer at the time.  Indeed, if it wereotherwise, Defendants could avoid liability by simply dividing upduties to ensure that fraudulent statements were only made by or[sic] uninformed employees.  

Id. at 896-97.  

Similarly, in United States v. Sun-Diamond Growers, 964 F. Supp. 486 (D.D.C. 1997),

the court noted that the defendant “makes much of the fact that purportedly no other corporate

officials knew about Mr. Douglas’ activities.  However, knowledge obtained by a corporate agent

acting within the scope of his employment is imputed to the corporation.”  Id. at 491 n.10.  In

addition, the Court noted that, under agency principles, the defendant could still be liable for

Douglas’ actions “even if Mr. Douglas had acted against corporate policy or the corporation’s

express instructions or even if Sun-Diamond had derived no benefit from Mr. Douglas’ actions.” 

Id.  

57

In CPC Intern., Inc. v. Aerojet-General Corp., 825 F. Supp. 795 (W.D. Mich. 1993), the

court stressed that “a corporation cannot plead innocence by asserting that the information

obtained by several employees was not acquired by any one individual employee.”  825 F. Supp

at 811-812  (citations and internal quotations omitted); United States v. T.I.M.E. - D.C. Inc., 381

F. Supp. 730, 738-39 (W.D. Va. 1974) (a corporation “cannot plead innocence by asserting that

the information obtained by several employees was not acquired by any one individual employee

who then would have comprehended its full import.  Rather the corporation is considered to have

acquired the collective knowledge of its employees and is held responsible for their failure to act

accordingly.”);  United States v. LBS Bank-New York Inc., 757 F. Supp. 496, 501 (E.D. Pa.

1990) (knowledge from different employees can be joined in order to establish corporate

knowledge, but specific intent cannot be so aggregated); United States v. Farm & Home Sav.

Ass’n, 932 F.2d 1256, 1259 (8th Cir. 1991) (imputing collective knowledge of employees

participating in multiple illegal transactions to employer).

Similarly in United States ex rel. Harrison v. Westinghouse Savannah River Co., 352

F.3d 908, 919 (4th Cir. 2003), a False Claims Act case, though not formally needing to reach the

“corporate scienter” rule, the court of appeals declined to adopt the defendant’s proposed “single

actor” requirement that the same employee know both the certifying requirement and the

wrongful conduct.  Under that rule, the court reasoned, “corporations would establish segregated

‘certifying’ offices that did nothing more than execute government contract certifications, thereby

immunizing themselves against FCA liability.”  Id.  As acknowledged by the California Supreme

Court, the single actor rule is “fraught with danger and would open up avenues of fraud which

would lead to incalculable hazards.  It would permit a corporation, by not letting its right hand

58

know what is in its left hand, to mislead and deceive . . . .”  Sanders v. Magill, 70 P.2d 159, 163

(Cal. 1937).

Thus, under the collective knowledge doctrine “[t]he knowledge necessary to adversely

affect the corporation does not have to be possessed by a single corporate agent; the cumulative

knowledge of several agents can be imputed to the corporation.”  WILLIAM M. FLETCHER,

FLETCHER CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS, § 790, at 16 (perm. Ed.)

(emphasis added); accord WILLIAM E. KNEPPER & DAN A. BAILEY, LIABILITY OF CORPORATE

DIRECTORS AND OFFICERS, § 1.02, at 4 (Supp. 1992).

Imposing the collective scienter upon the corporation follows equity as well as the

extensive legal authority cited above.  As the First Circuit noted in Bank of New England, the

collective knowledge doctrine prevents a corporation from “plead[ing] innocence by asserting

that the information obtained by several employees was not acquired by any one individual who

then would have comprehended its full import.”  821 F.2d at 856 (citing T.I.M.E.-D.C., 

381 F. Supp. at 738).  Indeed, numerous courts have prevented corporations (and other

organizations) from taking advantage of their corporate form by attempting to “ostrich”

themselves away from liability by insulating the actors (or spokespersons) of a corporation from

those within the organization who have certain information.  As one commentator noted:

Given the often complex and decentralized nature of manycorporations, it is sometimes difficult, if not impossible, to provethat any single corporate agent acted with the necessary intent andknowledge to commit an offense.  Under the judicially created“collective knowledge” doctrine, however, this will not preclude acorporation’s conviction.  That doctrine deems a corporation’sknowledge to be the combined knowledge and intent of all of itsemployees.  Thus, even if no single employee has the intent andknowledge necessary to commit a crime, the corporation can beconvicted on the basis of its employees [sic] collective knowledge

  See also Charles J. Walsh & Alissa Pyrich, Corporate Compliance Programs as a52

Defense to Criminal Liability: Can a Corporation Save its Soul?, 47 RUTGERS L. REV. 605, 625(1995) (noting that corporations can be convicted of intent-based crimes even where none oftheir employees possessed the requisite intent); Kevin B. Huff, The Role of CorporateCompliance Programs in Determining Corporate Criminal Liability: A Suggested Approach, 96 COLUM. L. REV. 1252, 1256 n.26 (1996) (“Under the ‘collective knowledge’ doctrine, courtshave found the required intent by imputing to the corporation the aggregate knowledge of morethan one employee.”); Steere Tank Lines v. United States, 330 F.2d 719, 721 (5th Cir. 1963)(“knowledge of employees’ agents of the corporation is attributable to the corporation, and . . .their acts may amount to wilfulness on the part of the corporation”).

See also FLETCHER, CORPORATIONS, § 790 (absent collective knowledge doctrine,“corporations could avoid the adverse implications of the [imputed knowledge] rule byrestricting the intracorporate flow of information.”).  As noted by the Fifth Circuit in ContinentalOil Co. v. Bonanza Corp., 706 F.2d 1365, 1376 (5th Cir. 1983), “Because a corporation operatesthrough individuals, the privity and knowledge of individuals at a certain level of responsibilitymust be deemed privity and knowledge of the organization, ‘else it could always limit itsliability.’” (citing Coryell v. Phipps, 317 U.S. 406, 410-11 (1943)); Silver Line, Ltd. v. UnitedStates, 94 F.2d 776, 780 (9th Cir. 1937) (ship owner may not escape liability by givingmanagement functions to employee acting as agent)).  As the Eleventh Circuit emphasized inFirst Ala. Bank v. First State Ins. Co., 899 F.2d 1045, 1060 n.8 (11th Cir. 1990), the reason thatcourts impose constructive knowledge upon the principal “is to avoid the injustice which wouldresult if the principal could have an agent conduct business for him and at the same time shieldhimself from the consequences which would ensue from knowledge of conditions or notice of therights and interests of others had the principal transacted his own business in person.”

59

and intent.

Dan K. Webb et al., Understanding and Avoiding Corporate and Executive Criminal Liability, 

49 BUS. LAW 617, 625 (1994).52

4. The Prohibition Against Intracorporate Conspiracies Under The AntitrustLaws Does Not Apply To Government Civil RICO Lawsuits

In Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), the Supreme

Court held that a parent corporation “and its wholly owned subsidiary . . . are incapable of

conspiring with each other for purposes of § 1 of the Sherman Act,” 15 U.S.C. § 1.  467 U.S. at

752.  But, the Supreme Court rested its decision in Copperweld on the Sherman Act’s distinctive

intent and purpose.  Section 1 of the Sherman Act prevents two or more enterprises from joining

60

their economic power to restrain trade; it does not apply to unilateral action by a single

enterprise.  See id. at 771-775.  Because Congress recognized that a prohibition on unilateral

action could impede the ability of a single enterprise to compete in the marketplace, the Court

held in Copperweld that Section 1 of the Sherman Act does not apply to intra-enterprise

agreements.  Id. at 775 (“Subjecting a single firm’s every action to judicial scrutiny for

reasonableness would threaten to discourage the competitive enthusiasm that the antitrust laws

seek to promote.”).

In fact, numerous courts have held that these antitrust considerations simply do not apply

to RICO.  For example, in Haroco v. Am. Nat’l Bank & Trust Co. of Chicago, 747 F.2d 384, 403

n.22  (7th Cir. 1984), aff’d on other grounds, 473 U.S. 606 (1985), the court ruled that

Copperweld did not apply to civil RICO conspiracy charges, explaining that “the Sherman Act is

premised, as RICO is not, on the ‘basic distinction between concerted and independent action.’ 

The policy considerations discussed in Copperweld therefore do not apply to RICO, which is

targeted primarily at the profits from patterns of racketeering activity.”  

747 F.2d at 403 n.22 (citation omitted).  Similarly, in Ashland Oil, Inc. v. Arnett, 875 F.2d 1271

(7th Cir. 1989), the court stated:

Since a subsidiary and its parent theoretically have a community ofinterest, a conspiracy “in restraint of trade” between them poses no threatto the goals of antitrust law – protecting competition.  In contrast,intracorporate conspiracies do threaten RICO’s goals of preventing theinfiltration of legitimate businesses by racketeers and separating racketeersfrom their profits.

875 F.2d at 1281 (citations omitted).  In accordance with the foregoing reasoning, numerous

courts have likewise ruled that the rationale of Copperweld does not apply to civil RICO claims

and that, therefore, a civil RICO conspiracy claim properly applies to a conspiracy between a

  See, e.g., Webster v. Omnitrition Intern., Inc., 79 F.3d 776, 787 (9th Cir. 1996);53

Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1166-67 (3d Cir. 1989); Fed. Reserve Bankof S.F. v. HK Sys., Inc., No. C-95-1190 MHP, 1997 WL 765952, at *3-*4 (N.D. Cal. Nov. 12,1997); N. Shore Med. Ctr., Ltd. v. Evanston Hosp. Corp., No. 92 C 6533, 1996 WL 435192, at*3 (N.D. Ill. July 31, 1996); Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., No. 95-1698,1996 WL 135336, at *5 (E.D. Pa.. Mar. 19, 1996); Bowman v. W. Auto Supply Co., 773 F.Supp. 174, 180 (W.D. Mo. 1991), rev’d on other grounds, 985 F. 2d 383 (8th Cir. 1993); Dun-Rite Tool & Fabricating Co. v. Am. Nat’l Bank of DeKalb, No. 89 C 20370, 1991 WL 293092,at *5 (N.D. Ill. Apr. 11, 1991); Rouse v. Rouse, No. 89-CV-597, 1990 WL 160194, at *14(N.D.N.Y. Oct. 17, 1990); Atlass v. Tex. Air Corp., Civ. A. No. 88-9637, 1989 WL 51724, at *5(E.D. Pa. May 10, 1989); Curley v. Cumberland Farms Dairy, Inc., 728 F. Supp. 1123, 1135(D.N.J. 1989); Pandick Inc. v. Rooney, 632 F. Supp. 1430, 1435 (N.D. Ill. 1986); Callan v. StateChemical Mfg. Co., 584 F. Supp. 619, 623 (E.D. Pa. 1984); Saine v. A.I.A., Inc., 582 F. Supp.1299, 1307 n.9 (D. Colo. 1984); Mauriber v. Shearson/Am. Express, Inc., 567 F. Supp. 1231,1241 (S.D.N.Y. 1983).

Moreover, Copperweld’s prohibition on intracorporate conspiracies does not apply tocriminal RICO conspiracy charges or other criminal conspiracy charges.  See, e.g., United Statesv. Hughes Aircraft Co., 20 F. 3d 974, 979 (9th Cir. 1994) (collecting cases); Crockett, 979 F.2d at 1218 n.12.

  For laches to apply, a defendant must establish two elements: (1) unreasonable delay in54

bringing the claim; and (2) prejudice caused by the delay.  See, e.g., Trustees of Centennial StateCarpenters Pension Trust Fund v. Centric Corp. (In re Centric Corp.), 901 F.2d 1514, 1519 (10thCir. 1990); Independent Bankers Ass’n of America v. Heimann, 627 F.2d 486, 488 (D.C. Cir.1980); Allen v. Carmen, 578 F. Supp. 951, 962-63 (D.D.C. 1983).

61

parent corporation and its subsidiary, between affiliated corporations, or between a corporation

and its own officers and representatives.53

C. Certain Defenses Do Not Apply to Government Civil RICO Actions For EquitableRelief

1. Laches and Statute of Limitations

The Supreme Court has repeatedly held that the United States is not bound by a statute of

limitations or subject to the defense of laches  when it brings a lawsuit in its sovereign capacity54

to enforce a public right or to protect the public’s interest.  See, e.g., Utah Power & Light Co. v.

United States, 243 U.S. 389, 409 (1917) (“As a general rule, laches or neglect of duty on the part

62

of officers of the government is no defense to a suit by it to enforce a public right or protect a

public interest.”).  Accord Nevada v. United States, 463 U.S. 110, 141 (1983); United States v.

California, 332 U.S. 19, 40 (1947); United States v. Summerlin, 310 U.S. 414, 416 (1940); Bd.

of County Comm’rs v. United States, 308 U.S. 343, 351 (1939); Guaranty Trust Co. of New

York v. United States, 304 U.S. 126, 132 (1938); Davis v. Corona Coal Co., 265 U.S. 219, 222

(1924); Chesapeake & Delaware Canal Co. v. United States, 250 U.S. 123, 125 (1919); United

States v. Insley, 130 U.S. 263, 266 (1889); United States v. Thompson, 98 U.S. 486, 489 (1878);

United States v. Kirkpatrick, 22 U.S. 720, 735-37 (1824).  Accord United States v. Angell, 292

F.3d 333, 338 (2d Cir. 2002); Herman v. South Carolina Nat’l Bank, 140 F.3d 1413, 1427 (11th

Cir. 1998); United States v. Arrow Transp. Co., 658 F.2d 392, 394 (5th Cir., Unit B, Oct. 1981);

United States v. Weintraub, 613 F.2d 612, 618-19 (6th Cir. 1979).  “This principle protects

public rights vested in the government for the benefit of all from ‘the inadvertence of the agents

upon which the government must necessarily rely.’”  Herman, 140 F.3d at 1427 (quoting United

States v. Alvarado, 5 F.3d 1425, 1427 (11th Cir. 1993)); accord SEC v. Rind, 991 F.2d 1486,

1491 (9th Cir. 1993).  

The RICO statute itself does not contain any time limitations upon the United States’

ability to bring civil RICO suits for equitable relief.  Indeed, Congress recognized in RICO’s

legislative history that “there is no general statute of limitations applicable to civil suits brought

by the United States to enforce public policy, nor is the doctrine of laches applicable.”  S. REP.

No. 91-617 at 160.  Therefore, it is clear that, consistent with the general principles discussed

above, Congress did not intend to, and affirmatively decided not to, apply a statute of limitations

or the doctrine of laches to civil RICO suits for equitable relief brought by the United States.  

 See, e.g., SEC v. Rind, 991 F.2d 1486, 1491 (9th Cir. 1993); SEC v. McCaskey,55

56 F. Supp. 2d 323, 327 (S.D.N.Y. 1999); SEC v. Willis, 777 F. Supp. 1165, 1174 (S.D.N.Y.1991); SEC v. Gulf & Western Indus., Inc., 502 F. Supp. 343, 348-49 (D.D.C. 1980); SEC v.Penn Central Co., 425 F. Supp. 593, 599 (E. D. Pa. 1976).

 See, e.g., United States v. Firestone Tire & Rubber Co., 374 F. Supp. 431, 433 (N.D.56

Ohio 1974).

 See, e.g., FTC v. Verity Int’l, Ltd., 194 F. Supp. 2d 270, 286 (S.D.N.Y. 2002); FTC v.57

Crescent Pub. Group, Inc., 129 F. Supp. 2d 311, 324 (S.D.N.Y. 2001); United States v. Reader’sDigest Ass’n, Inc., 464 F. Supp. 1037, 1043 (D. Del. 1978).

63

In accordance with the foregoing authority, every court that has considered the issue has

held that a statute of limitations and the doctrine of laches do not apply against claims of the

United States to obtain injunctive and other equitable relief under RICO.  See United States v.

Philip Morris Inc., 300 F. Supp. 2d 61, 72-74 (D.D.C. 2004); United States v. Private Sanitation

Indus. Ass’n of Nassau/Suffolk, Inc., 793 F. Supp. 1114, 1152 (E.D.N.Y. 1992); United States v.

Int’l Bhd. of Teamsters, 708 F. Supp. 1388, 1402 (S.D.N.Y. 1989); United States v. Bonanno

Organized Crime Family, 695 F. Supp. 1426, 1430-31 (E.D.N.Y. 1988).  Moreover, courts in

other analogous enforcement contexts similarly have held that the doctrine of laches does not

apply against actions of the United States to enforce the securities laws,  antitrust laws,  or fair55 56

trade laws.   Likewise, in various other civil enforcement actions, courts have concluded that57

limitations periods will not be imposed on suits brought by the United States.  See Dole v. Local

427, Int’l Union of Elec. Radio & Mach. Workers, 894 F.2d 607, 610-16 (3d Cir. 1990) (no

statute of limitations applies when Secretary of Labor sues under Labor-Management Reporting

and Disclosure Act (“LMRDA”) to enjoin local union from refusing to allow one of its members

to review collective bargaining agreements); Donovan v. West Coast Detective Agency, Inc., 748

F.2d 1341, 1343 (9th Cir.1984) (Secretary of Labor suit to compel filing of requisite reports

64

under LMRDA); Donovan v. Square D Co., 709 F.2d 335, 341 (5th Cir. 1983) (Secretary of

Labor’s anti-retaliation suit under Occupational Safety and Health Act); Marshall v.

Intermountain Elec. Co., 614 F.2d 260, 263 (10th Cir. 1980) (same); Nabors v. NLRB, 323 F.2d

686, 688-89 (5th Cir. 1963) (National Labor Relations Board enforcement of National Labor

Relations Act); see also United States v. Ali, 7 F.2d 728 (E.D. Mich. 1925) (laches inapplicable

to denaturalization proceeding brought by the government); United States v. Brass, 37 F. Supp.

698 (E.D.N.Y. 1941) (same).

2. United States’ Civil RICO Claims Cannot Be Implicitly Waived

As a matter of law, the United States cannot be found to have implicitly waived its

sovereign capacity to protect public interests through civil RICO suits for equitable relief.  In

United States v. California, 332 U.S. 19 (1947), the Supreme Court considered a dispute between

a state and the federal government over ownership and control of submerged coastal land.  The

state argued, inter alia, that the federal government’s policies, decisions and actions, as well as

the “conduct of its agents” served to waive the United States’ claim to the lands.  See id. at 39. 

The Supreme Court squarely rejected this analysis:

even assuming that Government agencies have been negligent infailing to recognize or assert the claims of the Government at anearlier date, the great interests of the Government in this ocean areaare not to be forfeited as a result.  The Government, which holdsits interests here as elsewhere in trust for all the people, is notto be deprived of those interests by the ordinary court rulesdesigned particularly for private disputes . . . .

Id. at 39-40 (emphasis added); see also cases in Section III (C)(3) below (demonstrating that

equitable estoppel does not lie against the United States acting as sovereign to protect the public

  Similarly, the Supreme Court has explained, in the context of a private right granted58

by federal statute, “Where a private right is granted in the public interest to effectuate alegislative policy, waiver of a right so charged or colored with the public interest will not beallowed where it would thwart the legislative policy which it was designed to effectuate.” Brooklyn Savs. Bank v. O’Neil, 324 U.S. 697, 704 (1945).  See also Tompkins v. UnitedHealthcare of New England, Inc., 203 F.3d 90, 97 (1st Cir. 2000) (“[a] statutory right may not bedisclaimed if the waiver could ‘do violence to the public policy underlying the legislativeenactment.’”) (internal quotations and citation omitted).

65

interest).  58

RICO vests the Attorney General with the exclusive authority to bring civil RICO suits

for injunctive and equitable remedies to vindicate the public’s paramount interests in eliminating

corruption from the channels of commerce.  See Section II (D) above; United States v. Int’l Bhd.

of Teamsters, 3 F.3d 634, 638 (2d Cir. 1993) (when it proceeds under § 1964, “the government

sues in its sovereign capacity pursuant to a ‘compelling governmental interest’ and ‘strong

congressional policy’”) (citations omitted).  The public interest vindicated by RICO enforcement

actions cannot be understated.  The Congressional Statement of Findings and Purpose underlying

RICO explains that, among other things, RICO was designed to combat activities that

weaken the stability of the Nation’s economic system, harminnocent investors and competing organizations, interfere with freecompetition, seriously burden interstate and foreign commerce,threaten the domestic security, and undermine the general welfareof the Nation and its citizens . . . .

Pub. L. No. 91-452, 84 Stat., at 922, 923.  Indeed, Congress created RICO to provide new and

expanded criminal and civil remedies to vindicate the public’s interest in combating racketeering

activity and “to free the channels of commerce” from such unlawful conduct.  See Sections II (B)

and (C) above.

Consequently, the United States’ right to maintain a civil RICO action, so clearly

“charged or colored with public interest,” Brooklyn Savs. Bank, 324 U.S. at 704, cannot be

  Even assuming arguendo that the right of the United States to bring a civil RICO claim59

could be waived, a defendant would have an exacting burden to establish a waiver.  “A waiver ‘isordinarily an intentional relinquishment or abandonment of a known right or privilege.’”  UnitedStates v. Robinson, 459 F.2d 1164, 1168 (D.C. Cir. 1972) (quoting Johnson v. Zerbst, 304 U.S.458, 464 (1938)); see also United States v. Olano, 507 U.S. 725, 733 (1993); BritamcoUnderwriters, Inc. v. Nishi, Papagjika & Assocs., Inc., 20 F. Supp. 2d 73, 77 n.2 (D.D.C. 1998). In the context of a right expressly reserved to the United States as sovereign, the waiver must be“unmistakable.”  See Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 148 (1982) (“Withoutregard to its source, sovereign power, even when unexercised, is an enduring presence thatgoverns all contracts subject to the sovereign’s jurisdiction, and will remain intact unlesssurrendered in unmistakable terms.”) (emphasis added); United States v. Cherokee Nation ofOkla., 480 U.S. 700, 707 (1987) (“waiver of sovereign authority [to ensure that navigable watersremain free to interstate and foreign commerce] will not be implied, but instead must besurrendered in unmistakable terms”) (internal quotation and citation omitted); Bowen v. PublicAgencies Opposed to Social Sec. Entrapment, 477 U.S. 41, 52 (1986) (“we have declined in thecontext of commercial contracts to find that a sovereign forever waives the right to exercise oneof its sovereign powers unless it expressly reserves the right to exercise that power in thecontract.” (internal quotation and citation to Merrion omitted)); United States v. Philip MorrisInc., 300 F. Supp. 2d at 69 (“any waiver [of the Government’s right to bring a civil RICOlawsuit] must be made in unmistakable terms”);  cf. also United States v. Mitchell, 445 U.S. 535,538 (1980) (“A waiver of sovereign immunity cannot be implied but must be unequivocallyexpressed.”) (internal quotation and citation omitted).

66

implicitly waived as a matter of law.59

3. Equitable Estoppel Can Not Lie Against the United States, If Ever, AbsentAffirmative Misconduct

a.  It is well settled that “equitable estoppel will not lie against the Government as it lies

against private litigants.”  OPM v. Richmond, 496 U.S. 414, 419 (1990).  The Supreme Court has

succinctly stated the rationale for this rule:  “When the Government is unable to enforce the law

because the conduct of its agents has given rise to an estoppel, the interest of the citizenry as a

whole in obedience to the rule of law is undermined.”  Heckler v. Community Health Servs. of

Crawford County, Inc., 467 U.S. 51, 60 (1984).  See also  FDIC v. Hulsey, 22 F.3d 1472, 1489

(10th Cir. 1994) (Where estoppel against the United States would “frustrate the purpose of the

statutes expressing the will of Congress or unduly undermine the enforcement of the public

67

laws,” it should not be invoked); Alacare Home Health Servs. Inc. v. Sullivan, 891 F.2d 850, 855

(11th Cir. 1990) (equitable estoppel should not apply when Government acting in its sovereign,

rather than proprietary, function); Chapman v. Santa Fe Pac. R. Co., 198 F.2d 498, 519 (D.C. Cir.

1952) (“It is settled law that no estoppel can arise against the Government in the exercise of a

public or governmental function as distinguished from a proprietary one.”) (citations omitted).

  While the Supreme Court has not absolutely foreclosed the possibility that estoppel

could lie against the United States in “extreme circumstances,” it has never applied the doctrine

of equitable estoppel against the United States.  See OPM v. Richmond, 496 U.S. at 434;  see

also id. at 422 (“Courts of Appeals have taken our statements as an invitation to search for an

appropriate case in which to apply estoppel against the Government, yet we have reversed every

finding of estoppel that we have reviewed.”) (emphasis added).  Accord ATC Petroleum, Inc.

v. Sanders, 860 F.2d at 1104, 1111 (D.C. Cir. 1988).  For example, in Utah Power & Light Co. v.

United States, 243 U.S. 389, 409 (1917), the Supreme Court stated:

As presenting another ground of estoppel it is said that the agents in theforestry service and other officers and employees of the government, withknowledge of what the defendants were doing, not only did not objectthereto, but impliedly acquiesced therein until after the works werecompleted and put in operation.  This ground also must fail.  As a generalrule, laches or neglect of duty on the part of officers of the government isno defense to a suit by it to enforce a public right or protect a publicinterest.

b.  Before equitable estoppel could ever lie against the United States, a Defendant would

have to present evidence of significant “affirmative misconduct” on the part of the Government. 

See, e.g., INS v. Hibi, 414 U.S. 5, 8 (1973); Montana v. Kennedy, 366 U.S. 308, 314-15 (1961);

Long v. Area Manager, Bureau of Reclamation, 236 F.3d 910, 916 (8th Cir. 2001); Drozd v. INS,

155 F.3d 81, 90 (2d Cir. 1998); City of New York v. Shalala, 34 F.3d 1161, 1168 (2d Cir. 1994). 

68

Such “affirmative misconduct” must consist, at minimum, of active misrepresentation or

concealment; negligent, indifferent, or passive conduct by the Government will not suffice.  See,

e.g., United States v. Marine Shale Processors, 81 F.3d 1329, 1348-51 (5th Cir. 1996); United

States v. Harvey, 661 F.2d 767, 775 (9th Cir. 1981); United States v. City of Toledo, 67 F. Supp.

603, 607 (N.D. Ohio 1994); United States v. City of Menominee, 727 F. Supp. 1110, 1121 (W.D.

Mich. 1989).  For example, in Alaska Limestone Corp. v. Hodel, 614 F. Supp. 642, 647 (D.

Alaska 1985), the court rejected an estoppel claim even though Government officials had failed

to comply with certain congressionally mandated deadlines.  In so doing, the Alaska Limestone

court concluded that the party claiming estoppel had offered nothing to show that the

Government had “intentionally ignored” its responsibilities or “affirmatively sought to deceive or

mislead” others.  614 F. Supp. at 648.

Moreover,  “[t]he case for estoppel against the government must be compelling,” and, at a

minimum, requires proof of (1) a false representation of fact; (2) a purpose to invite action by the

party to whom the representation was made; (3) ignorance of the true facts by that party; (4)

reasonable reliance; (5) a showing of injustice; and (6) lack of undue damage to the public

interest.  ATC Petroleum, 860 F.2d at 1111; Graham, 222 F.3d at 1007; United States v. Philip

Morris Inc., 300 F. Supp. 2d at 71-72; Moore v. Blue Cross & Blue Shield of the Nat’l Cap.

Area, 70 F. Supp. 2d 9, 31 (D.D.C. 1999).  Defendants must demonstrate that all these elements

are satisfied in order for equitable estoppel to apply.  See, e.g., Heckler, 467 U.S. at 61

(“[H]owever heavy the burden might be when an estoppel is asserted against the Government,

the private party surely cannot prevail without at least demonstrating that the traditional elements

of an estoppel are present.”); ATC Petroleum, 860 F.2d at 1111; Trustees of Michigan Laborers’

  Accord Kelley v. Thomas Solvent Co., 714 F. Supp. 1439, 1451 (W.D. Mich. 1989);60

United States v. Vineland Chem. Co., 692 F. Supp. 415, 423-24 (D.N.J. 1988).69

Health Care Fund v. Gibbons, 209 F.3d 587, 591 (6th Cir. 2000); Kennedy v. United States, 

965 F.2d 413, 417 (7th Cir. 1992).

4. The United States Is Not Subject to the Defenses of Unclean Hands or In PariDelicto

a.  The doctrine of unclean hands derives from the equitable maxim that one “who comes

into equity must come with clean hands.”  See, e.g., Precision Instrument Mfg. Co. v. Auto.

Maint. Mach. Co., 324 U.S. 806, 814 (1945).  Just as with waiver, equitable estoppel, and laches,

this doctrine generally may not be invoked against the United States when it is “attempting to

enforce a congressional mandate in the public interest.”  See SEC v. Gulf & Western Indus., Inc.,

502 F. Supp. 343, 348 (D.D.C. 1980); Pan-American Petroleum & Transp. Co. v. United States,

273 U.S. 456, 505-506 (1927) (stating that principle that “he who seeks equity must do equity . . .

will not be applied to frustrate the purpose of [the United States’] laws or to thwart public

policy”); SEC v. Sprecher, 1993 WL 544306, *2 (D.D.C. 1993) (“an unclean hands defense does

not lie in a civil enforcement action brought by a federal agency”).   As noted above,60

Government civil RICO actions for equitable relief seek to enforce Congress’ mandate to protect

the public’s interests.  Thus, such civil RICO suits “enforc[e] a congressional mandate in the

public interest,” Gulf & Western, 502 F. Supp. at 348, thereby precluding the application of the

doctrine of “unclean hands” against it.  Accord United States v. Philip Morris Inc., 300 F. Supp.

2d at 74-76.

b.  The doctrine of in pari delicto, which “literally means ‘of equal fault,’” Pinter v. Dahl,

486 U.S. 622, 632 (1988), is closely related to the defense of “unclean hands.”  This defense is

70

not applicable to Government civil RICO lawsuits for the reasons discussed above, but for other

legal reasons as well.  In order for in pari delicto to apply, “[t]he plaintiff must be an active

voluntary participant in the unlawful activity that is the subject of the suit.”  Pinter, 486 U.S. at

636.  Indeed, “[p]laintiffs who are truly in pari delicto are those who have themselves violated

the law in cooperation with the defendant.”  Id.  

However, an action can only be barred by in pari delicto “if preclusion of suit does not

offend the underlying statutory policies.”  Id. at 637-38; Perma Life Mufflers, Inc. v.

International Parts Corp., 392 U.S. 134, 138 (1968) (rejecting in pari delicto defense to private

treble damages antitrust suit where nothing in the statutory language indicated that Congress

wanted to make in pari delicto defense available, and recognizing “inappropriateness of invoking

broad common-law barriers to relief where a private suit serves important public purposes”).  It

is beyond question that permitting the in pari delicto defense to bar a RICO suit brought by the

United States to address alleged violations of RICO and thus protect the American public would

offend the important public purposes served by RICO.  Accord United States v. Philip Morris

Inc., 300 F. Supp. 2d at 76.

Further, the United States is not a “person” within the meaning of the RICO statute.  See

United States v. Bonanno Organized Crime Family, 879 F.2d 20, 21-27 (2d Cir. 1989); Peia v.

United States, 152 F. Supp. 2d 226, 234 (D. Conn. 2001).  Thus, the United States cannot, as a

matter of law, participate in a RICO Enterprise under 18 U.S.C. § 1962(c) (“It shall be unlawful

for any person . . . to conduct or participate, directly or indirectly, in the conduct of such

enterprise’s affairs. . . .”) (emphasis added), or participate in a RICO conspiracy to violate

1962(c) under 18 U.S.C. § 1962(d) (“It shall be unlawful for any person to conspire to violate

71

[the RICO statute].”) (emphasis added).  Thus, because the United States is not a person within

the meaning of RICO, it may not be held liable for a violation of RICO.

D. Collateral Estoppel

Civil RICO, 18 U.S.C. § 1964 (d), explicitly authorizes the Government to invoke

collateral estoppel to prove its civil RICO charges, and provides as follows:

A final judgment or decree rendered in favor of the United Statesin any criminal proceeding brought by the United States under thischapter shall estop the defendant from denying the essentialallegations of the criminal offense in any subsequent civilproceeding brought by the United States.

Collateral estoppel “means simply that when an issue of ultimate fact has once been

determined by a valid and final judgment, that issue cannot again be litigated between the same

parties in any future lawsuit.”  Ashe v. Swenson, 397 U.S. 436, 443 (1970).  Accord United

States v. Console, 13 F.3d 641, 664 (3d Cir. 1993).  Moreover, a party invoking collateral

estoppel bears the burden of demonstrating that the issue of fact whose litigation he seeks to

foreclose was actually decided in his favor by a valid and final judgment in an earlier proceeding. 

See Dowling v. United States, 493 U.S. 342, 350-51 (1990) (collecting cases); Console, 13 F.3d

at 665, n. 28.  To determine whether a party has carried his burden of establishing that a jury in a

prior prosecution necessarily resolved a particular fact in his favor, “requires a court to ‘examine

the record of a prior proceeding, taking into account the pleadings, evidence, charge, and other

relevant matter, and conclude whether a rational jury could have grounded its verdict upon an

issue other than that which the defendant seeks to foreclose from consideration.’” Ashe, 397 U.S.

at 444 (citation deleted).  Accord Dowling, 493 U.S. at 350; Console, 13 F.3d at 665, n.28.

  However, collateral estoppel does not bar the United States from relitigating in a civil61

RICO case an issue upon which a defendant was acquitted in a prior criminal prosecutionbecause a lesser standard of proof applies in a civil proceeding.  In United States v. OneAssortment of 89 Firearms, 465 U.S. 354 (1984), the Supreme Court held that a gun owner’sacquittal on criminal charges involving firearms did not preclude a subsequent in rem civilforfeiture proceeding against those same firearms, explaining:

[The acquittal did] not prove that the defendant is innocent; it merely proves theexistence of a reasonable doubt as to his guilt. . . [T]he jury verdict in the criminalaction did not negate the possibility that a preponderance of the evidence couldshow that [the defendant] was engaged in an unlicensed firearms business. . . It isclear that the difference in the relative burdens of proof in the criminal and civilactions precludes the application of the doctrine of collateral estoppel.

Id. at 361-62.  Accord Dowling, 493 U.S. at 349 (“an acquittal in a criminal case does notpreclude the Government from relitigating an issue when it is presented in a subsequent actiongoverned by a lower standard of proof”); One Lot Emerald Cut Stones v. United States, 409 U.S.232, 235 (1972) (holding that the Double Jeopardy Clause did not bar a forfeiture actionsubsequent to acquittal on the underlying offense because “the difference in the burden of proofin criminal and civil cases precludes application of the doctrine of collateral estoppel”);Helvering v. Mitchell, 303 U.S. 391, 397 (1938) (ruling that “[t]he difference in degree in theburden of proof in criminal and civil cases precludes application of the doctrine of res judicata”). See also, United States v. IBT, 787 F. Supp. 345, 351 (S.D.N.Y. 1992) (holding that a unionofficer’s acquittal on criminal assault charges did not preclude a subsequent civil disciplinarycharge, brought by a court-appointed officer in a Government civil RICO suit, based on the sameconduct where the preponderance of evidence standard applied); United States v. Ianniello, 646 F. Supp. 1289, 1290-91 (S.D.N.Y. 1986), aff’d, 824 F.2d 203 (2d Cir. 1987) (holding thatthe defendant’s prior acquittal on a criminal RICO conspiracy charge did not preclude asubsequent Government civil RICO suit based on the same conduct).

72

In accordance with the foregoing authority, courts in several Government civil RICO

cases have collaterally estopped defendants from contesting issues and facts which underlaid

defendants’ prior criminal convictions.   For example, in United States v. Private Sanitation61

Indus. Ass’n, 899 F. Supp. 974, 980-81 (E.D.N.Y. 1994), the court held that under principles of

collateral estoppel, a defendant’s guilty plea in state court to the New York State offense of

coercion in the first degree conclusively established that the defendant committed one predicate

act of extortion, in violation of the Hobbs Act (18 U.S.C. § 1951), that was charged in the

  See also United States v. IBT, 905 F.2d 610, 620-23 (2d Cir. 1990), aff’g, 725 F. Supp.62

162 (S.D.N.Y. 1989) (holding that the defendants were collaterally estopped from denying the(continued...)

73

Government’s civil RICO complaint.  The court explained that even though the “state offense of

coercion in the first degree does not constitute a RICO predicate act. . . a conviction for the state

felony of coercion in the first degree can establish the elements of a Hobbs Act violation.”  Id. at

981.  Accord United States v. Private Sanitation Indus. Ass’n, 811 F. Supp. 808, 813-15

(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993) (same as to New York State conviction for

coercion in the second degree, and also holding that the defendant’s prior guilty plea in state

court to the New York misdemeanor offense of conspiring to commit the felony of Second

Degree Bribery conclusively established in a subsequent Government civil RICO suit that he

committed several state bribery offenses that constitute a predicate act of bribery under 

18 U.S.C. § 1961 (1)(A)).

Moreover, in United States v. Local 30, United Slate, Tile, 686 F. Supp. 1139, 1165-66

(E.D.Pa. 1988), aff’d 871 F.2d 401 (3d Cir. 1989), the district court held that the individual union

officials-defendants’ prior criminal RICO convictions for conspiring to conduct, and conducting,

the Roofers Union through a pattern of racketeering activity “collaterally estop them from

denying [in a subsequent Government civil RICO lawsuit] that they conducted the affairs of the

Roofers Union through a pattern of racketeering activity.”  686 F. Supp. at 1165.  The district

court also held that:

The statutory estoppel provided in 18 U.S.C. § 1964 (d) operatesagainst the Union defendant as well, because the Union (theprincipal) is estopped and bound by the actions of its agents (theUnion officials and representatives).

686 F. Supp. at 1166.62

(...continued)62

facts underlying their state criminal convictions in a disciplinary action brought by a court-appointed officer pursuant to a consent decree in a Government civil RICO lawsuit); UnitedStates v. IBT, 777 F. Supp. 1133, 1137 (S.D.N.Y. 1991), aff’d, 970 F.2d 1132 (2d Cir. 1992)(holding in the same Government civil RICO suit that “[b]ecause Parise entered a guilty plea tothe criminal charge arising from the September 4, 1987 incident, he is collaterally estopped fromcontesting the facts underlying the disciplinary charge arising from the same incident.”).

74

As noted above, collateral estoppel bars relitigation of finally resolved issues “between

the same parties in any future lawsuit.”  Ashe v. Swenson, 397 U.S. at 443.  For example, in

United States v. IBT, 754 F. Supp. 333, 338 (S.D.N.Y. 1990), the district court rejected a

defendant’s argument that disciplinary charges, brought by the Investigations Officer appointed

by the district court pursuant to a consent decree in a Government civil RICO lawsuit, were

barred by the doctrines of collateral estoppel and res judicata because the General President of

the IBT had conducted a trusteeship hearing into the matter.  The district court explained that

“since the Investigations Officer was neither a party to the trusteeship proceeding nor in privity

with the General President, those defenses were unavailable.”  754 F. Supp. at 338.

  This Section addresses the amendments to the Federal Rules of Civil Procedure,63

including Rule 4, that absent Congressional action, will go into effect December 1, 2007.  Theseamendments were undertaken to make the Rules more easily understood, and to make style andterminology consistent.  The changes are primarily stylistic in content; however, wheresubstantive changes are included, they will be specifically noted. See Memorandum from JamesC. Duff, Sec’y, Judicial Conference of the U.S., to The Chief Justice of the U.S. and the Assoc.Justices of the Supreme Court (Dec. 21, 2006) (Westlaw).

75

IV

JURISDICTION AND VENUE

A. Serving the Summons

“[S]ervice of summons is the procedure by which a court having venue and jurisdiction of

the subject matter of the suit asserts jurisdiction over the person of the party served.”  Mississippi

Pub. Corp. V. Murphree, 326 U.S. 438, 444-45 (1946).  “[S]ervice of process in a federal action

is covered generally by Rule 4 of the Federal Rules of Civil Procedure.”  (“Rule 4 ”). Omni

Capital Int’l. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987).

Rule 4(a) sets forth the required contents of a summons, and Rule 4(b) and (c) provides

for the manner of issuance and service of a summons.  Service of a summons may be waived

pursuant to Rule 4(d).63

Rule 4(e) authorizes serving an individual within a judicial district of the United States

and provides as follows:

(e) Serving an individual within a Judicial District of theUnited States.  Unless federal law provides otherwise, anindividual -- other than a minor, an incompetent person, or aperson whose waiver has been filed -- may be served in a judicialdistrict of the United States by:(1) following state law for serving a summons in an action broughtin courts of general jurisdiction in the state where the district courtis located or where service is made; or (2) doing any of the following:(A) delivering a copy of the summons and of the compliant to the

76

individual personally;(B) leaving a copy of each at the individual’s dwelling or usualplace of adobe with someone of suitable age and discretion whoresides there; or(C) delivering a copy of each to an agent authorized byappointment or by law to receive service of process.

Service of an individual in a foreign country is covered by Rule 4(f), which provides:

(f) Serving an Individual in a Foreign Country.  Unless federallaw provides otherwise, an individual -- other than a minor, anincompetent person, or a person whose waiver has been filed --may be served at a place not within any judicial district of theUnited States:(1) by any internationally agreed means of service that isreasonably calculated to give notice, such as those authorized bythe Hague Convention on the Service Abroad of Judicial andExtrajudicial Documents;(2) if there is no internationally agreed means, so if an internationalagreement allows but does not specify other means, by a methodthat is reasonably calculated to give notice:(A) as prescribed by the foreign country’s law for service in thatcountry in an action in its courts of general jurisdiction;(B) as the foreign authority directs in response to a letter rogatoryor letter of request; or (C) unless prohibited by the foreign country’s law, by:(i) delivering a copy of the summons and the complaint to theindividual personally; or(ii) using any form of mail that the clerk addresses and sends to theindividual and that requires a signed receipt; or(3) by other means not prohibited by international agreement, asthe court orders.

Rule 4(h) provides for serving a corporation, partnership, or association as follows:

(h) Serving a Corporation, Partnership, or Association.  Unlessfederal law provides otherwise or the defendant’s waiver has beenfiled, a domestic or foreign corporation, or a partnership or otherunincorporated association that is subject to suit under a commonname, must be served:(1) in a judicial district of the United States:(A) in the manner prescribed by Rule 4(e)(1) for serving anindividual; or(B) by delivering a copy of the summons and of the complaint to

  See, e.g., Henderson v. United States, 517 U.S. 654, 661-64 (1996); Boley v. Kaymark,64

123 F.3d 756, 758-59 (3d Cir. 1997); CFTC v. Wall Street Underground, Inc., 221 F.R.D. 554,556 (D. Kan. 2004).

77

an officer, a managing or general agent, or any other agentauthorized by appointment or by law to receive service of processand - - if the agent is one authorized by statute and the statute sorequires - - by also mailing a copy of each to the defendant; or(2) at a place not within any judicial district of the United States, inany manner prescribed by Rule 4(f) for serving an individual,except personal delivery under (f)(2)(C)(i).

Rule 4(m), provides as follows:

(m) Time Limit for Service.  If a defendant is not served [with asummons] within 120 days after the complaint is filed, the court --on motion or on its own after notice to the plaintiff -- must dismissthe action without prejudice against that defendant or order thatservice be made within a specified time.  But if the plaintiff showsgood cause for the failure, the court must extend the time forservice for an appropriate period.  This subdivision (m) does notapply to service in a foreign country under Rule 4(f) or 4(j)(1).

“[T]he core function of service [of a summons] is to supply notice of the pendancy of a

legal action, in a manner and at a time that affords the defendant a fair opportunity to answer the

complaint and present defenses and objections.”  Henderson v. United States, 517 U.S. 654, 673

(1996).

Pursuant to Rule 4(m), a summons must be dismissed if it is not served “within 120 days

after the complaint is filed,” unless the court either has ordered “that service be made within a

specified time” or the court has found that the plaintiff has shown “good causes for the failure” to

timely serve the summons.   “If good cause exists, the extension must be granted.  If good cause64

does not exist, the district court must consider whether to grant a discretionary extension of

time.”  Boley v. Kaymark, 123 F.3d 756, 758 (3d Cir. 1997) (internal citations omitted).  Accord

Troxell v. Fedders of North America, Inc., 160 F.3d 381, 382-83 (7th Cir. 1998); CFTC v. Wall

  See, e.g., Thompson v. Maldonado, 309 F.3d 107, 110 (2d Cir. 2002) (collecting65

cases); Boley, 123 F.3d at 758; Dominic, 841 F.2d at 516.78

Street Underground, Inc., 221 F.R.D. 554, 556 (D. Kan. 2004).

As one court noted, although “good cause” is not defined by Rule 4, it “seems to require a

demonstration of good faith on the part of the party seeking an enlargement and some reasonable

basis for noncompliance within the time specified in the rules.”  Dominic v. Hess Oil V. I. Corp.,

841 F.2d 513, 517 (3d Cir. 1988) (quoting WRIGHT & MILLER, FEDERAL PRACTICE AND

PROCEDURE, § 1165 (2d ed. 1987)).

Courts consider various factors in deciding whether good cause exists, including: 

1) whether the inadvertence reflected professional incompetencesuch as ignorance of rules of procedure, 2) whether an assertedinadvertence reflects an easily manufactured excuse incapable ofverification by the court, 3) counsel’s failure to provide for areadily foreseeable consequence, 4) a complete lack of diligence or5) whether the inadvertence resulted despite counsel’s substantialgood faith efforts towards compliance. . . . [6] whether theenlargement of time will prejudice the opposing party. 

Dominic, 841 F. 2d at 517 (citations omitted).  Accord MacCauley v. Wahlig, 130 F.R.D. 302,

304 (D. Del. 1990).

Likewise, a court may grant a discretionary extension of time within which to serve a

summons for a variety of reasons, including, “for example, if the applicable statute of limitations

would bar the refiled action.”  Boley, 123 F. 3d at 758 (quoting FED.R.CIV.P. 4(m) Adv. Comm.

Notes (1993)).

A district court’s decision to dismiss the complaint for failure to comply with Rule 4(m)

or whether to extend the time to serve a summons is reviewed under the above of discretion

standard.65

79

B. General Principles Governing Subject Matter and Personal Jurisdiction

1. Subject Matter Jurisdiction

Section 1331 of Title 28, United States Code, provides that “[t]he district courts shall

have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the

United States,” and hence confers subject matter jurisdiction upon federal district courts to hear a

claim arising from an alleged violation of a federal law or statute (i.e., a federal question).  See,

e.g., Sec. Investor Prot. Corp. v. Vigman, 764 F.2d 1309, 1314 (9th Cir. 1985).  Therefore,

federal district courts are empowered to hear civil claims arising from an alleged violation of the

RICO statute, 18 U.S.C. §§ 1961, et seq.  See e.g., Rolls-Royce Motors, Inc. v. Charles Schmitt

& Co., 657 F. Supp. 1040, 1055 (S.D.N.Y. 1987). 

2. Due Process Requirements for State Courts’ Exercise of In PersonamJurisdiction Under the Fourteenth Amendment as to State Claims

Regarding personal jurisdiction, it is well established that “the judgment of a [state] court

lacking [personal] jurisdiction is void” and “violate[s] the Due Process Clause of the Fourteenth

Amendment as well.”  Burnham v. Superior Court of California, County of Marin, 495 U.S. 604,

608-09 (1990).  “The requirement that a court have personal jurisdiction flows not from Art. III,

but from the Due Process Clause. . . . It represents a restriction on judicial power not as a matter

of sovereignty, but as a matter of individual liberty.”  Omni Capital Int’l Ltd. v. Rudolf Wolff &

Co., Ltd., 484 U.S. 97, 104 (1987) (quoting Ins. Corp. of Ireland v. Campagnie des Bauxities de

Guinee, 456 U.S. 694, 702 (1982)).  

The Supreme Court has addressed due process limitations upon courts’ exercise of

personal jurisdiction under the Due Process Clause of the Fourteenth Amendment as they apply

to state courts, but “has never addressed the scope of Due Process Protections under the Fifth

  On at least two occasions, the Supreme Court has noted that “the question of whether66

the Due Process Clause of the Fifth Amendment could be satisfied solely by reference to adefendant’s contacts with the nation as a whole was not properly before it.”  Republic of Panama,119 F.3d at 944 n.15, citing Omni Capital Int’l, 484 U.S. at 102 n.5; Asahi Metal Indus. v.Superior Court of California, 480 U.S. 102, 113 n.107 (1987) (plurality opinion).  Due Processrequirements under the Fifth Amendment regarding federal causes of action in federal courts aresomewhat different than those under the Fourteenth Amendment as to causes of action understate law.  See Section IV(B)(3) below.

80

Amendment in the jurisdictional context” in federal suits in federal courts.  See Republic of

Panama v. BCCI Holdings (Luxembourg), S.A.,  119 F. 3d 935, 944 (11th Cir. 1997).66

For example, in Burnham v. Superior Court of California, 495 U.S. 604, 608 (1990), the

Supreme Court held that consistent with the requirements of due process, California state courts

had personal jurisdiction over a non-resident individual, who was personally served with process

while temporarily in California, in a suit that was unrelated to his activities in California.  The

Supreme Court explained:

Among the most firmly established principles of personaljurisdiction in American tradition is that the courts of a state havejurisdiction over non-residents who are physically present in theState. . . . [P]ersonal service upon a physically present defendant[is] sufficient to confer jurisdiction, without regard to whether thedefendant was only briefly in the state or whether the cause ofaction was related to activities there.

Id. at 610, 612.

In the seminal case of International Shoe Co. v. State of Washington, 326 U.S. 310

(1945), the Supreme Court set forth due process requirements to obtain personal jurisdiction in

state courts over defendants who were not physically present in the forum state.  In International

Shoe, the State of Washington sought to collect from International Shoe contributions to an

unemployment compensation fund required by a state statute to be made by employers, and

personally served a notice of assessment for the years in question upon a sales solicitor employed

  The Supreme Court stated that the following facts were not in dispute:67

Appellant is a Delaware corporation, having its principal place ofbusiness in St. Louis, Missouri, and is engaged in the  manufactureand sale of shoes and other footwear.  It maintains places ofbusiness in several states, other than Washington, at which itsmanufacturing is carried on and from which its merchandise isdistributed interstate through several sales units or branches locatedoutside the State of Washington.

Appellant has no office in Washington and makes no contractseither for sale or purchase of merchandise there.  It maintains nostock of merchandise in that state and make there no deliveries ofgoods in intrastate commerce.  During the years from 1937 to1940, now in question, appellant employed eleven to thirteensalesmen under direct supervision and control of sales managerslocated in St. Louis.  These salesmen resided in Washington; theirprincipal activities were confined to that state; and they werecompensated by commissions based upon the amount of their sales. The commission for each year totaled more that $31,000. Appellant supplies its salesmen with a line of samples, eachconsisting of one shoe of a pair, which they display to prospectivepurchasers.  On occasion they rent permanent sample rooms, forexhibiting samples, in business buildings, or rent rooms in hotelsor business buildings temporarily for that purpose.  The cost ofsuch rentals is reimbursed by appellant.

The authority of the salesmen is limited to exhibiting their samplesand soliciting orders from prospective buyers, at prices and onterms fixed by appellant.  The salesmen transmit the orders toappellant’s office in St. Louis for acceptance or rejection, andwhen accepted the merchandise for filling the orders is shippedf.o.b. from points outside Washington to the purchasers within the

(continued...)81

by International Shoe in the State of Washington.  International Shoe contended that the

assessment violated due process because it “was not a corporation of the State of Washington

and was not doing business within the State; that it had no agent within the State upon whom

service could be made; and that appellant [International Shoe] is not a employer and does not

furnish employment within the meaning of the statute.”  Id. at 312.67

(...continued)67

state.  All the merchandise shipped into Washington is invoiced atthe place of shipment from which collections are made.  Nosalesman has authority to enter into contracts or to makecollections.

International Shoe, 326 U.S. at 313-14.82

The Supreme Court rejected these arguments, finding that International Shoe’s activities

in the State of Washington were sufficient to establish in personam jurisdiction over it regarding

a cause of action that arose from International Shoe’s activities in the forum state consistent with

the requirements of due process under the Fourteenth Amendment.  The Supreme Court

explained:

[D]ue process requires only that in order to subject a defendant to ajudgment in personam, if he be not present within the territory ofthe forum, he have certain minimum contacts with it such that themaintenance of the suit does not offend “traditional notions of fairplay and substantial justice.”

326 U.S. at 316 (citations omitted).  The Supreme Court added that:

“Presence” in the state in this sense has never been doubted whenthe activities of the corporation there have not only beencontinuous and systematic, but also give rise to the liabilities suedon, even though no consent to be sued or authorization to an agentto accept service of process has been given. . . . Conversely it hasbeen generally recognized that the casual presence of the corporateagent or even his conduct of single or isolated items of activities ina state in the corporation’s behalf are not enough to subject it tosuit on causes of action unconnected with the activities there. . . .[The Due Process Clause of the Fourteenth Amendment] does notcontemplate that a state may make binding a judgment in personamagainst an individual or corporate defendant with which the statehas no contacts, ties, or relations.

326 U.S. at 317, 319 (internal citations omitted).

83

The Supreme Court concluded that International Shoe’s activities “in the State of

Washington were neither irregular or causal.  They were systematic and continuous throughout

the years in question,” and were sufficient to establish in personam jurisdiction over International

Shoe regarding a lawsuit that “arose out of those very activities.”  326 U.S. at 320.

In so ruling, the Supreme Court also noted that “there have been instances in which the

continuous corporate operations within a state were thought so substantial and of such a nature as

to justify suit against it on causes of action arising from dealings entirely distinct from those

activities.”  326 U.S. at 318.

Courts have interpreted International Shoe and its progeny to allow in personam

jurisdiction in a forum state over a foreign corporation to enforce causes of action not arising out

of that corporation’s activities in the forum state where the corporation’s activities in the forum

state are “substantial” and “continuous and systematic,” but to disallow in personam jurisdiction

where a foreign corporation’s activities in the forum state are minimal unless the cause of action

at issue arises from those forum contacts.  For example, in Wells Fargo & Co. v. Wells Fargo

Exp. Co., 556 F.2d 406 (9th Cir. 1977), the court stated:

The rules which emerge from these [Supreme Court] cases may besummarized as follows: If the defendant corporation has sufficientdeliberate “minimum contacts” with the forum state, a court mayacquire in personam jurisdiction over it in actions which arise fromthose forum contacts.  If, however, a corporation’s activities in theforum are so “continuous and systematic” that the corporation mayin fact be said already to be “present” there, it may also be servedin causes of action unrelated to its forum activities.

Id. at 413 (collecting cases).  Accord Butcher’s Union Local No. 498 v. SDC Inv., Inc., 788 F.2d

  See, e.g., Burnham, 495 U.S. at 620 (stating that where jurisdiction of an absent68

defendant is based on minimum contacts with the forum state, those contacts must be related tothe litigation at issue); Helicopteros Nacionales De Colombia, S.A. v. Hall, 466 U.S. 408, 414(1984) (“When a controversy is related to or ‘arises out of’ a defendant’s contacts with theforum, the Court has said that a ‘relationship among the defendant, the forum, and the litigation’is the essential foundation of in personam jurisdiction. . . . Even when the cause of action doesnot arise out of or relate to the foreign corporation’s activities in the forum State, due process isnot offended by a State’s subjecting the corporation to its in personam jurisdiction when there aresufficient contacts between the State and the foreign corporation.”  (citations and footnotesomitted)); Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 447 (1952) (ruling that it doesnot violate due process to exercise in personam jurisdiction over a foreign corporation when thecorporation’s activities in the forum State “was sufficiently substantial. . . . where the cause ofaction arose from activities entirely distinct from its activities in [the forum State]”).

84

535, 540 (9th Cir. 1986).68

Moreover, the Supreme Court has explained that the requisite “minimum contacts” with a

forum state may be established when a foreign corporation “purposely avails itself to the

privilege of conducting activities within the forum State”, such as when a foreign “corporation.. .

delivers its products into the stream of commerce with the expectation that they will be

purchased by consumers in the forum State.”  World-Wide Volkswagen Corp. v. Woodson, 

444 U.S. 286, 297-98 (1980) (citations omitted).  Accord Asahi Metal Ind. Co. v. Super. Ct. of

Cal., Solano Cty., 480 U.S. 102, 111-12 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462,

475-77 (1985).

Furthermore, the Supreme Court has stated that even when such minimum contacts are

established, due process requires that a state’s exercise of personal jurisdiction over an out of

state defendant not offend “‘traditional notions of fair play and substantial justice.’” Asahi Metal

Ind., 480 U.S. at 113 (citations omitted).  In determining whether the “traditional notions of fair

play and substantial justice,” have been satisfied, 

  Generally, a district court’s dismissal on jurisdictional grounds is reviewed under the69

de novo standard of review.  See, e.g., PT United Can Co. Ltd. v. Crown Cork & Seal Co., 138F.3d 65, 69 (2d Cir. 1998).  Moreover, the due process requirements “of personal jurisdictionmay be intentionally waived, or for various reasons a defendant may be estopped from raising theissue.”  Ins. Corp. of Ireland, 456 U.S. at 704.

85

A court must consider the burden on the defendant, the interests ofthe forum State, and the plaintiff’s interest in obtaining relief.  Itmust also weigh in its determination “the interstate judicialsystem’s interest in obtaining the most efficient resolution ofcontroversies; and the shared interest of the several States infurthering fundamental substantive social policies.”

Id. at 113 (citations omitted).69

3. Due Process Requirements Under the Fifth Amendment for Federal Courts’Exercising In Personam Jurisdiction Over Federal Causes of Action

As noted above in Section IV(B)(2), the Supreme Court has not squarely decided the

requirements of due process under the Fifth Amendment as they apply to claims arising under

federal law in federal courts.  Some courts have ruled that although some of the considerations

underlying the Supreme Court’s personal jurisdiction jurisprudence under the Fourteenth

Amendment are relevant to the dictates of due process under the Fifth Amendment, they are not

parallel.  For example, in BCCI Holdings (Luxembourg), 119 F. 3d at 945-48, the Eleventh

Circuit explained that “contacts with the forum state - the relevant sovereign - are relevant under

the Fourteenth Amendment primarily to justify the sovereign exercise of power in asserting

jurisdiction [over a foreign defendant]. . . . Because minimum contacts with the United States -

the relevant sovereign -  satisfy the ‘purposeful availment’ prong in federal question cases,

contacts with the forum state are not constitutionally required.”  Id. at 946 n.21 (citations

omitted).  “A court must therefore examine a defendant’s aggregate contacts with the nation as a

whole rather than his contacts with the forum state in conducting the Fifth Amendment analysis.” 

  Applying this balancing test, the Eleventh Circuit concluded that the defendant did not70

carry its initial burden of demonstrating “any constitutionally significant inconvenience,” and,therefore, it was not necessary to “balance the federal interest at stake in this lawsuit.”  BCCIHoldings (Luxembourg), 119 F.3d at 948.  In that respect, the court stated:

First, we note that the First American defendants are largecorporations providing banking services to customers in majormetropolitan areas along the eastern seaboard.  The fact that they

(continued...)86

Id. at 946-47 (collecting cases).

The Eleventh Circuit ruled that where, as under civil RICO, “Congress has provided for

nationwide service of process, courts should presume that nationwide personal jurisdiction is

necessary to further congressional objectives.”  Id. at 948; See Section IV(C)(3) below.  The

Eleventh Circuit further ruled that a defendant may overcome this presumption and establish a

violation of due process under a two-part balancing test.  First, “[t]he burden is on the defendant

to demonstrate that the assertion of jurisdiction in the forum will ‘make litigation ‘so gravely

difficult and inconvenient’ that [he] unfairly is at a ‘severe disadvantage’ in comparison to his

opponent.’” BCCI Holdings (Luxembourg), 119 F.3d at 948 (quoting Burger King, 

471 U.S. at 478).  Only if the defendant carries this burden, then the court must determine “if the

federal interest in litigating the dispute in the chosen forum outweighs the burden imposed on the

defendant.”  BCCI Holdings (Luxemborg), 119 F.3d at 948.

The Eleventh Circuit added:

In evaluating the federal interest, courts should examine the federalpolicies advanced by the statute, the relationship betweennationwide service of process and the advancement of thesepolicies, the connection between the exercise of jurisdiction in thechosen forum and the plaintiff’s vindication of his federal right,and concerns of Judicial efficiency and economy.” 

 Id. at 948.70

(...continued)70

may not have had significant contacts with Florida is insufficient torender Florida an unreasonably inconvenient forum.  In addition,the fact that discovery for this litigation would be conductedthroughout the world suggests that Florida is not significantly moreinconvenient than other districts in this country.  The FirstAmerican defendants have presented no evidence that their abilityto defend this lawsuit will be compromised significantly if they arerequired to litigate in Miami.

Id. 

87

Other courts, however, have eshewed such balancing tests, ruling that where a federal

statute authorizes nationwide service of process, “due process requires only that a defendant in a

federal suit have minimum contacts with the United States, ‘the sovereign that has created the

court’”  FTC v. Jim Walker Corp., 651 F.2d 251, 256 (5th Cir. 1981) (citation omitted).  Accord

Action Embroidery Corp. v. Atlantic Embroidery, Inc., 368 F. 3d 1174, 1179-80 (9th Cir. 2004);

In Re Automotive Refinishing Paint Antitrust, 358 F.3d 288, 297-99 (3d Cir. 2004).  Cf. Pinker

v. Roche Holdings Ltd., 292 F.3d 361, 369-70 (3d Cir. 2002) (collecting cases).  See also cases

cited in Section IV (C)(3) below.

C. Civil RICO’s Jurisdiction and Venue Provision

In order for a district court to adjudicate the merits of a lawsuit, it must have personal

jurisdiction over the defendants, as discussed above in Section IV(B), and also venue must

properly lie in the district where the lawsuit is brought.  The Supreme Court has explained the

distinction between “personal jurisdiction” and “venue”, stating “personal jurisdiction. . . goes to

the court’s power to exercise control over the parties . . . [whereas] venue . . . is primarily a

matter of choosing a convenient forum.”  Leroy v. Great Western United Corp., 443 U.S. 173,

180 (1979).  Accord Sec. Investor Prot. Corp. v. Vigman, 764 F.2d 1309, 1313 (9th Cir. 1985)

88

(“jurisdiction is the power to adjudicate, while venue, which relates to the place where judicial

authority may be exercised is intended for the convenience of the litigants”) (citations omitted). 

The Supreme Court has admonished that “[i]n most instances, the purpose of statutorily specified

venue is to protect the defendant against the risk that a plaintiff will select an unfair or

inconvenient place of trial.”  Leroy, 443 U.S. at 183-84.

1. Overview of Civil RICO’s Jurisdiction and Venue Provision

Civil RICO’s jurisdiction and venue provision, 18 U.S.C. § 1965, provides as follows:

(a)  Any civil action or proceeding under this chapter against anyperson may be instituted in the district court of the United Statesfor any district in which such person resides, is found, has anagents, or transacts his affairs.

(b) In any action under section 1964 of this chapter in any districtcourt of the United States in which it is shown that the ends ofjustice require that other parties residing in any other district bebrought before the court, the court may cause such parties to besummoned, and process for that purpose may be served in anyjudicial district of the United States by the marshal thereof.

(c) In any civil or criminal action or proceeding instituted by theUnited States under this chapter in the district court of the UnitedStates for any judicial district, subpenas issued by such court tocompel the attendance of witnesses may be served in any otherjudicial district, except that in any civil action or proceeding nosuch subpena shall be issued for service upon any individual whoresides in another district at a place more than one hundred milesform the place at which such court is held without approval givenby a judge of such court upon a showing of good cause.

(d) All other process in any action or proceeding under this chaptermay be served on any person in any judicial district in which suchperson resides, is found, has an agent, or transacts his affairs.

  See S. Rep. No. 91-617 at 160-61.  See also Cory v. Aztec Steel Bldg., Inc., 468 F.3d71

1226, 1231 (10th Cir. 2006); City of New York v. Cyco. Net, Inc., 383 F. Supp. 2d 526, 541(S.D.N.Y. 2005); Bulk Oil (USA) Inc. v. Sun Oil Trading Co., 584 F. Supp. 36, 39 (S.D.N.Y.1983); Farmers Bank of State of Del. v. Bell Mtg. Corp., 452 F. Supp. 1278, 1280 (D. Del.1978).

  When federal jurisdiction is premised on a federal question, as is involved in a civil72

RICO suit, 28 U.S.C. § 1391(b) establishes that venue is proper in:

(1) a judicial district where any defendant resides, if all defendantsreside in the same State, (2) a judicial district in which a substantialpart of the events or omissions giving rise to the claim occurred, ora substantial part of property that is the subject of the action issituated, or (3) a judicial district in which any defendant may befound, if there is no district in which the action may otherwise bebrought.

Moreover, 28 U.S.C. § 1391(c) provides:

For purposes of venue under this chapter, a defendant that is acorporation shall be deemed to reside in any judicial district inwhich it is subject to personal jurisdiction at the time the action iscommenced.  In a State which has more than one judicial districtand in which a defendant that is a corporation is subject to personaljurisdiction at the time an action is commenced, such corporationshall be deemed to reside in any district in that State within whichits contacts would be sufficient to subject it to personal jurisdictionif that district were a separate State, and, if there is no such district,the corporation shall be deemed to reside in the district withinwhich it has the most significant contacts.

  See, e.g., Cyco. Net, Inc., 383 F. Supp. 2d at 543-44 (collecting cases); Crenshaw v.73

Antokol, 287 F. Supp. 2d 37, 41-42 (D.D.C. 2003); Gatz v. Penboldt, 271 F. Supp. 2d 1143,1158-59 (D. Neb. 2003); Eastman v. Initial Invs., Inc., 827 F. Supp. 336, 338 (E.D. Pa. 1993);Monarch Normandy Square Partners v. Normandy Square Assoc., 817 F. Supp. 899, 904 (D.Kansas 1993); Shuman v. Computer Assocs. Int’l, Inc., 762 F. Supp. 114, 116 (E.D. Pa. 1991);Delta Educ. Inc., v. Langlois, 719 F. Supp. 42, 49 (D. N.H. 1989); Anchor Glass Container Corp.

(continued...)89

Section 1965 was patterened after the antitrust statutes,  and it supplements the general71

federal venue provision set forth in 28 U.S.C. § 1391.     Therefore, both 18 U.S.C. § 1965 and72

28 U.S.C. § 1391 may provide the basis for venue in a civil RICO lawsuit.   Moreover,73

(...continued)73

v. Stand Energy Corp., 711 F. Supp. 325, 327 n.7 (S.D. Miss. 1989); Miller Brewing Co., v.Landau, 616 F. Supp. 1285, 1291 (D. Wis. 1985); So-Comm, Inc. v. Reynolds, 607 F. Supp. 663,665-66 (N.D. Ill. 1985); Sunray Enterprises Inc. v. David C. Bouza & Assocs., Inc., 606 F. Supp.116, 119 (S.D.N.Y. 1984); Clement v. Pehar, 575 F. Supp. 436, 443 (N.D. Ga. 1983); DeMoss v.First Artists Prod. Co., 571 F. Supp. 409, 411 (N.D. Ohio 1983); VanShaick v. Church ofScientology of Cal., Inc., 535 F. Supp. 1125, 1133 n.6 (D.MA. 1982); Farmers Bank of State ofDel., 452 F. Supp. at 1280.

90

“[a]lthough 18 U.S.C. § 1965 is entitled ‘venue and process,’ the fact that it also authorizes

service of process makes it relevant to personal jurisdiction because of Federal Rules of Civil

Procedure 4 (k)(1)(D).”  Esab Group, Inc. v. Centricut, Inc., 126 F.3d 617, 626 (4th Cir. 1997). 

Accord Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1229-32 (10th Cir. 2006).

In PT United Can Co. Ltd. v. Crown Cork & Seal Co. Inc., 138 F.3d 65, 70 (2d Cir.

1998), the Second Circuit stated that Section “1965 must be read to give effect to all its sections

in a way that renders a coherent whole.”  Accordingly, the Second Circuit succintly explained the

different coverage of the subsections of Section 1965 as follows:

First, § 1965(a) grants personal jurisdiction over an initialdefendant in a civil RICO case to the district court for the districtin which that person resides, has an agent, or transacts his or heraffairs.  In other words, a civil RICO action can only be brought ina district court where personal jurisdiction based on minimumcontacts is established as to at least one defendant.

Second, § 1965(b) provides for nationwide service and jurisdictionover “other parties” not residing in the district, who may beadditional defendants of any kind, including co-defendants, thirdparty defendants, or additional counter-claim defendants.  Thisjurisdiction is not automatic but requires a showing that the “endsof justice” so require.

Id. at 71.  The Second Circuit added that Section 

1965(c) simply refers to service of subpoenas on witnesses.  Thus,§ 1965(d)’s reference to “[a]ll other process,” means process otherthan a summons of a defendant or subpoena of a witness.  This

  See, e.g., Wood v. Barnette, Inc., 648 F. Supp. 936, 939 (E.D. Va. 1986); Grappone,74

Inc. v. Subaru of America, Inc., 403 F. Supp. 123, 127-28 (D. N.H. 1975).

  See, e.g., Farmers Bank of State of Del., 577 F. Supp. at 35; 15 WRIGHT, MILLER &75

COOPER, FEDERAL PRACTICE AND PROCEDURE § 3805 (1986).

  Accord Eastman, 827 F. Supp. at 338; Berry v. New York State Dept. of Corr.76

Services, 808 F. Supp. 1106, 1111 (S.D.N.Y. 1992) (“to be ‘found’ under [§ 1965(a)] demandsmore than mere occasional physical presence; some acts relevant to the RICO claim must haveoccurred in the venue sought by plaintiff, some kind of business must have been conducted”).

  Van Shaick, 535 F. Supp. at 1133.  Accord DeMoss, 571 F. Supp. at 411; Grappone,77

Inc., 403 F. Supp. at 128.91

interpretation, one which gives meaning to the word “other” byreading sequentially to understand “other” as meaning “differentfrom that already stated in subsections (a)-(c),” gives coherenteffect to all sections of § 1965, and effectively provides for alleventualities without rendering any of the sections duplicative,without impeding RICO actions and without unnecessarilyburdening parties.

Id. at 72.

2. The Bases for Venue Under Section 1965(a)

a. The District In Which Such Person “Resides”

For venue purposes, a corporation “resides” in the district in which it is incorporated,74

and a natural person resides in the district wherein he/she maintains his/her domicile.  75

b. “Found”

“The term ‘is found’ has been construed to mean presence and continuous local activity.” 

Shuman v. Computer Associates International, Inc., 762 F. Supp. 114, 116 (E.D. Pa. 1991).  76

“For a corporate defendant in a private action under [§ 1965(a)] to be ‘found’ in the district

within the meaning of this section, it must be present in the district by its officers and agents

carrying on the business of the corporation.”77

  Accord Eastman, 827 F. Supp. at 338; Shuman, 762 F. Supp. at 116; Dody v. Brown,78

659 F. Supp. 541, 545 (W.D. Mo. 1987); Miller Brewing Co., 616 F. Supp. at 1288; Bukoil(USA) Inc., 584 F. Supp. at 39-40.

92

c. “Has an Agent”

The meaning of the third clause (“any district in which such person . . . has an agent”) has

apparently not yet been litigated in a civil RICO case.  However, cases decided under Section 4

of the Clayton Antitrust Act, which contains identical language, suggest that the courts look

primarily at the amount of control exercised by the alleged principal as well as “the extent to

which the public is led to believe that it is dealing with the principal when it deals with the

supposed agent” in determining whether the defendant has an agent present in the district.  

15 WRIGHT, MILLER & COOPER, FEDERAL PRACTICE AND PROCEDURE § 3818 (1986).

d. “Transacts His Affairs”

The “‘transacts his affairs’ language of Section 1965(a) has been held to be synonymous

with the ‘transacts business’ language of section 12 of the Clayton Act, 15 U.S.C. § 22,” which

was the model for Section 1965(a).  City of New York v. Cyco. Net, Inc., 383 F. Supp. 2d 526,

542 (S.D.N.Y. 2005).  “Moreover, ‘[t]he test for transacting business for venue purposes under

the antitrust law is co-extensive with the test for jurisdiction under New York CPLR § 302.’” Id.

at 542 (citation omitted).  Accordingly, “[t]he ‘transacts his affairs’ language in Section 1965(a)

has been interpreted to mean that the defendants ‘regularly transact business of a substantial and

continuous character within the district.’” Gatz v. Pensoldt, 271 F. Supp. 2d 1143, 1158 (D. Neb.

2003) (citations omitted).78

  Butchers Union Local No. 498 v. SDC Inv., Inc., 788 F. 2d 535, 539 (9th Cir. 1986). 79

Accord Cory, 468 F.3d at 1231; PT United Can Co., 138 F.3d at 70-72; Stauffacher v. Bennett,969 F. 2d 455, 460-61 (7th Cir. 1992); Boon Partners v. Advanced Financial Concepts, Inc., 917F. Supp. 392, 397 (E.D.NC. 1996); Hawkins v. Upjohn Co., 890 F. Supp. 601, 604 (E.D. Tex.1994); Magic Toyota, Inc., v. Southwest Toyota Distributors, 784 F. Supp. 306, 311 (D.S.C.1992); Bridge v. Invest America, Inc., 748 F. Supp. 948, 951 (D. RI. 1990); Rolls-Royce Motorsv. Charles Schmitt, 657 F. Supp. 1040, 1055 (S.D.N.Y. 1987).

  Accord Cory, 468 F.3d at 1230-31; Boon Partners, 917 F. Supp. at 397; Herbstein v.80

Bruetman, 768 F. Supp. 79, 81 (S.D.N.Y.  1991); University Sav. Ass’n v. Bank of New Haven,(continued...)

93

3. Nationwide Service of Process Under Section 1965(b)

The relevant legislative history states that “[s]ubsection (b) [of 18 U.S.C. § 1965]

provides Nationwide service of process on parties, if the ends of justice require it,” and that the

“broad provisions [of § 1965] are required by the nationwide nature of the activity of organized

crime in its infiltration efforts.”  S. REP. NO. 91-617 at 161.  Thus, “Congress intended [Section

1965(b)] to enable plaintiffs to bring all members of a nationwide RICO conspiracy before a

court in a single trial,” and hence Section 1965(b) allows nationwide service of process to

defendants residing outside the forum district court provided that the forum district court has

“personal jurisdiction over at least one of the participants in the alleged multidistrict conspiracy,”

and the ends of justice require such service.79

Where, “nationwide service of process is authorized,” as under Section 1965(b), the

plaintiff need not establish that each defendant has contacts with the forum state.  Rather,

the plaintiff’s prima facie burden is met by showing that adefendant has contacts with the United States.  Minimum contactswith the forum state, as required under the traditional long-termjurisdiction analysis, is not necessary.  A defendant’s contact withthe United States is sufficient to satisfy the requirements of dueprocess.

Dooley v. United Technologies Corp., 786 F. Supp. 65, 71 (D.D.C. 1992).80

(...continued)80

765 F. Supp. 35, 37 (D. Conn. 1991); Bridge, 748 F. Supp. at 951; Rolls-Royce Motors, 657 F. Supp. at 1055; Soltex Polymer Corp. v. Fortex Industries, Inc., 590 F. Supp. 1453, 1458(E.D.N.Y. 1984); Hodgden v. Needham-Skyles Oil Co., 556 F. Supp. 75, 77 (D.D.C. 1982).

  Some courts have indicated that 18 U.S.C. § 1965(d) provides for nationwide service81

of a summons against defendants.  See, e.g., Esab Group, Inc. v. Centricut, 126 F. 3d 617, 626-27(4th Cir. 1997); Republic of Panama v. BCCI Holdings (Luxembourg), 119 F.3d 935, 942 (11th

Cir. 1997); Michelson v. Merrill Lynch, Pierce, Fenner & Smith, 709 F. Supp. 1279, 1285(S.D.N.Y. 1989).  However, that position arguably cannot be reconciled with the text of Section1965 or its legislative history.  As the Second Circuit stated in PT United Can Co. Ltd., 138 F.3dat 71-72, because Section 1965(b) refers to the service of a summons and Section 1965(c) refersto the service of a subpoena, Section 1965(d)’s reference to the service of “[a]ll other process,”

(continued...)94

As noted above, nationwide service of process upon non-resident defendants pursuant to

Section 1965(b) is not automatic; rather, “the ends of justice” must require such service.  As of

this writing, courts have not definitively interpreted the requirements of “the ends of justice.” 

For example, the Ninth Circuit has ruled that to establish the requisite “ends of justice,” “the

plaintiff must show that there is no other district in which a court will have personal jurisdiction

over all the alleged co-conspirators.”  Butcher’s Union Local No. 498, 788 F. 2d at 539.  Other

courts, however, have taken a more flexible approach, ruling that the absence of another district

having personal jurisdiction over all the defendants is a relevant, but not a dispositive factor. 

See, e.g., Cory, 468 F.3d at 1231-32; Magic Toyota, Inc., 784 F. Supp. at 311-12; Southmark

Prime Plus, L.P. v. Falzone, 768 F. Supp. 487, 490-92 (D.Del. 1991).

Moreover, although Section 1965(b) “authorizes nationwide service of process,” it does

not authorize “international service.   For that the RICO plaintiff must rely on the long-arm

statute of the state in which he files his suit.”  Stauffacher v. Bennett, 969 F. 2d 455, 460-61 (7th

Cir. 1992).  Accord Nat’l Asbestos Medical Fund v. Philip Morris, 86 F. Supp. 2d 137, 142

(E.D.N.Y. 2000); Michelson, 709 F. Supp. at 1285.81

(...continued)81

“means process other than a summons of a defendant or subpoena of a witness.”  Moreover, asnoted above, the Senate Report regarding Section 1965 states that “[s]ubsection (b) [of 1965]provides nationwide service of process on parties,” and not subsection (d).  Accord Cory, 468 F.3d at 1230-31.

  Accord Republic of Panama v. BCCI Holdings (Luxembourg), 119 F.3d at 951-53;82

Transunion Corp. v. Pepsico, Inc., 811 F. 2d 127, 129-30 (2d Cir. 1987); United States v.International Bhd. of Teamsters, 708 F. Supp. 1388, 1404 (S.D.N.Y. 1989); So-Comm, Inc. v.Reynolds, 607 F. Supp. at 665-67; Clement v. Pehar, 575 F. Supp. at 443-46; Hodgdon, 556 F. Supp. at 78-79.

95

4. Transfer of Venue - Forum Non-Conveniens

Even if venue properly lies in a district, the district court has discretion to transfer a civil

RICO suit to another district pursuant to the doctrine of forum non conviens.  To obtain such a

transfer, the defendant has the burden of establishing that “the litigation may be conducted

elsewhere against all defendants,” which may include a foreign country.  PT United Can Co. Ltd.,

138 F.3d at 73.  “If there is no adequate alternative forum, the inquiry ends.  . . . If the existence

of an adequate alternative forum is established,” the district court must consider “private factors

includ[ing] the access to sources of proof, cost of obtaining willing witnesses, availability of

compulsory process for unwilling witnesses, and other practical concerns,” and “public factors

[including] court congestion, interest of forums in deciding local disputes, and interest in issues

of foreign law being decided by foreign tribunals.”  Id. at 73-74.82

96

V

PROCEDURAL MATTERS

A. Expedition of Actions

Section 1966 of Title 18, United States Code,  provides as follows:

Expedition of actions

In any civil action instituted under this chapter by the United Statesin any district court of the United States, the Attorney General mayfile with the clerk of such court a certificate stating that in hisopinion the case is of general public importance.  A copy of thatcertificate shall be furnished immediately by such clerk to the chiefjudge or in his absence to the presiding district judge of the districtin which such action is pending.  Upon receipt of such copy, suchjudge shall designate immediately a judge of that district to hearand determine action.

As of this writing, there are no reported decisions interpreting Section 1966.  The explicit

terms of Section 1966 do not require that the district court give Government civil RICO lawsuits

priority over other civil suits.  However, its requirement that, upon receipt of the specified

certification, a judge shall be designated immediately to hear and determine the action, implies

that the action should be expeditiously considered.

B. Adequacy of the Pleading and Drafting the Complaint

1. Adequacy of the Pleading

a. General Principles

Rule 8(a), FED. R. CIV. P. provides, in relevant part, that:

A pleading which sets forth a claim for relief. . . shall contain (1) ashort and plain statement of the grounds upon which the court’sjurisdiction depends, unless the court already has jurisdiction andthe claim needs no new grounds of jurisdiction to support it, (2) ashort and plain statement of the claim showing that the pleader isentitled to relief and (3) a demand for judgment for the relief the

  The above-quoted version is in effect through November 30, 2007.  Rule 8(a) will be83

amended effective December 1, 2007.  This amendment clarifies Rule 8(a) but does not changethe substance of the Rule.

97

pleader seeks. Relief in the alternative of several different typesmay be demanded.83

Pursuant to Rule 12(b)(6), FED. R. CIV. P., a complaint may be dismissed for “failure to

state a claim upon which relief can be granted.”  “While a complaint attacked by a Rule 12(b)(6)

motion to dismiss does not need detailed factual allegations. . . [it] requires more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will not do. . . .

Factual allegations must be enough to raise a right to relief above the speculative level” and

demonstrate “plausible grounds” for relief.  Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955,

1964-65 (2007).  Accord Iqbal v. Hasty, 490 F.3d 143, 155-58 (2d Cir. 2007); Kuhns Brothers,

Inc. v. Fushi Int’l, Inc., 2007 WL 2071622 (D. Conn. July 16, 2007); Hyland v. Homeservices of

America, Inc., 2007 WL 2407233 (W.D. Ky. Aug. 17, 2007).  Moreover, “once a claim has been

stated adequately, it may be supported by showing any set of facts consistent with the allegations

in the complaint.”  Bell Atlantic Corp., 127 S. Ct. at 1969..

Furthermore, in considering a motion to dismiss a complaint for alleged failure to state a

claim, the court must view the factual allegations in the complaint in the light most favorable to

the plaintiff, and those allegations must be presumed to be true. Papasan v. Allain, 478 U.S. 265,

283 (1986).  See also Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“What Rule 12(b)(6) does

not countenance are dismissals based on a judge’s disbelief of a complaint’s factual allegations”); 

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other arounds by Davis v. Sherer,

468 U.S. 183, 191 (1984); Harris, 127 F.3d at 1123; Shear v. National Rifle Ass’n of America,

606 F.2d 1251, 1253 (D.C. Cir. 1979) . As the Supreme Court stated in Scheuer, 416 U.S. at 236: 

98

When a federal court reviews the sufficiency of a complaint, beforethe reception of any evidence either by affidavit or admissions, itstask is necessarily a limited one. The issue is not whether aplaintiff will ultimately prevail but whether the claimant is entitledto offer evidence to support the claims. Indeed it may appear on theface of the pleadings that a recovery is very remote and unlikelybut that is not the test. Moreover, it is well established that, inpassing on a motion to dismiss, whether on the ground of lack ofjurisdiction over the subject matter or for failure to state a cause ofaction, the allegations of the complaint should be construedfavorably to the pleader. 

Accord Caribbean Broad. Sys., 148 F.3d at 1086.  Indeed, the United States Court of Appeals for

the District of Columbia pointedly stated: “The rule that the allegations of the complaint must be

construed liberally and most favorably to the pleader is so well recognized that no authority need

be cited.” Sinclair v. Kleindienst, 711 F.2d 291, 293 (D.C. Cir. 1983).

Furthermore, in determining whether the complaint is sufficient, the court is limited to

consideration of the four corners of the complaint. Shear, 606 F.2d at 1253; Caudle v. Thomason,

942 F. Supp. 635, 638 (D.D.C. 1996).

Moreover, it is also well established “that the Federal Rules of Civil Procedure do not

require a claimant to set out in detail the facts upon which he bases his claim.  To the contrary,

all the Rules require is ‘a short and plain statement of the claim’ that will give the defendant fair

notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson,

355 U.S. 41, 47 (1957)(quoting Rule 8(a) (2), FED. R. CIV. P.)  Accord Sinclair, 711 F.2d at 293

(“notice pleading’ is sufficient”) . “[U]nder Rule 8(a), [a] complaint need not state facts or

ultimate facts or facts sufficient to constitute a cause of action.”  United States v. Private

Sanitation Indus. Ass’n, 793 F. Supp. 1114, 1124 (E.D.N.Y. 1992) (internal quotations and

citation deleted).  Accord Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786,

  See, e.g., United States v. Philip Morris Inc., 116 F. Supp. 2d 131, 152-155 (D.D.C.84

2000); United States v. Private Sanitation Indus. Ass’n, 793 F. Supp. 1114. 1123-49 (E.D.N.Y.1992); United States v. Dist. Council of New York, 778 F. Supp. 738, 746-60 (S.D.N.Y. 1991);

(continued...)99

790 (3d Cir. 1984).  All that is required is that the complaint “provides enough factual

information to make clear the substance of that claim.”  Caribbean Broad. Sys., 148 F.3d at 1086. 

“Plaintiffs . . .need only ‘adduce a set of facts’ supporting their legal claims in order to survive a

motion to dismiss” under Rule 12(b)(6) . Wells v. United States, 851 F.2d 1471, 1473 (D.C. Cir.

1988).  For more details and facts, the defendants must rely upon “the liberal opportunity for

discovery and other pretrial procedures established by the Rules to disclose more precisely the

basis of both claim and defense and to define more narrowly the disputed facts and issues.”

Conley, 355 U.S. at 47-48. Accord Seville Indus. Mach. Corp., 742 F.2d at 790.

Indeed, motions to dismiss pursuant to Rule 12(b)(6) are “viewed with disfavor and [are]

rarely granted.”  5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND

PROCEDURE § 1357 at 321 (1990 ed.); Wilkerson v. United States, 839 F. Supp. 440, 442 (E.D.

Tex. 1993).  Courts are reluctant to dismiss a case on technical grounds and, consistent with the

federal rules, prefer to decide cases on their merits.  See, e.g., Kauffman v. Moss, 420 F. 2d

1270, 1276 (3d Cir.)(citing Foman v. Davis, 371 U.S. 178, 181 (1962)) (relying on Conley, court

stated “[i]t is too late in the day and entirely contrary to the spirit of the Federal Rules of Civil

Procedure for decisions on the merits to be avoided on the basis of . . . mere technicalities.”);

Texas v. Am. Tobacco Co., 14 F. Supp. 2d 956, 961 (E.D. Tex. 1997); Yeitrakis v. Schering-

Plough Corp., 804 F. Supp. 238, 240 (D.N.M. 1992).

In accordance with these principles, courts have repeatedly denied defendants’ motions

under Rule 12(b)(6) to dismiss the Government’s civil RICO complaints.84

(...continued)84

United States v. Int’l Bh’d. of Teamsters, 708 F. Supp. 1388, 1395-1401 (S.D.N.Y.  1989);United States v. Bonanno Organized Crime Family of La Cosa Nostra, 683 F. Supp. 1411, 1422-40 (E.D.N.Y. 1988), aff’d, 879 F. 2d 20 (2d Cir. 1989).

    The above-quoted version is in effect through November 30, 2007.  Rule 9(a) will be85

amended effective December 1, 2007.  This amendment clarifies Rule 9(a) but does not changethe substance of the Rule.  

100

b. Application of Civil Rule 9(b)

Rule 9(b), FED. R. CIV. P. provides as follows:

In all averments of fraud or mistake, the circumstances constitutingfraud or mistake shall be stated with particularity. Malice, intent,knowledge, and other condition of mind of a person may beaverred generally.85

This particularity requirement serves two primary interests: “Protecting a defendant from

reputational harm and ‘strike’ suits, and providing defendant sufficient information to respond to

plaintiff’s claims.”  Firestone v. Firestone, 76 F.3d 1205, 1211 (D.C. Cir. 1996) . Generally, Rule

9(b) is satisfied when the complaint “state[s] the ‘time, place and content of the false

misrepresentations, the fact misrepresented and what was retained or given up as a consequence

of the fraud,’” and the identity of the party making the representation. Firestone, 76 F.3d at 1211

(citations deleted).  Accord, Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1068 (5th

Cir. 1994).

Although such allegations are sufficient to satisfy Rule 9(b), the Rule does not require

such allegations.  “Plaintiffs are free to use alternative means of injecting precision and some

measure of substantiation into their allegations of fraud.”  Seville Indus. Mach. Corp, 

742 F.2d at 791.  Accord, Mayer v. Dell, 1991 WL 21567 (D. D.C. 1991) .

101

At bottom, the complaint “must provide enough detail about the underlying facts which

illustrate that [the defendant’s] statements were fraudulent to allow a court to evaluate the claim

in a meaningful way.”  Arazie v. Mullane, 2 F.3d 1456, 1465 (7th Cir. 1993).  “However, the

“plaintiff need not allege specific evidentiary details needed to prove his claim at trial in order to

satisfy Rule 9(b) specificity.”  Formax, Inc. v. Hostert, 841 F.2d 388, 391 (Fed. Cir. 1988),

(citing Seville Indus. Corp., 742 F.2d at 791-92).  Cf. Shahmirzadi v. Smith Barney, Harris

Upham & Co., 636 F. Supp. 49, 53 (D.D.C. 1985) (“Rule 9 should not be treated as requiring

allegations of facts in the pleadings”) (citations deleted).  See also Brady v. Games, 128 F. 2d

754, 755 (D.C. Cir. 1942).  Rather, “bare bones averments of fraudulent schemes coupled with

plaintiff’s allegations that defendant used the mails” in furtherance of the scheme to defraud is

sufficient to allege mail fraud and wire fraud predicate acts.  Formax, Inc., 841 F.2d at 391.

Although Rule 9(b) explicitly provides that intent and knowledge “may be averred

generally,” courts have held that the complaint must allege “specific facts that support an

inference of fraud.”  Tuchman, 14 F.3d at 1068.  See also, Greenstone v. Cambex Corp., 

975 F.2d 22, 25 (1st Cir. 1992) (The complaint must allege “specific facts that make it

reasonable to believe that defendant knew that a statement was materially false or misleading.”);

DiLeo v. Ernest & Young, 901 F.2d 624, 629 (7th Cir. 1990) (“the complaint still must provide a

basis for believing that plaintiffs could prove scienter”); Powers v. British Vita, P.L.C., 57 F. 3d

176, 184 (2d Cir. 1995) (the plaintiff must “allege a motive for committing fraud and a clear

opportunity for doing so”).

Such inference of fraud and the requisite mental state “can be satisfied by alleging facts

that show a defendant’s motive to commit [the charged] fraud.  Where a defendant’s motive is

  See, e.g.,  Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 26 n.4 (2d Cir.86

1990); Rose v. Bartle, 871 F.2d 331, 366 (3d Cir. 1989); United States v. Dist. Council of NewYork, 778 F. Supp. at 746-47 (collecting cases); Federal Ins. Co. v. Ayers, 741 F. Supp. 1179,1185-86 (E.D. Pa. 1990); United States v. IBT, 708 F. Supp. at 1395-96; United States v.Bonnano Organized Crime Family, 683 F. Supp. at 1427-28.

  Indeed, most Government civil RICO complaints have included lengthy, detailed87

allegations in excess of 75 pages.102

not apparent, a plaintiff may adequately plead scienter by identifying circumstances that indicate

conscious behavior on the part of the defendant, though the strength of the circumstantial

allegations must be correspondingly greater.”  Tuchman, 14 F.3d at 1068.  Accord, Beck v.

Manufacturers Hanover Trust Co., 820 F.2d 46,50 (2d Cir. 1987), cert. denied, 484 U.S. 1005

(1988), overruled on other grounds by United States v. Indelicato, 865 F.2d 1370 (2d Cir.) (en

banc), cert. denied, 493 U.S. 811 (1989).

Moreover, the pleading requirements of Rule 9(b) apply only to RICO predicate offenses

sounding in fraud, and not to the other elements of RICO claims.86

2. Drafting the Complaint

Of course, the precise content of a civil RICO complaint will depend upon the particular

circumstances of each case.  However, several guidelines apply to virtually all Government civil

RICO complaints.  First, although short “notice pleading” is permitted by the Rules of Civil

Procedure (see Section V(B)(1) above), it is the policy of OCRS that to the extent feasible, civil

RICO complaints at least be as detailed as criminal RICO charges.   Therefore, attorneys should87

consult OCRS’ Criminal RICO Manual, which provides guidance in drafting criminal RICO

charges.

  This requirement does not preclude alleging, in appropriate circumstances, that the88

enterprise included unspecificed persons or entities.103

For example, the complaint should include a distinct section describing the alleged RICO

enterprise, including identifying the specific known components of the enterprise.   Where the88

alleged enterprise is an association-in-fact, the complaint should include an allegation, in

substance, that the members of the enterprise functioned as a continuing unit over a period of

time to achieve a shared objective or objectives of the enterprise.  It is also preferable to allege a

brief factual basis that supports such allegations.

The enterprise section of the complaint should also allege the principal purposes of the

enterprise, the manner and means the members of the enterprise used to carry out its affairs, and

a brief description of the enterprise’s structure and the roles of the defendants in the enterprise.

Moreover, where the RICO complaint alleges a substantive RICO violation under 

18 U.S.C. § 1962(c), the enterprise section should include allegations that satisfy the “operation

or management” test of Reves v. Ernst & Young, 507 U.S. 170, 177-83 (1993) (holding that to

establish liability for a substantive RICO violation under Section 1962(c), the United States must

prove that the defendant participated in the operation or management of the enterprise).  See

OCRS’ Criminal RICO Manual’s discussion of Reves’ “operation or management” test. 

A substantive RICO violation under 18 U.S.C. § 1962(a),(b) or (c) should allege, in

substance, that the defendant engaged in a pattern of racketeering activity that extended over a

substantial period of time and/or posed a threat of continuing unlawful activity and that the

alleged predicate racketeering acts were related to each other and/or to the affairs of the

enterprise.  See H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989); OCRS’

Criminal RICO Manual’s discussion of pattern of racketeering activity.

104

Furthermore, where the Government’s civil RICO complaint alleges that a defendant is

estopped from contesting certain predicate offenses or facts that were the basis of a defendant’s

prior conviction (see Section III(D) above), it is preferable to plead those offenses, to the extent

feasible, just as they were alleged in the criminal indictment and to incorporate those allegations

by reference to facilitate the application of collateral estoppel.  It is also preferable to attach to

the complaint certified copies of the indictment and the defendant’s judgment of conviction that

provide the basis for application of collateral estoppel.

Moreover, the complaint must allege that there is a reasonable likelihood that the

defendant will commit a RICO violation in the future and include supporting factual allegations,

as appropriate.  For example, the Government’s civil RICO complaints involving labor unions

(see Section VIII below) typically have included extensive allegations of defendants’ past

unlawful activities, prior criminal convictions, and systemic corruption of the unions involved,

and how the defendants obtained and exercised corrupt influence over the unions involved, that

give rise to an inference that the defendants are reasonably likely to engage in similar unlawful

activities in the future.

Finally, the complaint should include a separate section for the relief sought which

provides, at minimum, a brief description of the specific relief sought.

C. There is No Right to a Jury Trial on Claims for Equitable Relief

1. The Seventh Amendment to the United States Constitution provides, in relevant

part:

In Suits at common law, where the value in controversy shallexceed twenty dollars, the right of trial by jury shall be preserved....

105

The Supreme Court has long held that the Seventh Amendment creates a right to a jury

trial only in suits at “common law,” but not in suits within the courts’ equity jurisdiction.  Thus,

the Court stated in Parsons v. Bedford, 28 U.S. 433, 446 (1830):

The phrase “common law,” found in [the Seventh Amendment], isused in contradistinction to equity, and admiralty, and maritimejurisprudence. . . .  It is well known, that in civil causes, in courtsof equity and admiralty, juries do not intervene, . . . .

Accord Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41 (1989) (“We have consistently

interpreted the phrase ‘Suits at common law’ to refer to ‘suits in which legal rights were to be

ascertained and determined, in contradistinction to those where equitable rights alone were

recognized, and equitable remedies were administered.’”)(quoting Parsons v. Bedford, 28 U.S. at

447); Tull v. United States, 481 U.S. 412, 417 (1987) (“The Court has construed [the Seventh

Amendment] to require a jury trial on the merits in those actions that are analogous to ‘Suits at

common law.’. . . In contrast, those actions that are analogous to 18  - century cases tried inth

courts of equity or admiralty do not require a jury trial. . . . This analysis applies not only to

common-law forms of action, but also to causes of action created by congressional enactment.”);

Barton v. Barbour, 104 U.S. 126, 133 (1881) (“[T]he right of trial by jury . . . does not extend to

cases of equity jurisdiction.”).  See also Colgrove v. Battin, 413 U.S. 149, 155 & n. 9 (1973).

The Supreme Court has adopted a two-pronged test to determine whether a Seventh

Amendment right to a jury trial attaches:

To determine whether a statutory action is more similar to casesthat were tried in courts of law than to suits tried in courts of equityor admiralty, the Court must examine both the nature of the actionand of the remedy sought.  First, we compare the statutory action to18  - century actions brought in the courts of England prior to theth

merger of the courts of law and equity. . . .  Second, we examinethe remedy sought and determine whether it is legal or equitable in

  See, e.g., Mertens v. Hewitt Ass’n, 508 U.S. 248, 255 (1993); Tull, 481 U.S. at 423;89

(continued...)106

nature.

Tull, 481 U.S. at 417-18 (citations omitted).  Moreover, the Court has admonished that “[t]he

second inquiry is the more important in [its] analysis.”  Teamsters v. Terry, 494 U.S. 558, 565

(1990).  Accord Granfinanciera, 492 U.S. at 42; Crocker v. Piedmont Aviation, Inc., 49 F.3d 735,

745 (D.C. Cir. 1995) (“the second part of this test (the nature of the remedy) is more important

that the first.”).

It is particularly significant that the Supreme Court has repeatedly recognized that civil

suits to obtain restitution or “disgorgement” of ill-gotten profits are equitable in nature.  See, e.g.,

Harris Trust & Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 250 (2000) (“an

action for restitution of the property (if not already disposed of) or disgorgement of proceeds (if

already disposed of), and disgorgement of the third person’s profits derived therefrom” is

“appropriate equitable relief”); Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 352

(1998) (“we have characterized as equitable, such as actions for disgorgement of improper

profits”); Teamsters, 494 U.S. at 570 (“we have characterized damages as equitable where they

are restitutionary, such as in actions for disgorgement of improper profits”) (citation and internal

quotation omitted); Tull, 481 U.S. at 424 (“[A]n action for disgorgement of improper profits [is]

traditionally considered an equitable remedy”); Porter v. Warner Holding Co., 328 U.S. 399, 402

(1946) (restitution of illegally obtained profits is “within the recognized power and within the

highest tradition of a court of equity.”).  Likewise, the Supreme Court has repeatedly stated that

suits to obtain injunctive relief, including to enjoin unlawful conduct, are equitable in nature, and

are not “suits at common law.”89

(...continued)89

Mitchell v. Robert De Mario Jewelry, Inc., 361 U.S. 288, 291-92 (1960); United Steelworkers ofAmerica v. United States, 361 U.S. 39, 40-41 (1959); Porter, 328 U.S. at 399; Barton, 104 U.S.at 133-34.

107

In Barton v. Barbour, the Supreme Court noted that such suits for injunctive relief and

disgorgement of improperly obtained profits are suits in equity to be tried without a jury, stating:

Thus, upon a bill filed for an injunction to restrain the infringementof letters - patent, and for an account of profits for pastinfringement, it is now the constant practice of courts of equity totry without a jury issues of fact relating to the title of the patentee,involving questions of the novelty, utility, prior public use,abandonment, and assignment of the invention patented.  Thejurisdiction of a court of equity to try such issues according toits own course of practice is too well settled to be shaken.

104 U.S. at 133-34 (emphasis added).

2. In accordance with the foregoing authority, courts have held that there is no right

to a jury trial in Government suits pursuant to 18 U.S.C. § 1964(a).  For example, in United

States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388 (S.D.N.Y. 1989), the court stated:

The Government’s complaint clearly seeks equitable relief in that itseeks injunctions and the appointment of a “court liaison officer.” The only demand for relief that would result in the payment ofmoney is the demand for disgorgement of proceeds derived fromalleged RICO violations and attorney’s fees.  Disgorgement andattorney’s fees are incidental to equitable relief, and thus notconsidered actions at law. . . .  As such, the relief is equitable innature, thereby not giving rise to the right to a jury trial.

Id. at 1408.  Accord United States v. Philip Morris Inc., 273 F. Supp. 2d 3 (D.D.C. 2002)

(holding that defendants did not have a right to a jury trial in Government’s civil RICO suit for

equitable relief, including injunctive relief, disgorgement of unlawful proceeds, appointment of

court officers, a medical monitoring fund and other equitable remedies).

  See, e.g., SEC v. Rind, 991 F.2d 1486, 1493 (9th Cir. 1993); SEC v. Tome, 833 F.2d90

1086, 1096 & n. 7 (2d Cir. 1987); SEC v. Commonwealth Chem. Sec., 574 F.2d 90, 94-96 (2dCir. 1978); Bradford v. SEC, 278 F.2d 566, 567 (9th Cir. 1960); SEC v. Asset Mgmt. Corp., 456F. Supp. 998, 999-1000 (S.D. Ind. 1978); SEC v. Petrofunds, Inc., 420 F. Supp. 958, 959-60(S.D.N.Y. 1976); SEC v. Associated Minerals, Inc., 75 F.R.D. 724 (E.D. Mich. 1977).  Cf. SECv. Blavin, 760 F.2d 706, 713 (6th Cir. 1985) (“the district court possesses the equitable power togrant disgorgement”); SEC v. Williams, 884 F. Supp. 28, 30-31 (D. Mass. 1995).

  Courts have likewise held that a right to a jury trial does not apply to suits by private91

litigants to obtain a wide variety of equitable relief, including suits for recovery of money.  See,e.g., Klein v. Shell Oil Co., 386 F.2d 659, 663-64 (8th Cir. 1967) (suit for specific performanceof an executory contract, pursuant to an option agreement); Railex Corp. v. Joseph Guss & Sons,Inc., 40 F.R.D. 119, 123 (D.D.C. 1966) (patent infringement suit for “final injunctions and an

(continued...)108

Likewise, courts have repeatedly held that a Seventh Amendment right to a jury trial does

not attach in suits by the Securities and Exchange Commission (“SEC”) to enjoin violations of

the securities laws and to obtain disgorgement of profits, even if paid to the United States,

because such suits are clearly “equitable in nature.”  90

As the Second Circuit explained in SEC v. Commonwealth, supra:

The [demand for a jury trial] seems surprising since it has beenassumed for decades that a suit for an injunction, whether by theGovernment or a private party, was the antithesis of a suit “atcommon law” in which the Seventh Amendment requires that theright to trial by jury “shall be preserved.”  In 1791, when theSeventh Amendment became effective, injunctions, both inEngland and in this country, were the business of courts of equity,not of courts of common law.

. . .

A historic equitable remedy was the grant of restitution “by whichdefendant is made to disgorge ill-gotten gains”. . . [for which] thereis no right to jury trial. . . Disgorgement of profits in an actionbrought by the SEC to enjoin violations of the securities lawsappears to fit this description; the court is not awarding damagesto which plaintiff is legally entitled but is exercising thechancellor’s discretion to prevent unjust enrichment.

574 F.2d at 95 (internal quotations and citations deleted) (emphasis added).91

(...continued)91

accounting of profits, with a prayer for incidental legal relief in the form of an award of moneydamages”), aff’d, 382 F.2d 179 (D.C. Cir. 1967); Gauthreaux v. Baylor Univ. Med. Ctr., 876 F.Supp. 847, 848-49 (N.D. Tex. 1994) (Plaintiff’s suit for backpay for age discrimination under theRehabilitation Act, 29 U.S.C. § 701 et seq.); Nedd v. Thomas, 316 F. Supp. 74, 76-78 (M.D. Pa.1970) (suit by retired union members to compel trustees of a union benefit fund to redress abreach of trust by restoring money lost to the fund).

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D. Standards Governing Motions for Summary Judgment

1. General Principles

Under Rule 56, summary judgment on a particular issue is appropriate “if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law.”  Rule 56(c), FED. R. CIV. P.  When “the record taken

as a whole could not lead a rational trier of fact to find for the non-moving party, there is no

‘genuine issue for trial.’”  Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587

(1986) (citation omitted).  A dispute about a material fact is genuine “if the evidence is such that

a reasonable [trier of fact] could return a verdict for the non-moving party.”  Anderson v. Liberty

Lobby Inc., 477 U.S. 242, 248 (1986).  Whether a fact is “material” is determined by reference to

the substantive law – “[o]nly disputes over facts that might affect the outcome of the suit under

the governing law will properly preclude the entry of summary judgment.  Factual disputes that

are irrelevant or unnecessary will not be counted.”  Id.

A court should consider motions for summary judgment “with caution so that no person

will be deprived of his or her day in court to prove a disputed material factual issue.”  Greenberg

v. FDA, 803 F.2d 1213, 1216 (D.C. Cir. 1986); Public Citizen Health Research Group v. FDA,

953 F. Supp. 400, 402 (D.D.C. 1996); Virtual Def. & Dev. Int’l, Inc. v. Republic of Moldova,

  See also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);92

Dunaway v. Int’l Bhd. of Teamsters, 310 F.3d 758, 761 (D.C. Cir. 2002); Borgo v. Goldin, 204F.3d 251, 254 (D.C. Cir. 2000).  

110

133 F. Supp. 2d 9, 15 (D.D.C. 2001).  Consistent with this principle, a court “should review all

of the evidence in the record,” Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150 (2000),

and must accept the evidence of the nonmoving party as true and draw all reasonable inferences

in favor of the nonmovant.  Anderson, 477 U.S. at 255.   Additionally, “[i]f the evidence92

presented on a dispositive issue is subject to conflicting interpretations, or reasonable persons

might differ as to its significance, summary judgment is improper.”  Greenberg, 803 F.2d at

1216.  At the summary judgment stage, “the court is not to make credibility determinations or

weigh the evidence.”  Dunaway, 310 F.3d at 761 (citing Reeves, 530 U.S. at 150).

A party may move for partial summary judgment on particular elements of its claim for

liability.  See, e.g., United States v. Philip Morris USA, Inc., 327 F. Supp. 2d 13, 18 (D.D.C.

2004) (granting the United States’ motion for partial summary judgment, finding that the

Government proved that the RICO defendants were distinct from the alleged RICO enterprise);

Virden v. Graphics One, 623 F. Supp. 1417 (C.D. Cal. 1986) (granting plaintiff summary

judgment on certain elements of civil RICO claim).

A party also may appropriately seek summary judgment to resolve issues of law.  See

Philip Morris USA, Inc., 327 F. Supp. 2d at 17 (“summary judgment is appropriate for purely

legal questions”); United States v. Philip Morris USA Inc., et al., 263 F. Supp. 2d 72, 76 (D.D.C.

2003) (“In the pending [Summary Judgment] Motions, we are concerned with issues of law,

rather than factual disputes.”); see also Crain v. Board of Police Comm’rs, 920 F.2d 1402, 1405-

06 (8th Cir. 1990); Adler v. Madigan, 939 F.2d 476, 478 (7th Cir. 1991); Wyoming Outdoor

  See also Warner v. United States, 698 F. Supp. 877, 880-82 (S.D. Fla. 1988) (resolving93

legal issue on motion for partial summary judgment to “narrow the issues in the case, advancethe progress of the litigation, and provide the parties with some guidance in how they proceedwith the case.”).

  See, e.g.,  Paraskevaides v. Four Seasons Washington, 292 F.3d 886 (D.C. Cir. 2002)94

(statutory defense of D.C. Code § 30-101 unavailable as a matter of law); Gray v. Bell, 712 F.2d490, 496 (D.C. Cir. 1983) (qualified immunity); Reed Research, Inc. v. Schumer Co., 243 F.2d602 (D.C. Cir. 1957); United States v. Philip Morris USA Inc., 327 F. Supp. 2d at 6-7 (grantingUnited States’ motion to dismiss several affirmative defenses); United States v. Philip Morris,263 F. Supp. 2d at 81 (granting United States’ motion for summary judgment, denyingdefendants’ affirmative defense based on pre-emption);  see also United States v. Bailey, 444 U.S. 394, 412-413 n.9 (1980) (“In a civil action, the question whether a particularaffirmative defense is sufficiently supported by testimony to go to the jury may often be resolvedon a motion  for summary judgment.”).  

111

Council v. Dombeck, 148 F. Supp. 2d 1, 7 (D.D.C. 2001) (“When the unresolved issues are

primarily legal rather than factual, summary judgment is particularly appropriate.”) (citing

Crain); Swan v. Clinton, 932 F. Supp. 8, 10 (D.D.C.), aff’d, 100 F.3d 973, 976 (D.C. Cir. 1996)

(recognizing that district court’s grant of summary judgment “was based on a pure question of

law”).  93

Moreover, summary judgment is appropriate to dispose of affirmative defenses that are

insupportable as a matter of law.   As a defendant bears the burden of proving his affirmative94

defenses at trial, Rule 56(c) mandates summary judgment rejecting any such defense where the

defendant has “fail[ed] to make a showing sufficient to establish the existence of an element

essential to” that affirmative defense.  See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);

see also id. at 323-24 (“One of the principal purposes of the summary judgment rule is to isolate

and dispose of factually unsupported claims or defenses” (emphasis added).  Id. at 327 (Rule 56

must be construed to permit parties opposing affirmative defenses to demonstrate, prior to trial,

that the defenses have no factual basis). 

  See, e.g.,  Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)(“Rule 56(e) therefore95

requires the nonmoving party to go beyond the pleadings and. . . designate ‘specific factsshowing that there is a genuine issue for trial.’”);  Ben-Kotel v. Howard University, 319 F.3d532, 536 (D.C. Cir. 2003)(“If the evidence is merely colorable, or is not significantly probative,summary judgment may be granted); Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999)(holding that “conclusory” statements and “unsubstantiated allegations” are not sufficient todefeat a properly supported motion for summary judgment);  Harding v. Gray, 9 F.3d 150, 154(D.C. Cir. 1993) (“a mere unsubstantiated allegation . . . creates no ‘genuine issue of fact’ andwill not withstand summary judgment”); Alyeska Pipeline Service Co. v. U.S. E.P.A., 856 F.2d309, 314 (D.C. Cir. 1988)(“a motion for summary judgment adequately underpinned is notdefeated simply by a bare opinion or an unaided claim that a factual controversy persists.”); Gardels v. CIA, 689 F.2d 1100, 1106 n.5 (D.C. Cir. 1982) (affiant’s “views” insufficient to raisetriable issue); Dickerson v. SecTek, Inc., 238 F. Supp. 2d 66, 72-73 (D.D.C. 2002) (“thenonmoving party’s opposition must consist of more than mere unsupported allegations or denialsand must be supported by affidavits or other competent evidence setting forth specific factsshowing that there is a genuine issue for trial.”); Williams v. Verizon Washington DC, Inc., 266 F. Supp. 2d 107, 115 (D.D.C. 2003)(“the non-movant may not rely on conclusoryallegations, but must present specific facts from which a reasonable jury could conclude in thenon-movant’s favor”);  Cooper v. First Government Mort. & Investors, 238 F. Supp. 2d 50, 53

(continued...)112

The moving party bears the initial burden of “‘showing’ – that is, pointing out to the

district court – that there is an absence of evidence to support the nonmoving party’s case.”  Id. at

325.  However, the party opposing summary judgment “may not rest upon the mere allegations or

denials of [its] pleading, but . . . must set forth specific facts showing that there is a genuine issue

for trial.”  FED. R. CIV. P. 56(e); Celotex, 477 U.S. at 323-25.  The “mere existence of a scintilla

of evidence” is insufficient to oppose a summary judgment motion under Rule 56.  Liberty

Lobby, 477 U.S. at 252.  Indeed, if the evidence presented by the opposing party is “merely

colorable” or “not significantly probative,” summary judgment may be granted.  Id. at 249-50

(citations omitted); see also Matsushita, 475 U.S. at 586 (party opposing summary judgment

“must do more than simply show that there is some metaphysical doubt as to the material facts”). 

Accordingly, conclusory denials and statements by the party opposing summary judgment are

insufficient to preclude summary judgment.  95

(...continued)95

(D.D.C. 2002)(“the non-moving party may not rely solely on allegations or conclusorystatements”).

  Accord Leggett & Platt, Inc. v. Hickory Springs Mfg. Co., 285 F.3d 1353, 1361-6296

(Fed. Cir. 2002); Provenz v. Miller, 102 F.3d 1478, 1489-90 (9th Cir. 1996); National Soffit &Escutcheons, Inc. v. Superior Sys., Inc., 98 F.3d 262, 267 (7th Cir. 1996); Kand Med., Inc. v.Freund Med. Prods., Inc., 963 F.2d 125, 127 (6th Cir. 1992); Clements v. County of Nassau, 835F.2d 1000, 1005 (2d Cir. 1987); ABB Daimler-Benz Transport. (N. Amer.), Inc. v. Nat’l RRPassenger Corp., 14 F. Supp. 2d 75, 86 (D.D.C. 1998); In re McGuirl, 162 B.R. 630, 634 (D.D.C.1993); Mandelkorn v. Patrick, 359 F. Supp. 692, 697 (D.D.C. 1973).

  See also Provenz, 102 F.3d at 1489; Kand Med. Inc., 963 F. 2d at 127; Clements, 83597

F. 2d at 1005; In re McGuirl, 162 B.R. at 634.  Just as “the mere incantation of intent or state ofmind [does not] operate as a talisman to defeat an otherwise valid [summary judgment] motion,”Citizens Bank of Clearwater, 927 F. 2d at 711 (internal quotation and citation omitted), the meredenial of fraudulent intent does not justify granting a defendant’s summary judgment motions inthe face of evidence of fraudulent intent.

  See, e.g., Hunt v. Cromartie, 526 U.S. 541, 549-54 (1999) (holding that district court98

erred in granting summary judgment where non-movant provided expert testimony whichsupported the inference that moving defendant had necessary intent); Provenz, 102 F.3d at 1490-91; In Re Worlds of Wonder Sec. Litig., 35 F.3d 1407, 1425-26 (9th Cir. 1994);  See generally Echazabal v. Chevron USA, Inc., 336 F.3d 1023, 1035 (9th Cir. 2003); TFWS, Inc. v. Schafer,325 F.3d 234, 242 (4th Cir. 2003) (same); Rodgers v. Monumental Life Ins. Co., 289 F.3d 442,449 (6th Cir. 2002).

113

2. Issues of Intent Generally are Ill-Suited for Summary Judgment

Generally, issues of intent and credibility are inappropriate for summary judgment.  See,

e.g., Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 711 (2d Cir. 1991).   For example, in a96

fraud case, the issue of whether a defendant acted with the requisite fraudulent intent is “purely a

question of fact.”  Id.    Likewise, courts have repeatedly held that where the non-movant97

adduces expert opinions in support of his claims regarding intent summary judgment is

inappropriate.98

114

VI

DISCOVERY

A. Civil Investigative Demands (“CID”)

1. RICO’s CID Provisions

Title 18, United States Code, Section 1968 provides as follows:

(a) Whenever the Attorney General has reason to believe that any person orenterprise may be in possession, custody, or control of any documentary materialsrelevant to a racketeering investigation, he may, prior to the institution of a civilor criminal proceeding thereon, issue in writing, and cause to be served upon suchperson, a civil investigative demand requiring such person to produce suchmaterial for examination.

(b) Each such demand shall--

(1) state the nature of the conduct constituting the alleged racketeering violationwhich is under investigation and the provision of law applicable thereto;

(2) describe the class or classes of documentary material produced thereunderwith such definiteness and certainty as to permit such material to be fairlyidentified;

(3) state that the demand is returnable forthwith or prescribe a return date whichwill provide a reasonable period of time within which the material so demandedmay be assembled and made available for inspection and copying orreproduction; and

(4) identify the custodian to whom such material shall be made available.

(c) No such demand shall--

(1) contain any requirement which would be held to be unreasonable ifcontained in a subpena (sic) duces tecum issued by a court of the United Statesin aid of a grand jury investigation of such alleged racketeering violation; or

(2) require the production of any documentary evidence which would be privilegedfrom disclosure if demanded by a subpoena duces tecum issued by a court of the UnitedStates in aid of a grand jury investigation of such alleged racketeering violation.

115

(d) Service of any such demand or any petition filed under this section may bemade upon a person by--

(1) delivering a duly executed copy thereof to any partner, executive officer,managing agent, or general agent thereof, or to any agent thereof authorized byappointment or by law to receive service of process on behalf of such person, orupon any individual person;

(2) delivering a duly executed copy thereof to the principal office or place ofbusiness of the person to be served; or

(3) depositing such copy in the United States mail, by registered or certifiedmail duly addressed to such person at its principal office or place of business.

(e) A verified return by the individual serving any such demand or petition settingforth the manner of such service shall be prima facie proof of such service. In thecase of service by registered or certified mail, such return shall be accompanied bythe return post office receipt of delivery of such demand.

(f)(1) The Attorney General shall designate a racketeering investigator to serve asracketeer document custodian, and such additional racketeering investigators as heshall determine from time to time to be necessary to serve as deputies to suchofficer.

(2) Any person upon whom any demand issued under this section has been dulyserved shall make such material available for inspection and copying orreproduction to the custodian designated therein at the principal place of businessof such person, or at such other place as such custodian and such person thereaftermay agree and prescribe in writing or as the court may direct, pursuant to thissection on the return date specified in such demand, or on such later date as suchcustodian may prescribe in writing. Such person may upon written agreementbetween such person and the custodian substitute for copies of all or any part ofsuch material originals thereof.

(3) The custodian to whom any documentary material is so delivered shall takephysical possession thereof, and shall be responsible for the use made thereof andfor the return thereof pursuant to this chapter. The custodian may cause thepreparation of such copies of such documentary material as may be required forofficial use under regulations which shall be promulgated by the AttorneyGeneral. While in the possession of the custodian, no material so produced shallbe available for examination, without the consent of the person who producedsuch material, by any individual other than the Attorney General. Under suchreasonable terms and conditions as the Attorney General shall prescribe,documentary material while in the possession of the custodian shall be available

116

for examination by the person who produced such material or any duly authorizedrepresentatives of such person.

(4) Whenever any attorney has been designated to appear on behalf of the United Statesbefore any court or grand jury in any case or proceeding involving any alleged violationof this chapter, the custodian may deliver to such attorney such documentary material inthe possession of the custodian as such attorney determines to be required for use in thepresentation of such case or proceeding on behalf of the United States. Upon theconclusion of any such case or proceeding, such attorney shall return to the custodian anydocumentary material so withdrawn which has not passed into the control of such court orgrand jury through the introduction thereof into the record of such case or proceeding.

(5) Upon the completion of--

(i) the racketeering investigation for which any documentary material was producedunder this chapter, and

(ii) any case or proceeding arising from such investigation,

the custodian shall return to the person who produced such material all such materialother than copies thereof made by the Attorney General pursuant to this subsection whichhas not passed into the control of any court or grand jury through the introduction thereofinto the record of such case or proceeding.

(6) When any documentary material has been produced by any person under this sectionfor use in any racketeering investigation, and no such case or proceeding arisingtherefrom has been instituted within a reasonable time after completion of theexamination and analysis of all evidence assembled in the course of such investigation,such person shall be entitled, upon written demand made upon the Attorney General, tothe return of all documentary material other than copies thereof made pursuant to thissubsection so produced by such person.

(7) In the event of the death, disability, or separation from service of the custodian of anydocumentary material produced under any demand issued under this section or the officialrelief of such custodian from responsibility for the custody and control of such material,the Attorney General shall promptly--

(i) designate another racketeering investigator to serve as custodian thereof, and

(ii) transmit notice in writing to the person who produced such material as to theidentity and address of the successor so designated.

Any successor so designated shall have with regard to such materials all duties andresponsibilities imposed by this section upon his predecessor in office with regard thereto,

117

except that he shall not be held responsible for any default or dereliction which occurredbefore his designation as custodian.

(g) Whenever any person fails to comply with any civil investigative demand dulyserved upon him under this section or whenever satisfactory copying orreproduction of any such material cannot be done and such person refuses tosurrender such material, the Attorney General may file, in the district court of theUnited States for any judicial district in which such person resides, is found, ortransacts business, and serve upon such person a petition for an order of suchcourt for the enforcement of this section, except that if such person transactsbusiness in more than one such district such petition shall be filed in the district inwhich such person maintains his principal place of business, or in such otherdistrict in which such person transacts business as may be agreed upon by theparties to such petition.

(h) Within twenty days after the service of any such demand upon any person, orat any time before the return date specified in the demand, whichever period isshorter, such person may file, in the district court of the United States for thejudicial district within which such person resides, is found, or transacts business,and serve upon such custodian a petition for an order of such court modifying orsetting aside such demand. The time allowed for compliance with the demand inwhole or in part as deemed proper and ordered by the court shall not run duringthe pendency of such petition in the court. Such petition shall specify each groundupon which the petitioner relies in seeking such relief, and may be based upon anyfailure of such demand to comply with the provisions of this section or upon anyconstitutional or other legal right or privilege of such person.

(i) At any time during which any custodian is in custody or control of anydocumentary material delivered by any person in compliance with any suchdemand, such person may file, in the district court of the United States for thejudicial district within which the office of such custodian is situated, and serveupon such custodian a petition for an order of such court requiring theperformance by such custodian of any duty imposed upon him by this section.

(j) Whenever any petition is filed in any district court of the United States underthis section, such court shall have jurisdiction to hear and determine the matter sopresented, and to enter such order or orders as may be required to carry into effectthe provisions of this section.

2. Background

RICO’s CID provisions were modeled after the CID provisions of antitrust laws, i.e., 

15 U.S.C. §§ 1311-1314.  See H.R. REP. No. 91-1549, 91st Cong., 2d Sess. 58 (1970);  

  18 U.S.C. § 1961(10) defines the “Attorney General.” (See Section VI(A)(3) below).99

   See 18 U.S.C. § 1968(a).  Although section 1968(a) explicitly authorizes the use of100

CIDs prior to the institution of a criminal proceeding, CIDs are most often used in civilinvestigations. Once a criminal investigation has commenced, however, it may be much moreexpeditious to use a grand jury subpoena to acquire materials, given the power to compel bothtestimony and physical evidence.

   See 18 U.S.C. § 1968(a); see also 18 U.S.C. § 1968(d).  These limitations will101

 be discussed below in this section.118

see also Section II(D) above; United States v. Forsythe, 429 F. Supp. 715, 721 (W.D. Pa. 1977),

rev’d on other grounds, 560 F.2d 1127 (3d Cir. 1977)(observing in dicta that a RICO civil

investigative demand is an “analogy to antitrust litigation”).  A CID, while similar to a subpoena,

is a pre-litigation discovery tool that the Government may use to compel document production

before commencing a civil or criminal investigation.  Specifically, pursuant to 18 U.S.C. 

§ 1968(a), the Attorney General  is authorized to issue and serve a written CID upon any person99

and/or enterprise believed to possess or be in control of materials that may be relevant to a civil

or criminal RICO investigation.   Unlike a federal grand jury subpoena, however, a CID may100

not compel testimony but, instead, only the production of  “documentary materials.”  A CID

requires the recipient to comply absent a successful challenge for unreasonableness or

privilege.101

Despite RICO’s enactment in 1970, there is a dearth of case law discussing CIDs’

application in RICO cases.  In fact, as of the time of this writing, there are no published cases

which squarely analyze CIDs in the RICO context.  Instead, the published cases that reference

RICO CIDs make only fleeting references to the statute in discussing collateral matters.  

See, e.g., Doe v. Ashcroft, 334 F. Supp. 2d 471, 487 (S.D. N.Y. 2004), vacated on other grounds, 

Doe v. Gonzales, 449 F.3d 415 (2d Cir. 2006)(observing, in dicta, that “the Government may

 Similarly, the smattering of unpublished cases that involve RICO CIDs provide only102

cursory observations about statutory language or note the exclusive province of the AttorneyGeneral (or his designees) to issue CIDs.  See, e.g., Prince v. Schofield, 1999 WL 1007344(E.D.N.Y. Sept. 23, 1999) (unpublished) (observing that only the Attorney General, and not aprivate citizen, has power to issue a CID); United States v. Eisenberg, 773 F. Supp. 662, 702(D.N.J. 1991)(mentions CIDs in a footnote that discusses U.S. Attorney Manual § 9-110.101 noting that before CIDs may issue, prior approval is needed from the CriminalDivision); United States v. Benjamin, 1986 WL 15567 (E.D. Cal. May 1, 1986) (same asEisenberg).

119

issue subpoenas related to criminal investigations even without initiating a formal criminal

proceeding” in prosecuting racketeering cases under the RICO statute and that the process is

governed by rules that allow for judicial review); Nagle v. Merrill Lynch, 790 F. Supp. 203, 208

(S.D. Iowa 1992)(notes that Section 1968 allows the Attorney General to issue a CID to any

“‘person or enterprise’ to produce relevant materials”); Intel Corp. v. Hartford Acc. & Indem.

Co., 662 F. Supp.1507, 1510 (N.D. Cal. 1987), abrogated on other grounds, Tafflin v. Levitt, 

493 U.S. 455 (1990) (citation omitted); Karel v. Kroner, 635 F. Supp. 725, 730 (N.D. Ill.

1986)(recognizing that Section 1968 authorizes “Attorney General and his designees” to issue

CIDs);  Kinsey v. Nestor Exploration, Ltd., 604 F. Supp. 1365, 1370 (E.D. Wash. 1985),

abrogated on other grounds, Tafflin, 493 U.S. 455 (recognizing that Section 1968 gives Attorney

General exclusive power to issue CIDs); United States v. Hossbach, 518 F. Supp. 759, 766 n.1

(E.D. Pa. 1980) (noting, in dicta in a non-RICO narcotics case, that “the Attorney General was

granted executive subpoena power in conducting investigations under the [RICO] Act, 18 U.S.C.

§ 1968 ”).    Accordingly, throughout this Section, references will be made to antitrust and102

grand jury subpoena case law as supporting authority where appropriate and instructive.

  See, e.g., Australia/Eastern U.S.A. Shipping Conference v. United States, 1981 WL103

2212 (D.D.C. Dec. 23, 1981)(Government argued that it was not required to have probable causein order to investigate with antitrust CID; court did not reach issue.).

  Under 18 U.S.C. § 1961(8), a racketeering investigation is defined as “any inquiry104

conducted by any racketeering investigator for the purpose of ascertaining whether any personhas been involved in any violation of this chapter or of any final order, judgment, or decreeof any court of the United States, duly entered in any case or proceeding arising under thischapter.”

 Under 18 U.S.C. § 1968(f)(4), the document custodian may deliver CID materials to105

(continued...)120

3. Issuance of a CID

Under Section 1968(a), the Attorney General may issue a CID when there is “reason to

believe”  that any person or enterprise may have “documents” relevant to a racketeering103

investigation.    Title 18, United States Code, Section 1961(9) defines “documents” to include104

recordings as well as books and papers.  The “reason to believe” standard has not been defined

under RICO and has not been significantly developed under the analogous antitrust case law. 

The CID is designed to be an investigative tool.  Because it is issued prior to the filing of

a complaint, it allows a civil investigation to continue without being involved in “full-blown

litigation.”  Materials submitted in response to a CID are privileged from disclosure, except for

certain statutory exemptions.  See 18 U.S.C. § 1968(f)(3).  If the civil investigation uncovers

evidence of criminal violations, the information can be presented to a grand jury. See 18 U.S.C. §

1968(f)(4).  Also, the document custodian may make CID materials available to government

attorneys for use in a court or grand jury proceeding which involves racketeering activity.  See 18

U.S.C. § 1968(f)(4).  It is clear that CID material can be used for a criminal grand jury

investigation, and there is no requirement that CID authority cease upon the commencement of a

criminal investigation.105

(...continued)any attorney for the United States designated to appear before any court or grand jury.  TheAntitrust Division*s CID authority, however, ceases when the CID uncovers evidence of criminalviolations necessitating investigation by a grand jury.  See H.R. REP. No. 94-1343, 94th Cong.,2d Sess. 11, reprinted in 1976 U.S.C.C.A.N. 2603.

 See 18 U.S.C. § 1968(a)(Attorney General may issue a CID in writing).106

121

A CID can be served upon any person or enterprise believed to have possession, custody,

or control of relevant documents.  Because the CID power enables the Government to obtain

documents from individuals or companies, which are not targets of the investigation, the

Government may often obtain more information than is normally available under civil discovery.

See generally FED. R. CIV. P. 26(b).

Pursuant to 18 U.S.C. § 1968(a), the Attorney General must issue the CID.  However, 18

U.S.C. § 1961(10) defines the “Attorney General” to include:

the Attorney General of the United States, the Deputy AttorneyGeneral of the United States, any Assistant Attorney General of theUnited States, or any employee of the Department of Justice or anyemployee of any department or agency of the United States sodesignated by the Attorney General to carry out the powersconferred on the Attorney General by this chapter.  Any departmentor agency so designated may use in investigations authorized bythis chapter either the investigative provisions of this chapter or theinvestigative power of such department or agency otherwiseconferred by law.

Thus, pursuant to this provision, the Attorney General, the Deputy Attorney General or any

Assistant Attorney General of the United States may issue a CID.  Any other employee of the

Department of Justice or any other Department may issue a CID only if the Attorney General of

the United States specifically designates such person to carry out the powers conferred on the

Attorney General by the RICO statute.  106

 See United States Attorneys* Manual § 9-13.410.107

 See 12 U.S.C. §§ 3401- 422; United States Attorneys* Manual § 9-13.800.108

 See 18 U.S.C. § 1968(b)(2).  RICO’s legislative history states that the CID should109

“fairly identify the documents being demanded.”  H.R. REP. No. 91-1549, 91st Cong., 2d Sess.58, reprinted in 1970 U.S.C.C.A.N. 4035.

122

Moreover, the U.S. Attorney’s Manual, Section 9-110.320, requires the review and

approval of the Organized Crime and Racketeering Section before a CID may be issued.   The

submitting attorney should allow three weeks for review of the CID.  Prior to submitting a

proposed CID for review, the Government attorney should ensure that the CID does not

contravene any other statutes or departmental regulations.  For example, a CID should not be

issued to an attorney for information relating to representation of a client unless the Assistant

Attorney General finds that certain conditions are met.   Also, no CID may be issued to a107

reporter or news media organization except as permitted by 28 C.F.R. § 50.10.  Lastly, CIDs

should not be used to obtain customer transaction records from a financial institution without

complying with the Right to Financial Privacy Act of 1978. 108

4. Content of a CID

Section 1968(b) sets forth the criteria for a valid CID.  Specifically, the CID must

adequately describe, with “definiteness and certainty,” the class of documents sought to be

produced.   In particular, the CID must:109

 (1) state the nature of the conduct constituting the alleged racketeering violationwhich is under investigation and the provision of law applicable thereto;

(2)  describe the class or classes of documentary material produced thereunder withsuch definiteness and certainty as to permit such material to be fairly identified;

(3)  state that the demand is returnable forthwith or prescribe a return date which willprovide a reasonable period of time within which the material so demanded maybe assembled and made available for inspection and copying or reproduction; and

 See 18 U.S.C. § 1968(b).110

 In Gold Bond, the CID described the subject of the investigation as “[r]estrictive111

practices and acquisitions involving the dispensing, supplying, sale or furnishing of tradingstamps and the purchase and sale of goods and services in connection therewith.”  See  221 F.Supp. at 397. Several other circuits have followed the Gold Bond decision.  See Lightning RodMfrs. Ass’n v. Staal, 339 F.2d 346, 347 (7th Cir. 1964); Hyster Co. v. United States, 338 F.2d183 (9th Cir. 1964); Material Handling Inst. Inc. v. McLaren, 426 F.2d 90 (3d Cir. 1970); Finnellv. United States Department of Justice, 535 F. Supp. 410 (D. Kan. 1982); First Multiple ListingServ. v. Shenefield, 1980 WL 1962 (N.D. Ga. Sept. 3, 1980); Petition of EniPrise Corp., 344 F.Supp. 319, 322-23 (W.D.N.Y. 1972)

123

(4)  identify the custodian to whom such material shall be made available.110

The information in (1), (3), and (4) can be provided in a standard cover page that attaches a list of

documents demanded under the CID. 

The nature of the conduct, under (1) above, need only be generally described.  For

example, in Petition of Gold Bond Stamp Co., 221 F. Supp. 391, 397 (D. Minn. 1963), aff*d, 325

F.2d 1018 (8th Cir. 1964), the court rejected a challenge to an antitrust CID, and held that the

nature of the conduct being investigated could be set forth in general terms.  The test, the court

explained, was whether the description of the nature of the conduct being investigated was

“sufficient to inform adequately the person being investigated and sufficient to determine the

relevancy of the documents demanded for inspection.”  Gold Bond, 221 F. Supp. at 397.   111

Finally, the CID must identify the custodian for the documents.  The custodian is appointed by

the Attorney General.  See Section VI(A)(6) below for a discussion of the custodian*s duties and

responsibilities.

5. Proper Service of a CID

Sections 1968(d) and (e) discuss service and return of service requirements related to

CIDs.  The CID, and any petitions filed in relation to the CID, may be served upon a person (as

  See 18 U.S.C. § 1968(e) (“by the individual serving any such demand”). 112

  This written notice must include the identity and address of the successor.  See 113

(continued...)124

defined by 18 U.S.C. § 1961(3)) by delivery of an executed copy to the specified person, to the

person*s authorized agent, or to the person*s principal office or place of business.  Service can

also be made by certified or registered mail to the person*s principal office or place of business. 

See 18 U.S.C. § 1968(d).  Any individual may serve the CID.   If an individual delivers the112

CID, proof of service is provided by a verified return that the person served the CID. When a

CID is mailed, proof of service is verified by the return post office receipt of delivery.

6. Racketeering Documents Custodians

Section 1968(f) addresses the authority, duties and responsibilities of the Attorney

General and “racketeering document custodians” in the issuing of CIDs and in receiving, keeping

and maintaining any documents compelled to be produced by the CID.  Section 1968(f)(1)

compels the Attorney General to designate a “racketeering investigator” to serve as document

custodian.  Title 18, United States Code, Section 1961(7) defines a “racketeering investigator” as

“any attorney or investigator so designated by the Attorney General and charged with the duty of

enforcing or carrying into effect this chapter.”  The Attorney General may appoint additional

racketeering investigators as necessary to serve as deputies and assist the document custodian.  A

custodian should be designated for each CID that is issued; in practice, it is likely that the same

person will be the custodian for every CID in a given investigation.  This is a significant decision

as notice of a replacement custodian must be submitted to the producing party in writing if the

original document custodian dies, becomes disabled, is separated from service, or is relieved

from responsibility.   The successor custodian has all of the same duties and responsibilities as113

(...continued)113

18 U.S.C. § 1968(f)(7).  A senior official should be appointed as custodian because of the strictnotice requirements imposed by 18 U.S.C. § 1968(f)(7).  Therefore, the United States Attorney,First Assistant United States Attorney, Strike Force Attorney-in-Charge, or other person at acomparable level should be listed as document custodian, with one or more of the attorneysassigned to the matter serving as deputy custodians.

 See 18 U.S.C. § 1968(f)(3).  Specifically, the statute notes that the Attorney General114

must proscribe “reasonable terms and conditions” for the CID recipient or her authorizedrepresentatives to examine the materials provided while in the government’s custody.

125

his predecessor except that he is not responsible for any “default or dereliction which occurred

before his designation as custodian.”  See 18 U.S.C. 1968(f)(7).

The custodian is charged with responsibility for the documents and takes physical

possession of them.  He or she is authorized to copy the documents for official use and, absent

consent of the person who produced the material, is prohibited from disclosing the documents to

anyone other than the Attorney General, the person who produced the material, or the person*s

authorized representative.   The custodian may also make the documents available to any114

attorney for the United States for use in a court or grand jury proceeding involving the United

States.  See 18 U.S.C. § 1968(f)(4).  Upon the conclusion of any such case, the attorney is

required to return to the custodian any provided materials which were not made part of the record

of the particular proceeding.  See 18 U.S.C. § 1968(f)(4). 

At the close of the racketeering investigation, or any case or proceeding arising out of

such investigation, the custodian is required to return all submitted documents (other than those

in control of a court or grand jury) to the person who produced them.  See 18 U.S.C. 

§§ 1968(f)(5).  If, after a reasonable time, no case or proceeding has been instituted after the

completion of the analysis and examination of the evidence, the person who submitted the

documents is entitled to their return upon a written request to the document custodian.  See 

 See 18 U.S.C. § 1968(f)(2).  There is no provision setting forth the amount the115

Government would pay for copying.  However, because it may be more expensive for theGovernment attorney to view and copy documents at the CID recipient*s place of business, itmay be economical to reimburse the recipient for reproduction and shipping.  There is noauthority requiring CID recipients to be reimbursed for the actual cost of the search, andGovernment attorneys should not enter into any agreements with regard to such reimbursement. See, e.g.,  Finnell, 535 F. Supp. at 415 (antitrust CID recipients sought to be reimbursed for costof search; court found they had not substantiated claim without discussing whether AntitrustDivision would be required to reimburse them).

 The statute specifically provides examples of failing to comply to include “wherever116

satisfactory copying or reproduction of any such material cannot be done and such person refusesto surrender such material.”  See 18 U.S.C. § 1968(g).

(continued...)126

18 U.S.C. § 1968(f)(6).  In both cases, the Government is only required to return the submitted

documents and need not turn over copies made from the submitted documents.  See 18 U.S.C. 

§ 1968(f)(5) & (6) (“other than copies thereof”).

7. Enforcement and Litigation of CIDs

The person receiving a CID is required to make the requested material available to the

custodian for inspection and copying or reproduction at the person*s principal place of business

on the return date specified in the CID.  See 18 U.S.C. § 1968(f)(2).  The document custodian

and the CID recipient can, in writing, designate another date and/or place than the date and place

specified in the CID for return of the documents, and may also agree that copies be submitted in

lieu of originals.   Should difficulties arise with regard to compliance, the statute provides for a115

district court to intervene to settle any disputes raised in petitions by the parties.

a. Petitions by the Attorney General

A recipient objecting to a CID can either refuse to respond to the CID or file a petition to

modify or set aside the CID.  See 18 U.S.C. §§ 1968(g)-1968(h).  Section 1968(g) outlines the

Attorney General’s recourse for compelling compliance.  If the person refuses to comply,  the116

(...continued)116

 See 18 U.S.C. § 1968(c).  The legislative history expands on the term “unreasonable”117

by also proscribing the seeking of “information which would [be] privileged from disclosure.” H.R. REP. No. 91-1549, 91st Cong., 2d Sess. 58, reprinted in 1970 U.S. Code Cong. & Admin.News 4035.  Applicable grand jury subpoena case law may also be consulted to determinewhether the description of documents sought meets the statutory standard and whether the returndate is a reasonable one.

127

Attorney General may petition a district court to enforce the CID.  The petition may be filed in

any judicial district in which the person resides, is found, or transacts business, except where (1)

the person transacts business in more than one district, and therefore the petition must be filed in

the district in which the person maintains a principal place of business, or (2) the parties agree

that the Attorney General will file the enforcement petition in another district in which the person

transacts business.

b. Petitions by the CID Recipient

It is important to note that CID recipients also have explicit rights to challenge their

compliance.  Specifically, Sections 1968(c) and (h) describe certain limitations that affect the

issuance of CIDs and the avenues of relief that may be afforded to an individual upon whom a

CID has been served.  These limits are similar to those which control the issuance of grand jury

subpoenas.   Therefore, Government attorneys should rely upon the relevant case law governing

the enforcement of grand jury subpoenas.  Specifically, § 1968(c) prohibits the Attorney General

from making an “unreasonable” demand or to seek the production of documentary evidence that

would be otherwise privileged from disclosure “if contained in a subpoena duces tecum before a

grand jury [investigating] a racketeering violation.”   In addition, it is conceivable that a CID117

may be attacked on relevance grounds, although it is not likely that such a challenge would be

   Accord United States v. R. Enterprises, Inc., 498 US 292, 301 (1991)(in evaluating118

relevancy challenge to grand jury subpoena, the Supreme Court held that “where subpoena ischallenged on relevancy grounds, the motion to quash must be denied unless the district courtdetermines that there is no reasonable possibility that the category of materials the Governmentseeks will produce information relevant to general subject of the grand jury’s investigation.”).

 See Chattanooga Pharmaceutical Ass*n v. United States Dept. of Justice, 358 F.2d119

864, 866-67 (6th Cir. 1966); Petition of Cleveland Trust, 1969 WL 230 (N.D. Ohio March 4,1969).

 See Australia/Eastern U.S.A. Shipping Conference, 1981 WL 2212 (no clear antitrust120

exemption from alleged illegal conduct and therefore CID recipient must comply); AmateurSoftball Ass*n of America v. United States, 467 F.2d 312 (10th Cir. 1972) (recipients alleged thatthey were not engaged in commerce; court refused to decide issue at CID stage).

 RICO’s CID provision, 18 U.S.C. § 1968, does not explicitly make the Federal Rules121

of Civil Procedure applicable, see antitrust provision, 15 U.S.C. § 1312(c)(1)(B) and 15 U.S.C. (continued...)

128

successful.  118

The most significant challenges have arisen when there have been claims that complying

with the CID would prove too costly.  For example, the district court in Multiple Listing Serv. v.

Shenefield, 1980 WL 1962 (N.D. Ga. Sept. 3, 1980), enforced an antitrust CID only after certain

modifications were made by both the Department of Justice and the court.  The court reasoned

that, absent such modifications, the financial burden on the recipient would be too great.  Id. at *

3.

As a practical matter, the CID recipient may either refuse to respond to the CID or

challenge the CID in court.  Besides challenges based on the content or format of the CID, a CID

may be successfully challenged if the Government issued it in bad faith (e.g., for the purpose of

intimidating a witness or for political reasons),  or if the Department does not have jurisdiction119

to conduct the investigation.   Other challenges may become evident as the RICO CID is120

utilized.121

(...continued)§ 1314.   However, RICO’s legislative history provides that the “subsection in the antitrust laws(15 U.S.C. § 1314(e)) which refers to the applicability of the Federal Rules of Civil Procedure, isunnecessary since rule 1 makes the civil rules applicable in this situation.”  H.R. REP. No. 91-1549, 91st Cong., 2d Sess. 59, reprinted in 1970 U.S.C.C.A.N. 4035.  Thus, it appears that CIDrecipients may base challenges on the Federal Rules of Civil Procedure in addition to challengeswhich may be brought against grand jury subpoenas.

 Once the petition is filed and is pending with the Court, the time allowed for122

compliance is stayed.  See 18 U.S.C. § 1968(h).129

Section 1968(h) provides a person who has been served with a CID with the right to

petition to modify or set aside a CID.  Specifically, this section authorizes the served person to

file a petition for such relief in the district court for the judicial district in which the person

resides, is found or transacts business.  Such a motion must be filed within the shorter of the

following time periods: (1) twenty (20) days after the service of the demand or (2) at any time

before the return date of the demand.   This petition must be served upon the racketeering122

document custodian of the issuer of the CID.  The petition must “specify each ground upon

which the petitioner relies in seeking such relief, and may be based upon any failure of such

demand to comply with the provisions of [Section 1968] or upon any constitutional or other legal

right or privilege of such person.”  See 18 U.S.C. § 1968(h).  Similarly, section 1968(i) permits a

person who has complied with a CID by providing documents to a racketeering custodian to

compel the custodian to perform a duty imposed upon him by law by petitioning the appropriate

district court for such relief and serving a copy of the petition on the racketeering custodian.

c. Powers of the District Court

Section 1968(j) explicitly provides that when a CID petition is filed, the district court has

jurisdiction to litigate and decide these matters and “to enter such order or orders as may be

required to carry into effect the provisions of this section.”

  This Section discusses the rules of discovery that will be effective December 1, 2007. 123

See Section IV, n.63 above.

  Such required disclosures includes: the name and address of each individual likely to124

have discoverable information, FED. R. CIV. P. 26(a)(1)(A); copies of documents or electronicinformation that the disclosing party will use to support or defend its claim, FED. R. CIV. P.26(a)(1)(B); a computation of damages and the documents supporting the computation, FED. R.CIV. P. 26(a)(1)(C); insurance agreements, FED. R. CIV. P. 26(a)(1)(D); the identity of all expertwitnesses and the basis and reasoning of their opinions, FED. R. CIV. P. 26(a)(2); and the identityand contact information of any potential witnesses - including those presented only throughdeposition, FED. R. CIV. P. 26(a)(3).

130

B. Discovery in General

1. The Federal Rules of Civil Procedure provide for broad avenues of civil

discovery, including oral depositions, FED.R.CIV. P. 30, written depositions, FED.R.CIV. P. 31,

interrogatories to parties, FED.R.CIV. P. 33, examinations of persons, FED.R.CIV. P. 35, and

requests for admission, FED.R.CIV. P. 36.   FED.R.CIV. P. 26 sets forth the general provisions123

governing discovery, and affords “[l]iberal discovery . . . for the sole purpose of assisting in the

preparation and trial, or the settlement, of litigation disputes.”  Seattle Times Co. v. Rhinehart,

467 U.S. 20, 34 (1984).  FED.R.CIV. P. 26(a) requires certain discovery “without awaiting a

discovery request.”   FED.R.CIV. P. 26(b)(1), provides, in relevant part, that unless otherwise124

limited by a court, 

[p]arties may obtain discovery regarding any matter, not privileged,that is relevant to the claim or defense of any party, including theexistence, description, nature, custody, condition, and location ofany books, documents, or other tangible things and the identity andlocation of persons having knowledge of any discoverable matter.For good cause, the court may order discovery of any matterrelevant to the subject matter involved in the action. Relevantinformation need not be admissible at the trial if the discoveryappears reasonably calculated to lead to the discovery of admissible evidence

FED. R. CIV. P. 26(b)(1).  

131

“Under [Rule 26], the only express limitations are that the information sought is not

privileged, and is relevant to the subject matter of the pending action.”  Seattle Times, 

467 U.S. at 30.  The phrase “relevant to the subject matter” “has been construed broadly, to

encompass any matter that bears on, or that reasonably could lead to other matter that could bear

on, any issue that is or may be in the case.”  Oppenheimer Fund Inc. v. Sanders, 437 U.S. 340,

351 (1978).  “Much of the information that surfaces during pretrial discovery may be unrelated,

or only tangentially related, to the underlying cause of action.”  Seattle Times, 467 U.S. at 33. 

Thus, discovery “is not limited to matters that will be admissible at trial so long as the

information sought ‘appears reasonably calculated to lead to the discovery of admissible

evidence.’”  Seattle Times, 467 U.S. at 29-30.  “Nor is discovery limited to the merits of a case,

for a variety of fact-oriented issues may arise during litigation that are not related to the merits.” 

Oppenheimer, 437 U.S. at 351.  Likewise, “discovery is not limited to issues raised by the

pleadings, for discovery itself is designed to help define and clarify the issues.”  Id. at 351. 

“While the Federal Rules unquestionably allow broad discovery, [the] right to discovery

is not unlimited.”  Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1322 (Fed. Cir. 1990). 

Under Rule 26, a court is authorized to limit the frequency or extent of discovery if it determines

that:

(i) the discovery sought is unreasonably cumulative or duplicative, or isobtainable from some other source that is more convenient, lessburdensome, or less expensive; (ii) the party seeking discovery has hadample opportunity by discovery in the action to obtain the informationsought; or (iii) the burden or expense of the proposed discovery outweighsits likely benefit, taking into account the needs of the case, the amount incontroversy, the parties' resources, the importance of the issues at stake inthe litigation, and the importance of the proposed discovery in resolvingthe issues.

  For agencies and individuals filing on behalf of the United States, there are additional125

regulations regarding discovery, to further “promote just and efficient resolution of civil claims.”Exec. Order No. 12,988, 61 Fed. Reg. 4,729, 4,729 (Feb. 5, 1996).  Litigation counsel is expectedto “streamline and expedite discovery in cases under [his] control.” Exec. Order No. 12,988, 61Fed. Reg. at 4730.  Federal agencies are expected to coordinate discovery procedures within theagency, including “review by a senior lawyer prior to . . . filing of the request in litigation, todetermine that the request is not cumulative or duplicative, unreasonable, oppressive, undulyburdensome, or expensive.” Id.  Additionally, before petitioning the trial court to resolvediscovery motions, “counsel shall attempt to resolve the issue with opposing counsel.” Id.

132

FED. R. CIV. P. 26(b)(2)(C).  Moreover, “[a] party need not provide discovery of electronically

stored  information from sources that the party identifies as not reasonably accessible because of

undue burden or cost,” unless the requesting party can show good cause; and, the court may set

the conditions for the discovery. FED. R. CIV. P. 26(b)(2)(B).  In addition,  a trial court may deny

discovery requests for matters “relevant only to claims or defenses that have been stricken,”

“information for use in proceedings other than the pending suit,” or “when a party’s aim is to

delay bringing a case to trial, or embarrass or harass the person from whom he seeks discovery,”

Oppenheimer, 437 U.S. at 352, 353 & n.17, or requests based upon a party’s mere suspicion or

speculation.  Micro Motion, 894 F.2d at 1326.  “The discovery rules are designed to assist a party

to prove a claim it reasonably believes to be viable without discovery, not to find out if it has any

basis for a claim.”  Id. at 1327.  Furthermore, trial courts may issue protective orders where “civil

discovery [is being used] to evade restrictions on discovery in criminal cases.”  Degan v. United

States, 517 U.S. 820, 826 (1996).125

2. Given the potential breadth of discovery, trial courts are vested with wide

discretion in handling pre-trial discovery matters and in fashioning appropriate protective orders. 

See, e.g., Degen, 517 U.S. at 826; Seattle Times Co., 467 U.S. at 36; Cruden v. Bank of New

York, 957 F.2d 961, 972 (2d Cir. 1992).  Accordingly, a district court’s orders regarding

  See, e.g., Ins. Corp. of Ireland Ltd. v. Compagnie desBauxities, 456 U.S. 694, 707126

(1982); Nat’l Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642 (1976);Cruden, 957 F.2d at 972.

  Accord Bennett v. City of Boston, 54 F.3d 18, 20 (1st Cir. 1995); In re Att’y Gen.of127

the United States, 596 F.2d 58, 61 (2d Cir. 1979); In re Ford Motor Co., 110 F.3d 954, 958 (3rdCir. 1997); MDK, Inc. v. Mike’s Train House, Inc., 27 F.3d 116, 119 (4th Cir. 1994); Piratello v.Phillips Elecs. N. Am. Corp., 360 F.3d 506, 508 (5th Cir. 2004); U.S. ex rel. Pogue v. DiabetesTreatment Ctrs. of Am., Inc., 444 F.3d 463, 471 (6th Cir. 2006);  Simmons v. City of Racine,PFC, 37 F.3d 325, 327 (7th Cir. 1994); Coleman v. Sherwood Med. Indus., 746 F.2d 445, 446-47(8th Cir. 1984); Boughton v. Cotter Corp., 10 F.3d 746, 748 (10th Cir. 1993); see also UnitedStates v. Ryan, 402 U.S. 530, 532 (1971);  Petroleum Prod. Antitrust Litig. v. Standard Oil Co.,747 F.2d 1303, 1305 (9th Cir. 1984).

133

discovery matters may be reversed only upon a clear showing of an abuse of discretion.126

“As a general rule, a district court’s order enforcing a discovery request is not a final

order subject to appellate review under 28 U.S.C. § 1291.”  Church of Scientology of Cal. v.

United States, 506 U.S. 9, 18 n.11 (1992).   “Federal appellate jurisdiction generally depends on127

the existence of a decision by the District Court that ends the litigation on the merits and leaves

nothing for the court to do but execute judgment.”  Coopers & Lybrand v. Livesay, 437 U.S. 463,

467 (1978) (quoting Catlin v. United States, 324 U.S. 229, 233 (1945)).  “A party that seeks to

present an objection to a discovery order immediately to a court of appeals must refuse

compliance, be held in contempt, and then appeal the contempt order.”  Church of Scientology of

Cal., 506 U.S. at 18 n.11; see also Ryan, 402 U.S. at 533.

“However, under the so-called Perlman doctrine, see Perlman v. United States, 247 U.S.

7. . . (1918), a discovery order directed at a disinterested third party is treated as an immediately

appealable final order because the third party presumably lacks a sufficient stake in the

proceeding to risk contempt by refusing compliance.”  Church of Scientology of Cal., 506 U.S. at

18 n.11.  Moreover, some circuits permit a party to take an immediate appeal from an order

  The collateral order doctrine permits an immediate appeal before final judgment from128

a “small class” of orders that “conclusively determine the disputed question, resolve an importantissue completely separate from the merits of the action, and [are] effectively unreviewable onappeal from a final judgment.”  Coopers & Lybrand, 437 U.S. at 468.  See also Cohen v.Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949).

134

compelling discovery of alleged privileged materials, provided that the order satisfies the

collateral order doctrine.   See, e.g., In Re Ford Motor Co., 110 F.3d 954, 963-64 (1997)128

(appealing an order compelling discovery of documents allegedly protected by attorney-client

privilege); United States v. Phillip Morris Inc., 314 F.3d 612, 617-20 (D.C. Cir. 2003) (same);

Koch v. Cox, 489 F.3d 384 (D.C. Cir. 2007) (appealing an order compelling discovery of

medical records allegedly protected by psychotherapist-patient privilege); Bittaker v. Woodford,

331 F.3d 715, 717-718 (9th Cir. 2003) (appealing an order precluding use of attorney-client

privileged documents for proceedings other than litigating the federal habeas corpus petition at

issue).

Although a few courts have held that discovery orders involving disclosure of alleged

privilege matters are immediately appealable under the collateral order doctrine, most courts

have held otherwise, ruling that such orders are not appealable until a final judgment has been

rendered.  See, e.g.,  Bennett, 54 F.3d at 20 (order compelling disclosure of various allegedly

privileged investigative materials held non-appealable); In re Att’y Gen., 596 F.2d at 61-62

(order compelling disclosure of the identities of several police-informants); MDK, Inc., 27 F.3d

at 120-22 (order compelling non-party to disclose trade secrets); Piratello, 360 F.3d at 508-09

(order compelling defendant to submit to depositions and disclose potentially self-incriminating

information); Pogue, 444 F.3d at 471-72 (order compelling disclosure of documents allegedly

protected by attorney-client privilege); Simmons, 37 F.3d at 327-29 (order compelling discovery

135

of informant’s identity); Coleman, 746 F.2d at 447 (order imposing attorney’s fees on party for

failing to comply with discovery order); Boughton, 10 F.3d at 749-50 (order compelling

discovery of documents allegedly protected by attorney-client, work-product, and non-testifying

expert privilege).

3. A party seeking discovery may move for an order compelling disclosure or

discovery.  FED. R. CIV. P. 37(a).  If a party or a party’s officer, director, managing agent, or

witness fails to obey an order to provide or permit discovery, the court is authorized to make such

orders as are just. FED. R. CIV. P. 37(b)(2).  These orders may include:

An order that the matters regarding which the order was made orany other designated facts shall be taken to be established forpurposes of the action in accordance with the claim of the partyobtaining the order;

An order refusing to allow the disobedient party to support oroppose designated claims or defenses, or prohibiting that partyfrom introducing designated matters in evidence;

An order striking out pleadings or parts thereof, or staying furtherproceedings until the order is obeyed, or dismissing the action orproceeding or any part thereof, or rendering a judgment by defaultagainst the disobedient party;

In lieu of any of the foregoing orders or in addition thereto, anorder treating as a contempt of court the failure to obey any ordersexcept an order to submit to a physical or mental examination. 

. . . .

In lieu of any of the foregoing orders or in addition thereto, the court shallrequire the party failing to obey the order or the attorney advising thatparty or both to pay the reasonable expenses, including attorney's fees,caused by the failure, unless the court finds that the failure wassubstantially justified or other circumstances make an award of expensesunjust. 

FED. R.CIV. P. 37(b)(2)(A)-(E).

  See, e.g., Degen, 517 U.S. at 827; National Hockey League, 427 U.S. at 641-42.129

  See, e.g., Church of Scientology of Cal., 506 U.S. at 18 n.11; see also cases cited n.130

127 above.

  See, e.g., Daval Steel Prods. v. M/V Fakredine, 951 F.2d 1357, 1365 (2d Cir. 1991)131

(prohibiting defendant from introducing evidence); Melendez v. Ill. Bell Tel. Co., 79 F.3d 661,671 (7th Cir. 1996) (sole expert witness barred from testifying); Boardman v. Nat’l Med. Enters.,106 F.3d 840, 843 (8th Cir. 1997) (plaintiff’s witness prohibited from testifying); Marchand v.Mercy Med. Ctr., 22 F.3d 933, 936 (9th Cir. 1994) (defendant ordered to pay plaintiff’sexpenses); Orjias v. Stevenson, 31 F.3d 995, 1005 (10th Cir. 1994) (witness testimonyexcluded); Ins. Corp. of Ireland v. Compagnie Des Bauxites, 456 U.S. 694, 707 (1982) (certainfacts taken as established).

136

Rule 37 “allows a court all the flexibility it might need in framing an order appropriate to

a particular situation.”  Societe Internationale Pour Participations Industrielles et Commerciales

v. Rogers, 357 U.S. 197, 208 (1958); B.F. Goodrich Tire Co. v. Lyster, 328 F.2d 411, 415 (5th

Cir. 1964).   The District Court has wide latitude in imposing sanctions for failure to obey

discovery orders; accordingly, a decision will not be reversed absent a clear abuse of discretion. 

See, e.g., Ins. Corp. of Ireland, 456 U.S. at 707; see also cases cited n.126 above.  For example,

permissible sanctions in appropriate circumstances include dismissal of an action,  contempt,129 130

or other appropriate sanction.131

“Although a trial judge’s latitude in framing orders and in penalizing failures to comply is

broad, his discretion is not limitless.”  BF Goodrich Tire Co., 328 F.2d at 415; see also Indep.

Prods., Inc. v. Loew’s, Inc., 283 F.2d 730, 733 (2d Cir. 1960).  District courts are not required “to

select the least drastic or most reasonable sanction,” Melendez, 79 F.3d at 672; however, courts

may only impose sanctions that are just and specifically related to the circumstances surrounding

a party’s failure to comply with the discovery rules.  Ins. Corp. of Ireland, 456 U.S. at 707;

Melendez, 79 F.3d at 672; Daval Steel Prods., 951 F.2d at 1366.  “A district court may be found

  For a detailed analysis of the law and procedures governing these and other132

Government privileges, Government attorneys should consult DOJ’s Civil Division CommercialLitigation Branch’s Monograph “The Governmental Privileges” (September 2006) (hereinafter“The Governmental Privileges Monograph”).  Prior approval from the Civil Division is requiredbefore a Government attorney may make a formal claim of privilege available only to theGovernment.  See USAM § 4-6.332 (E).  This Section of the Manual is derived, in part, fromThe Governmental Privileges Monograph and is limited to a brief description of the deliberativeprocess, Presidential communications and investigatory files privileges.

137

to have abused its discretion if the exclusion of testimony results in fundamental unfairness in the

trial of the case.”  Orjias, 31 F.3d at 1005.   “[T]here are constitutional limitations upon the

power of courts, even in aid of their own valid processes, to dismiss an action without affording a

party the opportunity for a hearing on the merits of the case.”  Societe Internationale, 357 U.S. at

209.  Rule 37 does not authorize severe sanctions such as dismissal of a complaint when failure

to comply is “due to inability, and not to wilfulness, bad faith, or any fault” of the offending

party.  Id. at 212; Nat’l Hockey League, 427 U.S. at 640; Melendez, 79 F.3d at 671; Daval Steel,

951 F.2d at 1367; BF Goodrich Tires, 328 F.2d at 415; Indep. Prods., 283 F.2d at 733.  “Bad

faith, however, is not required for a district court to sanction a party for discovery abuses.” 

Melendez, 79 F.3d at 671.

C. Privileges

1. Deliberative Process, Presidential Communications and Investigatory FilesPrivileges

The United States, but not private litigants, may rely upon several privileges to shield

information from discovery, including the deliberative process, Presidential communications and

investigatory files privileges.   132

  Congress codified the deliberative process privilege under Exemption No. 5 of the133

Freedom of Information Act (“FOIA”), 5 U.S.C. § 552.  See, e.g., Grumman Aircraft Eng’g.Corp. , 421 U.S. at 183-84; EPA v. Mink, 410 U.S. 75, 85-87 (1973).

138

a. The Deliberative Process Privilege

The deliberative process privilege protects the “decision making process of government

agencies” and hence protects from discovery “documents ‘reflecting advisory opinions,

recommendations and deliberations comprising part of a process by which governmental

decisions and policies are formulated.’”  NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150

(1975) (citations omitted).  Generally, “pre-decisional communications . . . are privileged . . . and

communications made after the decision and designed to explain it . . . are not” privileged.  Id. at

151-52.  Accord Renegotiation Bd. v. Grumman Aircraft Eng’g. Corp., 421 U.S. 168, 184

(1975).  See The Governmental Privileges Monograph at 9-27.133

As the Supreme Court explained, “the ultimate purpose of this long-recognized privilege

is to prevent injury to the quality of agency decision.  The quality of a particular agency decision

will clearly be affected by the communications received by the decisionmaker on the subject of

the decision prior to the time the decision is made.”  Sears, Roebuck, 421 U.S. at 151.

Assertion of the deliberative process privilege “requires: (1) a formal claim of privilege

by the ‘head of the department’ having control over the requested information; (2) assertion of

the privilege based on actual personal consideration by that official; and (3) a detailed

specification of the information for which the privilege is claimed, with an explanation why it

properly falls within the scope of the privilege.”  Landry v. F.D.I.C., 204 F.3d 1125, 1135 (D.C.

Cir. 2000).  Some courts have interpreted the term “head of the department” broadly to include

“supervisory personnel of sufficient rank to achieve the necessary deliberations in assertion of the

139

deliberative process” privilege.  Id. at 1135-36.  See The Governmental Privileges Monograph at

11.

The deliberative process privilege “is not absolute.  After the government makes a

sufficient showing of entitlement to the privilege, the district court should balance the competing

interests of the parties.  The party seeking discovery bears the burden of showing that its need for

the documents out-weights the government’s interest.”  Redland Soccer Club v. Dept. of Army of

the Untied States, 55 F. 3d 827, 854 (3d Cir. 1995).  See also The Government Privileges

Monograph at pp. 21-22.  In balancing the interests, courts consider various factors, including: 

“(i) the relevant of the evidence sought to be protected; (ii) the availability of other evidence; (iii)

the ‘seriousness’ of the litigation and the issues involved; (iv) the role of the government in the

litigation; [and] (v) the possibility of future timidity by government employees who would be

forced to recognize that their secrets are violable.”  Redland Soccer Club, 55 F. 3d at 854,

quoting First Eastern Corp. V. Mainwaring, 21 F.3d 465, 468 n.5 (D.C. Cir. 1994).

b. The Presidential Communications Privilege

In United States v. Nixon, 418 U.S. 683, 686 (1974), the President of the United States

sought “to quash a third-party subpoena duces tecum issued by the United States District Court

for the District of Columbia, pursuant to Fed. R. Crim. Proc. 17(c).  The subpoena directed the

President to produce certain tape recordings and documents relating to his conversations with

aides and advisers,” to be used by a Special Prosecutor in a criminal case against third parties. 

The President argued, among other matters, that the Constitution provided “an absolute privilege

of confidentiality for all Presidential communications.”  Id. at 703.  However, the Supreme Court

rejected this claim, holding that confidential Presidential communications are only

  Pursuant to the state secrets privilege, “matters the revelation of which reasonably134

could be seen as a threat to the military or diplomatic interests of the Nation - are absolutelyprivileged from disclosure in the courts . . . . Once the court is satisfied that the information posesa reasonable danger to secrets of state, ‘even the most compelling necessity cannot overcome theclaim of privilege . . . .’”  Harkin v. Helm, 690 F. 2d 977, 990 (D.C. Cir. 1982) (quoting UnitedStates v. Reynolds, 345 U.S. 1, 11 (1953)).  The states’ secret privilege also protects againstdisclosure of information that would impair the Government’s “intelligence - gathering methodsor capabilities.”  Black v. United States, 62 F. 3d 1115, 1118 (8th Cir. 1995).  See also TheGovernmental Privileges Monograph at 3-5.

140

“presumptively privileged,” and that such a “privilege is fundamental to the operation of

Government and inextricably rooted in the separation of powers under the Constitution.”  The

Supreme Court explained:

The expectation of a President to the confidentiality of hisconversations and correspondence, like the claim of confidentialityof judicial deliberations, for example, has all the values to whichwe accord deference for the privacy of all citizens and, added tothose values, is the necessity for protection of the public interest incandid, objective, and even blunt or harsh opinions in Presidentialdecision-making.  A President and those who assist him must befree to explore alternatives in the process of shaping policies andmaking decisions and to do so in a way many would be unwillingto express except privately.  These are the considerations justifyinga presumptive privilege for Presidential communications.

Id. at 708.

The Supreme Court found it highly significant that the President did not base his claim of

privilege “to protect military, diplomatic, or sensitive, national security secrets,” where the

President’s interest in confidentiality is greatest.  Id. at 706.   The Supreme Court explained:134

In this case the President challenges a subpoena served on him as athird party requiring the production of materials for use in acriminal prosecution; he does so on the claim that he has aprivilege against disclosure of confidential communications.  Hedoes not place his claim of privilege on the ground they aremilitary or diplomatic secrets.  As to these areas of Art. II dutiesthe courts have traditionally shown the utmost deference toPresidential responsibilities.  In C. & S. Air Lines v. Waterman

  In a related case, Senate Select Committee on Presidential Campaign Activities v.135

Nixon, 498 F.2d 725 (D.C. Cir. 1974) (en banc), the District of Columbia Circuit held that thePresidential communications privilege protected the President from complying with a subpoenaduces tecum, directing him to produce original electronic tape recordings of five conversationsbetween the President and his former Counsel, John W. Dean, III, to a Senate Committeeinvestigating “‘illegal, improper or unethical activities’ occurring in connection with thepresidential campaign and election of 1972.”  Id. at 726.  The appellate court held that the SenateSelect Committee did not carry its burden of showing that “the subpoenaed evidence isdemonstrably critical to the responsible fulfillment of the Committee’s [legislative] functions.” Id. at 731.  The court explained that: (1) the Senate Select Committee’s need for the subpoenaedmaterials to perform its oversight functions was “merely cumulative” since the House JudiciaryCommittee had copies of the tape recordings at issue, id. at 732; and (2) because “Congressfrequently legislates on the basis of conflicting information provided in its hearings,” id. at 732,the Select Committee’s alleged need for the tape recordings “to resolve particular conflicts in thevoluminous testimony it has heard,” id. at 731, did not outweigh the presumption ofconfidentiality.

141

S.S. Corp., 333 U.S. 103, 111 (1948), dealing with Presidentialauthority involving foreign policy considerations, the Court said: “The President, both as Commander-in-Chief and as the Nation’sorgan for foreign affairs, has available intelligence services whosereports are not and ought not to be published to the world.  Itwould be intolerable that courts, without the relevant information,should review and perhaps nullify actions of the Executive takenon information properly held secret.”

Nixon, 418 U.S. at 710.  The Court then weighed “the importance of the general privilege of

confidentiality of Presidential communication in performance of the President’s responsibilities

against” the interests in the “fair administration of criminal justice,” id. at 711-12, and concluded

that the privilege was outweighed by those interests, stating:

when the ground for asserting privilege as to subpoenaed materialssought for use in a criminal trial is based only on the generalizedinterest in confidentiality, it cannot prevail over the fundamentaldemands of due process of law in the fair administration ofcriminal justice.  The generalized assertion of privilege must yieldto the demonstrated, specific need for evidence in a pendingcriminal trial.

Id. at 713.   Accord In Re Sealed Case, 121 F.3d 729, 745 (D.C. Cir. 1997) (“the privilege is135

142

qualified, not absolute, and can be overcome by an adequate showing of need”).

The Presidential communications privilege “is limited to communications ‘in

performance of [a President’s] responsibilities . . . of his office’ . . . and made ‘in the process of

shaping policies and making decisions.’”  Nixon v. Admin. of Gen. Servs., 433 U.S. 425, 449

(1977) (quoting United States v. Nixon, 418 U.S. at 708, 711, 713 (citations omitted)).  However,

the privilege is not limited “to direct communications with the President,” but also extends to

“communications made by presidential advisers in the course of preparing advice for the

President.”  In re Sealed Case, 121 F.3d at 746, 751-52.  The District of Columbia Circuit

explained the scope of the Presidential communications privilege as follows:

Given the need to provide sufficient elbow room for advisers toobtain information from all knowledgeable sources, the privilegemust apply both to communications which these advisers solicitedand received from others as well as those they authoredthemselves.  The privilege must also extend to communicationsauthored or received in response to a solicitation by members of apresidential adviser’s staff, since in many instances advisers mustrely on their staff to investigate an issue and formulate the adviceto be given to the President.

. . . 

Not every person who plays a role in the development ofpresidential advice, no matter how remote and removed from thePresident, can qualify for the privilege.  In particular, the privilegeshould not extend to staff outside the White House in executivebranch agencies.  Instead, the privilege should apply only tocommunications authored or solicited and received by thosemembers of an immediate White House adviser’s staff who havebroad and significant responsibility for investigating andformulating the advice to be given the President on the particularmatter to which the communications relate.  Only communicationsat that level are close enough to the President to be revelatory ofhis deliberations or to pose a risk to the candor of his advisers.  SeeAAPS, 997 F.2d at 910 (it is “operational proximity” to thePresident that matters in determining whether “[t]he President’sconfidentiality interest” is implicated) (emphasis omitted).

  The court in In re Sealed Case also explained that:136

[W]hile the presidential communications privilege and thedeliberative process privilege are closely affiliated, the twoprivileges are distinct and have difference scopes.  Both areexecutive privileges designed to protect executive branchdecisionmaking, but one applies to decisionmaking of executiveofficials generally, the other specifically to decisionmaking of thePresident.  The presidential privilege is rooted in constitutionalseparation of powers principles and the President’s uniqueconstitutional role; the deliberative process privilege is primarily acommon law privilege. . . . Consequently, congressional or judicialnegation of the presidential communications privilege is subject togreater scrutiny than denial of the deliberative privilege.

. . . In addition, unlike the deliberative process privilege, thepresidential communication privilege applies to documents in theirentirety, and covers final and post-decisional materials as well aspre-deliberative ones.

121 F.3d at 745 (citations omitted).143

Of course, the privilege only applies to communications that theseadvisers and their staff author or solicit and receive in the course ofperforming their function of advising the President on officialgovernment matters.  This restriction is particularly important inregard to those officials who exercise substantial independentauthority or perform other functions in addition to advising thePresident, and thus are subject to FOIA and other governmentstatutes.

In Re Sealed Case, 121 F.3d at 752.   See also The Governmental Privileges Monograph at 27-136

30.  It is not clear whether the President must assert the privilege personally.  See id. at 29.

c. The Investigatory Files Privilege

The investigatory files privilege protects from discovery investigatory files compiled for

both civil and criminal law enforcement purposes and testimony about the information in the

files.  See, e.g., In Re Sealed Case, 856 F.2d 268, 271 (D.C. Cir. 1988); Friedman v. Bache

Halsey Stuart Shields, Inc., 738 F.2d 1336, 1341 (D.C. Cir. 1984); McPeek v. Ashcroft, 202

144

F.R.D. 332, 335-36 (D.D.C. 2001); The Government Privileges Monograph at 36-41.  Congress

incorporated the principles underlying this privilege in exemption (b)(7) of the FOIA, 5 U.S.C. §

552 (b)(7), which allows the Government to withhold:

investigatory records compiled for law enforcement purposes, butonly to the extent that the production of such records would (A)interfere with enforcement proceedings, (B) deprive a person of aright to a fair trial or an impartial adjudication, (C) constitute anunwarranted invasion of personal privacy, (D) disclose the identityof a confidential source and, in the case of a record compiled by acriminal law enforcement authority in the course of a criminalinvestigation, or by an agency conducting a lawful national securityintelligence investigation, confidential information furnished onlyby the confidential source, (E) disclose investigative techniquesand procedures, or (F) endanger the life or physical safety of lawenforcement personnel.

See, e.g., NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 223 (1978); see also, United

States Dept. of Justice v. Landano, 508 U.S. 165, 171-72 (1993); John Doe Agency v. John Doe

Corp., 493 U.S. 146, 153-54 (1989).

To successfully invoke this privilege, the Government must meet three requirements:

(1) there must be a formal claim of privilege by the head of thedepartment having control over the requested information; (2)assertion of the privilege must be based on actual personalconsideration by that official; and (3) the information for which theprivilege is claimed must be specified, with an explanation why itproperly falls within the scope of the privilege.

In re Sealed Case, 856 F.2d at 271.  Accord Landry v. F.D.I.C., 204 F.3d 1125, 1135 (D.C. Cir.

2000).  The “head of the department” requirement has been broadly interpreted to include, in

addition to the head of the department, “supervisory personnel. . . of sufficient rank to achieve

the necessary deliberateness in assertion of the [privilege].”  Landry, 204 F.3d at 1136.

  See, e.g., Gill v. Gulfstream Park Racing Ass’n, Inc., 399 F.3d 391, 401 (1st Cir.137

2005)(“The privilege is applicable in both criminal and civil proceedings.”); Lawmaster v.United States, 993 F.2d 773, 774 (10th Cir. 1993) (“the privilege is applicable in civil cases aswell”); Dole v. Local 1942, IBEW, AFL-CIO, 870 F.2d 368, 372 (7th Cir. 1989); Suarez v.United States, 582 F.2d 1007, 1011-12 (5th Cir. 1978); In re United States, 565 F.2d 19, 22 (2d

(continued...)145

“[T]he law enforcement privilege is qualified.  The public interest in non-disclosure must

be balanced against the need of a particular litigant for access to the privileged information.”  In

re Sealed Case, 856 F.2d at 272.  Accord Friedman, 738 F.2d at 1341.  The District of Columbia

Circuit has ruled that in applying this balancing test the district court should consider:

(1) the extent to which disclosure will thwart governmentalprocesses by discouraging citizens from giving the governmentinformation; (2) the impact upon persons who have giveninformation of having their identities disclosed; (3) the degree towhich governmental self-evaluation and consequent programimprovement will be chilled by disclosure; (4) whether theinformation sought is factual data or evaluative summary; (5)whether the party seeking discovery is an actual or potentialdefendant in any criminal proceeding either pending or reasonablylikely to follow from the incident in question; (6) whether thepolice investigation has been completed; (7) whether anyinterdepartmental disciplinary proceedings have arisen or may arisefrom the investigation; (8) whether the plaintiff’s suit is non-frivolous and brought in good faith; (9) whether the informationsought is available through other discovery or from other sources:(10) the importance of the information sought to the plaintiff’scase.

In re Sealed Case, 856 F.2d at 272 (citations omitted).  See also The Governmental Privileges

Monograph at 39.  

2. Confidential Informant Privilege

a. The United States also has the exclusive right to rely upon the confidential

informant privilege in both civil and criminal cases regarding information furnished by a

confidential informant relating to a violation of the law.   Specifically, the confidential137

(...continued)137

Cir. 1977); Mitchell v. Roma, 265 F.2d 633, 635 (3d Cir. 1959); Cofield v. City of LaGrange,913 F. Supp. 608, 619 (D.D.C. 1996); Michelson v. Daly, 590 F. Supp. 261, 264 (N.D.N.Y.1984).

146

informant privilege allows the United States to shield the identity of those individuals who assist

law enforcement officers by providing information about violations of law with the expectation

that their identity will remain confidential.  See Roviaro v. United States, 353 U.S. 53, 60-61

(1957).   These individuals are commonly referred to as “confidential informants” (CIs).

“Exemption 7(D) of the Freedom of Information Act, 5 U.S.C. § 552 (FOIA), exempts

from disclosure agency records ‘compiled for law enforcement purposes . . . by criminal law

enforcement authority in the course of a criminal investigation’ if release of those records ‘could

reasonably be expected to disclose’ the identity of, or information provided by, a ‘confidential

source.’ § 552(b)(7)(D).”  Landano, 508 U.S. at 167.  In Landano, the Supreme Court held that

the Government is not entitled to a presumption that all sources supplying information to the FBI

in the course of a criminal investigation are confidential sources within the meaning of

Exemption 7(D).  Id. at 171-78.  Rather, the Supreme Court held that:

A source should be deemed confidential if the source furnishedinformation with the understanding that the FBI would not divulgethe communication except to the extent the Bureau thoughtnecessary for law enforcement purposes.

Id. at 174.

  Unlike the common law confidential informant privilege, the FOIA Exemption 7(D) is138

limited to disclosure of “agency records,” and in civil cases, the information need not relate to acrime, but may relate to a violation of a regulatory provision or other civil law.  See, e.g.,Brennan v. Engineered Prods., Inc., 506 F.2d 299, 302-04 (8th Cir. 1974); Wirtz v. Hooper-Holmes Bureau, Inc., 327 F.2d 939, 961-43 (5th Cir. 1964); Wirtz v. Continental Fin. & LoanCo. of West End, 326 F.2d 561, 563 (5th Cir. 1964); Culinary Foods, Inc. v. Raychem Corp., 150F.R.D. 122, 126-27 (N.D. Ill. 1993); Schultz v. Farino Excavating Co., 55 F.R.D. 346, 347 (E.D.Mich. 1972).

147

The confidential informant privilege, which is broader than Exemption 7(D) of FOIA,  138

is grounded in the United States Supreme Court’s long-standing recognition of the importance of 

protecting the flow of information about criminal violations to the Government. See, e.g.,  In re

Quarles and Butler, 158 U.S. 532, 535-536 (1895)(observing that “information, given by a

private citizen [to law enforcement officials], is a privileged and confidential communication . . .

the disclosure of which cannot be compelled without the assent of the government”).  As the

Second Circuit has observed:

[I]t has been the experience of law enforcement officers that theprospective informer will usually condition his cooperation on anassurance of anonymity, fearing that if disclosure is made, physicalharm or other undesirable consequences may be visited upon himor his family.  By withholding the identity of the informer, thegovernment profits in that the continued value of informants placedin strategic positions is protected, and other persons are encouragedto cooperate in the administration of justice.

United States v. Tucker, 380 F.2d 206, 213 (2d Cir. 1967); The Governmental Privileges

Monograph at 32-33. 

It is important to note that, as a general rule, only the identity of the informant is

privileged.  However, if disclosure of information that the confidential informant provided would

reveal his identity, the Government may move to shield that information from disclosure as well. 

See, e.g., Roviaro, 353 U.S. at 60; Simon v. Dep’t of Justice, 980 F.2d 782, 784 (D.C. Cir. 1992);

  Accord Lawmaster, 993 F.2d at 774; United States v. Alexander, 761 F.2d 1294, 1303139

(9th Cir. 1985); Tenorio-Angel, 756 F.2d at 1509; United States v. Grisham, 748 F.2d 460, 462-63 (8th Cir. 1984).

148

United States v. Tenorio-Angel, 756 F.2d 1505, 1509-10 (11th Cir. 1985).  Of course, this

privilege may not apply if the informant testifies at a proceeding.  See Banks v. Dretke, 540 U.S.

668, 698 (2004)(stating that the Government may not “examine an informant at trial, withholding

acknowledgment of his informant status in the hope that (the) defendant will not catch on”). 

Moreover, the confidential informant privilege is not absolute. Lawmaster, 

993 F.2d at 774.  A district court may reject the Government’s privilege claim where the

information sought is essential to the opposition’s case and there is no other manner to acquire

the information.  See Roviaro 353 U.S. at 60-61 (noting that, if the requested information is

“relevant and helpful to the defense of an accused, or is essential to a fair determination of a

cause, the privilege must give way”).  Under Roviaro, the courts must apply a balancing test to

determine whether disclosure of an informant’s identity and related information is required.  As

the Supreme Court stated in Roviaro:

We believe that no fixed rule with respect to disclosure isjustifiable.  The problem is one that calls for balancing the publicinterest in protecting the flow of information against theindividual’s right to prepare his defense.  Whether a proper balancerenders nondisclosure erroneous must depend on the particularcircumstances of each case, taking into consideration the crimecharged, the possible defenses, the possible significance of theinformer’s testimony, and other relevant factors.

Roviaro, 353 U.S. at 62.   The person seeking disclosure has the burden of showing that “his139

need for the information outweighs the government’s entitlement to the privilege.”  Dole, 

  Accord Elnasher v. Speedway Superamerica, LLC, 484 F.3d 1046, 1052-53 (8th Cir.140

2007); Lawmaster, 993 F.2d at 774; Alexander, 761 F.2d at 1303; Grisham, 748 F.2d at 463-64;In re United States, 565 F.2d at 23.

  Accord Carpenter v. Lock, 257 F.3d 775, 779 (8th Cir. 2001); Holman, 873 F.2d at141

946; Alexander, 761 F.2d at 1303; United States v. Kerris, 748 F.2d 610, 614 (11th Cir. 1984);Grisham, 748 F.2d at 463; United States v. Aguierre Aguierre, 716 F.2d 293, 301 (5th Cir. 1983);United States v. Diaz, 655 F.2d 580, 588 (5th Cir. 1981); United States v. Manley, 632 F.2d 978,985 (2d Cir. 1980); United States v. Larson, 612 F.2d 1301, 1304 (8th Cir. 1980); United Statesv. Gonzales, 606 F.2d 70, 75 (5th Cir. 1979); United States v. Kim, 577 F.2d 473, 478 (9th Cir.1978); In re United States, 565 F.2d at 23.

149

870 F.2d at 372-73.   Significantly, a person seeking disclosure of matters protected by the140

confidential informant privilege may not meet his burden by mere speculation, supposition or

conclusory allegations that an informant may be able to provide information helpful to his

defense.  Rather, such person must make a particularized showing that the confidential informant

can provide material evidence that “would significantly aid in establishing an asserted defense”

Tenorio-Angel, 756 F.2d at 1511, or establish “a reasonable probability that the evidence would

change the outcome,”  Elnasher, 484 F.2d at 1053, or “show that the disclosure is vital to a fair

trial.”  United States v. Weir, 575 F.2d 668, 673 (8th Cir. 1978).141

For example, the Supreme Court upheld the Government’s invocation of the confidential

informant privilege in a criminal case where a defendant claimed he needed the identity of the

informant to properly attack an affidavit in support of a search warrant.  See Rugendorf v. United

States, 376 U.S. 528, 533-36 (1964).  In Rugendorf, the Supreme Court determined that the

defendant had failed to meet his burden to show that the informant’s identity was essential to

establish his innocence.  Id.; see also McCray v. Illinois, 386 U.S. 300, 309-312 (1967)(holding

that the Government was not required under either the Due Process Clause or the Confrontation

Clause to disclose the identity of an informer during a pretrial probable cause hearing); Scher v.

  Lawmaster, 993 F.2d at 774-775; accord Elnasher, 484 F.3d at 1053;  United States v.142

One 1986 Chevrolet Van, 927 F.2d 39, 43 (1st Cir. 1991); Holman v. Cayce, 873 F.2d 944, 947(6th Cir. 1989); Dole v. Local 1942, Int’l Bhd. of Elec. Workers, 870 F.2d 368, 372 (7th Cir.1989); In re United States, 565 F.2d at 22 (collecting cases); Westinghouse Elec. Corp. v.Burlington, 351 F.2d 762 (D.C. Cir. 1965);  Wirtz, 326 F.2d at 563; Michelson, 590 F. Supp. at264. 

  See, e.g., Carpenter, 257 F.3d at 779; United States v. Moore, 129 F.3d 989, 992-93143

(8th Cir. 1997); Grisham, 748 F.2d at 463-64; United States v. Buras, 633 F.2d 1356, 1359-60(9th Cir. 1980); United States v. Arrington, 618 F.2d 1119, 1125-26 (5th Cir. 1980); UnitedStates v. Larson, 612 F.2d 1301, 1303-04 (8th Cir. 1980).

  See, e.g., United States v. Moralez, 908 F.2d 565, 567 (10th Cir. 1990); Holman, 873144

F.2d at 946-47; Diaz, 655 F.2d at 588; United States v. Shursen, 649 F.2d 1250, 1254 (8th Cir.1981); United States v. Anderson, 627 F.2d 161, 164 (8th Cir. 1980); Gonzales, 606 F.2d at 75-76; Suarez v. United States, 582 F.2d 1007, 1012 (5th Cir. 1978).

150

United States, 305 U.S. 251, 254 (1938) (holding that a police officer was not required to reveal

the identity of a confidential informant who provided information leading to the arrest of the

defendant and stating that “public policy forbids disclosure of an informer’s identity unless

essential to the defense”).

In civil cases, the Government’s invocation of the confidential informant privilege is

similarly tested.  However, in civil cases, “the informer’s privilege is arguably stronger, because

the constitutional guarantees assured to criminal defendants are inapplicable.”  142

 Applying the foregoing principles, courts have frequently denied disclosure of

confidential informant matters where the informant was a mere “tipster” who provided valuable

information to law enforcement,  or the informant was a witness to a crime but did not actively143

or substantially participate in it,  or where the person seeking disclosure failed to carry his144

burden of showing that the sought information was material to an asserted defense and necessary

  See Alexander, 761 F.2d at 1303 and cases cited in notes 143 & 144 above and145

accompanying text.

  See, e.g., Aguirre Aguirre, 716 F.2d at 300; United States v. Ward, 703 F.2d 1058,146

1062 (8th Cir. 1983); United States v. Lanci, 669 F.2d 391, 393 (6th Cir. 1982); United States v.Jiles, 658 F.2d 194, 198 (3d Cir. 1981); United States v. Garcia, 625 F.2d 162, 165-66 (7th Cir.1980); United States v. Hernandez-Berceda, 572 F.2d 680, 682-83 (9th Cir. 1978); United Statesv. McLaughlin, 525 F.2d 517, 519 (9th Cir. 1975); United States v. Toombs, 497 F.2d 88, 94(5th Cir. 1974); United States v. Picard, 464 F.2d 215, 217 (1st Cir. 1972); United States v.Turchick, 451 F.2d 333, 338 (8th Cir. 1971); United States v. Drew, 436 F.2d 529, 534 (5th Cir.1970); Gonzales v. Beto, 425 F.2d 963, 971 (5th Cir. 1970).

151

to secure a fair trial.145

Regarding the Government’s countervailing interests in maintaining informant

confidentiality, such confidentiality is essential to enable the Government to obtain valuable

information from informants to carry out its important obligations to uncover unlawful activity. 

Therefore, the public interest in effective law enforcement strongly supports non-disclosure of

confidential informant matters.  See, e.g., Roviaro, 353 U.S. at 59; Scher, 305 U.S. at 254;

Grisham, 748 F.2d at 462.

Moreover, courts frequently have ruled that the likelihood of danger to an informant or

others is a crucial factor weighing heavily in favor of non-disclosure of informant information,

and accordingly have relied upon such potential danger as a ground to withhold an informant’s

identity.146

b. There appears to be some tension among the federal circuits about whether an

interlocutory appeal may be taken from an order denying discovery of privileged matters or

granting discovery and rejecting a claim of privilege.  Specifically, the First, Second, Fifth,

Seventh, Ninth and Tenth Circuits have held that an interclocutory appeal from such orders may

not be taken, including from orders upholding assertion of the confidential informant privilege,

  For a discussion of interlocutory appeals involving privilege matters under the147

collateral order doctrine, see Section VI(B)(2) above.152

and instead require the litigants to use the contempt or mandamus processes to seek appellate

review.   See, e.g., Simmons v. City of Racine, PFC, 37 F.3d 325, 327-329 (7th Cir.147

1994)(rejecting claim of collateral order doctrine to appeal discovery order denying disclosure of

confidential informant information and observing that litigants may use the contempt process or

mandamus to receive immediate review of an adverse discovery order); In re Coordinated Pretrial

Proceedings in Petroleum Products Antitrust Litigation, 747 F.2d 1303, 1304-06 (9th Cir. 1984)

(denying interlocutory review of a discovery order denying disclosure of confidential informant

matters); In re Attorney General of the United States, 596 F.2d 58, 61 (2d Cir. 1979) (holding

that an order holding the Attorney General of the United States in civil contempt for refusing to

disclose certain confidential informant files was not appealable, but granting the Government’s

Petition for a Writ of Mandamus); In re United States, 565 F.2d at 21-22 (denying interlocutory

appeal of an order requiring in camera inspection of confidential informant files); see also

Bennett v. City of Boston, 54 F.3d 18, 20-21 (1st Cir. 1995)(holding that the appellate court did

not have jurisdiction to hear an interlocutory appeal of a discovery order denying invocation of

privilege against “disclosure of sensitive investigative techniques” and noting that “contempt

citation is the ordinary route to appellate review in this context”); Boughton v. Cotter Corp., 10

F.3d 746, 749-751 (10th Cir. 1993)(disallowing interlocutory appeal of a discovery order denying

invocation of attorney-client and work product privileges, but noting mandamus relief may be

available in some circumstances “to correct a clear abuse of discretion”); Chase Manhattan Bank,

N.A. v. Turner & Newall, PLC, 964 F.2d 159, 162-63 (2d Cir. 1992)(holding the court lacked

jurisdiction to conduct interlocutory review of district court’s discovery order rejecting

153

invocation of attorney client privilege).

However, some courts have allowed interlocutory appeals from discovery orders rejecting

privilege claims other than the confidential informant privilege.  See, e.g., Koch v. Cox, 489 F.3d

384, 387-388 (D.C. Cir. 2007) (stating that the court of appeals has “jurisdiction over the

interluctory appeal of an order denying a motion to quash based upon a privilege,” and allowing

an interlocutory appeal of a discovery order rejecting an assertion of the psychotherapist-patient

privilege); United States v. Phillip Morris Inc., 314 F.3d 612, 617-621 (D.C. Cir. 2003)(allowing

interlocutory appeal of a discovery order denying assertion of attorney-client privilege under the

collateral order doctrine without requiring the litigants to resort to the contempt process noting

that “[i]t would be impossible for a court to sort out and redress the harm caused by the incorrect

disclosure,” id. at 619); In re Ford Motor Co., 110 F.3d 954, 957-964 (3  Cir. 1997)(allowingrd

interlocutory appeal of a discovery order denying a claim of attorney-client and work product

privileges). 

3. Fifth Amendment Privilege

The Fifth Amendment of the United States Constitution provides, in relevant part, that no

person “shall be compelled in any criminal case to be a witness against himself.”  “The

Amendment not only protects the individual against being involuntarily called as a witness

against himself in a criminal prosecution but also privileges him not to answer official questions

put to him any other proceeding, civil or criminal, formal or informal, where the answers might

incriminate him in future criminal proceedings.”  Lefkowitz v. Turley, 414 U.S. 70, 77 (1973). 

Accord Baxter v. Palmigiano, 425 U.S. 308, 316-17 (1976); McCarthy v. Arndstein, 266 U.S. 34,

  However, as a general rule, a person who fears only a future criminal prosecution by a148

foreign country may not invoke the privilege.  See United States v. Balsys, 524 U.S. 666, 698-99(1998).  Moreover, the Fifth Amendment privilege against self-incrimination applies only tonatural persons, and not to corporations.  See Hale v. Henkel, 201 U.S. 43, 74-75 (1906).

  See also Mason v. United States, 244 U.S. 362, 367 (1917) (holding that a witness149

lacked reasonable cause to fear incrimination from his sought testimony about his participation ina card-game that was not itself illegal); Martin-Trigona v. Gouletas, 634 F.2d 354, 360-62 (7thCir. 1980) (ruling that the Fifth Amendment privilege did not preclude a witness’ testimonyabout his financial transactions that had “only the most tenuous relationship to any potentiallyincriminating financial transactions”).

  See, e.g., Hoffman, 341 U.S. at 486; Rogers v. United States, 340 U.S. 367, 375150

(continued...)154

40 (1924).  “The privilege protects a mere witness as fully as it does one who is a party148

defendant.”  Id. at 40.  Accord Malloy v. Hogan, 378 U.S. 1, 11 (1964).

To validly assert the privilege, a witness must establish that he “reasonably believes that

the information sought, or discoverable as a result of his testimony, could be used in a

subsequent state or federal criminal proceeding.”  United States v. Balsys, 524 U.S. 666, 672

(1998).  Accord Kastigar v. United States, 406 U.S. 441, 444-45 (1972); Hoffman v. United

States, 341 U.S. 479, 486 (1951).  In that regard, “[t]o sustain the privilege, it need only be

evident from the implications of the question, in the setting in which it is asked, that a responsive

answer to the questions or an explanation of why it cannot be answered might be dangerous

because injurious disclosure could result.”  Hoffman, 341 U.S. at 486-87.  Accord N.L.R.B. v.

Trans Ocean Export Packing, Inc., 473 F.2d 612, 617 (9th Cir. 1973).  However, the Fifth

Amendment privilege does not apply where the danger of incrimination is “remote, unlikely, or

speculative.”  McCoy v. Comm. of Internal Revenue, 696 F.2d 1234, 1236 (9th Cir. 1983).  149

Significantly, a witness’ assertion of his Fifth Amendment privilege does not end the inquiry

since the court makes the final determination whether the privilege has been properly invoked.150

(...continued)150

(1951); Martin-Trigona, 634 F.2d at 360; In re Corrugated Container Antitrust Litig., 662 F.2d875, 882 (D.C. Cir. 1981).

  See Griffin v. California, 380 U.S. 609 (1965) (holding that it violates a defendant’s151

protection against self-incrimination under the Fifth Amendment to instruct a jury in a criminalcase that it may draw an adverse influence of guilt from a defendant’s failure to testify aboutfacts relevant to his case).

  See, e.g., Curtis v. M&S Petroleum, Inc., 174 F. 3d 661, 673-75 (5th Cir. 1999);152

United States v. Dist. Council of N.Y. City, 832 F. Supp. 644, 651-52 (S.D.N.Y. 1993).

  See, e.g., Rad Servs, Inc. v. Aetna Cas. and Sur. Co., 808 F.2d 271, 273-75 (3d Cir.153

1986); Brink’s Inc. v. City of New York, 717 F. 2d 700, 707-10 (2d Cir. 1983).

  See, e.g., LiButti v. United States, 107 F. 3d 110, 123-24 (2d Cir. 1997) (holding that154

it was proper to draw an adverse inference from the assertion of the Fifth Amendment privilegeby a party’s father based on considering the nature of the relationship between the party and thewitness, the degree of control of the party over the witness, the compatibility of the interests ofthe party and the witness in the outcome of the litigation and the role of the non-party witness inthe litigation); Cerro Gordo Charity v. Fireman’s Fund Am. Life Ins., 819 F.2d 1471, 1481-82

(continued...)155

Moreover, in a civil proceeding, unlike in a criminal prosecution,  the fact-finder may151

draw an adverse inference from a party’s refusal to testify based on his assertion of his Fifth

Amendment privilege against self incrimination.  See, e.g., Baxter v. Palmigiano, 425 U.S. at

316-19; United States v. 4003-05 5  Ave., Brooklyn, N.Y., 55 F. 3d 78, 83 (2d Cir. 1995);th

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F. Supp. 808, 812

(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993); United States v. Bonanno Organized Crime

Family, 683 F. Supp. 1411, 1449-50 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989). 

Likewise, the fact-finder may draw an adverse inference against a party from the assertion of the

Fifth Amendment privilege by a non-party witness whose interests are aligned with a party, such

as a party’s agents or representatives,  current and former employees,  and others whose152 153

relationships to a party warrant drawing an adverse inference against a party.   Indeed, an154

(...continued)154

(8th Cir. 1987) (adverse inference from party’s brother’s assertion of his Fifth Amendmentprivilege).

  See, e.g., Cerro Gordo Charity, 819 F.2d at 1480-82; Brink’s Inc., 717 F.2d at 707-10;155

Farace v. Independant Fire Ins. Co., 699 F.2d 204, 210-211 (5th Cir. 1983).  Likewise, a witness’deposition in which he asserted his Fifth Amendment privilege is admissible under somecircumstances.  See, e.g., Koester v. Am. Republic Invs., Inc., 11 F.3d 818, 823 (8th Cir. 1993);Rad Servs., Inc., 808 F.2d at 274, 280-81.

  See, e.g., Baxter v. Palmigiano, 425 U.S. at 317-18; La Salle Bank Lake View v.156

Seguban, 54 F.3d 387, 390 (7th Cir. 1995); Private Sanitation Indus. Ass’n, 811 F. Supp. at 812;Bonanno Organized Crime Family, 683 F. Supp. at 1451-52.

  See, e.g., Curtis, 174 F.3d at 675; 4003-4005 5  Ave., Brooklyn, N.Y., 55 F.3d at 83;157 th

LaSalle Bank Lake View, 54 F.3d at 392-93; Avirgan v. Hull, 932 F.2d 1572, 1580 (11th Cir.1991).

  See, e.g., Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 995 F.2d at 377;158

Dist. Council of N.Y. City, 832 F. Supp. at 651-52; United States v. Bonanno Organized CrimeFamily, 683 F. Supp. at 1449-52; United States v. Ianniello, 646 F. Supp. 1289, 1296-97(S.D.N.Y. 1986), aff’d, 824 F.2d 203 (2d Cir. 1987).

156

opposing party may even call a non-party witness to the stand to invoke his Fifth Amendment

privilege before the jury, provided that the probative value of such evidence is substantially

outweighed by the danger of unfair prejudice.155

Although the fact-finder may draw an adverse inference from a party’s or witness’

assertion of his Fifth Amendment privilege, such adverse interest standing alone is not sufficient

to impose liability  or to defeat or carry a motion for summary judgment.156 157

In accordance with the foregoing principles, courts in Government civil RICO cases have

drawn an adverse inference against a party or a witness aligned with a party from their assertion

of their Fifth Amendment Privilege against self-incrimination.158

  Accord System Federation v. Wright, 364 U.S. 642, 650-51 (1961); United States v.159

Local 359, United Seafood Workers, 55 F.3d 64, 68-69 (2d Cir. 1995); EEOC v. Local 580, Int’lAss’n of Bridge, Structural and Ornamental Ironworkers, 925 F. 2d 588, 592 (2d Cir. 1991).United States v. Int’l Bhd. of Teamsters, 803 F. Supp. 761, 777 (S.D.N.Y. 1992) (“IBT”).

157

VII

JUDGMENTS, CONSENT DECREES, AND ENFORCEMENT

A. Judgments and Consent Decree

1. The General Nature of Consent Decrees and Rules of Their Construction

A consent decree is a voluntary agreement, subject to the court’s approval, entered into by

consent of the parties to a lawsuit to resolve a lawsuit.  “The parties waive their right to litigate

the issues involved in the case and thus save themselves the time, expense, and inevitable risk of

litigation.”  United States v. Armour & Co., 402 U.S. 673, 681 (1971).  As the Supreme Court

has explained, consent decrees have a “hybrid nature”:

[C]onsent decrees bear some of the earmarks of judgments enteredafter litigation.  At the same time, because their terms are arrived atthrough mutual agreement of the parties, consent decrees alsoclosely resemble contracts.  See United States v. ITT ContinentalBanking Co., 420 U.S. 223, 235-237 (1975); United States v.Armour & Co., 402 U.S. 673 (1971). . . . [C]onsent decrees “haveattributes both of contracts and of judicial decrees,” a dualcharacter that resulted in different treatment for different purposes. United States v. ITT Continental Banking Co., supra, at 235-237,and n. 10.  The question is not whether we can label a consentdecree as a “contract” or a “judgment,” for we can do both.

Local No. 93, Int’l Ass’n of Firefighters v. City of Cleveland, 478 U.S. 501, 519 (1986)

(“Firefighters”).159

Insofar as consent decrees share attributes of contracts, consent decrees are interpreted

like contracts; that is, “the scope of a consent decree must be discerned within its four corners,

and not by reference to what might satisfy the purposes of one of the parties to it.”   Armour &

  Accord Firefighters, 478 U.S. at 522; Firefighters v. Stotts, 467 U.S. 561, 574 (1984);160

ITT Continental Banking Co., 420 U.S. 223, 236-38 (1975); EEOC v. New York Times Co.,196 F.3d 72,78 (2d Cir. 1999); United States v. IBT, 998 F. 2d 1102, 1106 (2d Cir. 1993); UnitedStates v. O’Rourke, 943 F.2d 180, 187 (2d Cir. 1991); S.E.C. v. Levine, 881 F.2d 1165, 1178-79(2d Cir. 1989); Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985); IBT, 803 F. Supp. at 777.

  Accord United States v. Int’l Bhd. of Teamsters, 998 F.2d 1101, 1106 (2d Cir. 1993);161

O’Rourke, 943 F.2d at 187; SEC v. Levine, 881 F.2d at 1179; IBT, 803 F. Supp. at 778.158

Co., 402 U.S. at 682.   Accordingly, “reliance upon certain aids to construction is proper, as160

with any other contract.  Such aids include the circumstances surrounding the formation of the

consent order, any technical meanings words may have had to the parties, and any other

documents expressly incorporated in the decree.”  United States v. ITT Continental Banking Co.,

420 U.S. 223, 238 (1975) (“ITT Continental Baking Co.”).161

Moreover, a “court is not entitled to expand or contract the agreement of the parties as set

forth in the consent decree. . . .”  Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985).  Accord

EEOC v. New York Times Co., 196 F.3d 72, 78 (2d Cir. 1999); United States v. Iint’l Bhd. of

Teamsters, 998 F.2d 1101, 1107 (2d Cir. 1993);  IBT, 803 F. Supp. at 777.  It follows that a

consent decree “should be interpreted in a way that gives effect to what the parties have agreed

to, as reflected in the judgment itself,” and courts should reject “restrictive and narrow

interpretations of the Consent Decree that would thwart implementation of the parties’

agreement.”  IBT, 803 F. Supp. at 778 (citations omitted).   Accord Taitt v. Chemical Bank , 

810 F.2d 29, 33 (2d Cir. 1987).  “[U]ltimately the question for the lower court, when it interprets

a consent decree. . . is what a reasonable person in the position of the parties would have thought

the language meant.”  Richardson v. Edwards, 127 F.3d 97, 101 (D.C. Cir. 1997).

  Firefighters, 478 U.S. at 517.  Accord Carson v. American Brands, Inc., 450 U.S. 79,162

83-90 (1981); United States v. Microsoft Corp., 56 F.3d 1448, 1455-57 (D.C. Cir. 1995). Moreover, “[a] district court’s interpretation of a consent decree that it has approved deserves‘substantial deference.’”  Ellis v. Gallatin Steel Co., 390 F.3d 461, 473 (6th Cir. 2004) (citationomitted). 

  See, e.g., Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 378,163

380 (1994); Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 378-79 (1992); Firefighters,478 U.S. at 518; ITT Continental Baking Co., 420 U.S. at 226 n.2, 236 n.10; United States v.Local 359 United Seafood Workers, 55 F.3d 64, 69 (2d Cir. 1995); E.E.O.C. v. Local 580, 925 F. 2d 588, 592 (2d Cir. 1991); Berger, 771 F.2d at 1568-69; Investigations Officer v. Lanza,1996 WL 514871 (S.D.N.Y. Sept. 10, 1996) at * 11.

  See, e.g., Firefighters, 478 U.S. at 529; United States v. Ward Baking Co., 376 U.S.164

327, 334 (1964); Ashley v. City of Jackson, Miss., 464 U.S. 900, 902 (1983) (Rehnquist, J.,dissenting from a denial of certiorari) (stating that “[t]his rule can be traced to an opinion ofChief Justice Marshall in Davis v. Wood, 1 Wheat 6, 8-9 (1816)”).  There are “severalexemptions” to this general rule.  See Sea-Land Services Inc. v. Gaudet, 414 U.S. 573, 593-94(1974); see also Section VII (C) below, which discusses such exceptions to the general rule thatjudgments bind only the parties to a lawsuit.

Moreover, “a consent decree is not enforceable directly or in collateral proceedings bythose who are not parties to it even though they were intended to be benefitted by it.”  Blue ChipStamps v. Manor Drug Stores, 421 U.S. 723, 750 (1975).

159

Insofar as consent decrees share attributes of a court judgment, “a District Court’s order

denying entry of a consent decree is appealable under 28 U.S.C. § 1292 (a)(1)”;  noncompliance162

with a consent decree is enforceable as a court order through a citation for contempt of court or

other sanctions;  and, as a general rule, a consent decree binds only the parties to the consent163

decree.164

Moreover, district courts allow parties a wide latitude in the terms of their agreement

under a consent decree; and as a general rule, a district court may not reject proposed consent

decrees merely because the court might have fashioned different terms or does not believe that

  See, e.g., United States v. Cannons Engineering Corp., 899 F.2d 79, 84 (1st Cir.165

1990); Janus Films, Inc. v. Miller, 801 F.2d 578, 582-83 (2d Cir. 1986).

  Accord Swift & Co. v. United States, 276 U.S. 311, 327-31 (1928); Komyatti v. Bayh,166

46 F.3d  955, 962 (7th Cir. 1996);  Kozlowski v. Coughlin, 871 F.2d 241, 244 (2d Cir. 1989);  United States v. Mason Tenders Dist. Council of Greater New York, 1997 WL 97836 (S.D.N.Y.March 6, 1997) at * 8.

  Accord System Federation No. 91, 364 U.S. at 650-51.167

  See, e.g., System Federation No. 91, 364 U.S. at 650-53; Biodiversity Associates v.168

(continued...)160

the agreement is ideal.   Indeed, because consent decrees constitute voluntary agreements165

between parties to a lawsuit, “a federal court is not necessarily barred from entering a consent

decree merely because the decree provides broader relief than the court could have awarded after

a trial.”  Firefighters, 478 U.S. at 525.166

However, there are limits on the parties’ voluntary agreements pursuant to a consent

decree.  As the Supreme Court has explained, “a consent decree must spring from and serve to

resolve a dispute within the court’s subject-matter jurisdiction.  Furthermore, consistent with this

requirement, the consent decree must ‘come within the general scope of the case made by the

pleadings’. . . and must further the objectives of the law upon which the complaint was based.” 

Firefighters, 478 U.S. at 525 (citations omitted).  A “District Court’s authority to adopt a consent

decree comes only from the statute which the decree is intended to enforce.”  System Federation

No. 91, Railway Employees’ Department, AFL-CIO v. Wright, 364 U.S. 642, 651 (1961)

(“System Federation No. 91”).  Accordingly, “the parties may [not] agree to take action that

conflicts with or violates the statute upon which the complaint was based.”  Firefighters, 

478 U.S. at 526.   A district court’s approval of a consent decree that does not satisfy these167

standards may be overturned as an abuse of discretion.168

(...continued)168

Cables, 357 F. 3d 1152, 1169-70 (10th Cir.  2004); Komyatti v. Bayh, 96 F.3d 955, 961-62 (7thCir. 1996);  United States v. Charles George Trucking, Inc., 34 F.3d 1081, 1084-85 (1st Cir.1994);  Sierra Club Inc. v. Electronic Controls Design, Inc., 909 F.2d 1350, 1355 (9th Cir. 1990);Kozlowski, 891 F.2d at 244; United States v. Wheeling-Pittsburg Steel Corp., 866 F.2d 57, 59-62(3d Cir. 1988); United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp. 192,193 (S.D.N.Y. 1993).

Moreover, a proposed consent decree may be rejected where consent of one of the partiesis lacking or was procured through fraud.  Swift & Co., 276 U.S. at 324; United States v. WardBaking Co., 376 U.S. 327, 334-35 (1964).

  In Firefighters v. Stotts, 467 U.S. at 576-78, the Supreme Court held that the district169

court exceeded its authority in imposing injunctive relief and modifications to a consent decreebecause such relief conflicted with, and was prohibited by, the statute underlying the relief.  Seealso Firefighters, 478 U.S. at 527-28.

Similarly, in System Federation No. 91, 364 U.S. at 646-51, the Supreme Court held thatthe district court abused its discretion in refusing to modify an injunction and related consentdecree when a change in law rendered the relief at issue contrary to the governing law.  See alsoFirefighters, 478 U.S. at 526-27.

  Accord Charles George Trucking, Inc., 34 F.3d at 1084-89; Cannons Engineering170

(continued...)161

For example, in Firefighters v. Stotts, 467 U.S. 561, 572-76 (1984) and System

Federation No. 91, 364 U.S. at 650-52, the Supreme Court held that district courts had authority

“to reject agreed-upon terms as not in furtherance of statutory objectives” and “to modify the

terms of a consent decree when a change in law brings those terms in conflict with statutory

objectives.”  364 U.S. at 651.  See also Firefighters, 478 U.S. at 526-28.   169

Moreover, a district court has greater authority to review and reject a proposed consent

decree that resolves a suit “affecting the public interest,” and accordingly, in such cases should

not enter a proposed consent decree unless it “decides that it is fair, reasonable, and equitable and

does not violate the law or public policy.”  Sierra Club, Inc. v. Electronic Controls Design, Inc.,

909 F.2d 1350, 1355 (9th Cir. 1990).   Furthermore, as many of the above-referenced cases170

(...continued)170

Corp., 899 F.2d at 84-92; Janus Films, Inc. v. Miller, 801 F.2d 578, 582-83 (2d Cir. 1986);Citizens for a Better Env’t v. Gorsuch, 718 F.2d 1117, 1126-27 (D.C. Cir. 1983) (collectingcases).

  See, e.g., Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 381-82171

(1994); Firefighters, 478 U.S. at 512; Railway Employees, 364 U.S. at 646-47; Pigford v.Veneman, 292 F.3d 918, 923-25 (D.C. Cir. 2002); Local 359, 55 F.3d at 69; E.E.O.C. v. Local580, 925 F.2d at 593; Berger v. Heckler, 771 F.2d at 1568; United States v. IBT, 728 F. Supp. 1032, 1044-45 (S.D.N.Y. 1990), aff’d, 907 F.2d 277 (2d Cir. 1990).

162

indicate, a consent decree also may authorize the district court to retain exclusive jurisdiction

over a consent decree to ensure full compliance with it.171

2. Courts Have Authority to Modify Judgments and Consent Decrees UnderSome Circumstances

Pursuant to Rule 60(b), FED. R. CIV. P., courts are authorized to modify judgments and

consent decrees in some circumstances.  In that respect, Rule 60(b), FED. R. CIV. P., provides, in

relevant part, as follows:

On motion and upon such terms as are just, the court may relieve a party or aparty’s legal representative from a final judgment, order, or proceeding for thefollowing reasons: . . . (4) the judgment is void; (5) the judgment has beensatisfied, released, or discharged, or a prior judgment upon which it is based hasbeen reversed or otherwise vacated, or it is no longer equitable that the judgmentshould have prospective application; or (6) any other reason justifying relief fromthe operation of the judgment.

In accordance with the principles embodied in Rule 60(b), it is well established that

courts have the authority to modify a consent decree over the objection of the parties to the

consent decree “when a change in law brings those terms in conflict with statutory objectives,” or

when such a change in law otherwise renders the terms of a consent decree unlawful.  System

Federation No. 91, 364 U.S. at 651.  Accord Firefighters v. Stotts, 467 U.S. at 576, n.9;

Biodiversity Assoc. v. Cables, 35 F.3d 1152, 1166-67 (10th Cir. 2004).  Modifications of 

163

consent decrees by district courts are reviewed under an abuse of discretion standard.  See Juan

F. v. Weicker, 37 F. 3d 874, 878 (2d Cir. 1994).  

                In Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367 (1992), the Supreme Court

adopted greater flexibility in determining whether to modify consent decrees in institutional

reform litigation.  In United States v. Swift & Co., 286 U.S. 106, 119 (1932), the Supreme Court

had ruled that “[n]othing less than a clear showing of grievous wrong evoked by new and

unforeseen conditions should lead us to change what was decreed after years of litigation with

the consent of all concerned.”  In Swift, the defendants agreed to a consent decree, resolving anti-

trust litigation, that “enjoined them from manipulating the meat-packing industry and banned

them from engaging in the manufacture, sale, or transportation of other foodstuffs.”  Rufo, 

502 U.S. at 379.

However, in Rufo, 502 U.S. at 380-81, the Supreme Court ruled that the Swift “grievous

wrong” standard was too rigid, and that the lower courts should employ “a flexible approach” to

modifications of consent decrees that “is often essential to achieving the goals of reform

litigation.”  Accordingly, in Rufo, 502 U.S. at 383, the Supreme Court ruled that “a party seeking

modification of a consent decree bears the burden of establishing that a significant change in

circumstances warrants revision of the decree.  If the moving party meets this standard, the court

should consider whether the proposed modification is suitably tailored to the changed

circumstances.”  The Supreme Court added that “[m]odification of a consent decree may be

warranted when changed factual conditions make compliance with the decree substantially more

onerous”  (id. at 384), or when “one or more of the obligations placed upon the parties has

  The Supreme Court cautioned that “[a] proposed modification should not strive to172

rewrite a consent decree so that it conforms to the constitutional floor. . . [t]he focus should be onwhether the proposed modification is tailored to resolve the problems created by the change incircumstances.  A court should do no more, for a consent decree is a final judgment that may bereopened only to the extent that equity requires.”  Rufo, 502 U.S. at 391. See also Bd. of Educ. ofOklahoma City Pub. Schs. v. Dowell, 498 U.S. 237 (1991) (holding that the Swift “ grievouswrong” standard does not apply to injunctions entered in school desegregation cases).

  For cases approving of modifications of consent decree, see, e.g., Evans v. Williams,173

206 F.3d 1292, 1297-99 (D.C. Cir. 2000); United States v. Western Elec. Co. Inc., 46 F.3d 1198(D.C. Cir. 1995);  Patterson v. Newspaper & Mail Deliveries’Union, 13 F.3d 33, 36-39(2d Cir.1993); Roadtechs, INC. V. MJ Highway Technology, Ltd., 83 F. Supp. 2d 677, 687-88 (E.D. Va.2000).

  For cases rejecting proposed modifications of consent decrees, see, e.g., Pigford v.174

Veneman, 292 F.3d 918, 925-26 (D.C. Cir. 2002); N.L.R.B. v. Harris Teeter Supermarkets, 215 F.3d 32, 35-37 (D.C. Cir. 2000); Thompson v. U.S. Dept of H. U. D., 220 F.3d 241 246-50(4th Cir. 2000); Alexander v. Britt, 89 F.3d 194 (4th Cir. 1996); Building & Const. Trades v.NLRB, 64 F.3d 880, 888-91 (3d Cir. 1995); In Re Midlands Utility, Inc., 253 B. R. 683, 688-90 (Bankr. D.S.C. 2000). 

164

become impermissible under federal law.”  Id. at 388.172

In the wake of Rufo, the lower courts have approved of  and rejected  modifications of173 174

consent decrees in a wide variety of circumstances.

B. Default Judgments

Rule 55(a), FED. R. CIV. P. provides as follows:

(a) Entry.  When a party against whom a judgment for affirmativerelief is sought has failed to plead or otherwise defend as providedby these rules and that fact is made to appear by affidavit orotherwise, the clerk shall enter the party’s default.

Pursuant to Rule 55(a), a district court may enter an order of default “where the party

against whom the judgment is sought has engaged in ‘wilful violations of court rules,

contumacious conduct, or intentional delays.’”  Forsythe v. Hales, 255 F.3d 487, 490 (8th Cir.

  Accord Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir. 2003) (“Where it appears that175

the defaulting party has willfully chosen not to conduct its litigation with the degree of diligenceand expediency prescribed by the trial court, this Circuit has repeatedly upheld the trial court’s[refusal to grant relief from the default]”) (quoting C.K.S. Eng’rs, Inc. v. White MountainGypsum Co., 726 F. 2d 1202, 1205 (7th Cir. 1984)); Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1988); New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996)(“A default occurs when a defendant has failed to plead or otherwise respond to the complaintwithin the time required by the Federal Rules”); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61,65 (2d Cir. 1981) (“failing to appear for a deposition, dismissing counsel, giving vague andunresponsive answers to interrogatories, and failing to appear for trial were sufficient to support afinding [of default]”).

  See, e.g., Comiskey v. JFTJ Corp., 989 F.2d 1007, 1009 (8th Cir. 1993); C.K.S.176

Engineers, Inc., 726 F.2d at 1205; Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981); E.F.Hutton & Co., Inc. v. Moffatt, 460 F.2d 284, 285 (5th Cir. 1972).

  Rule 60(b), FED. R. CIV. P. provides, in relevant part, as follows:177

On motion and upon such terms as are just, the court may relieve a party or aparty’s legal representative from a final judgment, order, or proceeding for thefollowing reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2)newly discovered evidence which by due diligence could not have beendiscovered in time to move for a new trial under Rule 59(b); (3) fraud (whetherheretofore denominated intrinsic or extrinsic), misrepresentation, or othermisconduct of an adverse party; (4) the judgment is void; (5) the judgment hasbeen satisfied, released, or discharged, or a prior judgment upon which it is basedhas been reversed or otherwise vacated, or it is no longer equitable that thejudgment should have prospective application; or (6) any other reason justifyingrelief from the operation of the judgment.

  Davis v. Hutchins, 321 F.3d at 646 n.2 (citations omitted).178

165

2001) (citation omitted).   However, default judgments are disfavored, and should be entered175

only when clearly supported by the record.  176

Rule 55(c), FED. R. CIV. P. provides that “[f]or good cause shown the court may set aside

an entry of default and, if a judgment by default has been entered, may likewise set it aside in

accordance with Rule 60(b).”   “[T]he standard to set aside an entry of default under Rule 55(c)177

is essentially the same as the standard for vacating a default under Rule 60(b)”;  and hence178

  Accord Forsythe v. Hales, 255 F.3d at 490; Robinson Eng’g Co. Pension Plan and179

Trust v. George, 223 F.3d 445, 453 (7th Cir. 2000); Johnson v. Dayton Elec. Mfg. Co., 140 F.3d at 783-84; Commercial Bank of Kuwait v. Rafidain, 15 F.3d 238, 243 (2d Cir. 1994);Meehan v. Snow, 652 F.2d at 276-77. 

  Johnson v. Dayton Elec. Mfg. Co., 140 F.3d at 783 (citations omitted).180

  See, e.g., Sun v. Bd. of Trustees of Univ. of Illinois, 473 F.3d at 810; Davis v.181

Hutchins, 321 F.3d at 646; Johnson v. Dayton Elec. Mfg. Co., 140 F.3d at 784-85; Inman v.American Home Furniture Placement, Inc., 120 F.3d 117, 118 (8th Cir. 1997); Pretzel & Stoufferv. Imperial Adjusters, 28 F.3d 42, 44-45 (7th Cir. 1994); Commercial Bank of Kuwait, 15 F.3d at243; Hal Commodity Cycles Management Co. v. Kirsh, 825 F.2d 1136, 1138 (7th Cir. 1987).

166

under both Rules 55(c) and 60(b), to have an entry of default vacated, “the moving party must

show: (1) good cause for the default; (2) quick action to correct it; and (3) a meritorious defense

to the complaint.”  Sun v. Bd. of Trustees of Univ. of Illinois, 473 F.3d 799, 810 (7th Cir.

2007).   However, “[m]ost decisions . . .  hold that relief from a default judgment [under Rule179

60(b)] requires a stronger showing of excuse than relief from a mere default order.”180

A district court’s decision to impose a default judgment and whether to set aside a default

order or default judgment under Rules 55(c) or 60(b) are reviewable under the abuse of discretion

standard.181

C. Scope Of Injunctions, Requisite Specifity, And Their Application To Non-Parties

1. Scope of Injunctions and Requisite Specifity 

The permissible breadth of an injunction depends upon the circumstances of the particular

case, “the purpose being to prevent violations, the threat of which in the future is indicated

because of their similarity or relation to those unlawful acts. . .  found to have been committed

. . . . in the past.”  NLRB v. Express Publ’g. Co., 312 U.S. 426, 436-37 (1941).  Therefore, courts

in equitable actions may not only enjoin unlawful acts, but also may enjoin otherwise lawful

conduct to ensure effective relief.  As the Supreme Court explained in United States v. Loew’s

  Accord United States v. Gypsum Co., 340 U.S. 76, 88-89 (1950) (Equitable relief in182

antitrust cases “is not limited to prohibition of the proven means by which the evil wasaccomplished, but may range broadly through practices connected with acts actually found to beillegal.  Acts entirely proper when viewed alone may be prohibited.”); Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944) (“The essence of equity jurisdiction has been the power of theChancellor to do equity and to mold each decree to the necessities of the particular case”); EEOCv. Wilson Metal Casket, Co., 24 F.3d 836, 842 (6th Cir. 1994) (“The proper scope of aninjunction is to enjoin conduct which has been found to have been pursued or is related to theproven unlawful conduct.”); United States v. Holtzman, 762 F.2d 720, 726 (9th Cir. 1985)(“[F]ederal courts have the equitable power to enjoin otherwise lawful activity if they havejurisdiction over the general subject matter and if the injunction is necessary and appropriate inthe public interest to correct or dissipate the evil effects of past unlawful conduct.”); KentuckyFried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 390 (5th Cir. 1977) (“Infashioning relief against a party who has transgressed the governing legal standard, a court ofequity is free to proscribe activities that, standing alone would have been unassailable.”).

167

Inc., 371 U.S. 38 (1962), abrogated on other grounds by Illinois Tool Works Inc. v. Independent

Ink, Inc., 547 U.S. 28 (2006):

Some of the practices which the Government seeks to haveenjoined . . . are acts which may be entirely proper when viewedalone.  To ensure, however, that relief is effectual, otherwisepermissible practices connected with the acts found to be illegalmust sometimes be enjoined.

Loew’s Inc., 371 U.S. at 53.182

An injunction, however broad, must satisfy the particularity requirements of Rule 65(d),

FED. R. CIV. P., which provides, in relevant part, as follows:

Every order granting an injunction and every restraining order shallset forth the reasons for its issuance; shall be specific in terms;shall describe in reasonable detail, and not by reference to thecomplaint or other document, the act or acts sought to berestrained.

This “Rule was designed to prevent uncertainty and confusion on the part of those faced with

injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague

  Accord Reno Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126, 1132 (9th Cir. 2006);183

S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 241 (2d Cir. 2001); CPC Intern., Inc. v.Skippy Inc., 214 F.3d 456, 459 (4th Cir. 2000); Reliance Ins. Co. v. Mast Constr. Co., 159 F.3d1311, 1316 (10th Cir. 1998).

  In constructing an injunction “as a whole,” some circuits allow courts to consider184

materials incorporated by reference (see, e.g., Reno Air Racing Ass’n Inc., 452 F.3d at 1130-32(collecting cases)); while some circuits do not allow such incorporation.  See, e.g., Dupuy v.Samuels, 465 F.3d 757, 758 (7th Cir. 2006) (collecting cases).

168

to be understood.”  Marshall v. United States, 414 U.S. 473, 476 (1974).183

Accordingly, an injunction when “read as a whole. . . [must provide] people of ordinary

intelligence. . . a reasonable opportunity to know what is prohibited.”  Schenck v. Pro-Choice

Network of Western New York, 519 U.S. 357, 383 (1997) (citations and internal quotations

omitted).  Accord Reno Air Racing Ass’n, Inc. V. McCord, 452 F.3d 1126, 1133-34 (9th Cir.

2006); Coca-Cola Co. v. Purdy, 382 F.3d 774, 790-91 (8th Cir. 2004); S.C. Johnson & Son, Inc.

v. Clorox Co., 241 F.3d 232, 240-41 (2d Cir. 2001).184

Regarding the requisite specificity, “Rule 65(d) requires only that the enjoined conduct be

described in reasonable, not excessive, detail.”  Reliance Ins. Co. v. Mast Const. Co., 159 F.3d

1311, 1316 (10th Cir. 1998).  Rule 65(d) “does not require the impossible.  There is a limit to

what words can convey. . . . The right to seek clarifications or modification of the injunction

provides assurance, if any be sought, that proposed conduct is not proscribed.”  Scandia Down

Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1431-32 (7th Cir. 1985).  Accord Pye v. Teamsters Local

Union No. 122, 61 F.3d 1013, 1025 (1st Cir. 1995) (“The requirement that. . . injunctions be

clear and specific, Fed. R. Civ. P. 65(d), does not mean that they must read like the working

plans for building hydrogen bombs”); Medtronic, Inc. v. Benda, 689 F.2d 645, 649 (7th Cir.

1983) (“It would be impossible for any court to identify every conceivable act that would be

  See, e.g., S.C. Johnson & Son, Inc., 241 F.3d at 240-41 (enjoining false and185

misleading advertisements); Pye, 61 F.3d at 1018, n. 4, 1025 (enjoining “organizing andconducting mass demonstrations. . .  where an object thereof is to force or require [namedentities] or any other person to cease using, selling, handling, transporting or otherwise dealing inthe products of or to cease doing business with August A. Busch & Co.”, and also enjoining “inany manner or by any means, threatening, coercing or restraining [any person]” to achieve theabove objectives); Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir.1985) (enjoining the defendant from “using any name, designation or material. . . likely to causeconfusion, mistake or deception as to source relative to plaintiff’s trademark”); Pacific MaritimeAss’n v. Int’l Longshoremen’s and Warehousemen’s Union, 517 F.2d 1158, 1162-63, & n. 2 (9thCir. 1975) (ordering a union and its members “[t]o cease and desist from using any coercion tonullify the right of Container Stevedoring Co., Inc. to use Steady Men or inducing, encouragingor causing such coercion; and [t]o take all necessary action to stop any [such] coercion”);Mitchell, 280 F.2d at 479, 481-82 (enjoining “defendant from violating the minimum wage andovertime provisions of the [Fair Labor Standards Act of 1938]”); F.T.C. v. Think AchievementCorp., 144 F. Supp. 2d 1013, 1017 (N.D. Ind. 2000) (“Defendants may be enjoined from makingmisrepresentations or false representations” in violation of the F.T.C. Act.).

169

covered by [an injunction]”); Sucrs De A. Mayol & Co. v. Mitchell, 280 F.2d 477, 482 (1st Cir.

1960) (“Some compromise must be effected in a decree between the need for articulation, and

the need for sufficient comprehensiveness to prevent ‘easy evasion.’”).

Moreover, to determine whether an injunction provides the requisite specific notice,

courts evaluate an injunction “‘in the light of the circumstances surrounding (the injunction’s)

entry: the relief sought by the moving party, the evidence produced at the hearing on the

injunction, and the mischief that the injunction seeks to prevent.’” Common Cause v. Nuclear

Regulatory Comm., 674 F.2d 921, 927 (D.C. Cir. 1982) quoting United States v. Christie Indus.,

Inc., 465 F.2d 1000, 1007 (3d Cir. 1972).

In accordance with the foregoing authority, courts in a wide variety of circumstances have

held that broad injunctions satisfy the particularity requirement of Rule 65(d).   On the other185

hand, courts have held that “an injunction broadly to obey” a statute or the law, which in essence

restrains “the commission of unlawful acts which are. . .  dissociated from those which a

  See NLRB v. Express Publishing Co., 312 U.S. 426, 435-36 (1941).  Accord186

Belitskus v. Pizzingrilli, 343 F.3d 632, 650 (3d Cir. 2003); Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 51 (2d Cir. 1996); Keyes v. School Dist. No. 1, Denver, Colo., 895 F.2d 659, 668-69(10  Cir. 1990).th

170

defendant has committed,” does not satisfy the particularity requirement of Rule 65(d).   The186

Supreme Court, however, has limited the potential breadth of that principle, and has stated that

“[a] federal court has broad power to restrain acts which are of the same type or class as unlawful

acts which the court has found to have been committed or whose commission in the future unless

enjoined, may fairly be anticipated from the defendant’s conduct in the past.”  NLRB v. Express

Pub. Co., 312 U.S. at 435.

For example, in McComb v. Jacksonville Paper Co., 336 U.S. 187, 191-92 (1949), the

district court ordered the defendants “to obey the provisions of the [Fair Labor Standards] Act

dealing with minimum wages, overtime, and the keeping of records.”  The Supreme Court upheld

the injunction, stating:

Decrees of that generality are often necessary to prevent furtherviolations where any proclivity for unlawful conduct has beenshown. . . [Defendants’] record of continuing and persistentviolations of the Act would indicate that that kind of a decree waswholly warranted in this case.  Yet if there were extenuatingcircumstances or if the decree was too burdensome in operation, . .. [defendants] could have petitioned the District Court for amodification, clarification or construction of the order.

Id. at 192.

Similarly, in United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp.

177, 191-92 (S.D.N.Y. 1993), following a bench trial, the district court enjoined certain

defendants found to have violated RICO: (1) “from committing any acts of racketeering activity

defined in [18 U.S.C. § 1961]”; (2) “from having any dealings, directly or indirectly, with any

  See also McLendon v. Continental Can Co., 908 F.2d 1171, 1174, 1182 (3d Cir. 1990)187

(continued...)171

members or associates of organized crime for any commercial purpose concerning the affairs of

the [alleged RICO]  Waterfront [Enterprise]. . . or any labor organization”; (3) “from having any

dealings, directly or indirectly, with any other defendant in this action for any commercial

purpose concerning the affairs of the Waterfront [Enterprise] or any labor organization”; (4)

“from participating in any way in the affairs of or having any dealings, directly or indirectly, with

(i) any labor organization. . . .(ii) any officer, agent, representative, employee, or member of

[several ILA locals], (iii) any other officer, agent, representative, employee, or member of the

ILA, or any other labor organization concerning the affairs of such organization or the Waterfront

[Enterprise]”; “and (iv) any person or entity that does business on the Waterfront; and (5) from

visiting the site of any ILA entity or other labor organization or communicating with any person

who is at the site of any ILA entity or other labor organization.”

On appeal, the Second Circuit rejected the argument that this injunction was overly broad. 

See United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995).  The Second Circuit

explained that this injunction was necessary to prevent future unlawful activity in light of the

scope of the defendants’ unlawful activity, involving the creation of a climate of fear and

intimidation within the ILA by the defendant and his LCN co-conspirators.  Id. at 1185.

Courts have approved similar broad injunctive relief in other Government civil RICO

cases involving labor unions, including prohibiting any act of racketeering activity as defined in

18 U.S.C. § 1961(1), where such relief was necessary to prevent future unlawful activity in light

of the extensive unlawful activity by the defendants and their co-conspirators.  See Sections 

VIII(B)(1) and (C) below.187

(...continued)187

(holding that a nationwide injunction barring the defendant from using a particular program ofoperation to violate Section 510 of the ERISA statute was “not an ‘obey the law’ injunction”);United States v. Miller, 588 F.2d 1256, 1261 (9th Cir. 1978) (holding that “the mere fact that[an] injunction is framed in language almost identical to the statutory mandate does not make thelanguage vague. . . [where] the statutory terms adequately describe the impermissible conduct”);SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1103 (2d Cir. 1972) (upholding aninjunction “enjoining further violations of the antifraud provisions of the federal securities laws. . .  in language virtually identical to that of Rule 10b-5”);  Interstate Commerce Comm’n v.Keeshin Motor Exp. Co., 134 F.2d 228, 231 (7th Cir. 1943) (holding that while “courts may notissue a blanket order enjoining any violation of a statute upon a showing that the Act has beenviolated in some particular respects, nevertheless, they do possess authority to restrain violationssimilar to those already committed”).

  Accord Martin v. Wilks, 490 U.S. 755, 761-62 (1989); Zenith Radio Corp. v.188

Hazeltine Research, Inc., 395 U.S. 100, 110 (1969); Pennoyer v. Neff, 95 U.S. 714 (1877).

  Accord Hansberry v. Lee, 311 U.S. at 41 (“[T]he judgment in a ‘class’ or189

‘representative’ suit, to which some members of the class are parties, may bind members of the(continued...)

172

It is also significant to note that failure to satisfy the requirements of Rule 65 (d) does not

render an injunction unenforceable when the error is harmless.  See, e.g., Dupuy, 465 F.3d at

759-60; Chathas v. Local 134 IBEW, 233 F. 3d 508, 512-13 (7th Cir. 2000).

2. An Injunction May Apply to Non-Parties in Various Circumstances

a. It has long been the general rule that a non-party is “not bound by a judgment . . .

in a litigation in which he is not designated as a party or to which he has not been made a party

by service of process.”  Hansberry v. Lee, 311 U.S. 22, 40 (1940).   “This rule is part of our188

deep-rooted historic tradition that everyone should have his own day in court.’”  Martin v. Wilks,

490 U.S. 755, 762 (1989).

There are several exceptions to this general rule.  For example, a non-party may be bound

by a judgment order, including an injunction, when the non-party “has his interests adequately

represented by someone with the same interests who is a party.”  Martin, 490 U.S. at 762 n.2.  189

(...continued)189

class or those represented who were not parties to it”); Montana v. United States, 440 U.S. 147,154-55 (1979) (collateral estoppel barred a non-party, the United States, from relitigating anissue resolved in prior litigation over which the non-party exercised control).  See also SectionVIII(B)(8) below, which discusses various exceptions to the general rule that non-parties are notbound by judgment in Government civil RICO lawsuits involving labor unions.

  See, e.g., NLRB v. Bildisco & Bildisco, 465 U.S. 513, 529 (1984) (“Under the190

Bankruptcy Code a proof of claim must be presented to the Bankruptcy Court for administration,or be lost when a plan of reorganization is confirmed”); Tulsa Professional Collection Services,Inc. v. Pope, 485 U.S. 478, 479-80 (1988) (a probate statute that “requires creditors to file claimsagainst an estate within a specified time period. . . .generally bars untimely claims”).

173

“Additionally, where a special remedial scheme exists foreclosing successive litigation by

nonlitigants, as for example in bankruptcy or probate, legal proceedings may terminate

preexisting rights if the scheme is otherwise consistent with due process.”  Martin, 490 U.S. at

762, n. 2.  190

Rule 65(d), FED. R. CIV.  P. also sets forth several exceptions to the general rule that non-

parties are not bound by a judgment, and provides, in relevant part, that:

Every order granting an injunction and every restraining order . . .is binding only upon the parties to the action, their officers, agentsservants, employees, and attorneys, and upon those persons inactive concert or participation with them who receive actual noticeof the order by personal service or otherwise.

The Supreme Court stated that this rule:

is derived from the common-law doctrine that a decree ofinjunction not only binds the parties defendant but also thoseidentified with them in interest, in “privity” with them, representedby them or subject to their control.  In essence it is that defendantsmay not nullify a decree by carrying out prohibited acts throughaiders and abettors, although they were not parties to the originalproceeding.

Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14 (1945).

  See, e.g., Regal Knitwear Co., 324 U.S. at 13-14; Chase National Bank v. Norwalk,191

291 U.S. 431, 436-37 (1934); Goya Foods, Inc. v. Wallack Management Co., 290 F.3d 63, 75-76(1st Cir. 2002); Microsystems Software, Inc. v. Scandinavia Online AB, 226 F.3d 35, 42-43 (1stCir. 2000); Chicago Truck Drivers v. Brotherhood Labor Leasing, 207 F.3d 500, 507 (8th Cir.2000); United States v. Kirschenbaum, 156 F.3d 784, 794-96 (7th Cir. 1998); Additive Controls& Measurement Sys. v. Flowdata, Inc., 96 F.3d 1390, 1395 (Fed. Cir. 1996); Rockwell GraphicsSystems, Inc. v. DEV Industries, Inc., 91 F.3d 914, 919 (7th Cir. 1996) (collecting cases);Alemite Mfg. Corp. v. Staff, 42 F.2d 832, 833 (2d Cir. 1930); Paramount Pictures Corp. v. CarolPubl’g Group, Inc., 25 F. Supp. 2d 372, 374 (S.D.N.Y. 1998).

174

Rule 65(d) establishes two distinct, abeit related, bases of liability for a non-party.  Under

the first basis, a non-party, who is in “privity” with an enjoined party and hence bears a close

relationship with the enjoined party, may be subject to the provisions of an injunction and liable

for its violation on the rationale that the enjoined party has adequately represented the interests of

the non-party.  Whereas under the second basis, the focus is on the non-party’s conduct after an

injunction has been imposed - - that is, a non-party, regardless of whether the non-party is

otherwise “in privity” with the party, may be held in contempt when the non-party aids and abets

an enjoined party’s violation of an injunction.  In such circumstances, the non-party is not

otherwise compelled to comply with the injunction; rather, such non-party is merely liable for

aiding and abetting an enjoined party’s violation of an injunction.191

As one court explained, “a non-party may be enjoined under [the “in privity” rationale of]

Rule 65(d) only when its interests closely ‘identify with’ those of the defendant, when the non-

party and defendant stand in ‘privity,’ or when the defendant ‘represents’ or ‘controls’ the non-

party.”  Thompson v. Freeman, 648 F.2d 1144, 1147 (8th Cir. 1981).  For example, under the

first “in privity” rationale, “[p]ersons acquiring an interest in property [such as successors and

assigns] that is a subject of litigation are bound by, or entitled to the benefit of, a subsequent

judgment”, and are deemed “in privity” with their predecessor for purposes of 

  See, e.g., Walling, 321 U.S. at 674-75; FTC v. Standard Education Society, 302 U.S.192

112, 119 (1937); Ex Parte Lennon, 166 U.S. 548, 553-55 (1897); Doctor’s Associates, Inc. v.Reinert & Duree, P.C.,191 F.3d 297, 302-03 (2d Cir. 1999); Petersen v. Fee International, Ltd.,435 F. Supp. 938, 941-42 (W.D. Okla. 1975).  Cf. Wilson v. United States, 221 U.S. 361, 376-77(1911).

However, such a corporate employee, agent, or officer “is bound by an injunction againsthis corporation only in his capacity as an officer.”  Saga International, Inc. v. John D. Brush &Co., Inc., 984 F. Supp. 1283, 1287 (C.D. Cal. 1997).

  See, e.g., Additive Controls & Measurement Sys., 96 F.3d at 1395; Spindelfabrik193

Suessen-Schurr v. Schubert & Salzer, 903 F.2d 1568, 1580-81 (Fed. Cir. 1990); G&C MerriamCo., 639 F.2d at 35; Paramount Pictures Corp., 25 F. Supp. 2d at 374-75.  See also cases citedsupra n.191.

  See, e.g., Goya Foods, Inc., 290 F. 3d at 75; Chicago Truck Drivers, 207 F.3d at 507;194

Vuitton et Fils S.A. v. Carousel Handbags, 592 F.2d 126, 129 (2d Cir 1979) (collecting cases);Reich v. United States, 239 F.2d 134, 137-38 (1st Cir. 1956).

175

Rule 65(d).  Golden State Bottling Co. v. NLRB, 414 U.S. 168, 179-80 (1973).  Accord Regal

Knitwear Co., 324 U.S. at 13-14; Walling James v. Reuter, Inc., 321 U.S. 671, 674-75 (1944).

Similarly, Rule 65(d)’s application of an injunction to a party’s “officers, agents, servants,

employees, and attorneys,” even though they may be non-parties to a litigation, is grounded in the

recognition that such employees and agents are identified with their principal and that because

corporations and other business entities can act only through such natural persons, such business

entities may easily avoid compliance with an injunction’s mandates through the actions of their

agents unless the injunction also applied to their agents.192

Turning to the aiding and abetting basis of liability under Rule 65(d), a non-party who is

not otherwise subject to an injunction may be held in contempt only for post-injunction activity

of aiding and abetting an enjoined party’s violation of an injunction.   Moreover, although such193

a non-party must have actual knowledge of the injunction, personal service of it is not required.  194

It also bears emphasis that under the second basis of liability imposed by Rule 65(d), a district

  See, e.g., Regal Knitwear Co., 324 U.S. at 13; Chase National Bank v. Norwalk Ohio,195

291 U.S. at 436-37; Doctor’s Associates, Inc. v. Reinert & Duree, P.C., 191 F.3d 297, 303 (2dCir. 1999); Max’s Seafood Café ex rel. Lou-Ann v. Quinteros, 176 F.3d 669, 674-75 (3d Cir.1999); Heyman v, Klein, 444 F.2d 65 (2d Cir. 1971); Alemite, 42 F.2d at 832 (“a court of equity.. . cannot lawfully enjoin the world at large, no matter how broadly it words its decree”).

  In that respect, the All Writs Act, 28 U.S.C. § 1651(a), provides that federal courts196

“may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeableto the usages and principles of law.”

  Accord United States v. Paccione, 964 F.2d 1269, 1274-75 (2d Cir. 1992) (“A court197

may bind non-parties to the terms of an injunction or restraining order to preserve its ability torender a judgment in a case over which it has jurisdiction.”); Vuitton et Fils S.A., 592 F.2d at 129n. 6 (same); United States v. Hall, 472 F.2d 262, 265 (5th Cir. 1972) (same); NAACP, JeffersonCounty Branch v. Brock, 619 F. Supp. 846, 852 (D.D.C. 1985) (same).

176

court may not enforce an injunction against all persons having notice of an injunction, or against

persons acting independently from an enjoined party, but rather must confine its enforcement to

those persons who aid and abet an enjoined party’s violation of the injunction.195

b. Apart from the authority to enjoin non-parties under Rule 65(d), FED.R.CIV.P., the

All Writs Act  vests federal courts with the authority to enjoin “non-parties who interfere with196

the implementation of court orders establishing public rights.”  Washington v. Fishing Vessel

Ass’n, 443 U.S. 658, 692 n.32 (1979).   The Supreme Court has also emphasized that “[t]he197

power conferred by the [All Writs] Act extends, under appropriate circumstances, to persons

who, though not parties to the original action or engaged in wrongdoing, are in a position to

frustrate the implementation of a court order or the proper administration of justice... and

encompasses even those who have not taken any affirmative action to hinder justice.”  United

States v. New York Telephone Co., 434 U.S. 159, 174 (1977) (citations omitted).  

Accordingly, the All Writs Act vests district courts with the authority to issue orders to

non-parties “when needed to preserve the court’s ability to reach or enforce its decision in a case

over which it has proper jurisdiction.”  In re Baldwin-United Corp., 770 F.2d 328, 338 (2d Cir.

  Accord S.E.C. v. Antar, 831 F. Supp. 380, 399 (D.N.J. 1993) (collecting cases);198

S.E.C. v. Shiv, 379 F. Supp.2d 609, 619 (S.D.N.Y. 2005); F.T.C. v. Think Achievement Corp.,144 F. Supp.2d 1013, 1020 (N.D. Ind. 2000) (collecting cases); S.E.C. v. The Infinity Group Co.,27 F. Supp. 2d 559, 563 (E.D. Pa. 1998).

177

1985).  Accord United States v. City of Detroit, 329 F.3d 515, 522-24 (6th Cir. 2003); United

States v. IBT, 911 F.Supp. 743, 750 (S.D.N.Y. 1996).  For example, “[a] court can obtain

equitable relief from a non-party against whom no wrong doing is alleged if it is established that

the non-party possesses illegally obtained profits but has no legitimate claim to them.  Courts

have jurisdiction to decide the legitimacy of ownership claims made by non-parties alleged to be

[illegal] proceeds.”  S.E.C. v. Cherif, 933 F.2d 403, 414 n.11 (7th Cir. 1991).   See Section 198

VIII (B)(8) below, which discusses relief against non-parties in Government Civil RICO cases

involving labor unions.

D. Removal Orders and Prohibition of Future Activities May Implicate PropertyRights Protected By Due Process

1. As noted above in Section II (C)(4), civil RICO, 18 U.S.C. § 1964(a), empowers

district courts to remove a person from a position of employment with an entity and to prohibit

such person from holding that position in the future.  This remedy should be carefully considered

because it may implicate an individual’s constitutional protection to due precess.  The Fifth

Amendment to the United States Constitution provides, in relevant part, that “[n]o person shall

be... deprived of life, liberty, or property, without due process of law.”  However, such property

interests subject to due process protections “are not created by the Constitution.  Rather, they are

created and their dimensions are defined by existing rules or understandings that stem from an

independent source such as state law - rules or understandings that secure certain benefits and

that support claims of entitlement to those benefits .”  Bd. of Regents of State Colleges v. Roth,

  See, e.g., Perry v. Sindermann, 408 U.S. 593, 600-01 (1972); Lynch v. United States,199

292 U.S. 571, 579 (1934); United States v. Gotti, 459 F.3d 296, 327-28 (2d Cir. 2006); UnitedStates v. Granberry, 908 F.2d 278, 279-80 (8th Cir. 1990); United States v. Rastelli, 870 F.2d822, 831 (2d Cir. 1989); United States v. Local 560 of Int’l Bhd. of Teamsters, 780 F.2d 267,280-82 (3d Cir. 1985).

  Accord Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538-39 (1985); Bishop200

v. Wood, 426 U.S. 341, 344-45 (1976); Perry v. Sindermann, 408 U.S. 593 599-602 (1972);Greene v. McElroy, 360 U.S. 474, 492 (1959) (“[T]he right to hold specific private employmentand to follow a chosen profession free from unreasonable government interference comes withinthe ‘liberty’ and ‘property’ concepts of the Fifth Amendment.”); DiMartini v. Ferrin, 906 F.2d465, 466 (9th Cir. 1950) (A person “has a clearly established constitutional right to be free fromunreasonable government interference with his private employment.”).

178

408 U.S. 564, 577 (1972).  Accord Ruckelshaus v. Monsanto Co., 467 U.S.  986, 1001 (1984). 

Federal law, regulations, contractual agreements and licenses may also give rise to property

interests protected by due process.   Moreover, while the underlying property right may be199

created by state law or regulation, “federal constitutional law determines whether that interest

rises to the level of a legitimate claim of entitlement protected by the Due Process Clause.” 

Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1, 9 (1978) (citations omitted).  

In accordance with these principles, it has long been recognized that a person has a

property right in continued employment when a person has “more than an abstract need or desire

for it,” but rather can demonstrate that he has “a legitimate claim of entitlement to it.”  Roth, 

408 U.S. at 577.    For example, in Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538-39200

(1985), the Supreme Court ruled that a public civil service employee had a property right in his

job when a state statute provided that such civil service employees were “entitled to retain their

positions ‘during good behavior and efficient service,’ [and] could not be dismissed ‘except...

for... misfeasance, malfeasance, or nonfeasance in office.’” (citations omitted).

  See also Bishop v. Wood, 426 U.S. 341, 344-45 (1976)(stating that “[a] property201

interest in employment can, of course, be created by ordinance, or by an implied contract,” butthat a property right in employment is not established by a “position [held] at the will andpleasure” of the employer); Bd. of Regents v. Roth, 408 U.S. at 567-68 (holding that a teacher,with no-tenure rights, hired for one year who is not rehired at the end of the one-year period doesnot have a property right in continued employment); Federal Deposit Ins. Corp. v. Henderson,940 F.2d 465, 475 (9th Cir. 1991) (“[I]n most states, the general rule is that a public employeeterminable at will does not have a property interest in continued employment, while an employeewhose contract provides, either expressly or by implication, that he may only be terminated forcause does have such an interest.”) (citations omitted).

179

Moreover, in Perry v. Sindermann, 408 U.S. 593, 599-602 (1972), the Supreme Court

held that notwithstanding the absence of a formal contractual tenure provision, a college

professor “might be able to show from the circumstances of [his service for a number of years] -

and from other relevant facts - that he has a legitimate claim of entitlement to job tenure.”  408

U.S. at 602.  In particular, the Supreme Court stated that the college teacher at issue could

establish such an entitlement from: (1) his college’s “official Faculty Guide” that stated that “the

College wishes the faculty member to feel that he has permanent tenure as long as his teaching

services are satisfactory and as long as he displays a cooperative attitude toward his co-workers

and his superiors, and as long as he is happy in his work,” and (2) upon guidelines that a person

“who had been employed as a teacher in the state college and university system for seven years or

more has some form of job tenure.” 408 U.S. at 600.  The Court remanded the case to allow the

petitioner  to make such a showing.201

2.a. Applying the forgoing authority, an officer or employee of a private corporation or

other legitimate private entity may have a property interest in continued employment protected by

due process from governmental interference when he demonstrates that he has a legitimate claim

of entitlement to it, such as when he has an employment contract guaranteeing continued

employment for a term of years, unless removed for just cause, misconduct or malfeasance.

180

For example, in Federal Deposit Ins. Corp. v. Henderson, 940 F.2d 465, 467-70 (9th Cir.

1991), a former bank president sued the Supervisor of Banking for the State of Washington under 

42 U.S.C. § 1983, alleging, among other matters, that actions of the Supervisor of Banking

pressuring his employer, a private bank, to fire him deprived him of his property interest to

continued employment.  The Ninth Circuit held that the bank president’s employment contract,

requiring that he be given ninety days notice if he was to be terminated, created a property

interest in his continued employment with the bank for ninety days.  940 F.2d at 476.  The Ninth

Circuit also held that:

The fact that the private employer and not the governmentalofficials actually fired the plaintiff did not shield the officials fromliability, because they “set in motion a series of acts by otherswhich they knew or reasonably should have known would causeothers to inflict the constitutional injury.”

940 F.2d at 476 (citations omitted).

Similarly, in Merrit v. Mackey, 827 F.2d 1368, 1370 (9th Cir. 1987), the plaintiff sued

federal and state officials under 42 U.S.C. § 1983, alleging that they caused his termination from

employment with a private corporation providing alcohol and drug counseling services without a

hearing, thereby depriving him of liberty and property interests without due process, in violation

of the Fifth and Fourteenth Amendments.  The Ninth Circuit held that the plaintiff had a property

interest in continued employment because his employer’s “personnel policies stated that

permanent employees could be fired only for cause.”  Id. at 1371.  The Ninth Circuit also held

that even though the plaintiff was fired by a private employer, state activity was responsible for

the plaintiff’s discharge because government officials threatened to cut off state and federal

funding for the employer unless it fired the plaintiff.  Id. at 1370-72.  Accordingly, the Ninth

  The constitution and bylaws of a union constitute a contract between a union member202

and his union.  See, e.g., Shea v. McCarthy, 953 F.2d 29, 31-32 (2d Cir. 1992); Doty v. Sewall,908 F.2d 1053, 1060 (1st Cir.1990) (citing cases).

  In that respect, 29 U.S.C. § 481(a) provides:203

Every national or international labor organization, except afederation of national or international labor organizations, shallelect its officers not less often than once every five years either bysecret ballot among the members in good standing or at aconvention of delegates chosen by secret ballot.

In turn, 29 U.S.C. §§ 481(h) and (i) provide:

(continued...)181

Circuit concluded that the plaintiff was entitled to “some predeprivation process.”   Id. at 1372. 

See also Stein v. Bd. of City of New York, 792 F.2d 13, 15-17(2d Cir. 1986) (holding that a bus

driver’s contract, providing that he could not be discharged except for “good cause,” created a

property interest in continued employment, entitling him to adequate notice and a hearing before

being discharged); McLaurin v. Fischer, 768 F.2d 98, 102-03 (6th Cir. 1985) (ruling that a

reasonable jury could find that the plaintiff had a property interest in his continued employment

as the head of the Division of Neurosurgery of a university hospital where there was a mutual

understanding between the plaintiff and his employer that his employment was permanent unless

he became physically unable to perform his job or he resigned).

b. A labor union official or union employee, likewise, may have a property interest

in his continued employment or union position when the terms of his employment contract or his

union’s constitution or bylaws guarantee his continued employment or his position for a fixed

term, or unless removed for cause.   Operation of federal law may also give rise to a union202

official’s property right in his union office.203

(...continued)203

(h) Removal of officers guilty of serious misconduct

If the Secretary [of Labor], upon application of any member of alocal labor organization, finds after hearing in accordance withsubchapter II of chapter 5 of Title 5 that the constitution andbylaws of such labor organization do not provide an adequateprocedure for the removal of an elected officer guilty of seriousmisconduct, such officer may be removed, for cause shown andafter notice and hearing, by the members in good standing votingin a secret ballot, conducted by the officers of such labororganization in accordance with its constitution and bylaws insofaras they are not inconsistent with the provisions of this subchapter.

(i) Rules and regulations for determining adequacy of removal procedures

The Secretary [of Labor] shall promulgate rules and regulationsprescribing minimum standards and procedures for determining theadequacy of the removal procedures to which reference is made insubsection (h) of this section.

182

For example, in Brennan v. Silvergate District Lodge No. 50, Int’l Ass’n of Machinists,

503 F.2d 800, 807 (9th Cir. 1974), the court held that an order denying an incumbent union local

officer’s motion to intervene as a party-defendant in an action by the Secretary of Labor to have

the officer’s election set aside, did not deprive “him of property, the right to hold his office,

without due process, because” the officer had another remedy under 29 U.S.C. § 464(a) to assert

his claims.

Moreover, in United States v. Local 560, Int’l Bhd. of Teamsters, 780 F.2d 267, 275, 281-

82 (3d Cir. 1986), the Third Circuit held that provisions of the Labor Management Reporting and

Disclosure Act (LMRDA), 29 U.S.C. § 411, which guarantee the rights of union members to,

inter alia, “nominate candidates, to vote in elections or referendums of the labor organization,”

gave rise to union members’ property rights to participate in internal union democracy.  In so

ruling, the Third Circuit quoted with approval a statement by another court that:

  For a discussion of union members’ property rights to participation in union204

democracy, see Section VIII(F) below.183

If a member has a “property right” in his position on the roster. . . .he has an equally enforceable property right in the election of menwho will represent him in dealing with his economic security andcollective bargaining where that right exists by virtue of expresscontract in the language of a union constitution. 

Id. at 281.  See also United States v. Gotti, 459 F.3d 296, 321, 327 (2d Cir. 2006) (stating that

“the right of the members of a union to democratic participation in a union election is property,”

and upholding a jury instruction that union members have a property right in “union positions.”  204

3. A person who has such a property interest in continued employment may,

nonetheless, be removed from his employment, provided he is afforded “due process.”  The

Supreme Court has described the process that is due in such circumstances as follows:

An essential principle of due process is that a deprivation of life,liberty, or property “be preceded by notice and opportunity forhearing appropriate to the nature of the case.”. . .. We havedescribed “the root requirement” of the Due Process Clause asbeing “that an individual be given an opportunity for a hearingbefore he is deprived of any significant property interest.” . .. . Thisprinciple recognizes “some kind of hearing” prior to the dischargeof an employee who has a constitutionally protected propertyinterest in his employment.”

Loudermill, 470 U.S. at 542 (citations omitted).  Accord Bd. of Regents v. Roth, 408 U.S. at 570-

71.

The Supreme Court has not specified “any minimally acceptable procedures for

termination of employment” that govern all such cases.  See Davis v. Scherer, 468 U.S. 183, 193

 n .10 (1984).  Rather, the determination of what process is due “would require a careful

balancing of the competing interests - of the employee and the [government] - implicated in the

official decision at issue.”  Id. at 192 n.10.  Accord Bell v. Burson, 402 U.S. 535, 541-42 (1971)

184

(“The hearing required by the Due Process Clause must be ‘meaningful’ . . . and ‘appropriate to

the nature of the case’”) (citations omitted); Boddie v. Connecticut, 401 U.S. 371, 377-80 (1971)

(same); Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 313-15 (1950) (same).

For example, in Arnett v. Kennedy, 416 U.S. 134, 150 (1974), a federal statute created a

property right to continued employment by providing that an employee had the right not to be

discharged “except for such cause as will promote the efficiency of said service.”  The Supreme

Court rejected a claim by a covered employee that his discharge for misconduct violated due

process because he was not afforded “a right to a trial-type hearing before an impartial officer

before he could be removed from his employment.” Id. at 137.  The Supreme Court held that due

process was satisfied because prior to his discharge, the employee was given notice of the

charges and the opportunity to respond orally and in writing.  Id. at 140-58.

Similarly, in Davis v. Scherer, 468 U.S. at 192, the Supreme Court held that procedural

due process was satisfied where a state highway patrol officer was discharged without a formal

pretermination hearing, but was informed several times of the basis for his discharge and had

several opportunities to present his reasons for his retention.  See also Barry v. Barchi, 443 U.S.

55, 65 (1979) (holding that due process was satisfied where a horse trainer, whose license was

suspended without “a formal hearing,” was notified of the basis for suspension “and he was

given more than one opportunity to present his side of the story to the state’s investigators.”).

4. Under the forgoing authority, OCRS maintains that under civil RICO, 18 U.S.C. 

§ 1964(a), a person who has a property right to continued employment in a position or office may

be removed, and barred from holding such a position or office, in compliance with due process

when:

  For a discussion of such removal orders, adjudicatory procedures, and due process in205

Government civil RICO cases involving labor unions, see Sections VIII(B)(4) and (6) below.185

(1) Such person is a named defendant in a civil RICO action pursuant to 18 U.S.C. § 1964(a), and is found to have violated RICO after due notice and atrial, summary judgment, or other appropriate adjudicatory proceeding, or bydefault; or

(2) Such person, whether or not named as a defendant in a civil RICO action, issubject to an injunction issued pursuant to 18 U.S.C. § 1964(a), and is found afterdue notice and an appropriate adjudicatory proceeding, or by default, to haveviolated, or aided and abetted one or more named defendant’s violation of a provision of a district court’s injunction or judgment order that warrants removal;or 

(3) Such person, even though not named as a defendant in a civil RICO action norotherwise subject to an injunction issued pursuant to 18 U.S.C. § 1964(a), isfound after due notice and an appropriate adjudicatory proceeding, or by default,to have aided and abetted an enjoined person’s violation of a district court’sinjunction or judgment order that warrants removal.

See Sections II(C)(4) and VII(D) above and VIII(B)(6) below.

Manifestly, imposition of such a sanction following a full scale trial, as in (1) above,

affords more rights than is minimally required by due process to discharge a person from

employment or a union office.  In the same vein, the adjudicatory procedures typically employed

during the enforcement phase of Government civil RICO cases (which often involve notice of the

charges, an evidentiary hearing in a trial-like adversary proceeding, a right to counsel, and a right

of review by the district court) before removing and barring a person from holding a particular

position or office for a violation of an injunction or judgment order issued pursuant to 18 U.S.C.

§ 1964(a), afford greater rights than the minimum requirements of due process.205

186

E. Court-Appointed Officers in General

1. Courts Have Inherent Authority to Appoint Officers to Assist Them inExecuting Their Duties

As discussed in Section II(A)(2) above, courts are vested with broad equitable powers to

impose highly intrusive remedies to redress unlawful conduct, especially in institutional reform

cases.  As a corollary principle, 

Courts have . . . inherent power to provide themselves withappropriate instruments required for the performance of theirduties. . . . This power includes authority to appoint personsunconnected with the court to aid judges in the performance ofspecific judicial duties. . . . From the commencement of ourGovernment, it has been exercised by the federal courts, whensitting in equity, by appointing, either with or without the consentof the parties, special masters, auditors, examiners andcommissioners.  To take and report testimony; to audit and stateaccounts; to make computations; to determine, where the facts arecomplicated and the evidence voluminous, what questions areactually in issue; to hear conflicting evidence, and make findingsthereon; these are among the purposes for which such aids to thejudges have been appointed.

Ex Parte Peterson, 253 U.S. 300, 312-13 (1920) (citations omitted) (emphasis added).

One commentator has noted:

These court appointed agents are identified by a confusing plethoraof titles: “receiver,” “Master,” “Special Master,” “Master HearingOfficer,” “Monitor,” . . . .   “Administrator” . . . . Terminologicalconfusion is compounded by functional confusion.  A “Master”may at the same time gather information, make recommendations,and act to implement a decree.  While the first two activities arepart of the Master’s traditional role, the latter is not.

Special Project:  The Remedies Process in Institutional Reform Litigation, 78 COLUM. L. REV.

784, 826-27 (1978) (footnotes omitted) (“Special Project”).

  In LaBuy v. Howes Leather Co., 352 U.S. 249 (1957), the Supreme Court held that206

“an extremely congested calendar” (id. at 253) did not satisfy the “exceptional condition”requirement of Rule 53(a), and accordingly ruled that the trial court abused its discretion inappointing a special master to “hear” the case and to conduct hearings and prepare findings offact and conclusions of law in a civil anti-trust case that was expected to take six weeks to try. “[S]everal cases decided subsequent to LaBuy indicate that the trial court’s authority to appointspecial masters is not [unduly] limited” by LaBuy.  See United States v. Conservation ChemicalCo., 106 F.R.D. 210, 218-222 (W.D. Mo. 1985) (collecting cases).  Indeed, the “United StatesSupreme Court, exercising its original jurisdiction to resolve governmental boundary disputespursuant to Art.  III § 2 of the Constitution, regularly appoints Special Masters to hold andconduct hearings and to submit comprehensive recommendations resolving contested issues.”  Id.at 218, citing United States v. Louisiana, 470 U.S. 93, 97-101, 115 (1985); United States v.Maine, 469 U.S. 504, 506, 526 (1985); Oklahoma v. Arkansas, 469 U.S. 1101 (1985); Texas v.New Mexico, 465 U.S. 1063 (1984).  See also cases cited below in Sections VII(E)(2) and (3)and VIII(B)(3) and (4).

187

An examination of Rules 53 and 66, FED. R. CIV. P., illustrates this potentially confusing

mix of labels and functions.  Rule 53 provides, in relevant part, as follows:

(a) Appointment.

(1) Unless a statute provides otherwise, a court may appoint a master only to:(A) perform duties consented to by the parties;(B) hold trial proceedings and make or recommend findings of fact on

issues to be decided by the court without a jury if appointment iswarranted by(i) some exceptional condition,  or206

(ii) the need to perform an accounting or resolve a difficultcomputation of damages; or 

(C) address pretrial and post-trial matters that cannot be addressedeffectively and timely by an available district judge or magistratejudge of the district.

.   .   .  .(d) Evidentiary Hearings.  Unless the appointing order expressly directs otherwise, a

master conducting an evidentiary hearing may exercise the power of theappointing court to compel, take, and record evidence.

.   .   .  .(g) Action on Master’s Order, Report, or Recommendations.

(1) Action.  In acting on a master’s order, report, or recommendations, thecourt must afford an opportunity to be heard and may receive evidence,and may: adopt or affirm; modify; wholly or partly reject or reverse; orresubmit to the master with instructions.

  In that regard, Rule 53 specifically addresses only a master’s functions involving207

making or recommending findings of fact, “accounting” or “difficult computation of damages,”and does not address a court-officer’s broader services in devising appropriate remedies,especially in institutional reform cases.  See Sections II(A)(2) above, and VIII(B)(3) below.

188

(2) Time To Object or Move.  A party may file objections to - - or a motion toadopt or modify - - the master’s order, report, or recommendations no laterthan 20 days from the time the master’s order, report, or recommendationsare served, unless the court sets a different time.

(3) Fact Findings.  The court must decide de novo all objections to findings offact made or recommended by a master unless the parties stipulate with thecourt’s consent that:(A) the master’s findings will be reviewed for clear error, or(B) the findings of a master appointed under Rule 53(a)(1)(A) or (C)

will be final.(4) Legal Conclusions. The court must decide de novo all objections to

conclusions of law made or recommended by a master.(5) Procedural Matters.  Unless the order of appointment establishes a

different standard of review, the court may set aside a master’s ruling on aprocedural matter only for an abuse of discretion.

Rule 66, FED. R. CIV. P. provides:

An action wherein a receiver has been appointed shall not bedismissed except by order of the court.  The practice in theadministration of estates by receivers or by other similar officersappointed by the court shall be in accordance with the practiceheretofore followed in the courts of the United States or asprovided in rules promulgated by the district courts.  In all otherrespects the action in which the appointment of a receiver is soughtor which is brought by or against a receiver is governed by theserules.

Rules 53 and 66 address only some of the functions often assigned to court-appointed

officers.  Significantly, Rules 53 and 66 do not squarely address the various roles of court-

appointed officers to assist the court in devising and implementing remedies  or in207

administering the operations of public or private wrongdoers to carry out court-ordered relief and

to prevent future unlawful conduct.  See Special Project, 78 COLUM. L. REV. at 826, n.322 (“The

terms ‘master’ and ‘receiver’ are used in the federal rules.  Fed. R. Civ. P. 53, 66.  However, the

  See, e.g., Trull v. Dayco Products, LLC, 178 Fed. Appx. 247, at * 3 (4th Cir. 2006)208

(unpublished) (“Defendants’ reliance on Rule 53 of the Federal Rules of Civil Procedure ismisguided, as the district court appointed the special master based on its inherent authority tofashion appropriate post-verdict relief.”); Jenkins by Agyei v. State of Mo., 890 F.2d 65, 67 (8thCir. 1989) (“The district court did not rely upon Rule 53 when it created the MonitoringCommittee, and we need not decide whether its actions are consistent with that Rule” because“‘Rule 53 does not terminate or modify the district court’s inherent equitable power to appoint aperson, whatever be his title, to assist it in administering a remedy.’”)(citation omitted); Reilly v.United States, 863 F.2d 149, 154 n.4 (1st Cir. 1988) (noting that because district court’s authorityto appoint a technical advisor “inheres generally in a district court,” court of appeals need notdecide whether Rule 53 served as additional source of such authority); Nat’l Org. for the Reformof Marijuana Laws v. Mullen, 828 F.2d 536, 544 (9th Cir. 1987) (ruling that in addition to Rule53, district court had inherent authority under the All Writs Act to appoint a special master tomonitor compliance with an injunction); Ruiz v. Estelle, 679 F.2d 1115, 1161 (5th Cir. 1982),vacated in part on other grounds, 688 F.2d 266 (5th Cir. 1982) (“[R]ule 53 does not terminate ormodify the district court’s inherent equitable power to appoint a person, whatever be his title, toassist it in administering a remedy”); Reed v. Cleveland Bd. of Ed., 607 F.2d 737, 743 (6th Cir.1979) (“[A] judge in equity has inherent power to appoint persons from outside the court systemfor assistance,” especially “in the remedial phase of a school desegregation or institutional reform

(continued...)189

use of ‘masters’ as court-appointed agents to administer the remedy bears little relation to the

traditional use of masters envisaged in the federal rules”).

More fundamentally, Rules 53 and 66 are not the exclusive bases of authority for

appointing officers.  Rather, as noted above, “courts have. . . inherent authority. . . to appoint

persons. . . to aid judges in the performance of specific judicial duties.”  Ex Parte Peterson, 

253 U.S. at 312.  As Judge Irving Kaufman observed:

Over and above the authority contained in Rule 53 to direct areference, there has always existed in the federal courts an inherentauthority to appoint masters as a natural concomitant of theirjudicial powers. . . .[R]ule 53 was intended merely as a codificationof pre-existing procedures, and it may be assumed that referencessanctioned by long usage and practice in the federal courts werenot intended to be forever foreclosed by the rule.

Irving R. Kaufman, Masters in the Federal Courts: Rule 53, 58 COLUM. L. REV. 452, 462

(1958).  208

(...continued)208

case”); Schwimmer v. United States, 232 F.2d 855, 865 (8th Cir. 1956) (“Beyond the provisionsof Rule 53 . . . for appointing and making references to Masters, a Federal District Court has ‘theinherent power to supply itself with this instrument for the administration of justice whendeemed by it essential’”) (citation omitted); United States v. State of Conn., 931 F. Supp. 974,984 (D. Conn. 1996) (“It is well settled in the law that federal courts have the inherent power toappoint an agent to oversee the implementation of its consent decrees. . . ‘[b]eyond theprovisions of [FED. R. CIV. P. 53]’”) (citation omitted); Powell v. Ward, 487 F. Supp. 917, 935(S.D.N.Y. 1980), aff’d 643 F. 2d 924 (2d Cir. 1981) (“Courts have inherent authority to appointnonjudicial officers to aid in carrying out their judicial functions.”); Jordan v. Wolke, 75 F.R.D.696, 701 (E.D. Wis. 1977) (appointing a special master “pursuant to the court’s general equitypowers and not under Rule 53 ”).  Cf. Young v. United States ex rel. Vuitton et Fils S.A., 481U.S. 787 (1987) (holding that courts have inherent authority to appoint counsel to investigate andprosecute violations of a court’s order).

  See Section VIII(B)(3) below,  which discusses court-appointed officers’ performance209

of these functions in Government civil RICO case involving labor unions.190

2. Court-Appointed Officers Perform Varied Functions

In light of above-referenced concerns regarding confusing titles, OCRS’ analysis below

focuses on three distinct, albeit related, categories of functions typically performed by court-

appointed officers to assist courts in executing their equitable powers, rather than focusing on the

titles of such officers: (1) devising remedies; (2) administering operations of an institutional

defendant; and (3) monitoring compliance with court-ordered relief and related adjudicatory

functions.  Of course, in any particular case, a court-appointed officer may perform more than

one of these functions and may be given different titles.209

a. Devising Remedies -- 

Court-appointed officers are often assigned the tasks of gathering information and making

recommendations as to appropriate remedies in complex litigation.  For example, in Swann v.

Bd. of Educ., 402 U.S. at 9-11, 18-32, a court-appointed expert devised a comprehensive school

desegregation plan, adopted by the district court, involving re-zoning, busing of students, and re-

  See also EEOC v. Local 638, 532 F.2d 821, 829-30 (2d Cir. 1976) (approving court-210

appointed administrator with broad powers to develop and enforce detailed plans to remedyracially discriminatory employment practices); Hart v. Cmty. Sch. Bd. of Educ., N.Y. Sch. Dist.#21, 512 F.2d at 42-43, 52 (approving court-appointed master to devise plans for schooldesegregation); SEC v. Heritage Trust Co., 402 F. Supp. 744, 754 (D. Ariz. 1975) (“appointment

(continued...)191

assignment of teachers to different schools.

Similarly, in Sheet Metal Workers v. EEOC, supra, 478 U.S. 421, the district court found

that Local 28 of the Sheet Metal Workers Union (“Local 28”) discriminated against non-white

workers in recruitment, selection, training and admission to the union.  The district court ordered

the parties “to devise and to implement recruitment and admission procedures designed to

achieve [a goal of 29% non-white membership] under the supervision of the court-appointed

administrator.”  Id. at 432.  The court-appointed administrator proposed, and the district court

adopted, an affirmative action program requiring Local 28 to adopt various changes to its

practices and policies, including requiring Local 28 “to offer annual, nondiscriminatory

journeyman and apprentice examinations, select members according to a white-non-white ratio to

be negotiated by the parties, conduct extensive recruitment and publicity campaigns aimed at

minorities, secure the administrator’s consent before issuing temporary work permits, and

maintain detailed membership records.”  Id. at 432-33.

The Supreme Court rejected Local 28's argument that “the District Court’s appointment

of an administrator with broad powers to supervise its compliance with the court’s orders [was]

an unjustifiable interference with its statutory right to self-governance.”  Id. at 481-82.  The

Supreme Court stated: “While the administrator may substantially interfere with petitioner’s

membership operations, such ‘interference’ is necessary to put an end to [Local 28's]

discriminatory ways.”  Id. at 482.  210

(...continued)210

of a receiver. . . to take charge of all books, records and assets of defendant corporation [foundliable for violations of securities laws], and to investigate and make recommendations to theCourt as to proceedings to be taken in the interest of and for the protection of all investors andtrustors”). 

  See e.g., Morgan v. McDonough, 540 F.2d 527, 529-35 (1st Cir. 1976) (upholding the211

power of the district court to appoint a receiver for South Boston High School with broad powersto devise plans to enroll students and to renovate the school, to evaluate the qualifications ofpersonnel and to transfer personnel, and to make other proposals to achieve schooldesegregation); EEOC v. Local 638, 532 F.2d at 829 (“a court-appointed administrator is grantedextensive supervisory power over Local 28” including authority “to develop and enforce”detailed plans to remedy racially discriminatory employment practices); SEC v. Bartlett, 422F.2d 475 (8th Cir. 1970) (appointing a receiver to liquidate corporate defendant’s assets wherethe defendant violated securities laws); Turner v. Goolsby, 255 F. Supp. 724, 730 (S.D. Ga.1966) (receiver appointed to implement a plan to desegregate a school system); see also Section VIII(B)(3) below.

192

b. Administering Operations - - 

Court appointed officers, typically titled “Administrator,” “Trustee” or “Receiver,” are

also assigned the duties of taking over the management of all or parts of an institutional

defendant’s operations.  Such function “extends beyond that of the Master, Monitor, or

Mediator.”   See generally Special Project, 78 COLUM. L. REV. at 831.211

c. Monitoring Compliance and Adjudicatory Functions -- 

The Supreme Court has long recognized the authority of courts in equity to appoint

officers “[t]o take and report testimony. . . to hear conflicting evidence, and make findings

thereon.”  Ex Parte Peterson, 253 U.S. at 313.  See also California v. Texas, 459 U.S. 963 (1982)

(Mem.) (The Supreme Court approved of the appointment of a Special Master “with authority to

fix the time and conditions for the filing of additional pleadings and to direct subsequent

proceedings, and with authority to summon witnesses, issue subpoenas, and take such evidence

as may be introduced and such as he  may deem necessary to call for . . . [and] to submit such

  See, e.g., Juan F. v. Weicker, 37 F.3d 874, 879-80 (2d Cir. 1994); In Re Pearson, 990212

F.2d 653, 659 (1st Cir. 1993); Nat’l. Org. for the Reform of Marijuana Laws, 828 F.2d at 542-45;United States v. Suquamish Indian Tribe of Washington, 901 F.2d 772, 774-75 (9th Cir. 1990);Williams v. Lane, 851 F.2d 867, 884 (7th Cir. 1988); In Re Armco, Inc., 770 F.2d 103, 105 (8thCir. 1985); New York State Ass’n For Retarded Children v. Carey, 706 F.2d 956, 962-65 (2d Cir.1983); Ruiz, 679 F.2d at 1159-62; Rosen v. Tennessee Com’r of Finance and Admin., 204 F.Supp. 2d 1061, 1095 (M.D. Tenn. 2001); United States v. Connecticut, 931 F. Supp. at 984(collecting cases); Taylor v. Perini, 413 F. Supp. 189 (N.D. Ohio 1976); Bell v. Hall, 392 F.Supp. 274 (D. Mass. 1975); United States v. Conservation Chem. Co., 106 F.R.D. 210, 218-222(W.D. Mo. 1985) (collecting cases).

  See, e.g., Cobell v. Norton, 392 F.3d 461, 476-78 (D.C. Cir. 2004); Stauble v.213

Warrob, 977 F.2d 690, 695-96 (1st Cir. 1992); In Re Bituminous Coal Operators’ Ass’n, Inc., (continued...)

193

reports as he may deem appropriate.”); Mississippi v. Arkansas, 402 U.S. 926 (1971) (same);

Arizona v. California, 347 U.S. 986 (1954) (same); City of Richmond v. United States, 422 U.S.

358, 366-67 (1995) (special master appointed to hold evidentiary hearings and submit

recommended findings of fact and conclusions of law regarding the effect of a municipal

annexation plan on diluting the right of black persons to vote).

Lower courts, likewise, have sanctioned appointing court-officers to assist district courts

in pre-liability adjudication functions, as well as monitoring compliance with court-ordered

relief, including performing adjudicatory functions such as investigating allegations of violations

of court orders, conducting evidentiary hearings, making factual findings, and recommending

sanctions.212

3. Article III Considerations

Appointment of a non-Article III officer to perform adjudicatory functions may constitute

an unconstitutional delegation of judicial powers in violation of Article III of the Constitution

when such a non-judicial officer’s adjudicatory functions usurp the judicial authority of the

district court to decide the dispositive issues in a lawsuit.   As the Supreme Court stated, absent213

(...continued)213

949 F.2d 1165, 1168-69 (D.C. Cir. 1991).

  In Northern Pipeline Co. v. Marathon Pipe Line Co., 458 U.S. 50, 69 (1982), the214

Supreme Court stated that “[t]he distinction between public rights and private rights has not beendefinitively explained in our precedents . . . [but] it suffices to observe that a matter of publicrights must at a minimum arise ‘between the government and others’”) (citation omitted). Manifestly, civil RICO equitable suits brought by the Government under 18 U.S.C. § 1964(a) tovindicate the public’s interests to reform corrupt institutions involve such “a matter of publicrights.”  See Section VIII below.

194

consent of the parties, Article III bars a district court, “of its own motion, or upon the request of

one party,” from “abdicat[ing] its duty to determine by its own judgment the controversy

presented, and devolve that duty upon any of its officers.”  Kimberly v. Arms, 129 U.S. 512, 524

(1889).

However, the Supreme Court has made clear that, in equitable suits involving “public

rights,”  “there is no requirement that, in order to maintain the essential attributes of the judicial214

power, all determination of fact in constitutional courts shall be made by judges.”  Crowell v.

Benson, 285 U.S. 22, 51 (1932).  The Supreme Court added:

In cases of equity and admiralty, it is historic practice to call to theassistance of the courts, without the consent of the parties, mastersand commissioners or assessors, to pass upon certain classes ofquestions, as, for example, to take and state an account or to findthe amount of damages.  While the reports of masters andcommissioners in such cases are essentially of an advisory nature,it has not been the practice to disturb their findings when they areproperly based upon evidence, in the absence of errors of law andthe parties have no right to demand that the court shallredetermine the facts.

Crowell, 285 U.S. at 51-52 (emphasis added).

In Crowell, the Supreme Court rejected an Article III challenge to a statutory scheme that

authorized an administrative agency to make initial factual determinations pursuant to a federal

195

statute requiring employers to compensate their employees for work-related injuries occurring

upon the navigable waters of the United States.  Id. at 37-45.  The Court noted that, under that

statutory scheme, “[i]n conducting investigations and hearings, the [Administrative Agency] is

not bound by common law or statutory rules of evidence, or by technical or formal rules of

procedure, except as the Act provides.”  Id. at 43.

In upholding this statutory scheme, the Supreme Court found it significant that the

administrative agency had the “limited” role “of determining the questions of fact,” the statute

reserved “full authority of the court to deal with matters of law” (id. at 54), and that the

administrative agency did not have the power to enforce any of its compensation orders.  Rather,

“every compensation order was appealable to the appropriate federal district court, which had the

sole power to enforce it or set it aside, depending upon whether the court determined it to be ‘in

accordance with law’ and supported by evidence in the record.”  See Northern Pipeline Co. v.

Marathon Pipeline Co., 458 U.S. 50, 78 (1982) quoting Crowell, 285 U.S. at 44.

Similarly, in United States v. Raddatz, 447 U.S. 677 (1980), the Supreme Court held that

the 1978 Federal Magistrates Act, which permitted district court judges to refer certain pretrial

motions, including motions to suppress evidence based on alleged constitutional violations, to a

magistrate for initial determination, did not violate Article III of the Constitution.  The Act also

provided that the district court shall make a “de novo determination” of those portions of the

magistrate’s report, findings, or recommendations to which objection is made.  Id. at 673.  The

Supreme Court stated that:

although the statute permits the district court to give to themagistrate’s proposed findings of fact and recommendations “suchweight as [their] merit commands and the sound discretion of thejudge warrants,”. . .  that delegation does not violate Art. III so long

196

as the ultimate decision is made by the district court.

Id. at 683 (citation omitted; brackets in original).

Morever, in Atlas Roofing Co. v. Occupational Safety and Health Review Comm’n., 430

U.S. 442 (1977), the Supreme Court held that the Seventh Amendment does not prohibit

Congress from assigning to an administrative agency the task of adjudicating violations of the

Occupational Safety and Health Act of 1970.  The administrative agency’s findings of a violation

and imposition of sanctions were final, subject to judicial review in the appropriate court of

appeals.  Id. at 446-47.  The Supreme Court explained:

At least in cases in which “public rights” are being litigated - e.g.,cases in which the Government sues in its sovereign capacity toenforce public rights created by statutes within the power ofCongress to enact - the Seventh Amendment does not prohibitCongress from assigning the factfinding function and initialadjudication to an administrative forum with which the jury wouldbe incompatible.

. . . In cases which do involve only “private rights,” this Court hasaccepted factfinding by an administrative agency, withoutintervention by a jury, only as an adjunct to an Art. III court,analogizing the agency to a jury or a special master and permittingit in admiralty cases to perform the function of the special master.

Id. at 450 and n.7.

The foregoing authority demonstrates that it does not violate Article III to assign

adjudicatory functions, including making factual findings, to a non-Article III body, when the

court retains its authority to decide dispositive issues of liability and remedies.  In accordance

with the foregoing authority, courts have noted that it did not violate Article III to assign a variety

of adjudicatory functions to court-appointed officers, provided that the district court retains

sufficient authority to decide the dispositive issues.  For example, in  Stauble v. Warrob, Inc.,

197

977 F.2d 690 (1st Cir. 1992), the court stated:

Article III does not require that a district judge find every fact anddetermine every issue of law involved in a case.  In respect to . . . remedy-related issues . . . a master may be appointed to makefindings of fact and recommend conclusions of law.  As long as thedistrict court discerns sufficient supporting evidence and issatisfied that the master applied the correct legal standards, it mayrely on the master’s report as part of its own determination ofliability.

Id. at 695.

Similarly, in In Re Armco, Inc., 770 F.2d 103 (8th Cir. 1985), the court ruled:

If the district court determines that liability rests with some or allof the parties, it may request the master to conduct evidentiaryrehearings with respect to damages and alternative relief and makerecommendations with respect to these matters.  It may also directthe magistrate to monitor and supervise any injunctive reliefgranted and to make reports to it with respect to compliance withany decrees entered.

Id. at 105.

Moreover, in United States v. Conservation Chem. Co., 106 F.R.D. 210 (W.D. Mo.

1985), the district court appointed a Special Master with “the power to order and preside over

pretrial hearings, the authority to supervise and issue recommendations regarding pretrial

matters, and the authority to hold hearings and issue recommendations on the claims for

inclusion in any injunctive relief order and appointment of costs.”  Id. at 216.  The “court

expressly reserved its judicial authority and responsibility to make the ultimate determinations on

all issues.”  Id.  The court concluded that the scope of the Special Master’s authority “does not

violate the constraints of Article III because the ultimate decision making authority clearly

  See also In re Pearson, 990 F.2d 653, 655, 659 (1st Cir. 1993) (holding that Article III215

was not violated by appointing a special master to assist in the implementation of a consentdecree “to analyze ‘the impact of existing and pending legislation on the consent decree’ and on‘the operation of the Treatment Center’; to study all unresolved claims alleging violations of theconsent decrees; and to advise the court concerning the Treatments Center’s operation and thecontinued viability of the King decrees.”); Jenkins By Agyei, 890 F.2d at 66-67 (authorizingcourt-appointed officers to decide any dispute involving interpretation of the district court’sdesegregation orders did not violate Article III when the district court retained de novo review).

  See, e.g., Kokkonem v. Guardian Life Ins. Co. of America, 511 U.S. 375, 380 (1994);216

Young, 481 U.S. at 793-96; Shillitani v. United States, 384 U.S. 364, 370 (1966); Michaelson v.United States ex rel Chicago, St. P., M., & R. Co., 266 U.S. 42, 65-66 (1924); Armstrong v.Guccione, 470 F.3d 89, 103-106 (2d Cir. 2006).

  18 U.S.C. § 401 provides as follows:217

A court of the United States shall have power to punish by fine or imprisonment,or both, at its discretion, such contempt of its authority, and none other, as -

(1) misbehavior of any person in its presence or so near theretoas to obstruct the administration of justice;

(2) misbehavior of any of its officers in their officialtransactions;

(3) disobedience or resistence to its lawful writ, process, order,rule, decree, or command.

See also 28 U.S.C. § 1826.

  See, e.g., Armstrong, 470 F.3d at 100-05.218

198

remains with the District Court.”  Id. at 234.215

F. Contempt

1. Determining Whether Contempt is Civil or Criminal in Nature

Courts have inherent authority to enforce their orders through contempt sanctions and to

appoint private attorneys to investigate and prosecute a violation of a court’s order.   Moreover,216

18 U.S.C. § 401  authorizes courts to impose both civil and criminal contempt sanctions217 218

under the following principles.

199

a. The Bagwell Decision

In Int’l Union, United Mine Workers of America v. Bagwell, 512 U.S. 821 (1994)

(“Bagwell”), the Supreme Court set forth the basic principles to determine whether a contempt

sanction is considered civil or criminal, stating:

In the leading early case addressing this issue in the context ofimprisonment, Gompers v. Bucks Stove & Range Co., 221 U.S., at441, the Court emphasized that whether contempt is civil orcriminal turns on the “character and purpose” of the sanctioninvolved.  Thus, a contempt sanction is considered civil if it “isremedial, and for the benefit of the complainant.  But if it is forcriminal contempt the sentence is punitive, to vindicate theauthority of the court.” Ibid.

Id.  at 827-28.

The Bagwell Court added:

As Gompers recognized, however, the stated purposes of acontempt sanction alone cannot be determinative.  Id., at 443. “[W]hen a court imposes fines and punishments on a contemnor, itis not only vindicating its legal authority to enter the initial courtorder, but it also is seeking to give effect to the law’s purpose ofmodifying the contemnor’s behavior to conform to the termsrequired in the order.”  Hicks, 485 U.S., at 635.  Most contemptsanctions, like most criminal punishments, to some extent punish aprior offense as well as coerce and offender’s future obedience . . .

The paradigmatic coercive, civil contempt sanction, as set forth inGompers, involves confining a contemnor indefinitely until hecomplies with an affirmative command such as an order “to payalimony, or to surrender property ordered to be turned over to areceiver, or to make a conveyance.”  221 U.S. at 442; see alsoMcCrone v. United States, 307 U.S. 61, 64 (1939) (failure totestify).  Imprisonment for a fixed term similarly is coercive whenthe contemnor is given the option of earlier release if he complies. Shillitani v. United States, 384 U.S. 364, 370, n.6 (1966)(upholding as civil “a determinate [2-year] sentence which includesa purge clause”).  In these circumstances, the contemnor is able topurge the contempt and obtain his release by committing anaffirmative act, and thus, “‘carries the keys of his prison in his own

  See, e.g., Armstrong, 470 F. 3d at 101-02; N.Y. State Nat’l Org. for Women v. Terry,219

(continued...)200

pocket.’” Gompers, 221 U.S. , at 442, quoting In re Nevitt, 117 F.448, 451 (CA8 1902).

By contrast, a fixed sentence of imprisonment is punitive andcriminal if it is imposed retrospectively for a “completed act ofdisobedience,” Gompers, 221 U.S., at 443, such that the contemnorcannot avoid or abbreviate the confinement through latercompliance.  Thus, the Gompers Court concluded that a 12-monthsentence imposed on Samuel Gompers for violating an antiboycottinjunction was criminal.  When a contempt involves the priorconduct of an isolated, prohibited act, the resulting sanction has nocoercive effect.  “[T]he defendant is furnished no key, and hecannot shorten the term by promising not to repeat the offense.” Id., at 442.

Bagwell, 512 U.S. at 828-29.

Thus, affording a contemnor the opportunity to purge his contempt by complying with the

order at issue renders a sanction of imprisonment civil in nature.  The same principles apply to

contempt sanctions involving fines.  In that respect, the Bagwell Court stated:

This dichotomy between coercive and punitive imprisonment hasbeen extended to the fine context.  A contempt fine accordingly isconsidered civil and remedial if it either “coerce[s] the defendantinto compliance with the court’s order, [or] . . . compensate[s] thecomplainant for losses sustained.”  United States v. Mine Workers,330 U.S. 258, 303-304 (1947).  Where a fine is not compensatory,it is civil only if the contemnor is afforded an opportunity to purge. See Penfield Co. of Cal. v. SEC, 330 U.S. 585, 590 (1947).  Thus,a “flat, unconditional fine” totaling even as little as $50 announcedafter a finding of contempt is criminal if the contemnor has nosubsequent opportunity to reduce or avoid the fine throughcompliance.  Id., at 588.

Bagwell, 512 U.S. at 829.  Thus, as in the case of imprisonment, affording the contemnor an

opportunity to purge a non-compensatory contempt fine will render the contempt civil in

nature.219

(...continued)219

159 F.3d 86, 94-95 (2d Cir. 1998) (collecting cases).  See also cases cited in Section VII(F)(1)(b)below.

201

Applying these principles, the Bagwell Court concluded that the fines involved rendered

the contempt criminal in nature.  In Bagwell, the trial court enjoined a union and its members

from conducting certain unlawful strike-related activities against certain mining companies, and

“ordered the union to take all steps necessary to ensure compliance with the injunction, to place

supervisors at picket sites, and to report all violations to the court.”  512 U.S. at 823-24. 

Following a civil contempt hearing, the trial court found that the union and its members

committed 72 violations of the injunction.  The trial court also stated that “it would fine the

union $100,000 for any future violent breach of the injunction and $20,000 for any future non-

violent infraction.”  Id. at 824.

In seven subsequent contempt hearings, the trial court found the union in contempt for

more than 400 separate violations of the injunction, many of them violent, and levied

approximately $52 million in fines against the union, payable to the State of Virginia and two

counties most affected by the union’s unlawful activity.  “The trial court required the

contumacious acts to be proved beyond a reasonable doubt, but did not afford the union a right to

a jury trial.”  Id. at 824.

On appeal, the Supreme Court of Virginia held that “[b]ecause the trial court’s

prospective fine schedule was intended to coerce compliance with the injunction and the union

could avoid the fines through obedience . . . . . the fines were civil and coercive and properly

imposed in civil proceedings.”  Id. at 826.

202

The Supreme Court reversed, finding that the “serious” contempt fines were criminal and

constitutionally could be imposed only through a jury trial.  Id. at 826-39.  First, the Court noted

that because none of the parties argued that the challenged fines are “compensatory,” they are

civil only if they were designed to coerce the defendants into compliance with the Court’s orders

and the defendants were afforded an opportunity to purge.  Id. at 834.  Second, the Court rejected

the argument that “the mere fact that the sanctions were announced in advance rendered them

coercive and civil as a matter of constitutional law.”  Id. at 837.  In that regard, the Court

reasoned that the trial court’s statement that it would impose “determinate fines of $20,000 or

$100,000 per violation” for future contempts made them “more closely analogous to fixed,

determinate, retrospective criminal fines which [the union] had no opportunity to purge once

imposed.”  Id. at 837.  Finally, the Court stated:

Other considerations convince us that the fines challenged here arecriminal . . . [T]he union’s contumacy [did not] involve simple,affirmative acts, such as the paradigmatic civil contemptsexamined in Gompers.  Instead, the Virginia trial court leviedcontempt fines for widespread, ongoing, out-of-court violations ofa complex injunction.  In so doing, the court effectively policedpetitioners’ compliance with an entire code of conduct that thecourt itself had imposed.  The union’s contumacy lasted manymonths and spanned a substantial portion of the State.  The finesassessed were serious, totaling over $52 million.  Under suchcircumstances, disinterested  factfinding and evenhandedadjudication were essential, and petitioners were entitled to acriminal jury trial.

Id. at 837-38.

b. Decisions Following Bagwell

(1.) Following Bagwell, circuit courts have held that various contempt fines and

sanctions were civil in nature.  For example, in NLRB v. Ironworkers Local 433, 169 F.3d 1217

203

(9th Cir. 1999), the district court imposed a contempt fine on the Ironworkers union for picketing

in violation of a consent decree.  The Ninth Circuit held that, although the fine was for past

conduct and had a punitive aspect, the fine was civil in nature because it had a remedial purpose

to compel future compliance.  Id. at 1221-22.

Similarly, in N.Y. State Nat’l Org. for Women v. Terry, 159 F.3d 86, 89-90 (2d Cir.

1998), the district court imposed “coercive civil penalties” in the amount of $100,000 against

anti-abortion protestors for violating a court order which enjoined them from blocking access to

abortion clinics.  The penalties were subject to a “purge provision” by which the defendants

could avoid the contempt penalties if they obeyed the injunction.  Id. at 91.  The Second Circuit

held that the penalties were civil in nature because they had a coercive purpose and allowed the

defendants to purge the contempt.  Id. at 94.

In Chadwick v. Janecka, 312 F.3d 597 (3d Cir. 2002), Chadwick petitioned the district

court for habeas corpus relief from his civil contempt incarceration for failure to pay $2.5 million

in a divorce proceeding.  The district court granted the petition, finding that, after petitioner had

spent seven years in prison, the incarceration had lost its coercive effect and had become

punitive.  Id. at 599.  The Third Circuit reversed, holding that there was no federal constitutional

bar to indefinite confinement for civil contempt, so long as the contemnor could still comply with

the order and purge the contempt.  Id. at 613.

Finally, in F.T.C. v. Kuykendall, 312 F.3d 1329 (10th Cir. 2002), the district court

imposed a $39 million contempt fine on defendants for violating an injunction relating to

telemarketing activities.  The fine was payable to the FTC to redress injuries to consumers for the

violations.  The Tenth Circuit held that consumer redress was a classic remedial sanction, was

  In that respect, the court stated that the consent “decree governs the administration of220

an entire governmental program in the District of Columbia.  It prescribes a complete code ofconduct - originally covering everything from bill payments to staffing to air conditioning - thatthe district court has enforced for years.”  Evans, 206 F.3d at 1297.  

204

“not designed to vindicate the authority of the court, and that therefore the fine was civil in

nature.”  Id. at 1337. 

(2.) Following Bagwell, circuit courts have held that various contempt fines and

sanctions were criminal in nature.  For example, in Cobell v. Norton, 334 F.3d 1128 (D.C. Cir.

2003), the district court found the Secretary of Interior “in civil contempt of court,” id. at 1136,

for failing to comply with a court order regarding Native American land trust accounts and

failing to disclose information to the court related to these accounts.  Although the district court

denominated the contempt as “civil,” and there was no “clear sanction,” the Appellate Court held

that it was criminal contempt because it was for past conduct and clearly intended to punish for

violation of a court order.  Id. at 1145-47.

In Evans v. Williams, 206 F.3d 1292 (D.C. Cir. 2000), the district court sanctioned the

District of Columbia for violating a consent decree concerning the management of institutions for

the mentally retarded, and ordered the defendant to pay over $5 million in fines.  The United

States Court of Appeals for the District of Columbia held that this sanction was criminal in

nature because of the complexity of the consent decree,  the lack of an opportunity to purge,220

and the fact that the fine was designed more to punish the city agency for past violations, rather

than gain compliance with the consent decree.  Id. at 1296-97. 

In F.J. Hanshaw Enterprises, Inc. v. Emerald River Dev, Inc., 244 F.3d 1128 (9th Cir.

2001), the district court sanctioned Frederick Hanshaw for $500,000 and ordered $200,000 in

compensatory civil award to the opposing party after Hanshaw attempted to bribe a court receiver

  See also Jake’s, Ltd. v. City of Coates, 356 F.3d 896 (8th Cir. 2004) (the district court221

enjoined the owner of an adult club from operating in violation of city zoning laws and orderedpayment of $1,000 per day if the operation continued.  Id. at 898.  The club continued to operatebut with clothed dancers in an attempt to comply with zoning.  Id.  The district court again foundthe owner in contempt and ordered a $68,000 contempt fine based on the $1,000 per-day penalty. The Eighth Circuit held that the $68,000 fine was criminal in nature, because of the complexityof city zoning laws, the lack of an opportunity to purge, and the non-compensatory nature ofpayment to the court.  Id. at 902-03.); Mellon v. Cessna Aircraft Co., 229 F.3d 1164 (10th Cir.2000) (the district court found Cessna in contempt for refusing to service plaintiff’s aircraft inviolation of a court order.  The district court ordered Cessna to pay the plaintiff for service byanother aircraft company.  The Tenth Circuit held that, although the order appears compensatory,the penalty was criminal in nature because it was imposed before the plaintiff had actuallyincurred any losses.); United States v. Ayres, 166 F.3d 991 (9th Cir. 1999) (the district court heldthe defendant in contempt for failing to testify before the IRS, but allowed a 10-day grace periodduring which the defendant could testify and purge the contempt.  Id. at 994.  For each daybeyond the grace period, the defendant would be fined $500.  The defendant agreed to testify onthe last day of the grace period, but due to scheduling problems attributable to the IRS, he wasnot able to do so.  The district court imposed a contempt fine of $1500 on the defendant fortestifying too late.  Id. at 993-94.  The Ninth Circuit held that although the contempt wasoriginally intended to coerce compliance, it became punitive when Ayres was not permitted topurge by testifying, thereby invoking the heightened procedural protections of Bagwell.  Id. at997.); Crowe v. Smith, 151 F.3d 217, 221-28 (5th Cir. 1998) (the district court sanctioneddefendants $5 million payable to the court for concealing an insurance policy in a civil RICOcase.  Id. at 221.  The Fifth Circuit held that the fines were criminal in nature because they werenot compensatory, and there was no opportunity to purge.)   

205

in a partnership dissolution.  The Ninth Circuit held that the $500,000 sanction was criminal in

nature, because it was “clearly punitive and intended to vindicate the court's authority and the

integrity of the judicial process.”  Id. at 1138.  However, the court held that the $200,000 award

to the opposing party was civil in nature, because it was intended to compensate the opposing

party for costs attributable to the bribe attempt.  Id. at 1143.221

2. Different Elements and Procedures Apply to Criminal and Civil Contempt

In Bagwell, the Supreme Court explained the fundamental differences in procedures that

apply to civil and criminal contempts, stating:

  The Bagwell Court added:222

We address only the procedures required for adjudication ofindirect contempts, i.e., those occurring out of court.  Directcontempts that occur in the court’s presence may be immediatelyadjudged and sanctioned summarily, see, e.g., Ex parte Terry, 128U.S. 289 (1888), and, except for serious criminal contempts inwhich a jury trial is required, Bloom v. Illinois, 391 U.S. 194, 209-210 (1968), the traditional distinction between civil and criminalcontempt proceedings does not pertain, cf. United States v. Wilson,421 U.S. 309, 316 (1975).

Bagwell, 512 U.S. at 826 n.2. 206

“Criminal contempt is a crime in the ordinary sense,” Bloom v.Illinois, 391 U.S. 194, 201 (1968), and “criminal penalties may notbe imposed on someone who has not been afforded the protectionsthat the Constitution requires of such criminal proceedings,” Hicksv. Feiock, 485 U.S. 624, 632 (1988).  See In re Bradley, 318 U.S.50 (1943) (double jeopardy); Cooke v. United States, 267 U.S. 517,537 (1925) (rights to notice of charges, assistance of counsel,summary process, and to present a defense); Gompers v. BucksStove & Range Co., 221 U.S. 418, 444 (1911) (privilege againstself-incrimination, right to proof beyond a reasonable doubt).  For“serious” criminal contempts involving imprisonment of more thansix months, these protections include the right to jury trial.  Bloom,391 U.S., at 199; see also Taylor v. Hayes, 418 U.S. 488, 495(1974).  In contrast, civil contempt sanctions, or those penaltiesdesigned to compel future compliance with a court order, areconsidered to be coercive and avoidable through obedience, andthus may be imposed in an ordinary civil proceeding upon noticeand an opportunity to be heard.  Neither a jury trial nor proofbeyond a reasonable doubt is required.

Id. at 862-27.222

a. Principles Governing Criminal Contempt

To convict a person for criminal contempt for violation of a court’s order, the plaintiff

must establish beyond a reasonable doubt that: (1) the contemnor violated the court’s order; (2)

  See, e.g., Panico v. United States, 375 U.S. 29, 30 (1963); United States v. United223

Mine Workers of America, 330 U.S. 258, 303 (1947); Cobell v. Norton, 334 F.3d 1128, 1147(D.C. Cir. 2003); In re Smothers, 322 F.3d 438, 441-42 (6th Cir. 2003); United States v. Mourad,289 F.3d 174, 188 (1st Cir. 2002); United States v. Vezina, 165 F.3d 176, 178 (2d Cir. 1999);United States v. Rapone, 131 F.3d 188, 192-95 (D.C. Cir. 1997); United States v. Nynex Corp., 8 F.3d 52, 54 (D.C. Cir. 1993); Taberer v. Armstrong World Indus., Inc., 954 F.2d 888, 908 (3dCir. 1992).

  See, e.g., Union Tool Co. v. Wilson, 259 U.S. 107, 110 (1922); S. Railway Co. v.224

Lanham, 403 F.2d 119, 124 (5th Cir. 1968).

  See, e.g., F.J. Hanshaw Enterprises, 244 F.3d at 1135.225

  See, e.g., United States v. Dist. Council of N.Y. City & Vicinity, 2007 WL 1157143 at226

* 3 (2d Cir. April 18, 2007);  United States v. Dowell, 257 F.3d 694, 699 (7th Cir. 2001); UnitedStates v. Ayres, 166 F.3d 991, 995 (9th Cir. 1999); United States v. Mircosoft Corp., 147 F.3d935, 940 (D.C. Cir. 1998); Local 1804-1 Int’l Longshoremen’s Ass’n., 44 F.3d at 1096; HowardJohnson Co., Inc. v. Khimani, 892 F.2d 1512, 1516 (11th Cir. 1990); Perfect Fit Indus., Inc. v.Acme Quilting Co., Inc., 646 F.2d 800, 808 (2d Cir. 1981).

207

the order was clear and reasonably specific; and (3) the contemnor’s violation was willful.  223

And, as noted above, the full panoply of constitutional rights that apply to criminal proceedings

also apply to criminal contempt proceedings.  Moreover, a criminal contempt sanction is

immediately appealable,  and is reviewed under an abuse of discretion standard.224 225

b. Principles Governing Civil Contempt

To establish a person’s liability for civil contempt for violating a court’s order, the

plaintiff must prove by clear and convincing evidence that the contemnor had notice of the

court’s order and violated the court’s order.   Significantly, however, the plaintiff need not226

establish that the contemnor acted willfully or with any other wrongful intent.  In McComb v.

Jacksonville Paper Co., 336 U.S. 187 (1949), the Supreme Court held that civil contempt did not

require wilfulness, explaining:  

  Moreover, as noted above, a civil contemnor does not have a right to a jury trial or to227

other procedural constitutional rights that attach to criminal proceedings.

  See, e.g., McPhaul v. United States, 364 U.S. 372, 379 (1960); In re Lawrence, 228

279 F.3d 1294, 1297 (11th Cir. 2002); Chicago Truck Drivers v. Bhd. Labor Leasing, 207 F.3d500, 506 (8th Cir. 2000); United States v. Jenkins, 760 F.2d 736, 739-40 (7th Cir. 1985); FalstaffBrewing Corp. v. Miller Brewing Co., 702 F.2d 770, 781-82 (9th Cir. 1983).

208

The absence of wilfulness does not relieve from civil contempt . . . Since the purpose [of civil contempt] is remedial, it matters notwith what intent the defendant did the prohibited act.  The decreewas not fashioned so as to grant or withhold its benefits dependenton the state of mind of respondents.  It laid on them a duty to obeyspecified provisions of the statute.  An act does not cease to be aviolation of a law and of a decree merely because it may have beendone innocently.   

Id. at 191 (footnote and citations omitted).  Accord NLRB v. Blevins Popcorn Co., 659 F.2d

1173, 1184 (D.C. Cir. 1981) (holding “the intent of the recalcitrant party is irrelevant”).227

“An alleged contemnor may defend against a finding of contempt by demonstrating a

present inability to comply.”  United States v. Ayres, 166 F.3d 991, 994 (9th Cir. 1999).  The

contemnor bears the burden of establishing his present inability to comply with a court’s order.  228

However, such “present inability to comply” is not the same as continuing to refuse to comply. 

In that regard, the Supreme Court has stated that a court may imprison a civil contemnor

“indefinitely until he complies with [a court’s order],” Bagwell, 512 U.S. at 828, or he “adduces

evidence as to his present inability to comply with that order.”  United States v. Rylander, 460

U.S. 752, 761 (1983).  Accord Maggio v. Zeitz, 333 U.S. 56, 74, n.7 (1948) (“The defendant can

not, of course, be committed for the failure to do something which is beyond his power”)

(citation omitted); Shillitani, 384 U.S. at 371 (“[T]he justification for coercive imprisonment as

applied to civil contempt depends upon the ability of the contemnor to comply with the court’s

order . . . Where the grand jury has been finally discharged, a contumacious witness can no

209

longer be confined since he then has no further opportunity to purge himself of contempt.”)

The decision in Armstrong v. Guccione, 470 F.3d 89 (2d Cir. 2006), illustrates the

distinction between “a present inability to comply” with a court’s order and a contemnor’s

persistent refusal to comply with a court’s order notwithstanding his ability to comply with it.  In

Armstrong, the contemnor was held in civil contempt for his refusal to return to a court-

appointed receiver corporate records and assets totaling approximately $16 million, and was

imprisoned until he complied with the court’s order.  Id. at 92.  Over nearly seven years, the

district court afforded the contemnor numerous opportunities to either comply with the court’s

orders or demonstrate his inability to comply with them, but he did neither.  Id. at 95-96.

On appeal, the contemnor argued, among other matters, that his length of incarceration

without compliance with the court’s orders warranted an inference of his inability to comply and

rendered any further imprisonment “coercive” in violation of due process.  Id. at 110-112.  The

Second Circuit rejected this argument, explaining that persistence in refusing to comply with a

court’s order does not by itself establish a present inability to comply.  Id. at 111-12.  The Second

Circuit added that “[t]he Due Process Clause does not demand that the test of [the contemnor’s]

obduracy end today, or for that matter, at any specific time.”  Id. at 113.  Accordingly, the Second

Circuit remanded for a determination of whether the contemnor’s continued failure to comply

with the district court’s orders was due to his present inability to comply or to his refusal to

comply, notwithstanding his present ability to comply.  Id. at 113. 

Similarly, in Chadwick v. Janecka, 312 F.3d 597 (3d Cir. 2002), the Third Circuit refused

to release a contemnor who had been incarcerated for nearly seven years for refusing to comply

with a court’s order, and rejected the contemnor’s claim that he should be released because there

  However, some courts have held that incarceration for civil contempt “cannot last229

forever,” and that a contemnor should be released from prison when a contemnor who has beenincarcerated for a substantial period of time persists in his refusal to comply with a court’s orderand there is no “realistic possibility” that the contemnor will comply with the court’s order,notwithstanding his present ability to comply with the court’s order.  In such circumstances,courts have concluded that “contempt sanctions lose their coercive effect [and] become punitiveand violate the contemnor’s due process rights.”  In re Lawrence v. Goldberg, 279 F.3d 1294,1300 (11th Cir. 2002) (citations omitted).  Accord CFTC v. Wellington Precious Metals, Inc., 950 F.2d 1525, 1530-31 (11th Cir. 1992) (collecting cases); United States v. Jenkins, 760 F.2d736, 740 (7th Cir. 1985).

The Supreme Court has not resolved the tension between the rulings of these cases andthe rulings in Armstrong v. Guccione, Chadwick v. Janecka, and Wronke v. Madigan discussedabove.  Cf. McNeil v. Director, Patuxent Inst., 407 U.S. 245, 251 (1972) (noting that if after ahearing on remand petitioner’s confinement, “potentially for life” “were explicitly premised on afinding of contempt, then it would be appropriate to consider what limitations the Due ProcessClause places on the contempt power.  The precise contours of that power need not be tracedhere.”).

210

was no substantial likelihood of his compliance with the court’s order.  The Third Circuit stated:

The Supreme Court has never endorsed the proposition thatconfinement for civil contempt must cease when there is “nosubstantial likelihood of compliance” . . . [T]here is no federalconstitutional bar to [the contemnor’s] indefinite confinement forcivil contempt so long as he retains the ability to comply with theorder requiring him to pay over the money at issue.

Id. at 613.  Accord Wronke v. Madigan, 26 F. Supp. 2d 1102, 1106 (C.D. Ill. 1998) (“a civil

contemnor may be incarcerated until he either complies with the court’s order or adduces

evidence as to his present inability to comply with that order”.)229

Moreover, as a general rule, a party to a lawsuit may not appeal a civil contempt sanction

until a final judgment is rendered in the underlying lawsuit.  As the Supreme Court stated in Fox

v. Capital Co., 299 U.S. 105 (1936):

The rule is settled in this Court that except in connection with anappeal from a final judgment or decree, a party to a suit may notreview upon appeal an order fining or imprisoning him for thecommission of a civil contempt.

  Accord United States v. Philip Morris Inc., 314 F.3d 612, 620 (D.C. Cir. 2003);230

Howard Johnson Co., Inc., v. Khimani, 892 F.2d 1512, 1515 (11th Cir. 1990); S. Railway Co. v.Lanham, 403 F.2d 119, 124 (5th Cir. 1968).

  See, e.g., U.S. Catholic Conference v. Abortion Rights Mobilization, 487 U.S. 72, 76231

(1988); United States v. Accetturo, 842 F.2d 1408, 1412 (3d Cir. 1988) (collecting cases); Unionof Professional Airmen v. Alaska Aeronautical Industries, Inc., 625 F.2d 881, 884 (9th Cir.1980).

  See, e.g., Gates v. Shinn, 98 F.3d 463, 467 (9th Cir. 1999); Combs v. Ryan’s Coal232

Co., 785 F.2d 970, 976-77 (11th Cir. 1986).

  See, e.g., United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 44 F.3d 1091,233

1095 (2d Cir. 1995); Armstrong v. Executive Office of President, 1 F.3d 1274, 1289 (D.C. Cir.1993).

  See also Frank v. United States, 395 U.S. 147 (1969) (holding that a sentence of three234

years probation for criminal contempt was not a serious offense and did not require a jury trial).

  Accord Bloom, 391 U.S. at 210.235

211

Id. at 107.   However, an order holding a non-party in civil contempt is immediately230

appealable,  and a post-judgment, non-contingent order holding a party in contempt is231

immediately appealable.   A civil contempt sanction is reviewable under the abuse of discretion232

standard.233

3. A Jury Trial for Criminal Contempt is Required When the Sanction InvolvesA “Serious Fine” or Imprisonment of More Than Six Months

In Bagwell, 512 U.S. at 826-27, the Supreme Court stated that “criminal contempts

involving imprisonment of more than six months” trigger a constitutional right to a jury trial. 

Accord Taylor v. Hayes, 418 U.S. 488, 495 (1974); Bloom v. State of Illinois, 

391 U.S. 194 (1968).   The Bagwell Court also held that the imposition “of serious criminal234

contempt fines triggers the right to jury trial,” 512 U.S. at 837, n.5,  and that the fines imposed235

in Bagwell, totaling over $52 million were “serious,” and hence required a jury trial.  512 U.S. at

  See, e.g., Jake’s Ltd. v. City of Coates, 356 F.3d 896, 903 (8th Cir. 2004) (requiring a236

jury trial for a $68,000 contempt fine against an adult club owner for violating a court order tocomply with city zoning laws, where state law would have provided a jury trial for the cityzoning violations); F. J. Hanshaw Enterprises, Inc., 244 F.3d at 1139-41 (requiring a jury trial fora $500,000 contempt fine for attempted bribery); Evans, 206 F.3d at 1297-99 (requiring a jurytrial for a $5 million contempt fine against the District of Columbia for its failure to comply witha consent decree); Crowe v. Smith, 151 F.3d 217, 228, n. 13 (5th Cir. 1998) (stating thatcontempt fines of $75,000 for an individual and $5 million for a corporation were “non-petty”sanctions, requiring a jury trial); Mackler Productions, Inc. v. Cohen, 146 F.3d 126, 129-130 (2dCir. 1998) (holding that a $10,000 punitive sanction on an individual required a jury trial); N.Y.State Nat’l Org. for Women v. Terry, 41 F.3d 794, 798 (2d Cir. 1994) (holding that non-compensatory contempt fines of $500,000 for defendants’ anti-abortion activities in violation ofan injunction required a jury trial).

  See, e.g., United States v. Linney, 134 F.3d 274, 280-81 (4th Cir. 1998) ($5,000237

criminal contempt fine for an individual did not require a jury trial); United States v. TroxlerHosiery Co., Inc., 681 F.2d 934 (4th Cir. 1982) ($80,000 contempt fine for a corporation did notrequire a jury trial); Musidor, B.V. v. Great American Screen, 658 F.2d 60, 62 (2d Cir. 1981)($10,000 contempt fine for a corporation’s violation of a court order did not require a jury trial).

212

837-39.

The Bagwell Court added that “to date [it] has not specified what magnitude of contempt

fine may constitute a serious criminal sanction, although it has held that a fine of $10,000

imposed on a union was insufficient to trigger the Sixth Amendment right to jury trial.”  512 U.S.

at 837, n.5, citing Muniz v. Hoffman, 422 U.S. 454, 477 (1975).  The Bagwell Court concluded:

We need not answer today the difficult question where the linebetween petty and serious contempt fines should be drawn, since a$52 million fine unquestionably is a serious contempt sanction.

512 U.S. at 838 n.5.

Lower courts have held that various fines for contempt were “serious,” which  required a

jury trial,  while other fines were not “serious” and did not require a jury trial.236 237

  Appendix B (“App.” B) includes an index and detailed summary of each of these 23238

cases.  RICO suits were filed in 22 of these 23 cases.  Only one case involving the Laborers’International Union of North America (“LIUNA”) was settled before a complaint was filed,which resulted in the United States obtaining relief similar to the relief obtained in the RICOsuits that were filed.  See App. B at 178-90 and Section VIII(A)(4) and (B) below.

For the sake of brevity, these 23 RICO cases sometimes will be cited by a shorthandreference after the initial full cite, as indicated in summary headings in App. B.  For example, thecase involving the International Brotherhood of Teamsters, Chauffeurs, Warehousemen andHelpers of America will be cited as the IBT or the Teamsters Union case, and Local 560 of theInternational Brotherhood of Teamsters case will be cited as the IBT Local 560 case.

  See, e.g., United States v. Gotti, 459 F.3d 296, 302-08, 324-30 (2d Cir. 2006); United239

States v. Bellomo, 176 F.3d 580, 592-93 (2d Cir. 1999); United States v. Local 560 of the Int’lBhd. of Teamsters, 581 F. Supp. 279, 303-21 (D.N.J. 1984), aff’d, 780 F.2d 267, 278-79 (3d Cir.1986).  See generally, The President’s Commission on Organized Crime:  THE EDGE: ORGANIZED CRIME, BUSINESS AND LABOR UNIONS (U.S. Government Printing Office,

(continued...)213

VIII

GOVERNMENT CIVIL RICO CASES INVOLVING LABOR UNIONS

A. Overview of Government Civil RICO Cases Involving Labor Unions

As of this writing, the United States has obtained relief in 23 civil RICO cases involving

labor unions.   The initiation of each civil RICO case was prompted by evidence of the La Cosa238

Nostra’s extensive corrupt influence over the labor unions involved.

1. Overview of Labor Racketeering

The La Cosa Nostra (“LCN”) gained substantial corrupt influence, and even control in

some instances, over labor unions through creating a climate of fear and intimidation by threats

and acts of violence.  Through such domination, the LCN was able to place its associates in key

official positions of various unions, and then use their control over such union officers to place

additional LCN associates in union positions, and to use such control over union officials to

exploit the unions, and derive illegal proceeds from the operation of the unions’ affairs.  239

(...continued)239

Washington, DC  1986) (“PCOC: THE EDGE”) at 1-6, 9-11, 33-40, 72-75, 89-98, 114-127, 146-160.  See also cases cited below in Section VIII and accompanying text.

  See, e.g., United States v. Norton, 867 F.2d 1354, 1357-59 (11th Cir. 1989); United240

States v. Cerone, 830 F.2d 938 (8th Cir. 1987); United States v. Robilotto, 828 F.2d 940, 944,946 (2d Cir. 1987); United States v. Caporale, 806 F.2d 1487, 1495-97 (11th Cir. 1986).

  See, e.g., Gotti, 459 3d at 305-12, 331-35; United States v. Cervone, 907 F.2d 332,241

336-40 (2d Cir. 1990); United States v. Rastelli, 870 F.2d 822, 826, 828-29 (2d Cir. 1989);United States v. Davidoff, 845 F.2d 1151, 1153 (2d Cir. 1988); United States v.Daly, 842 F.2d1380, 1383-90 (2d Cir. 1986); Robilotto, 828 F.2d at 942-44; United States v. Kopituk, 690 F.2d1289, 1294-1305 (11th Cir. 1982); United States v. Provenzano, 688 F.2d 194, 196-98 (3d Cir.1982); United States v. Provenzano, 620 F.2d 985, 989-91 (3d Cir. 1980).

  See, e.g., Bellomo, 176 F.3d at 592; United States v. Presser, 844 F.2d 1275, 1276-77242

(6th Cir. 1988); Robilotto, 828 F.2d at 943, 945-46.  See generally United States v. Green, 350 U.S. 415, 417, 412 (1956); United States v. Quinn, 514 F.2d 1250, 1257 (5th Cir. 1975);Bianchi v. United States, 219 F.2d 182, 186-87 (8th Cir. 1955).

  See, e.g., United States v. Lore, 430 F.3d 190, 197-204 (3d Cir. 2005); Carson, 243

52 F.3d at 1176-78; United States v. Int’l Bhd. of Teamsters, 753 F. Supp. 1181, 1190-91(S.D.N.Y. 1990); United States v. Int’l Longshoremen Ass’n, Local 1814, 1993 WL 330578 at *5-8, 10-11 (S.D.N.Y. Jan. 14, 1993); PCOC: THE EDGE at 12-15.

214

For example, the LCN was able to use its control and influence over labor unions and

their assets to derive illegal proceeds through a variety of typical labor racketeering activities,

including the following:  (1) obtain illegal payoffs in exchange for loans or vendor contracts from

union-related pension, health and welfare, and other benefit funds established for the benefit of

union members;  (2) extort payments and obtain unlawful payoffs from employers in exchange240

for labor peace, relaxed enforcement of costly union work rules, and other benefits;  (3) obtain241

no show jobs or superfluous jobs for friends and associates of the LCN through extortion and

other illegal means,  (4) embezzlement of union funds and other assets;  and  (5) obtain illegal242 243

payoffs for “sweet heart” contracts that reduce costs to the employers and benefits to their union

  See, e.g., United States v. Local 560 of the Int’l Bhd. of Teamsters, 974 F.2d 315,244

325-27 (3d Cir. 1992); United States v. Boffa, 688 F.2d 919, 923-24 (3d Cir. 1982); PCOC: THE

EDGE at 10, 16-18.

  See, e.g., Rastelli, 870 F.2d at 829-30.245

  See, e.g., Sanitation and Recycling Indus. v. City of New York, 107 F.3d 985 (2d Cir.246

1997); United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 793 F. Supp.1114 (E.D.N.Y. 1992); App. B at 82-94.

  See, e.g., United States v. Salerno, 868 F.2d 524, 528-32 (2d Cir. 1989); United States247

v. Scopo, 861 F.2d 339, 341-42 (2d Cir. 1988); United States v. Persico, 832 F.2d 705, 707-09(2d. Cir. 1987).

  See, e.g., United States v. Gigante, 166 F.3d 75, 78-79 (2d Cir. 1999); United States v.248

(continued...)215

employees.244

Perhaps the most lucrative illegal scheme involving the LCN’s corrupt influence over

labor unions entails establishing illegal cartels that control awarding contracts and allocation of

business in a particular industry or business sector.  Such illegal cartels involve conspiracies

among LCN members and associates and corrupt labor union officials and businessmen, whereby

the conspirators threaten businesses with physical harm and/or labor strife and other forms of

economic harm unless they participate in their unlawful scheme to rig bids to control or allocate

business in a particular industry.  Typically, the LCN and labor union conspirators obtain

unlawful payoffs from the proceeds of the ensuing contracts for business and, in exchange, the

corrupt businesses receive lucrative contracts, labor peace, relaxed enforcement of costly union

work rules and other benefits.  For example, the LCN previously established such illegal cartels

in the commercial moving and storage industry in Metropolitan New York City,  the waste-245

hauling industry in New York City and Long Island,  the construction industry involving246

concrete pouring contracts in Metropolitan New York City,  window replacement  and247 248

(...continued)248

McGowan, 58 F.3d 8 (2d Cir. 1995); United States v. Gigante, 39 F.3d 42, 44-45 (2d Cir. 1994);United States v. Amuso, 21 F.3d 1251, 1254 (2d Cir. 1994).

  See, e.g., People v. Capaldo, 572 N.Y.S.2d 989 (Sup. Ct. N.Y. County 1991).249

216

commercial painting  industries in New York City.249

2. Congress Designed Civil RICO to Combat the LCN’s Corrupt InfluenceOver Labor Unions

RICO’s legislative history makes clear that Congress specifically intended the civil RICO

remedies provided in 18 U.S.C. §§ 1964(a) and (b) to be used vigorously by the United States to

eliminate organized crime’s control and influence over labor unions.  See 

S. REP. No. 91-617 at 77-83; H.R. REP. No. 1574, 90  Cong., 2d Sess. at 5-9 (1968); see alsoth

Sections II(B) and (C) above; Local 1814, Int’l Longshoremen’s Ass’n v. New York Shipping

Ass’n. Inc., 965 F.2d 1224, 1236-37 (2d Cir. 1992), cert. denied, 506 U.S. 953 (1992).  For

example, the Senate Report regarding RICO states:

Closely paralleling its takeover of legitimate businesses, organizedcrime has moved into legitimate unions.  Control of labor supplythrough control of unions can prevent the unionization of someindustries or can guarantee sweetheart contracts in others.  Itprovides the opportunity for theft from union funds, extortionthrough the threat of economic pressure, and the profit to be gainedfrom the manipulation of welfare and pension funds and insurancecontracts.  Trucking, construction, and waterfront entrepreneurshave been persuaded for labor peace to countenance gambling,loan sharking and pilferage.  As the takeover of organized crimecannot be tolerated in legitimate business, so, too, it cannot betolerated here.

. . .[RICO] recognizes that present efforts to dislodge the forces oforganized crime from legitimate fields of endeavor have provenunsuccessful.  To remedy this failure, the proposed statute adoptsthe most direct route open to accomplish the desired objective. Where an organization is acquired or run by defined racketeeringmethods, then the persons involved can be legally separated from

217

the organization, either by the criminal law approach of fine,imprisonment and forfeiture, or through a civil law approach ofequitable relief broad enough to do all that is necessary to free thechannels of commerce from all illicit activity.

S. REP. No. 91-617 at 78-79 (footnote omitted).

It also bears emphasis that, because the public interest is involved in the Government’s

efforts to reform corrupt institutions through its civil RICO suits involving labor unions, the

courts’ equitable powers are at their zenith.  See Sections II(A)(2) and VII(E) above.

3. The United States Department of Justice Adopted A Strategy to Eliminatethe LCN’s Corrupt Influence Over Labor Unions

In March, 1986, The President’s Commission on Organized Crime (“PCOC”) issued a

report to the President and the Attorney General entitled:  THE EDGE:  ORGANIZED CRIME,

BUSINESS AND LABOR UNIONS (U.S. Government Printing Office, Washington, DC  1986)

(“PCOC:  THE EDGE”).  The PCOC concluded that the LCN had for decades controlled and

corruptly influenced major labor unions in the United States, including “the International

Brotherhood of Teamsters (IBT), the Laborers International Union of North American (LIUNA),

the Hotel Employees and Restaurant Employees International Union (HEREIU), and the

International Longshoreman’s Association (ILA).”  PCOC:  THE EDGE at 4.

In particular, the PCOC stated that “since the 1950’s,” the Teamsters Union had been

“The Most Controlled Union” by the LCN, and that during the period 1952-1985, the LCN

“exercised substantial influence” over the Teamsters Union through its control of the five

persons who served as President of the Teamsters Union during that period.  See PCOC:  THE

EDGE at 89.  Similarly, the PCOC found that for many years the LCN, particularly the Chicago

LCN Family or “Outfit,” had controlled the principal officials of LIUNA, including its

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Presidents, as well as officials in many LIUNA Locals.  See id. at 145-163, 217-32.

The PCOC also found that since the 1920’s, “the International Longshoremen’s

Association (ILA) has been virtually a synonym for organized crime in the labor movement.” Id.

at 33.  The PCOC added that, “[i]n 1937, New York La Cosa Nostra leader Albert Anastasia

muscled into” control of “the Brooklyn Waterfront,” and that the ILA did “little, if anything, to

disturb La Cosa Nostra influence in its locals.”  Id. at 36-37.  The PCOC further found that, since

at least the late 1930’s, the LCN had exercised substantial corrupt influence over the HEREIU

and its locals, including the selection of Edward Hanley to be President of HEREIU.  Id. at 71-

85.

The PCOC recommended a national strategy to eliminate the LCN’s corrupt domination

of labor unions.  Id. at 307-59.  In particular, the PCOC recommended that the Department of

Justice “should use the RICO statute more aggressively in civil and criminal proceeding, and it

should pursue more vigorously breaches of fiduciary duty by union officers and employee benefit

plan trustees.”  Id. at 314.  In accordance with the PCOC’s recommendations, the OCRS,

working with the United States Attorneys’ Offices in the Eastern and Southern Districts of New

York, the District of New Jersey and the Northern District of Illinois, devised a strategy to bring

civil RICO lawsuits against the four most corrupt international unions (The Teamsters Union,

The LIUNA, the HEREIU, and the ILA) to eliminate the LCN’s corrupt influences.  See App. B

at 42-79, 178-208, 243-55.  In addition, the Department of Justice brought 17 civil RICO

lawsuits against LCN dominated local unions in New York and New Jersey (see App. B at 1-33,

40-42, 79-178, 220-243), and one civil RICO lawsuit in the Eastern District of Pennsylvania and

one in the Northern District of Illinois.  See App. B at 33-40, 208-20.  These Government civil

  See e.g., United States v. Local 359, United Seafood Workers, 55 F.3d 64 (2d Cir.250

1995); United States v. Local 1804-1, Int’l Longshoreman’s Ass’n, 44 F.3d 1091, 1093-95 (2dCir. 1995); United States v. Int’l Bhd. of Teamsters, 948 F.2d 98, 106 (2d Cir. 1991); UnitedStates Int’l Bhd. of Teamsters, 907 F.2d 277, 279-81 (2d Cir. 1990); United States v. Int’l Bhd.of Teamsters, 905 F.2d 610, 613-17 (2d Cir. 1990);  United States v. Int’l Bhd. of Teamsters, 

(continued...)219

RICO lawsuits have achieved considerable success toward eliminating the LCN’s corrupt

domination of labor unions.  See App. B.

4. Overview of Essential Relief

Although the relief obtained in these civil RICO lawsuits vary somewhat, they typically

have involved the issuance of injunctions to prohibit unlawful activities and conduct that might

facilitate union corruption.  District courts also have appointed officers, usually experienced

former prosecutors and law enforcement investigators, to assist the district courts to implement

relief designed to eliminate corruption by the defendants and in the alleged RICO enterprises and

to prevent future unlawful activity.  District courts have authorized such officers to exercise

broad powers, subject to review by the district courts, including the following: (1) conduct the

legitimate business of the defendants and the RICO enterprises; (2) review and approve hiring,

certain contracts and financial expenditures of defendants and affiliated entities; (3) impose and

implement various structural reforms in the defendants and entities comprising the RICO

enterprises, including union election reform, revised rules and practices for conducting business;

(4) impose and implement ethical practices codes governing the defendants and members of the

RICO enterprises; (5) investigate, prosecute, and adjudicate in civil proceedings allegations of

violations of the consent decrees, judgment orders and related ethical practices codes; and (6)

imposition of fines, discipline or removal from the defendants’ entities or RICO enterprises and

prohibition of certain activities in the future for individuals found guilty of such violations.  250

(...continued)250

899 F.2d 143, 145-46 (2d Cir. 1990); United States v. Hotel Employees & Rest. Employees, Int’lUnion, 974 F. Supp. 411 (D.N.J. 1997); United States v. Dist. Council of New York City, 941 F. Supp. 349, 355 (S.D.N.Y. 1996); United States v. Local 6A, Cement and ConcreteWorkers, 832 F. Supp. 674 (S.D.N.Y. 1993); United States v. Local 1804-1, Int’lLongshoremen’s Ass’n, 831 F. Supp. 192, 193-95 (S.D.N.Y. 1993); United States v. Int’l Bhd. ofTeamsters, 803 F. Supp. 761, 766-71 (S.D.N.Y. 1992); United States v. Int’l Bhd. of Teamsters,782 F. Supp. 243, 248-51 (S.D.N.Y. 1992); United States v. Int’l Bhd. of Teamsters, 723 F. Supp. 203 (S.D.N.Y. 1989), aff’d as modified, 931 F.2d 177 (2d Cir. 1991).  See alsoSections VIII(B) and (C) below.

  In the LIUNA civil RICO matter (see App. B at 178-90), the United States agreed to251

settle a civil RICO lawsuit before it was filed, and for the first time agreed to allow a union anopportunity to implement a reform program without court supervision and court-appointedofficers.  The Initial Settlement Agreement provided that if after 90 days “the Assistant AttorneyGeneral for the Criminal Division determines, in her sole discretion, that the imposition of aconsent decree is necessary or desirable, after having given LIUNA an opportunity to have ameeting to be heard, the parties agree to the filing of the attached complaint and entry andimplementation of the attached consent decree.”  See App. B at 183-84. 

The attached consent decree provided for, among other matters: (1) a permanentinjunction against LIUNA officers, representatives and members from committing any act ofracketeering and other misconduct; (2) court-appointed officers to investigate, prosecute, anddiscipline LIUNA officers, representatives, employees and members for misconduct; (3)adoption of procedures to conduct investigations and adjudication of disciplinary charges; (4)various reforms in LIUNA’s Job Referral Rules and financial practices; and (5) union electionreforms.  See App. B at 184.

This agreement provided the Government with virtually unlimited discretion to obtainimposition of court-supervision and court-appointed officers if it believed that such relief was“necessary or desirable.”  However, the United States did not seek such court-supervised reliefbecause LIUNA achieved considerable success in eliminating LCN influence over its affairsthrough the efforts of experienced, independent attorneys and investigators.  See App. B at 185-88.  Throughout the period of LIUNA’s reform efforts, the Government closely monitoredLIUNA’s reform efforts through regular meetings and discussions, insisted upon various reformsand provided information and evidence to enable LIUNA’s reform team to eliminate corruption. Thus, the United States obtained essentially the same relief regarding LIUNA that it would have

(continued...)220

Such relief has significantly contributed to the Government’s success in combating the LCN’s

corrupt control over labor unions and related businesses, and is discussed in more detail below in

this Section.251

(...continued)251

obtained through court-supervision.  See App. B at 188.

  The two exceptions were the John F. Long (see App. B at 40-42) and Vincent Gigante252

cases (see App. B at 79-82), which imposed limited injunctive relief, barring certain personsfrom specified union-related activities.

It bears repeating that injunctive relief is not limited to enjoining future unlawful conduct,but also may broadly encompass relief necessary to cure the ill-effects of the defendants’ pastunlawful conduct, and may also include enjoining otherwise lawful practices connected to theunlawful conduct.  See Sections II(E) and VII(C)(1) above.

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B. Specific Relief Obtained in Government Civil RICO Cases Involving Labor Unions

1. Injunctions

Courts have granted similar broad injunctive relief in 20 of the 22 filed Government civil

RICO cases involving labor unions.   The injunctive relief granted under a Consent Decree in252

United States v. Local 69 of the Hotel Employees and Rest. Employees Int’l Union, Civil No.

1733, U.S. District Court for the District of New Jersey (hereinafter “HEREIU Local 69”), is

typical of the injunctions granted in those 20 cases, and it provided, in substance, as follows (see

App. B at 231-32):

All current and future officers, agents, employees, representatives,members of, and persons holding positions of trust in Local 69 orits affiliated entities (other than representatives of employers) andany and all persons in active concert or participation with any or allof them, were permanently restrained and enjoined from directly orindirectly:

a. committing any crime listed in 18 U.S.C. § 1961(1);

b. knowingly associating with any member or associate of any criminal groupor with any barred person;

c. knowingly permitting any member or associate of any criminal group orany barred person to exercise any control or influence, directly orindirectly, in any way or degree, in the conduct of the affairs of Local 69and its affiliated entities; and

  Similar injunctions were also granted in the following additional 19 Government civil253

RICO cases involving labor unions: 

(1) The Teamsters Local 560 Case; see App. B at 6-7; United States v. Local 560, Int’lBhd. of Teamsters, 581 F. Supp. 279, 337 (D.N.J. 1984), aff’d, 780 F.2d 267 (3d Cir. 1986);United States v. Local 560 Int’l Bhd. of Teamsters, 974 F.2d 315, 324 (3d Cir. 1992);

(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17;(3) The Bonanno Family Case; see App. B at 22-24;(4) The Fulton Fish Market Case; see App. 30-31;(5) The Roofers Union Case; see App. B at 37-38; United States v. Local 30, United

Slate, Tile and Composition Roofers, 686 F. Supp. 1139, 1162-74 (E.D. Pa. 1988) (“Local 30Roofers Union”);

(6) The International Brotherhood of Teamsters Union Case; see App. B at 47, and casescited in App. B at 51, n. 7;

(7) The Private Sanitation Industry of Long Island Case; see App. B at 85-86, 91; UnitedStates v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F. Supp. 808, 818(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993) (“Private Sanitation Indus. Case”); UnitedStates v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F. Supp. 974, 983-84

(continued...)222

d. obstructing or otherwise interfering, directly or indirectly, with the effortsof anyone effectuating or attempting to effectuate the terms of this ConsentDecree or in attempting to prevent any criminal groups or barred personfrom exercising influence on the conduct of the affairs of the Local 69 andits affiliated entities.

As used in the HEREIU Local 69 Consent Decree, the term “knowingly associating”

meant that:  (a) an enjoined party knows or should know that the person with whom he or she is

associating is a member or associate of any criminal group or is a barred person; and (b) the

association is more than fleeting.

As used in the HEREIU Local 69 Consent Decree, a “barred person” was defined as:  (a)

any member or associate of any organized crime family or other criminal group, or (b) any person

prohibited from participating in the affairs of any union pursuant to or by operation of this

Consent Decree, other court order or statute, and/or a disciplinary disposition or agreement by the

HEREIU’s Public Review Board.253

(...continued)253

(E.D.N.Y. 1994), aff’d 47 F.3d 1158 (2d Cir. 1995) (Table);(8) The ILA Local 10804-1 Case; see App. B at 98-102; United States v. Local 1804-1,

Int’l Longshoremen’s Ass’n, 831 F. Supp. 177, 191-92 (S.D.N.Y. 1993), aff’d and vacated inpart on other grounds, 52 F.3d 1173 (2d Cir. 1995); (“ILA Local 1804-1”);

(9) The IBT Local 295 Case; see App. at 113-115, 118;(10) The New York Carpenters Union Case; See App. B at 123-25; United States v. Dist.

Council of New York City, 409 F. Supp.2d 439, 442 (S.D.N.Y. 2006);(11) The HEREIU Local 54 Case; see App. B at 136-38;(12) The HEREIU Local 100 Case; see App. B at 145;(13) The Teamsters Local 282 Case; see App. B at 149; United States v. Local 282 of the

Int’l Bhd. of Teamsters, 13 F. Supp.2d 401, 402 (E.D.N.Y. 1988); aff’d in part, and vacated andremanded in part on other grounds, 215 F.3d 283 (2d Cir. 2000) (“Teamsters Local 282 Case”);

(14) The Mason Tenders District Council of Greater New York Case; see App. B at 161-62, 173-75; United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL742637 (S.D.N.Y. Dec. 27, 1994); United States v. Mason Tenders Dist. Council of Greater NewYork, 1995 WL 679245 (S.D.N.Y. Nov. 15, 1995) (“Mason Tenders District Council”);

(15) The Hotel Employees and Restaurant Employees International Union Case; see App.B at 194-95;

(16) The Chicago District Council of LIUNA Case; see App. B at 211-12;(17) The LIUNA Local 210 Case; see App. B at 222, 225-26;(18) The ILA Bellomo Case; see App. B at 241-42; and(19) The International Longshoremen’s Ass’n Case; see App. B at 250-55.

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2. Dissolution, Divestiture and Reorganization

As noted in Section II(C)(2) above, 18 U.S.C. § 1964 (a) explicitly authorizes equitable

relief involving divestiture, dissolution and reorganization.  Accordingly, courts have approved

of such relief in Government civil RICO cases involving labor unions.  See, e.g., United States v.

Local 30, United Slate, Tile and Composition Roofers and Waterproof Workers Ass’n, 871 F.2d

401, 407 (3d Cir. 1989); United States v. Local 560 of Int’l Bhd. of Teamsters, 780 F.2d 267, 295

(3d Cir. 1985); United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F.

Supp. 974, 983-84 (E.D.N.Y. 1994) and 811 F. Supp. 808, 818 (E.D.N.Y. 1992), aff’d, 995 F.2d

375 (2d Cir. 1993); United States v. Bonanno Organized Crime Family of La Cosa Nostra, 683 F.

Supp. 1411, 1442-44 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989).

  See also, App. B at 3-8, 16-17, 22-24, 37-39, 47-49, 86, 99-102, 107, 115-18, 123-26,254

136-38, 142-45, 149-54, 162-174, 195-96, 199-200, 213-15, 218, 223-25, 232-36.  See alsoSection VIII(B)(5) below, which discusses reorganization of unions’ election procedures.

224

Moreover, in numerous Government civil RICO cases involving labor unions, courts

have authorized a wide variety of relief that required wrongdoers to change their business

practices and policies, such as adopt new union and job referral rules, and restructure other

aspects of their operations.  See United States v. Dist. Council of New York City, 409 F. Supp.

2d 439, 442-44 (S.D.N.Y. 2006).254

3. Court-Appointed Officers

(a) Officers to Administer the Affairs of a Union

In 17 of the 22 filed Government civil RICO cases involving labor unions, courts have

appointed officers to administer the affairs of unions with broad powers to, among other things,

oversee or carryout various aspects of the unions’ operations;  negotiate, approve or void

contracts and expenditures; and discipline union officers and members.  For example, in the

HEREIU Local 69 civil RICO case, the district court appointed a Monitor with the powers, rights

and authority of all officers and other persons holding positions of trust in Local 69 including the

powers, rights and authority of the Local 69 President; the Executive Board of Local 69; the

union’s other committees; the union trustees on Local 69’s pension, and health and welfare

funds; and any other officer, agent, employee or representative of Local 69.  Accordingly, the

Monitor was authorized to:

a. oversee, approve or disapprove of all disbursements and distributions ofLocal 69 funds and other assets, purchases and financial obligations ofLocal 69;

225

b. approve or disapprove of the hiring, appointment, discharge orreassignment of Local 69 officers and others holding positions of trust inLocal 69, employees, agents, representatives, commissioners andcommittee members of Local 69;

c. carry on and supervise the legitimate activities of Local 69;

d. hold (or designate the persons who hold) the positions currently held byLocal 69 representatives in Local 69’s affiliated entities;

e. review, oversee and otherwise take action upon all collective bargainingagreements, the processing of grievances, grievance awards, or othermatters involving employers with whom Local 69 deals or seeks to deal;

f. investigate, audit and review all aspects of Local 69 and its affiliatedentities. These powers shall include the power of the Monitor to conductinvestigatory interviews and sworn depositions;

g. issue subpoenas and serve such subpoenas in this or any other judicialdistrict pursuant to 18 U.S.C. § 1965(c) without the need for priorapplication to the district court.  Such subpoenas shall be issued only forgood cause if the individuals reside in another district at a place more thanone hundred miles from the district court;

h. initiate charges or disallow nominations or elections of persons inaccordance with this Consent Decree;

i. refer matters to the Public Review Board of the HEREIU for disciplinaryaction or, in the alternative, exercise the disciplinary authority and powersdescribed in this Consent Decree over any person described in Paragraph(3)(a) above;

j. refer any matter to the United States Attorney for appropriate action orrequest the United States Attorney or any agency of the United States toprovide legal, audit and investigative personnel to assist in the executionof the Monitor’s duties;

k. retain legal, investigative, accounting and other support personnel at Local69’s expense;

l. attend any and all meetings of Local 69 and its affiliated entities,including, but not limited to, meetings of the Local 69 Executive Board,the membership, committees, negotiation meetings or grievanceproceedings regarding Local 69 members involving employers with whom

226

Local 69 deals or seeks to deal and meetings of employee benefit plans inwhich Local 69 members participate;

m. enter into, disapprove or terminate any contract (including, but not limitedto, contracts with service providers or vendors), lease, or other obligationof Local 69 or any of Local 69’s affiliated entities for whichrepresentatives of Local 69 otherwise have authority to enter into,disapprove or terminate;

n. oversee and monitor all affairs of Local 69, including, but not limited to,any Local 69 elections;

o. act to preclude actions or inactions that violate the law or otherwise areinimical to the remedial objectives of this Consent Decree;

p. perform all such functions and duties not specifically enumerated herein inorder to fulfill his/her duties as Monitor; and

q. delegate any of his/her powers or duties to any other person(s).

See Appendix B at 232-34.

The HEREIU Local 69 Consent Decree also provided, in substance, that:

a. The Monitor was given unfettered access to, and the right to make copiesof, all records or documents of officials, agents, employees, and membersof Local 69 and its affiliated entities.

b. The Monitor was required to report to the district court at least every 6months or when requested by the court regarding the progress of Local 69and its affiliated entities in achieving the remedial objectives of thisConsent Decree.

c. The term of the Monitor would expire four years from the date theConsent Decree was entered.

d. The Consent Decree also provided that the Monitor, the United States orthe HEREIU may make application to the district court to modify orenforce this Consent Decree and the court may grant such relief as may beequitable and just, having due regard for the purposes of the underlyinglitigation, the remedial purposes of this Consent Decree and thecircumstances at the time of the application.

  Courts appointed officers with similar or some of the administrative powers granted255

the Monitor in the HEREIU Local 69 case in the following 16 additional Government civil RICOcases involving labor unions:

(1) The Teamsters Local 560 Case; see App. B at 3-7; Local 560 Int’l Bhd. of Teamsters,780 F.2d at 295-96; United States v. Sciarra, 851 F.2d 621, 623-24, 632-33 (3d Cir. 1988); Local560 Int’l Bhd. of Teamsters, 694 F. Supp. 1158, 1160-62 (D.N.J. 1988); see also, SectionVIII(C)(1) below.

(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17;(3) The Bonanno Family Case; see App. B at 22-24;(4) The Fulton Fish Market Case; see App. B at 30-31, 32; United States v. Local 359

United Seafood Workers Union, 1991 WL 172962 (S.D.N.Y. August 21, 1991);(5) The Local 30 Roofers Union Case; see App. B at 37-39; United States v. Local 30,

United Slate, Tile, 871 F.2d 401, 404-07 (3d Cir. 1989); United States v. Local 30, United Slate,Tile, 686 F. Supp. 1139, 1162, 1169-74 (E.D. Pa. 1988);

(6) The International Brotherhood of Teamsters Union Case; see App. B at 47-51; UnitedStates v. Int’l Bhd. of Teamsters, 905 F.2d 610, 613 (2d Cir. 1990); United States v. Int’l Bhd. ofTeamsters, 899 F.2d 143, 145 (2d Cir. 1990); United States v. Int’l Bhd. of Teamsters, 765 F.Supp. 1206 (S.D.N.Y. 1991); United States v. Int’l Bhd. of Teamsters, 761 F. Supp. 315, 316-17(S.D.N.Y. 1991);

(7) The ILA Local 1804-1 Case; see App. B at 99-102;(8) The IBT Local 295 Case; see App. B at 115-18; United States v. Local 295 of the Int’l

Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y. 1992);(9) The New York Carpenters Union Case; see App. B at 123-26;(10) The HEREIU Local 54 Case; see App. B at 136-38;(11) The HEREIU Local 100 Case; see App. B at 142-45;(12) The Teamsters Local 282 Case; see App. B at 149-54;

(continued...)227

e. The district court retained jurisdiction over the parties and signatories tothe Consent Decree and the subject matter of the litigation in order toimplement the terms of the Consent Decree.

f. Pursuant to the All Writs Act, 28 U.S.C. § 1651, all parties and non-partiesto the Consent Decree were permanently restrained and enjoined fromlitigating any and all issues relating to the Consent Decree or arising fromthe interpretation or application of the Consent Decree in any court orforum in any jurisdiction except the United States District Court for theDistrict of New Jersey. Such issues relating to the Consent Decree include,but are not limited to, challenges to actions of the Monitor and/or hisdelegates and challenges to issuance of or compliance with subpoenas.

See App. B at 236.255

(...continued)255

(13) The Mason Tenders District Council of Greater New York Case; see App. B at 162-66, 172-74; United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL742637 (S.D.N.Y. Dec. 27, 1994);

(14) The HEREIU Case; see App. B at 195-96;(15) The Chicago District Council of LIUNA Case; see App. B at 218;(16) The LIUNA Local 210 Case; see App. B at 223-25.       

228

(b) Adjudication Officers

In most of the Government civil RICO cases involving labor unions, district courts have

also appointed officers to carry-out various adjudication functions, including to investigate

violations of the district courts’ injunctions and judgment orders, other misconduct by union

members, and to recommend or impose sanctions for such violations; all subject to the district

court’s review.  For example, in the HEREIU civil RICO case, the district court appointed a

Monitor for a 4-year term, subject to extensions.  The Monitor’s  powers included the following:

(i) General Powers

a. To investigate, audit and review all aspects of the HEREIU and itsconstituent entities to advance the remedial objective of this action.These powers shall include the power of the Monitor to conductinvestigatory interviews and sworn depositions to advance theremedial objective of this action;

b. To request the United States Attorney or any agency of the UnitedStates to provide legal, audit and investigative personnel to assistin the execution of the Monitor’s duties; 

c. To retain legal, investigative, accounting and other supportpersonnel at the HEREIU’s expense and delegate any of his/herpowers or duties to such persons, where, in the Monitor’sdiscretion, such personnel and delegation are necessary to executethe Monitor’s duties as set forth herein; 

d. To attend all HEREIU Executive Board meetings and HEREIUcommittee meetings (with the exception of bargaining committeemeetings);

229

e. To refer matters to the HEREIU or the United States Attorney forappropriate action;

f. To perform all such functions and duties not specificallyenumerated herein in order to fulfill his/her duties as Monitor.

(ii) Review Authority

Whenever the Monitor reasonably believes that anyof the following actions, proposed actions, oromissions to act (a) may violate the injunctiveprohibitions of this Consent Decree, (b) mayconstitute any crime involving labor organizationsor employee benefit plans, or (c) may further thedirect or indirect influence of any organized crimegroup or the threat of such influence now or in thefuture, he or she has the power to:

a. disapprove the hiring, appointment, reassignment ordischarge of any person or business entity by the HEREIUor its constituent entities; and

b. disapprove or terminate any contract (including, but notlimited to, contracts with service providers or vendors)lease, or other obligation of the HEREIU or its constituententities.

The HEREIU had a right to appeal any such decision to the district court.

(iii) Disciplinary Powers

The Monitor had the right and power to remove,suspend, expel, fine or forfeit the benefits (with theexception of vested employee retirement benefitssubject to title I of the Employee Retirement IncomeSecurity Act -- 29 U.S.C. § 1001, et seq.) of anyofficer, representative, agent, employee or personholding a position of trust in the HEREIU and itsconstituent entities or member of HEREIU whensuch person engages or has engaged in actions orinactions which (i) violate the injunctiveprohibitions of this Consent Decree, (ii) violate anycriminal law involving the operation of a labororganization or employee benefit plan, or (iii)

  Courts appointed officers with similar adjudication powers in the following 17256

additional Government civil RICO cases involving labor unions:

(1) The Teamsters Local 560 Case; see App. B at 4;(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17; United

States v. Local 6A, Cement & Concrete Workers, Laboreres Int’l Union of North America, 832 F. Supp. 674 (S.D.N.Y. 1993);

(3) The Bonanno Family Case; see App. B at 22-24;(4) The Fulton Fish Market Case; see App. B at 30-31; United States v. Local 359 United

Seafood Workers, 55 F.3d 64 (2d Cir. 1995);(5) The Local 30 Roofers Union Case; see App. B at 38; United States v. Local 30,

United Slate, Tile and Composition Roofers, 686 F. Supp. 1139, 1171 (E.D. Pa. 1988); UnitedStates v. Local 20, United Slate, Tile and Composition Roofers, 871 F.2d 401 (3d Cir. 1989);

(6) The International Brotherhood of Teamsters Union Case; see App. B at 48-51; UnitedStates v. Int’l Bhd. of Teamsters, 745 F. Supp. 908 (S.D.N.Y. 1990), aff’d, 941 F.2d 1292, 1294-95 (2d Cir. 1991); United States v. Int’l Bhd. of Teamsters, 743 F. Supp. 155 (S.D.N.Y. 1990),aff’d, 905 F.2d 610 (2d Cir. 1990);

(7) The Private Sanitation Industry of Long Island Case; see App. B at 86-87;(8) The ILA Local 1804-1 Case; see App. B at 99-100; United States v. Local 1804-1,

Int’l Longshoremen’s Ass’n, 831 F. Supp. 192 (S.D.N.Y. 1993);(9) The IBT Local 295 Case; see App. B at 115-118; United States v. Local 295 of the

Int’l Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y. 1992);(10) The New York Carpenters Union Case; see App. B at 123-26;(11) The HEREIU Local 54 Case; see App. B at 136-38;(12) The HEREIU Local 100 Case; see App. B at 144-45;(13) The IBT Local 282 Case; see App. B at 150-53;(14) The Mason Tenders District Council of Greater New York Case; see App. B at 162,

164-66;(15) The LIUNA Chicago District Council Case; see App. B at 212-15;(16) The LIUNA Local 210 Case; see App. B at 224-25;(17) The HEREIU Local 69 Case; see App. B at 232-35.

230

further the direct or indirect influence of anyorganized crime group or the threat of suchinfluence now or in the future.

See App. B at 195-97.256

231

4. Imposition of Ethical Practices Codes and Disciplinary Procedures

a. Disciplinary Procedures

In conjunction with appointing adjudication officers, courts have also approved

ethical practices codes and disciplinary procedures designed to prevent future misconduct and to

impose appropriate sanctions for violations of the courts’ injunctions and other orders.  For

example, in the HEREIU civil RICO case, the district court approved of the following procedures

for imposing disciplinary sanctions (see App. B 196-200):

i.  Disciplinary Procedure. In order to discharge disciplinary duties under this

decree, the Monitor shall have the same rights and authority as the HEREIU

General President, the HEREIU General Executive Board, and any other officer,

agent, employee, or representative of the HEREIU as well as the full authority

derived from any and all provisions of law. When exercising his/her disciplinary

rights and powers, the Monitor shall afford the subject of the potential disciplinary

action written notice of the charge(s) against him/her and an opportunity to be

heard. The Monitor shall conduct any hearing on any disciplinary charges, render

the final decision regarding whether discipline is appropriate and impose the

particular discipline.  The charged party shall have 20 days to answer the charges

against him/her and may be represented by counsel at any hearing conducted by

the Monitor. Any hearing shall be conducted under the rules and procedures

generally applicable in labor arbitration proceedings and decisions shall be made

using a “just cause” standard. In conducting any hearing, the Monitor shall have

the right and power: 

232

i. to administer oaths. All testimony and other evidence shallbe subject to penalties of perjury to the same extent as ifsuch evidence was submitted directly to the district court;

ii. to examine witnesses or conduct depositions;

iii. to receive evidence. The Monitor may receive evidencewithheld from the charged party and the public whichcontains or constitutes sensitive information provided by alaw enforcement agency, and can choose what weight, ifany, to give such evidence, but in no case shall the identityof a confidential source of law enforcement information berequired to be disclosed; and

iv. to issue subpoenas requiring the attendance andpresentation of testimony of any person and/or theproduction of documentary or other evidence.  In the caseof contumacy or failure to obey a subpoena issued underthis Paragraph, the Monitor may: (i) impose discipline uponthe person in accordance with this Consent Decree; and/or(ii) seek an order from the Court requiring the person totestify or to produce documentary or other evidence.

ii. Appeal of Disciplinary Action. Any discipline imposed by the Monitor shall be

final and binding, subject to review by the district court.  A person disciplined by

the Monitor may obtain review of the Monitor’s decision regarding such

discipline by filing a written appeal of such decision with the Court within thirty

(30) days of such decision by the Monitor.  The Monitor’s decision, all papers or

other material relied upon by the Monitor and the papers filed or issued pursuant

to this appeal procedure shall constitute the exclusive record for review.  The

Monitor’s decisions pursuant to this Paragraph shall be reviewed by the district

court, if necessary, under the substantial evidence standard set forth in 5 U.S.C. 

§ 706(2)(E).  Materials considered by the Monitor but withheld from the appellant

and the public which contain sensitive information provided by a law enforcement

233

agency shall be submitted to the district court for ex parte, in camera

consideration and shall remain sealed.  The person disciplined by  the Monitor

may appeal the Monitor’s decision regarding the discipline imposed against

him/her and any decision by the Monitor regarding discipline imposed against a

person which is not appealed in accordance with this Paragraph may not be

appealed or otherwise challenged. HEREIU or the United States may seek the

district court’s review of the Monitor’s decision not to impose discipline.

iii. The Public Review Board.  The Consent Decree further provided that the

HEREIU would create a three-member Public Review Board (PRB) within the

HEREIU to enforce an Ethical Practices Code (EPC) attached to the Consent

Decree.  The PRB and EPC were to be presented to the HEREIU Convention in

1996 for incorporation within the HEREIU Constitution.  If these steps were taken

by the HEREIU, the Consent Decree further provided that the Monitor would

become a member of the PRB and his independent disciplinary authority would

expire within 6 months of the date when the PRB became effective, or not later

than March 5, 1997.  All new matters arising after the Monitor’s appointment to

the PRB would be jointly investigated and pursued by the Monitor and the two

other members of the PRB.

See App. B at 196-200.

Moreover, courts in 13 additional Government civil RICO cases involving labor unions

have adopted similar disciplinary procedures, which typically require written notice of the

charges, the rights to representation by an attorney and to present a defense at an evidentiary

  See:257

(1) The Fulton Fish Market Case; see App. B at 30; United States v. Local 359, UnitedSeafood Workers, 55 F.3d 64, 66-69 (2d Cir. 1995);

(2) The International Brotherhood of Teamsters Union Case; see App. B at 48-50.  Seealso the following decisions that are all entitled United States v. Int’l Bhd. of Teamsters:  998 F.2d 1101 (2d Cir. 1993); 998 F.2d 120 (2d Cir. 1993); 968 F.2d 1506 (2d Cir. 1992); 725 F.Supp. 162 (S.D.N.Y. 1989), aff’d, 905 F.2d 610 (2d Cir. 1990); 741 F. Supp. 491 (S.D.N.Y. 1990); 764 F. Supp. 787 (S.D.N.Y. 1991); 775 F. Supp. 90 (S.D.N.Y. 1991), aff’d in part andreversed in part, 948 F.2d 1278 (2d Cir. 1991) (Table); 803 F. Supp. 761 (S.D.N.Y. 1992), aff’dand reversed in part, 998 F.2d 1101 (2d Cir. 1993); 829 F. Supp. 602 (S.D.N.Y. 1993); 842 F.Supp. 1550 (S.D.N.Y. 1994);

(3) The Private Sanitation Industry of Long Island Case; see App. B at 86-88;(4) The ILA Local 1804-1 Case; see App. B at 99, 106-07; United States v. Local 1804-1,

Int’l  Longshoremen’s Ass’n, 831 F. Supp. 192, 194-198 (S.D.N.Y. 1993);(5) The IBT Local 295 Case; see App. B at 117-18; United States v. Local 295 of the Int’l

Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y. 1992);(6) The New York Carpenters Union Case; see App. B at 123-26; United States v. Dist.

Council of New York City, 409 F. Supp.2d 439, 442-44 (S.D.N.Y. 2006) and 941 F. Supp. 349,355, 361-64 (S.D.N.Y. 1996);

(7) The HEREIU Local 54 Case; see App. B at 137-38;(8) The HEREIU Local 100 Case; see App. B at 144-45;(9) The Teamsters Local 282 Case; see App. B at 150-53;(10) The Mason Tenders District Council of Greater New York Case; see App. B at 164-

171; United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL 742637(S.D.N.Y. Dec. 27, 1994);

(11) The LIUNA Chicago District Council Case; see App. B at 214-17;(12) The LIUNA Local 210 Case; see App. B at 224-25;(13) The HEREIU Local 69 Case; see App. B at 234-35.  

234

hearing that is fair, impartial and adversarial in nature, and a right of review by the district

court.257

b. Due Process and Article III Considerations

The disciplinary procedures in these cases do not violate Article III of the Constitution

because the district courts retain their authority to decide dispositive issues of liability and

sanctions.  See Section VII(E)(3) above.  Furthermore, even assuming, arguendo, that due

  See Section VIII(E)(1) below, which indicates that due process and other258

Constitutional protections may not apply to procedures to discipline union members under aConsent Decree because the requisite state action is lacking in some circumstances.

235

process applies to these disciplinary procedures,  they afford greater rights than the minimum258

requirements of due process, and hence do not violate due process.  See Section 

VII(D)(3) above; see also the following cases ruling that the disciplinary and adjudicatory

procedures employed in Government civil RICO cases involving labor unions satisfy due

process:  United States v. Int’l Bhd. of Teamsters, 954 F.2d 801, 807 (2d Cir. 1992); United

States v. Int’l Bhd. of Teamsters, 948 F.2d 98, 104-105 (2d Cir. 1991); United States v. Int’l Bhd.

of Teamsters, 941 F.2d 1292, 1297-98 (2d Cir. 1991); United States v. Int’l Bhd. of Teamsters,

791 F. Supp. 421, 426 (S.D.N.Y. 1992).

Analogous case law under 29 U.S.C. § 411(a)(5) of the LMRDA also supports the

Government’s position that the disciplinary procedures adopted in Government civil RICO cases

involving labor unions satisfy the requirements of due process.  Indeed, it is the policy of OCRS

that court-ordered disciplinary procedures in Government civil RICO cases involving labor

unions comply with the due process requirements embodied in 29 U.S.C. § 411(a)(5).  Section

411(a)(5), which applies to internal union disciplinary procedures, provides as follows:

No member of any labor organization may be fined, suspended,expelled, or otherwise disciplined except for nonpayment of duesby such organization or by any officer thereof unless such memberhas been (A) served with written specific charges; (B) given areasonable time to prepare his defense; (C) afforded a full and fairhearing.

“The ‘full and fair hearing’ requirement of the LMRDA incorporates the ‘traditional

concepts of due process.’”  United States v. Int’l Bhd. of Teamsters, 247 F.3d 370, 385 (2d Cir.

2001), quoting Kuebler v. Central Lithographers & Photoengravers Union Local 24-P, 473 F.2d

  Accord N.L.R.B. v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 194 (1967); Holmes v.259

Donovan, 984 F.2d 732, 737-38 (6th Cir. 1993); Wellman v. Int’l Union of Operating Engineers,812 F.2d 1204, 1205 (9th Cir. 1987); Tincher v. Piasecki, 520 F.2d 851, 854 (7th Cir. 1975);Falcone v. Dantinne, 420 F.2d 1157, 1163-65 (3d Cir. 1970); Parks v. Int’l Bhd. of ElectricalWorkers, 314 F.2d 886, 911-12 (4th Cir. 1963); Loekle v. Hansen, 551 F. Supp. 74, 82 (S.D.N.Y.1982).  See generally, Risa L. Lieberwitz, Due Process and the LMRDA: An Analysis ofDemocratic Rights in the Union and at the Workplace, 29 B. C. L. REV. 21 (1987).

  See, e.g., United States v. Int’l Bhd. of Teamsters, 247 F.3d at 387; Wellman, 260

812 F.2d at 1206; Yager v. Carey, 910 F. Supp. 704, 713 (D.D.C. 1995).

  Accord Ferguson v. Int’l Ass’n of Bridge, Structural and Ornamental Iron Workers,261

854 F.2d 1169, 1174-75 (9th Cir. 1988); Rosario v. Amalgamated Ladies Garment CuttersUnion, 605 F.2d 1228, 1240 (2d Cir. 1979) (collecting cases); Tincher v. Plasecki, 520 F.2d 851,854 (7th Cir. 1975); Kuebler v. Cleveland, Lithographers & Photo Union Local 24-P, 473 F.2d359, 363-64 (6th Cir. 1973); Falcone, 420 F.2d at 1163-65; Hurley v. Steamfitters Local UnionNo. 464, 714 F. Supp. 996, 1001 (D. Neb. 1989). 

236

359, 363-64 (6th Cir. 1973).   To obtain relief for a violation of a union member’s LMRDA259

rights, it is not enough to establish that an internal union disciplinary hearing violated the union’s

constitution or bylaws; rather, the union member must also establish that the violation deprived

him of a fair trial within the meaning of the LMRDA.260

Moreover, Section 411 (a) (5) of the LMRDA “was not intended to authorize courts to

determine the scope of offenses for which a union may discipline its members,” and therefore

unions have wide discretion to decide the scope of proscribed conduct, provided that the union

does not violate the protections afforded union members under the LMRDA.  

Int’l Bhd. of Boilermakers v. Hardeman, 401 U.S. 233, 244 (1971)(“Hardeman”).   Indeed, the261

LMRDA “does not require that these charges to be valid, must be based on activity that the union

had proscribed prior to the union member having engaged in such activity.”  Hardeman, 401 U.S.

at 244 (internal quotations and citation omitted).

  Hardeman, 401 U.S. at 245 (finding sufficient notice of the charges based on a262

detailed statement of facts underlying the charges) (internal quotations omitted).

  Gleason v. Chain Serv. Rest., 422 F.2d 342, 343 (2d Cir. 1970).  See also, Curtis v.263

Int’l Alliance of Theatrical Stage Emp., 687 F. 2d 1024, 1027 (7th Cir. 1982) (Section 411 (a) (5)“does not require the elaborate specificity of a criminal indictment”) (collecting cases); Null v.Carpenters Dist. Council of Houston, 239 F. Supp. 809, 815 (S.D. Tex. 1965).

  See, e.g., Wellman, 812 F. 2d at 1206 (28 days was sufficient notice); Stewart v. St.264

Louis Typographical Union No. 8, 451 F. Supp. 314, 315-16 (E.D. Mo. (1978) (14 days wassufficient); Null, 239 F. Supp. at 815 (20 days was sufficient).

  Accord Ritz v. O’Donnell, 566 F.2d 731, 735 (D.C. Cir. 1977); Parks v. Int’l Bhd. of265

Electrical Workers, 314 F.2d 886, 912 (4th Cir. 1963); Yager v. Carey, 910 F. Supp. 704, 715(D.D.C. 1995); Loekle, 551 F. Supp. at 82; Reilly, 488 F. Supp. at 1127; Steward, 451 F. Supp.316.

237

Regarding the requisite specificity, the “charges must be . . . specific enough to inform

the accused member of the offense that he has allegedly committed,”  and provide “the262

information needed to conduct a meaningful investigation and prepare a defense.”   Moreover,263

Section 411(a)(5) of the LMRDA does not specify a time period to satisfy “as reasonable time to

prepare [the accused’s] defense.”  One court has noted that “[a]t a minimum, however, due

process does require that the accused be told [of the charges], far enough in advance of trial to be

of some use to him. . . .”  Reilly v. Sheet Metal Workers’ Int’l Ass’n, 488 F. Supp. 1121, 1127

(S.D.N.Y. 1980).264

The right to a “full and fair hearing” encompasses the rights to be present and “a

reasonable opportunity to be heard - including the right to present evidence and the right to

confront and cross examine witnesses.”  Milne v. Int’l Ass’n of Bridge, Structural, Ornamental &

Reinforcing Iron Workers, AFL-CIO Local 15, 156 F. Supp.2d 172, 178 (D. Conn. 2001)

(internal quotations and citations omitted).   Accordingly, courts have found that an accused265

was denied a right to a “full and fair hearing” under the LMRDA when:  (1) the discipline was

  See, e.g., Hardeman, 401 U.S. at 246 (collecting cases).266

  See, e.g., Murphy v. Int’l Union of Operating Eng’rs, Local 18, 774 F.2d 114, 125267

(6th Cir. 1985); Semancik v. United Mineworkers of America, Dist. No. 5, 466 F.2d 144, 159(3d Cir. 1972); Falcone, 420 F.2d at 1166-67.

  See, e.g., Knight v. Int’l Longshoremen’s Ass’n, 457 F.3d 331, 340-42 (3d Cir. 2006);268

Rosario, 605 F.2d at 1240-42; Tincher, 520 F.2d at 854-56.

  See, e.g., Kuebler, 473 F.2d at 362-64; Milne, 156 F. Supp. 2d at 177-81; Loekle, 269

551 F. Supp. at 82-83.

  Accord United States v. Int’l Bhd. of Teamsters, 247 F.3d at 385-86 (rights to270

compulsory process and to subpoena witness are not required); United States v. Boggia, 167 F.3d113, 118-19 (2d Cir. 1999) (right to representation of counsel at a disciplinary hearing is notrequired and reliable hearsay is admissible); Wilderger v. AFGE, 86 F.3d 1188, 1193-95 (D.C.Cir. 1996) (overlap of investigative, prosecutorial, and adjudicatory functions in the union’spresident did not violate due process); Curtis, 687 F.2d at 1027-29 (right to counsel atdisciplinary hearing is not required) (collecting cases); Yager v. Carey, 910 F. Supp. 704, 714-15(D.D.C. 1995) (no rights to be represented by counsel or to the application of the “technical rulesof pleading, procedure and evidence”) (citations omitted); Hurley v. Steamfitters Local UnionNo. 464, 714 F. Supp. 996, 1002 (D. Neb. 1988) (union members “need not be provided with thefull panoply of procedural safeguards afforded to criminal defendants”); Null v. Carpenters Dist.Council of Houston, 239 F. Supp. 809, 814 (S.D. Tx. 1965).

238

unsupported by any evidence;  (2) the tribunal was not impartial;  (3) the accused was not266 267

allowed to record the trial when the union did not do so;  and (4) the accused’s rights to cross-268

examination and to present a defense were unduly limited.269

However, while courts “apply traditional due process concepts, [courts] recognize that a

union has a significant interest in controlling internal discipline, and so do not require the union’s

disciplinary proceeding to incorporate the same protections found in criminal proceedings.” 

Wellman v. Int’l Union of Operating Eng’rs, 812 F.2d 1204, 1205 (9th Cir. 1987).270

5. Election Reform

In light of the LCN’s corrupt influence over union officials and union elections (see

Section VIII(A) above), union election reform is essential to eliminate such corruption and

  See:271

(1) The Teamsters Local 560 Case; App. B at 3-6; United States v. Local 560 (I.B.T.),736 F. Supp. 601 (D.N.J. 1990);

(2) The Local 6A, Cement and Concrete Workers Case; see App. B at 16-17;(3) The Bonanno Family Case; see App. B at 22-24;(4) The International Brotherhood of Teamsters Union Case; see App. B at 47-51; see

also the following decisions all entitled United States v. Int’l Bhd. of Teamsters: 247 F.3d 370(2d Cir. 2001); 723 F. Supp. 203 (S.D.N.Y. 1989), aff’d as modified, 931 F.2d 177 (2d Cir.1991); 742 F. Supp. 94 (S.D.N.Y. 1990), aff’d as modified, 931 F.2d 177 (2d Cir. 1991); 764 F.Supp. 787 (S.D.N.Y. 1991); 782 F. Supp. 243 (S.D.N.Y. 1992); 803 F. Supp. 761 (S.D.N.Y.1992), aff’d and reversed in part, 998 F.2d 1101 (2d Cir. 1993);

(5) The ILA Local 1804-1 Case; see App. B at 100-02;(6) The IBT Local 295 Case; see App. B at 117;(7) The New York Carpenters Union Case; see App. B at 125-27; United States v. Dist.

Council of New York City & Vicinity of the United Bhd. of Carpenters and Joiners of America,880 F. Supp. 1051 (S.D.N.Y. 1995);

(8) The HEREIU Local 54 Case; see App. B at 135-38;(9) The Teamsters Local 282 Case; see App. B at 154;(10) The Mason Tenders District Council of Greater New York Case; see App. B at 166;

United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL 742637 (S.D.N.Y.Dec. 27, 1994); 1997 WL 340993 (S.D.N.Y. June 20, 1997); and 1997 WL 345036 (S.D.N.Y.June 20, 1997);

(11) The HEREIU Case; see App. B at 200-2001;(12) The Chicago District Council of LIUNA Case; see App. B at 214-15, 218;(13) The LIUNA Local 210 Case; see App. B at 221-25;(14) The HEREIU Local 69 Case; see App. B at 234.

239

restore union democracy to rank-and-file union members.  Accordingly, in most of the

Government civil RICO cases involving labor unions, courts have imposed various union

election reforms, including: (1) requiring election of new officers; and (2) appointing court-

officers to promulgate election rules, conduct and oversee union elections to guarantee uncoerced

and untainted elections, and to review and approve candidates for union office.   Indeed, in the271

International Brotherhood of Teamsters Union Case, the district court approved a consent decree

requiring the IBT to amend its Constitution to provide, for the first time, elections of the IBT

General President and other International Officers by direct rank-and-file secret balloting.  See

240

App. B at 47-48; United States v. Int’l Bhd. of Teamsters, 931 F.2d 177 (2d Cir. 1991); United

States v. Int’l Bhd. of Teamsters, 803 F. Supp. 761, 767-772, 774-76 (S.D.N.Y. 1992) (the IBT

election rules are set forth as exhibit A at 803 F. Supp. at 800-806), aff’d and reversed in part,

998 F.2d 1101 (2d Cir. 1993).

6. Removal of Persons From Union Office and Membership, and Prohibitionson Holding Union Office or Membership

As demonstrated in Sections II(C)(4) and VII(D) above, 18 U.S.C. § 1964(a) authorizes

district courts to remove a person from a position or office and to bar a person from holding a

position or engaging in specified activity in the future when: 

(1) Such person is a named defendant in a civil RICO action pursuant to 18 U.S.C. § 1964(a) and is found to have violated RICO after due notice and atrial, summary judgment, or other appropriate adjudicatory proceeding, or bydefault; or

(2) Such person, whether or not named as a defendant in a civil RICO action, issubject to an injunction issued pursuant to 18 U.S.C. § 1964(a), and is found afterdue notice and an appropriate adjudicatory proceeding, or by default, to haveviolated, or aided and abetted one or more named defendant’s violation of a provision of a district court’s injunction or judgment order that warrants removal;or 

(3) Such person, even though not named as a defendant in a civil RICO action norotherwise subject to an injunction issued pursuant to 18 U.S.C. § 1964(a), isfound after due notice and an appropriate adjudicatory proceeding, or by default,to have aided and abetted an enjoined person’s violation of a district court’sinjunction or judgment order that warrants removal.

Accordingly, in many Government civil RICO cases involving labor unions, courts have

removed persons found to have violated RICO from membership or holding an office in a labor

union, and prohibited such persons from holding membership or office in a labor union in the

future, or have otherwise prohibited such person from engaging in activities related to union

  See:272

(1) The Teamsters Local 560 Case, see App. B at 3-12; United States v. Local 560 of theInt’l Bhd. of Teamsters, 581 F. Supp. 279, 321, 336-37 (D.N.J. 1984), aff’d, 780 F.2d 267, 295-96 (3d Cir. 1985), cert. denied, 476 U.S. 1140 (1988); United States v. Local 560 of the Int’lBhd. of Teamsters, 694 F. Supp. 1158, 1160-62, 1191-92 (D.N.J. 1988), aff’d, 865 F.2d 252 (3dCir. 1986) (Table); United States v. Sciarra, 851 F.2d 621, 623-24, 632-33 (3d Cir. 1988);

(2) The Local 6A Cement and Concrete Workers Case, see App. B at 17;(3) The Local 30, Roofers Union Case, see App. B at 30-32; United States v. Local 30,

United Slate, Tile and Composition Roofers, 686 F. Supp. 1139, 1162, 1171-74 (E.D. Pa. 1988),aff’d, 871 F.2d 401, 407-09 (3d Cir. 1989);

(4) The Private Sanitation Industry of Long Island Case, see App. B at 89-94; UnitedStates v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F. Supp. 808, 818(E.D.N.Y. 1992), aff’d, 995 F.2d 375 (2d Cir. 1993); United States v. Private Sanitation Indus.Ass’n of Nassau/Suffolk, Inc., 899 F. Supp. 974, 983-84 (E.D.N.Y. 1994), aff’d 47 F.3d 1158 (2dCir. 1995) (Table);

(5) The ILA Local 1804-1 Case, see App. B at 101-02, 105-07; United States v. Local1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp. 177, 191-92 (S.D.N.Y. 1993), aff’d andvacated in part on other grounds, United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995);

(6) The IBT Local 295 Case, see App. B at 117-18; United States v. Local 295 of the Int’lBhd. of Teamsters, 784 F. Supp. 15, 19 (E.D.N.Y. 1992);

(7) The Teamsters Local 282 Case, see App. B at 152-54; United States v. Local 282 ofthe Int’l Bhd. of Teamsters, 13 F. Supp.2d 401, 402 (E.D.N.Y. 1998), aff’d in part and vacatedand remanded on other grounds in part, 215 F.3d 283 (2d Cir. 2000);

(8) The Mason Tenders District Council Case, see App. B at 173-74; United States v.Mason Tenders Dist. Council of Greater New York, 1995 WL 679245 (S.D.N.Y. Nov. 15, 1995).

  See: (1) App. B at 3-7; United States v. Local 560 of the Int’l Bhd. of Teamsters, 273

736 F. Supp. 601 (D.N.J. 1990), United States v. Local 560 of the Int’l Bhd. of Teamsters, 754 F. Supp. 395 (D.N.J. 1991),  aff’d 974 F.2d 315 (3d Cir. 1992);

(2) App. B at 16-17; United States v. Local 6A, Cement & Concrete Workers, LaborersInt’l Union of North America, 832 F. Supp. 674 (S.D.N.Y. 1993);

(3) App. B at 23-24;(continued...)

241

matters.272

Moreover, in all 22 filed Government civil RICO cases involving labor unions, courts

have authorized such sanctions and other sanctions for persons who consented to such sanctions,

or who, after an appropriate adjudicatory procedure, were found to have violated the district

courts’ injunctions or other court orders.   But see United States v. Local 30, United Slate, Tile,273

(...continued)273

(4) App. B at 30;(5) App. B at 37-39;(6) App. B at 41;(7) App. B at 47-51; United States v. Int’l Bhd. of Teamsters, 247 F.3d 370 (2d Cir.

2001) and cases cited at App. B at 51, n. 7;(8) App. B at 81;(9) App. B at 86, 91;(10) App. B at 101-102; United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, et

al., 831 F. Supp. 192 (S.D.N.Y. 1993);(11) App. B at 115-18;(12) App. B at 123, 126; United States v. Dist. Council of New York City of the United

Bhd. of Carpenters and Joiners of America., 941 F. Supp. 349, 364-87 (S.D.N.Y. 1996);(13) App. B at 136-38;(14) App. B at 144-46;(15) App. B at 152, 154-55;(16) App. B at 165, 167-68, 173-75; United States v. Mason Tenders Dist. Council of

Greater New York, 1994 WL 742637 (S.D.N.Y. Dec. 27, 2994); Investigations Officers v. Lanza,1996 WL 514871 (S.D.N.Y. Sept. 10, 1996); United States v. Mason Tenders Dist. Council ofGreater New York, 1998 WL 23214 (S.D.N.Y. Jan. 13, 1998); 

(17) App. B at 196, 201-06; United States v. Hotel Employees and Rest. Employees Int’lUnion, 974 F. Supp. 411 (D.N.J. 1997);

(18) App. B at 211-14, 219;(19) App. B at 223-25;(20) App. B at 231-34, 236-37;(21) App. B at 241-42; (22) App. B at 250-55.

242

and Composition Roofers, 686 F. Supp. 1139, 1167-68 (E.D. Pa. 1988), aff’d, 

871 F.2d 401 (3d Cir. 1989) (the district court rejected the Government’s argument that the court

should remove newly elected union officers who were not defendants and who were not found to

have violated RICO, because they were close to the defendants found liable for RICO violations

and were likely “to follow the course that the old regime did”).

7. Disgorgement

As noted in Section II(C)(3) above, there is a conflict between the Second Circuit and the

District of Columbia Circuit regarding the issue whether disgorgement is an available remedy

  See United States v. Carson, 52 F.3d 1173, 1180-82 (2d Cir. 1995); United States v.274

Private Sanitation Indus. Ass’n, 914 F. Supp. 895, 900-01 (E.D.N.Y. 1996); United States v.Private Sanitation Indus. Ass’n, 899 F. Supp. 974, 983-84 (E.D.N.Y. 1994), aff’d, 47 F.3d 1158(2d Cir. 1995); United States v. Private Sanitation Indus. Ass’n, 811 F. Supp. 808, 818 (E.D.N.Y.1992), aff’d, 995 F.2d 375 (2d Cir. 1993); United States v. Int’l Bhd. of Teamsters, 708 F. Supp.1389, 1408 (S.D.N.Y. 1989); United States v. Bonanno Organized Crime Family, 683 F. Supp.1411, 1446-49 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989).

  See, e.g., United States v. Int’l Bhd. of Teamsters, 998 F.2d 120, 124 (2d Cir. 1993);275

United States v. Int’l Bhd. of Teamsters, 964 F.2d 180, 183 (2d Cir. 1992); United States v. Int’lBhd. of Teamsters, 931 F.2d 177, 184-87 (2d Cir. 1991); United States v. Int’l Bhd. of

(continued...)243

under 18 U.S.C. § 1964.  Courts in the Second Circuit have repeatedly held that disgorgement of

a wrongdoer’s ill-gotten gains is an equitable remedy available to the United States under 18

U.S.C. § 1964 (a).274

8. Relief Against Non-Parties

In accordance with the authority set forth in Section VII(C)(2) above, courts have

frequently imposed equitable relief against non-parties in Government civil RICO lawsuits.  For

example, in the Government’s civil RICO suit against the International Brotherhood of

Teamsters Union, courts have held that provisions of the Consent Decree entered into by the

Government and the International Teamsters Union defendant, involving application of

disciplinary rules and related sanctions and rules governing union elections, applied to Teamsters

Union members and Teamsters Union affiliated entities that were non-parties and non-signatories

to the Consent Decree on the grounds that: (1) the interests of such non-parties were adequately

represented by the International Teamsters Union defendant, and (2) because the investigatory

and disciplinary powers of the officers appointed under the Teamsters’ Consent Decree are

proper delegations of the powers of the IBT General President and the IBT’s General Executive

Board within the scope of the IBT Constitution that binds all members of the IBT.275

(...continued)275

Teamsters, 905 F.2d 610, 622 (2d Cir. 1990); United States v. Int’l Bhd. of Teamsters, 808 F. Supp. 279, 282 (S.D.N.Y. 1992); United States v. Int’l Bhd. of Teamsters, 777 F. Supp.1123, 1125-26 (S.D.N.Y. 1991) (collecting cases); United States v. Int’l Bhd. of Teamsters, 764 F. Supp. 787, 789-90 (S.D.N.Y. 1991); United States V. Int’l Bhd. of Teamsters, 745 F. Supp. 908, 912 (S.D.N.Y. 1990); Joint Council 73 v. Int’l Bhd. of Teamsters, 741 F. Supp. 491, 493 (S.D.N.Y. 1990).

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Moreover, courts have enforced consent decrees against non-parties and non-signatories

under the All Writs Act, 28 U.S.C. § 1651(a), when “necessary or appropriate in aid of their

respective jurisdiction and agreeable to the usages and principles of law.”  See, e.g., United

States v. Int’l Bhd. of Teamsters, 954 F.2d 801, 806-07 (2d Cir. 1992) (affirming district court

order directing an employer to comply with the decision of a court officer appointed pursuant to

the IBT Consent Decree to reinstate a union employee whom it had dismissed in retaliation for

engaging in Teamsters union campaign activity, which was protected by election rules

promulgated pursuant to the IBT Consent Decree); United States v. Int’l Bhd. of Teamsters, 948

F.2d 98, 101-105 (2d Cir. 1991) (approving district court’s authority to issue an order affirming a

ruling by an officer appointed by the district court pursuant to the Teamsters Consent Decree

granting non-employee members of the IBT access to the premises of the employer to campaign

for union office, which order was necessary to effectuate the provisions of the Teamsters Consent

Decree relating to holding open and fair elections for union officers); United States v. Int’l Bhd.

of Teamsters, 907 F.2d 277, 279-281 (2d Cir. 1990) (affirming district court’s order enjoining all

members and affiliates of the IBT from litigating issues related to a Consent Decree between the

IBT and the Government in any court other than the Southern District of New York, where the

Consent Decree was entered, as necessary to aid the Southern District of New York’s jurisdiction

because collateral lawsuits in other jurisdictions “created a ‘significant risk of subjecting the

  See also United States v. Sciarra, 851 F.2d 621, 629-633 (3d Cir. 1988) (affirming an276

order of the district court compelling non-parties to submit to depositions to effectuate theadministration of a court imposed trusteeship over the defendant-union).

  Moreover, the case law involving equitable relief obtained through consent decrees is277

also relevant to the issue of what equitable relief is available in contested Government civilRICO cases over the objections of defendants, because a court may not approve a consent decreeunless it determines that the terms of the consent decree are consistent with, and do not violate,the governing law, and that they further the objectives of the statute underlying the cause ofaction.  See Section VII(A)(1) above.

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Consent Decree to inconsistent interpretations and the Court Officers to inconsistent

judgments.’”276

C. Relief Obtained In Contested Civil RICO Cases Involving Labor Unions

For the most part, the equitable relief discussed in Section VIII(B) above was obtained

through consent decrees voluntarily agreed upon by the parties in the litigation.  Substantially

similar equitable relief also has been obtained in eight contested Government civil RICO cases

involving labor unions over the objections of defendants, as discussed below.277

1. The IBT Local 560 Case -

United States v. Local 560 of the Int’l Bhd. of Teamsters, 581 F. Supp. 279 (D.N.J. 1984)

(“Local 560”), was the first civil RICO suit brought by the United States against a labor union. 

In Local 560, 581 F. Supp. at 321, 336-37, following a bench trial, and over the objection of the

defendants, the district court imposed an injunction, enjoining two defendants “from any future

contacts of any kind with Local 560.”  The district court also removed the members of the Local

560 Executive Board, who the court found had violated RICO, ordered a court-supervised

election of new officers for Local 560, and appointed a Trustee who conducted the business and

operations of Local 560.  The trusteeship was imposed in order “to effectively dispel the existing

atmosphere of intimidation within Local 560, to restore union democracy, and to ensure (to the

  The district court found that various defendants, including members and associates of278

the LCN and corrupt Local 560 officials, had created a climate of intimidation that induced Local560 members to surrender their rights to union democracy through a pattern of racketeeringactivity involving several murders, extortion and the systematic appointment and re-appointmentto union positions of persons with ties to organized crime and/or serious and extensive criminalrecords.  See Local 560, 581 F. Supp. at 284-85, 290-92, 306-19.

  See App. B at 3-12.  See also United States v. Local 560 of the Int’l Bhd. of279

Teamsters, Civil No. 82-689 (D.N.J. Opinion and Order dated May 12, 1987); United States v.Local 560 of the Int’l Bhd. of Teamsters, 694 F. Supp. 1158, 1160-62, 1191-92 (D.N.J. 1988),aff’d, 865 F.2d 252 (3d Cir. 1988)(Table); United States v. Sciarra, 851 F.2d 621, 623-24, 632-33 (3d Cir. 1988).

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extent possible) that racketeers do not obtain positions of trust within the Local.”  Id. at 326.278

In United States v. Local 560 of the Int’l Bhd. of Teamsters, 780 F.3d 267, 295-96 (3d

Cir. 1986), cert. denied, 476 U.S. 1140 (1986), the Third Circuit affirmed the district court’s

relief, stating that the power to appoint “a trustee to be in charge of Local 560 . . . falls within the

broad equitable powers granted to district courts under Section 1964(a), ” Id. at 296 n. 39, 

particularly the “broad remedial powers of ‘divestiture’ and ‘reasonable restrictions’ provided for

under Section 1964.”  Id. at 295.

During the course of the trusteeship, which was in place for over twelve years, the district

court authorized the Trustee, subject to review by the district court, to, among other matters,

administer the affairs of Local 560, negotiate contracts, hire and discharge employees and

investigate acts of wrongdoing within the union.279

In particular, the powers of the court-appointed Trustee included, but were not limited to,

the following:

a. All powers accorded to the members of the Local 560 Executive Board,either individually or collectively, by virtue of the bylaws and,constitutions of the Local and International Union;

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b. All powers accorded to the offices formerly held by those personsremoved from office pursuant to the Judgment Order of March 16, 1984,by virtue of the bylaws and constitutions of the Local and InternationalUnion;

c. The power to enter into negotiations, execute contracts, pursue grievances,conduct organizing campaigns, and otherwise direct and engage in alllawful activities of Local 560;

d. The power to initiate pursue, defend or settle litigation on behalf of Local560 or its members in accordance with the lawful powers of the Union;

e. The power to hire and discharge employees of Local 560 and set thewages, terms and conditions of employment, subject to any limitations thatmay be created by law or existing written contracts;

f. The power to appoint and remove business agents, stewards and otherrepresentatives of Local 560, subject to any limitations that may be createdby the bylaws and constitutions of the Local and International Unions;

g. The power to retain or terminate any legal counsel, accountants,consultants or other professionals that he may deem necessary to theaccomplishment of his duties under such terms and conditions as he maydetermine appropriate, including the fixing of compensation which shallbe paid by Local 560;

h. The power to make all determinations with respect to the affairs of Local560 in any and all aspects of its operations; and

i. The power to participate in the affairs of the Joint Council, the BenefitPlans and other bodies related to Local 560 to the same extent as wascustomary for Executive Board members prior to the imposition of, theTrusteeship.

See United States v. Local 560 of the Int’l Bhd. of Teamsters, Civ. No. 82-689 (D.N.J.

Opinion and Order dated May 12, 1987) at 6-7.

2. The Local 30, Roofers Union Case -

In United States v. Local 30, United Slate, Tile and Composition Roofers, 

686 F. Supp. 1139, 1162-1174 (E.D. Pa. 1988) (“Local 30, United Slate, Tile”), following an

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evidentiary hearing, the district court found that defendants had violated RICO and imposed a

“Decreeship” over the Roofers Union that included the following equitable relief over the

defendants’ objections:

a. The district court barred defendants who violated RICO “from the roofingindustry within the jurisdiction of Local 30/30B.”  Id. at 1162.

b. The district court appointed a Chief Liaison Officer “who will serve as theprincipal enforcement officer of all provisions of the Decree,” id. at 1171,and “will have the authority, upon application and approval of [theDistrict] Court, to hire such assistants and support services as will beneeded to fulfill his responsibilities under the Decree.”  Id. at 1169.

c. The district court ordered an audit of all accounts of Local 30/30B and anyaffiliated entity by a designee of the Court.  Id. at 1169, 1172.

d. The district court barred all defendants found to have violated RICO “fromholding, occupying, or controlling any position of leadership or influencein respect to any matter within the jurisdiction of Local 30/30B or any ofits affiliated entities”and “from engaging in employment in the roofing orrelated construction industries, in any capacity, within the geographicalarea of the jurisdiction of Local 30/30B”.  Id. at 1171.

e. The district court ordered that Local 30/30B develop with the appropriateemployer representative groups an industry-wide grievance/arbitrationprocedure for resolving contractual disputes between the union andemployers, subject to the court’s approval.  Id. at 1172-73.

f. The district court ordered that all face-to-face collective bargainingagreement negotiations take place under the supervision of the CourtLiaison Officer.  Id. at 1172-73.

g. The district court prohibited any collective bargaining agreement fromtaking effect until it was approved by the Court Liaison Officer.  Id. at1173.

h. The district court established “direct control of all matters within thejurisdiction of the union that require the expenditure of any funds of theUnion or any affiliated entity for the transfer of any of its assets” andenjoined defendants “from transferring any funds, property, or interests inany assets of any kind of Local 30/30B or any of its affiliated entities,except in the ordinary course of business without the express written

249

consent of the court.”  Id. at 1172.

i. The district court ordered that the “Court Liaison Officer shall have theright, without prior notice, to have access to any records, wherever located,at the offices, locations and other property of Local 30/30B or anyaffiliated entity” and to copy such records.  Id. at 1173.

j. The district court required the union to “provide written notice to the courtof all meetings, proceedings, or decisions providing for nominationsand/or elections for offices or positions within Local 30/30B, or anyaffiliated entity.” Id. at 1173.

k. The district court prohibited the union and any affiliated entity and theindividual defendants “in respect to any member within the jurisdiction ofLocal 30/30B, or any affiliated entity, from intimidating, inflictingviolence, fear, or threats of personal or property damage upon any person,corporation or entity, or attempting to do so.”  Id. at 1174.

l. The district court retained jurisdiction of all matters relating to the unionand any affiliated entity and ordered that “[a]ll costs incurred in theadministration of the Decreeship shall be borne by Local 30/30B and,where appropriate, its affiliated entities.”  Id.

In United States v. Local 30, United Slate, Tile and Composition Roofers, 871 F.3d 401,

404 (3d Cir. 1989), the Third Circuit affirmed this equitable relief, noting that “the District Court

converted the preliminary injunction into a ‘final decree.’”  The Third Circuit concluded that the

relief granted was authorized by 18 U.S.C. § 1964(a), and that the District Court did not abuse its

discretion in imposing a decreeship against the Roofers Union and deciding that the ordered

relief was necessary to eliminate and prevent corruption in the union.  Id. at 404-09.

The Third Circuit stated that, under Section 1964 of RICO, “[t]he district court is

empowered not only to restrain but also to prevent future violations of § 1962 by ordering

reorganization or even dissolution of any enterprise, as long as the court makes due provision for

the rights of innocent parties.”  Id. at 407.  The Third Circuit also explained that the intrusive

relief was necessary because the evidence “supports the district court’s finding that the removal

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of the thirteen individual defendants would not have eliminated that corrupt influence from the

Roofers Union.”  Id. at 407.  Finally, the court of appeals noted that the evidence showed:

that the newly elected officials are long time associates and alliesof the thirteen individual defendants in this case, which indicatesthat corrupt influences continue to exist within the Union. [Consequently] the district court properly found a likelihood ofwrongful acts continuing into the future.

Id. at 409.

3. The ILA Local 1804-1 Case -

In United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 831 F. Supp. 177, 191-192

(S.D.N.Y. 1993), following a bench trial, the district court enjoined certain defendants found to

have violated RICO: 

(1) from committing any acts of racketeering, as defined in [18U.S.C. § 1961]; (2) from having any dealings, directly orindirectly, with any members or associates of organized crime forany commercial purpose concerning the affairs of the Waterfront[Enterprise]. . . or any labor organization; and (3) from having anydealings, directly or indirectly, with any other defendant in thisaction for any commercial purpose concerning the affairs of theWaterfront [Enterprise] or any labor organization; and (4) fromparticipating in any way in the affairs of or having any dealings,directly or indirectly, with (i) any labor organization. . . .(ii) anyofficer, agent, representative, employee, or member of [several ILAlocals], (iii) any other officer, agent, representative, employee, ormember of the ILA, or any other labor organization concerning theaffairs of such organization or the Waterfront [Enterprise]; and (iv)any person or entity that does business on the Waterfront; and (5)from visiting the site of any ILA entity or other labor organizationor communicating with any person who is at the site of any ILAentity or other labor organization.

In United States v. Carson, 52 F.3d 1173, 1183-85 (2d Cir. 1995), the Second Circuit

upheld this injunctive relief.  The Second Circuit ruled that the above restrictions on the

defendants were “reasonable,” not overly broad, were specifically authorized by Section 1964 (a)

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that allows “reasonable restrictions on the future activities” of RICO violators (id. at 1183), and

did not violate the defendants’ First Amendment rights to freedom of association.

4. The IBT Local 295 Case - 

In United States v. Local 295 of the Int’l Bhd. of Teamsters, 784 F. Supp. 15 (E.D.N.Y.

1992), over the objection of Local 295, the district court imposed a court - trusteeship to conduct

various operations of Local 295 and to conduct investigations to eliminate corruption within

Local 295.  The district court stated that it had authority to “appoint a trustee to oversee the

affairs of a local union under [Section 1964(a) of RICO].”  Id. at 19.  The district court also

quoted a Senate Report stating that “‘[t]he implementation of trusteeships under civil RICO is no

longer a novel, one-time experiment.  It is quickly being recognized as an extremely valuable part

of effective law enforcement.’”  Id. at 19.

In a subsequent order, the district court authorized the Trustee, among other matters:

a. “To conduct, administer and supervise the daily affairs of Local 295,including the power to handle grievances, arbitration and collect anddisburse monies (including member dues) on behalf of the Local; [and negotiate, enter, and terminate contracts and leases]”.

. . . b. “To investigate corruption and abuse within Local 295, with or without

probable cause, and with such investigative assistance as he deemsappropriates.”

. . .c. To discipline, remove and replace any officer, administrator, organizer,

business agent, employee, shop steward, negotiator, or trustee of Local295, for just cause as follows:

i. The Trustee’s decisions with respect to discipline of members shallbe final and binding.  Any member’s appeal shall be to the UnitedStates District Court for the Eastern District of New York withinfourteen days of receipt of the Trustee’s decision.

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ii. In any appeal pursuant to paragraph 2(e)(1), the standard of reviewshall be whether the Trustee’s decision is supported by apreponderance of the evidence. Such evidence may consist of orinclude hearsay.

iii. Any actions of the Trustee pursuant to this subparagraph shall bereviewable, exclusively by this Court, and are not subject toarbitration or other challenge  under the IBT Constitution or Local295 By-Laws.

. . .d. To take possession of and review all current and past books, records, files,

accounts and correspondence of Local 295 and the Executive Board.

e. [To conduct and supervise union elections].

f. “To subpoena witnesses and documents.”

g. “To take testimony formally or informally, on the record under oath before a courtreporter or otherwise as the circumstances may require in the Trustee’s solediscretion.”

h. “To receive assistance of federal and local law enforcement” and to “referpossible violations of criminal law to federal or local law enforcementauthorities.”

i. “To apply to the [district] Court for such assistance as may be necessary andappropriate to carry out the powers conferred upon the Trustee.”

j. To provide periodic written reports to the district court and the government.

k. To provide the Trustee with “all powers granted to Trustees of locals pursuant tothe IBT Constitution and all powers formerly held by the Executive Board of[Local 295] to the extent that such powers, including the power to conducthearings, discipline, remove and replace officers, employees and members, arebroader than those emumerated [in the district court’s order].”

l. To petition the district court for modification of any of the terms of the districtcourt’s order.

See App. B at 117-18.

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5. The IBT Local 282 Case -

In United States v. Local 282 of the Int’l Bhd. of Teamsters, 13 F. Supp.2d 401 (E.D.N.Y.

1998), aff’d in part, and vacated and remanded in part, by 215 F.3d 283 (2d. Cir. 2000), based on

Robert Sasso’s guilty plea to a RICO conspiracy charge, the district court granted the

Government’s motion for summary judgment in its civil RICO action “to the extent of finding

Sasso liable in that he ‘conspired with the other individual defendants and members of organized

crime to conduct the affairs of defendant Local 282 of the International Brotherhood of

Teamsters as an enterprise through a pattern of labor racketeering activities, including acts of

extortion and illegal receipt of money from employers, from the late 1970s through 1991 in

violation of 18 U.S.C. § 1962(c).’” Id. at 402.  The district court also permanently enjoined Sasso

from:  (1) “owning, operating, or working for any business in the construction, demolition, or

excavation industries or part of the trucking industry which was engaged in construction,

demolition, or excavation”; (2) “working in any capacity for any person or business doing

business with the construction, demolition, or excavation industries and from associating for any

commercial purpose with any member or associate of organized crime”;  and (3) “from visiting

the work sites of the International Brotherhood of Teamsters and, with limited exceptions,

communicating with any person at these sites.”  Id. at 402.

The district court also ordered Sasso to pay 15% of the costs of a monitorship (i.e.,

$136,000) that the district court had imposed over Local 282 pursuant to a Consent Decree.  In so

ruling, the district court stated:

The broad discretion in fashioning remedies granted by section1964(a) affords this Court the power to order Sasso to fund themonitorship which the Consent Judgment created.  Ordering Sasso tofund the monitorship does not violate the restraints on district courts’

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powers under § 1964(a) emphasized in [United States v. Carson, 52F. 3d 1173 (2d Cir. 1995)].  In Carson, the Second Circuit warnedthat district courts have the power to “‘prevent and restrain’ futureconduct” but not the power to “punish past conduct.”  Carson, 52F.3d at 1182 (emphasis in original).  The Second Circuit held that theCarson district court overstepped its jurisdiction by ordering Carsonto disgorge profits he illicitly acquired eight years before the launchof the civil suit.  Id. at 1182.  Carson’s profits were garnered “too farin the past to be part of an effort to ‘prevent’ and ‘restrain futureconduct.’”  Id. (emphasis in original).

Here, in contrast, the plaintiff does not request that Sasso disgorgeprofits.  Rather, plaintiff only moves the Court to order Sasso tocontribute to the funding of the monitorship.  As Judge Glasser noted,funding a monitorship furthers the prevention and the restraint offuture illegal conduct.  See Private Sanitation Indus. Ass’n., 914 F.Supp. at 901, surpra.  Here, there is no question that additionalfunding for the Local 282 monitorship will help prevent the illegalconduct Sasso fostered at Local 282.  Indeed, the monitorship in thiscase was created for the express purpose of eradicating the possibilityof future labor racketeering by Local 282 officials.  Additionally,funding the monitorship will further prevent future illegal conduct bySasso.  Sasso will be deterred from engaging in labor racketeeringbecause a fully funded monitorship is difficult to evade.

Id. at 403.

In United States v. Sasso, 215 F.3d 283 (2d Cir. 2000), on appeal of the above-referenced

opinion, the Second Circuit held that the district court’s order requiring Sasso to fund a portion

of the costs of the court-imposed Monitorship of Local 282 fell within the district court’s broad

equitable powers under 18 U.S.C. § 1964.  The Second Circuit distinguished its earlier opinion in

United States v. Carson, 52 F.3d 1173 (2d Cir. 1995), stating:

In Carson, we dealt with a disgorgement order, not with an order ofcontribution to the funding of a monitorship; and we reversed only tothe extent that the sums ordered disgorged were not meant for theprevention of future RICO violations.  Our remand plainly allowedan order requiring the payment of any amounts that were “intendedsoley to prevent and restrain future RICO violations.”  52 F.3d at1182 (internal quotation marks omitted).

255

In the present case, we deal with an order for Sasso’s payment ofmoney into a fund that plainly is to be used to prevent furtherviolations of section 1962.

Sasso, 215 F.3d at 291.

The Second Circuit also rejected Sasso’s argument “that ordering contribution from him

is inappropriate because he has now been enjoined from engaging in the pertinent activities,

thereby preventing him from committing any future RICO offense.”  Id. at 291.  The Second

Circuit explained:

First, there was evidence from the Corruption Officer that Sasso,while imprisoned following his RICO conviction, had hundreds ofcommunications with persons associated with organized crime,persons associated with Local 282, persons whose businesses werewithin the Local’s jurisdiction, and persons who had previously madeillegal payments to corrupt Local officials.  That evidence easilydemonstrates that there can be no effective monitorship withoutattention to Sasso’s own current activities.  Sasso’s suggestion thatsuch attention is unnecessary because he has been enjoined ringshollow in light of his postconviction conduct and in light of thepattern of concealment previously engaged in by the individualdefendants, which included clandestine meetings, surreptitious moneytransfers, and lying under oath.  Second, even if Sasso himself hadnot continued to have suspicious contacts with the persons describedabove, it would be well within the court’s equity powers to concludethat Sasso, having engaged in conduct that corrupted the union,should bear part of the cost of eliminating that corruption.

Id. at 291.

 The Second Circuit remanded the matter to the district court to make appropriate

findings as to “how it arrived at 15 percent as Sasso’s appropriate share of the [monitorship]

expense.”  Id. at 292.

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6. The Mason Tenders District Council of LIUNA Case -

In United States v. Mason Tenders Dist. Council of Greater New York, 

1995 WL 679245 (S.D.N.Y. Nov. 15, 1995), the Government sought permanent injunctive relief

against individual defendants Casciano, LaBarbara, Mandragona, Messera, Soussi, and Vario

(Athe Individual Defendants@), seeking to limit their involvement in organized crime, union

affairs, and the construction and asbestos removal industries.  Each of these defendants was at

one time an official of the Mason Tenders District Council, the Trust Funds, or a constituent

local union.  Between 1989 and 1992, each had pled guilty to various racketeering charges.  At

the time the Government’s proposed injunctions were submitted, all of the Individual Defendants

either had been recently released from prison for those offenses or were pending imminent

release.  The District Court rejected defendants’ argument that their guilty plea agreements

precluded any relief in this action, noting that “[t]he RICO statute specifically contemplates

simultaneous criminal and civil liability for the identical acts of a single defendant.”  Id. at * 21. 

The district court also rejected defendant Vario’s argument that the conditions of his supervised

release subjected him to conditions that made the injunctive relief unnecessary.

The Government’s proposed injunction sought various restraints on the activities of the

Individual Defendants, barring them from any further racketeering activity, all contacts with LCN

members, all association with labor unions or the trust funds, all commercial activities involving

the District Council or its unions, and involvement in the construction and asbestos removal

industries.  Several defendants filed various objections to the breadth and scope of these

proposed restraints, asserting that the terms of the requested relief were vague and overbroad and

violated their First Amendment rights.  However, the District Court ruled that, under United

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States v. Carson, 52 F.3d 1173 (2d Cir. 1995), and other government civil RICO cases, the

court’s authority to fashion equitable relief in order to accomplish RICO’s purposes was very

broad.  In particular, the District Court enjoined the defendants from:

a. committing any act of racketeering as defined in 18 U.S.C. § 1961;

b. knowingly associating for commercial purposes, directly or indirectly,with any member or associate of organized crime, with any defendant inthis action, with any member of the MTDC or its constituent locals, orwith any owner, officer, agent, or employee of any business employingmembers of LIUNA, the MTDC, or the MTDC’s constituent local unions; 

c. visiting any social clubs where commercial activities are discussed, orwhich is known to be frequented by members or associates of organizedcrime; 

d. participating in any way in the affairs of, or continuing as a member of, orhaving any dealings, directly or indirectly, with any labor organization oremployee benefit fund, including, without limitation, any entity oremployee benefit fund affiliated with LIUNA, the MTDC, or an MTDCconstituent local, provided that nothing in this judgment shall prohibit anyone of the Six Individual Defendants from (a) making application for orreceiving a pension from the MTDC Pension Fund, or fromcommunicating with the MTDC Pension Fund concerning these pensionpayments; (b) permitting any business not employing members of LIUNA,the MTDC, or the MTDC constituent local unions, which businessemploys any one of the Six Individual Defendants, from deducting moneyfrom his wages and from remitting such money to a labor organization notaffiliated with LIUNA, the MTDC, or any MTDC constituent local; or (c)seeking and receiving benefits provided for by a collective bargainingagreement binding on any business not employing members of LIUNA,the MTDC, or the MTDC constituent local unions, which businessemploys any one of the Six Individual Defendants, or provided for by anERISA-protected employee benefit plan established by that business;

e. knowingly associating for any commercial purpose, directly or indirectly,with any officer, agent, delegate, representative, shop steward, oremployee of any labor organization or employee benefit fund, including,without limitation, any labor organization or employee benefit fundaffiliated with LIUNA, the MTDC, and the MTDC constituent locals;

258

f. owning, operating, having any interest in or control of, doing businesswith, or having any commercial dealings, directly or indirectly, with anyentity that employs members of LIUNA or the MTDC, including, but notlimited to, such entities in the construction or asbestos removal industries.

Masson Tenders Dist. Council of Greater New York, 1995 WL 679245 at * 22-23.

7. The Private Sanitation Industry Ass’n Case -

(1.) In United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 811 F.

Supp. 808 (E.D.N.Y. 1992), aff’d, 995 F. 2d 375 (2d Cir. 1993), the district court granted the

Government’s motion for partial summary judgment, providing for broad injunctive relief against

defendant Salvatore Avellino, and denied Avellino’s request for a continuance to conduct

discovery pursuant to FED.  R. CIV. P. 56(f).

The complaint alleged, and the district court found, that Avellino, a capo in the Luchese

LCN Family and hidden owner in two corporate defendant carting companies, collected extortion

payments and tribute from area carters.  Avellino divided these illegal proceeds between the

Luchese LCN Family and the Gambino LCN Family, which controlled IBT Local 813, the union

that represented workers employed by employers engaged in the solid waste industry on Long

Island.  To control the carting industry, Avellino used and threatened to use force against rebel

carters, controlled bidding on certain jobs, and bribed public and union officials to ensure

continued control of the carting industry.  811 F. Supp. at 810-11.

The district court rejected Avellino’s contention that the broad injunctive relief sought by

the Government impermissibly infringed on his constitutional right of association.  In that

respect, the district court ordered that:

a. defendant Avellino refrain from participating directly or indirectly in thecarting industry, any company engaged in the business of carting, any tradewaste association and in the affairs of Local 813;

259

b. defendant Avellino be divested of his interests in the carting industry andin PSIA enterprises;

c.  defendant Avellino disgorge the illicit proceeds of his racketeeringactivity; 

d.  defendant Avellino refrain from associating with the other defendants inthis action for any commercial purpose; and

e.  defendant Avellino refrain from associating with known members andassociates of organized crime for any commercial purpose.

811 F. Supp. at 818.

The district court, citing United States v. Bonanno Organized Crime Family of La Cosa

Nostra, 683 F. Supp. 1411, 1441 (E.D.N.Y. 1988), aff’d, 879 F.2d 20 (2d Cir. 1989), ruled that

18 U.S.C. § 1964(a) granted the court authority “‘to enter reasonable injunctions against violators

restricting their future business activities.’” 811 F. Supp. at 818.  The district court found that the

injunction against associating with other defendants and with known members and associates of

organized crime was “designed to further the significant governmental interest in eliminating the

insidious impact upon a captive community of corruption and racketeering in the Long Island

carting industry.”  Id.

(2.) In United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F.

Supp. 974 (E.D.N.Y. 1994), aff’d 47 F.3d 1158 (2d Cir. 1995) (table), the district court granted

the Government’s motion for summary judgment and broad injunctive relief against defendant

Nicholas Ferrante.  The complaint alleged, and the district court found, that Ferrante, a reputed

associate of the Lucchese LCN Family and owner of two Long Island carting companies, was a

close associate of Salvatore Avellino, an alleged Capo in the Lucchese LCN Family, and assisted

Avellino on a regular basis in collecting extortion payments and tribute from area carters.  In

260

reaching its conclusion that Ferrante failed to show a genuine issue of fact as to his civil liability,

the district court found that under principles of collateral estoppel, Ferrante’s guilty plea in state

court to coercion in the first degree conclusively established that he had committed one predicate

racketeering act and that undisputed evidence submitted by the Government established the

second predicate act alleged, second degree bribery under New York State Penal Law Section

200.00.   899 F. Supp. at 980-82.  Ferrante’s liability for the bribery charge, the district court

found, was based on the adverse inference which arises when a defendant invokes the privilege

against self-incrimination and “independent corroborative evidence of the matters to be inferred”

presented by the Government.  Id. at 982 (citations omitted).

The district court found Ferrante liable for a RICO violation and enjoined  Ferrante from:

(i) engaging in any activities involved in connection with thecollection, transportation or disposal of solid waste, (ii) violating,aiding or abetting the violation of, and/or conspiring to violate anyof the provisions of Title 18, United States Code Section 1961 etseq., (iii) participating in the affairs of PSIA or other trade wasteassociation, and from participating in the affairs of Local 813 andits Trust Funds, any other union and its trust funds, (iv) associatingwith any other defendant or member or associate of organizedcrime for any commercial purpose and (b) ordered to divest hisinterests in the named enterprises and to disgorge the proceedsderived from his unlawful conduct and participation therein into aCourt-administered fund.

899 F. Supp. at 983-84.

(3.) In United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 914 F.

Supp. 895 (E.D.N.Y. 1996), the district court granted the Government’s motion for summary

judgment against defendants Sanitation and U-Need-a-Roll Off. Corp., finding that under

principles of collateral estoppel, the corporate-defendants’ guilty pleas to criminal charges

conclusively established that they committed the racketeering acts charged against them in the

261

civil RICO suit.  Id. at 896-98.

The district court ruled that United States v. Carson, 52 F.3d 1173 (2d Cir. 1995), did not

preclude its order requiring Ferrante and the corporate defendants to disgore the proceeds of their

RICO violations because “unlike Carson, the defendants in this case continue to be actively

involved in the identical activities upon which this RICO suit is predicated,” and hence “the

monies these corporations gained illegally obviously constitute capital available for the purpose

of funding or promoting the illegal conduct.”  914 F. Supp. at 901.

The district court also ordered that the defendants were subject to the same equitable

relief provided in the Consent Judgment entered by the district court on February 28, 1994.  Id. at

901-02.  See App. B at 85-87.

8. The LIUNA Local 6A Case -

In United States v. Local 6A, Cement and Concrete Workers, Laborers International

Union of North America, Complaint No. 86 Civ. 4819 (S.D.N.Y.), in an order entered April 23,

1987, the district court granted the Government’s motion for summary judgment against eight

alleged organized crime figures and permanently enjoined them from:

a. participating in any way, in the affairs of Local 6A, Cement and ConcreteWorkers, Laborers International Union of North America (“Local 6A”),the District Council of Cement and Concrete Workers, LaborersInternational Union of North America (the “District Council”), or anyother labor organization or employee benefit plan, as defined in Title 29 ofthe United States Code;

b. having any dealings with any officer, auditor or employee of Local 6A, theDistrict Council or any other labor organization or employee benefit plan,about any matter which relates, directly or indirectly, to the affairs of Local6A, the District Council or any other labor organization; and

c. participating in any way in, or profiting from, any concrete constructionbusiness in the Southern District of New York or elsewhere.

  See, e.g., Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 400 (1982); Int’l Bhd. of280

Teamsters v. United States 431 U.S. 324, 355-56  n.43 (1977); Providence Bank v. Patterson,390 U.S. 102, 107-08 (1968); City of Syracuse v. Onondaga County, 464 F.3d 297, 307-11 (2dCir. 2006); Commodity Future Trading Comm’n v. Kimberlynn Creek Ranch, Inc., 276 F.3d 187,

(continued...)262

See App. B at 17.

D. Union Officials and Entities As Nominal Defendants

1. Evidence of Wrongdoing is Not Required to Obtain Relief Against a NominalDefendant

Rule 19 (a), FED. R. CIV. P. provides as follows:

Rule 19. Joinder of Persons Needed for Just Adjudication

(a) Persons to be Joined if feasible.  A person who is subject toservice of process and whose joinder will not deprive the court ofjurisdiction over the subject matter of the action shall be joined asa party in the action if (1) in the person’s absence complete reliefcannot be accorded among those already parties, or (2) the personclaims an interest relating to the subject of the action and is sosituated that the disposition of the action in the person’s absencemay (i) as a practical matter impair or impede the person’s abilityto protect the interest or (ii) leave any of the persons already partiessubject to a substantial risk of incurring double, multiple, orotherwise inconsistent obligations by reason of the claimedinterest.  If the person has not been so joined, the court shall orderthat the person be made a party.  If the person should join as aplaintiff but refuses to do so, the person may be a defendant, or, ina proper case, an involuntary plaintiff.  If the joined party objects tovenue and joinder of that party would render the venue of theaction improper, that party shall be dismissed from the action.

Pursuant to Rule 19(a)(1), FED. R. CIV. P., a person may be joined as a “nominal

defendant” when joinder is necessary to afford “complete relief . . .  among those already

parties,” even though: (1) no cause of action is asserted against the nominal defendant; (2) the

nominal defendant is not liable for any wrongdoing; and (3) there is no evidence of wrongdoing

by the nominal defendant.280

(...continued)280

191-93 (4th Cir. 2002); Local 1351 Int’l Longshoreman’s Ass’n v. Sea-Land Servs. Inc. 214 F.3d566, 569-70 (5th Cir. 2002); SEC v. Cavanagh, 155 F.3d 129, 136 (2d Cir. 1998); SEC v.Colello, 139 F.3d 674, 675-77 (9th Cir. 1998); Shaw v. Dow Brands, Inc., 994 F.2d 364, 369 (7thCir. 1993); SEC v. Cherif,,  933 F.2d 403, 414 (7th Cir. 1991), EEOC v. MacMillian BlodedelContainers, Inc., 503 F.2d 1086, 1095-96 (6th Cir. 1974); Selfix, Inc. v. Bisk, 867 F. Supp. 1333,1335-36 (N.D. Ill. 1994); SEC v. Egan, 856 F. Supp. 401, 402  (N.D. Ill. 1993); SEC v. Antar,831 F. Supp 380, 399 (D.N.J. 1993); Eldredge v. Carpenters 46 N. Cal. Joint Apprenticeship andTraining Comm., 440 F. Supp. 506, 518 -524 (N.D. Cal. 1977). 

263

For example, in Teamsters v. United States, 431 U.S. 324 (1977), the United States

brought a civil rights suit against a nationwide common carrier and a union that represented

many of the company’s employees, alleging that the company had engaged in a pattern of

discrimination against “Negroes and Spanish-surnamed” persons by giving them lower paying,

less desirable jobs than whites.  The Supreme Court ruled that the union did not engage in any

misconduct and that the injunction against it must be vacated.  However, the Court ruled that the

union should remain “as a defendant so that full relief may be awarded the victims of the

employer’s . . . discrimination.”  Id. at 356 n.43.  In that regard, the Supreme Court directed that,

on remand, the district court was to determine which minority members were actual victims of

discrimination and “balance the equities of each minority employee’s situation in allocating the

limited number of vacancies that were discriminatorily refused to class members.”  431 U.S. at

371-72.   

Similarly, in EEOC v. MacMillian Bloedel Containers, Inc., 503 F.2d 1086, 1095-96 (6th

Cir. 1974), the Equal Employment Opportunity Commission (“EEOC”) sued MacMillian

Bloedel Containers, Inc., (“MacMillian”) for alleged race and sex discrimination.  A union which

represented MacMillian’s employees argued that it was improperly joined as a nominal defendant

under Rule 19(a), FED. R. CIV. P., because it was not charged with any unlawful conduct and that

  The Court of Appeals added that “[a]s a practical matter, the union need not play a281

role in the litigation until the court finds that MacMillian” had engaged in the alleged violations.503 F.2d at 1095.  

264

it was “inequitable [to be] put through the expense of hiring an attorney and doing involuntary

discovery work for EEOC.”  Id. at 1096.  The Court of Appeals rejected the union’s arguments,

upholding the district court’s finding that it was appropriate to join the union as a nominal

defendant “because the decree entered by the court may affect, in some way, its collective

bargaining agreement” with MacMillian.  Id. at 1095.281

Moreover, in Commodity Futures Trading Commission v. Kimberlynn Creek Ranch, Inc.,

276 F.3d 187, 191-93 (4th Cir. 2002), the Fourth Circuit rejected nominal defendants’ argument

that an injunction, which froze their assets and directed them to transfer those assets to a court

appointed receiver, could not be imposed against them because they were not accused of any

unlawful conduct.  The Fourth Circuit explained that the district court had broad equitable

authority to order the transfer of assets alleged to be unlawful proceeds held by the nominal

defendants because the nominal defendants were simply holding the alleged proceeds on behalf

of the defendants who were charged with unlawful conduct, and hence the relief against the

nominal defendants was necessary to effectuate the relief against defendants accused of

wrongdoing.

2. Nominal Defendants in Government Civil RICO Cases Involving LaborUnions

In accordance with the above-referenced authority, the Government has often named

union entities and union officials as nominal defendants in order to obtain full and effective

relief.  See App. B at 1, 27-28, 43, 95, 133, 139, 157-58, 243-44.  As the court observed in

United States v. Local 359, United Seafood Workers, Smoked Fish & Cannery Union, 

265

1991 WL 230613, *2 (S.D.N.Y. Oct. 24, 1991), “it is common practice in [Government] civil

RICO cases to add as nominal defendants entities that are not themselves charged with RICO

violations but that would be directly affected by the equitable relief sought.”

For example, in United States v. Local 560 of the Int’l Bhd. of Teamsters, 

581 F. Supp. 279, 337 (D.N.J. 1984), aff’d, 780 F.2d 267 (3d Cir. 1986), the district court found

that various defendants, including corrupt union officials and persons associated with organized

crime, had created a climate of intimidation in Local 560 through murder and other acts of

violence and misconduct, that induced Local 560 members to surrender their rights to democratic

participation in internal affairs.  See Section VIII(C)(1) above.  The district court ruled that Local

560 and its benefit funds and plans were not liable for violating RICO because, although their

employees and representatives had committed the charged racketeering acts in the scope of their

employment, such persons were not intending to benefit their principals, as is required to impose

liability against a principal under the principles of “Respondeat Superior.”  See generally, 

Section III(B)(2) above.  However, the district court retained Local 560 “as a nominal defendant

to effectuate the equitable relief heretofore specified and as may be ordered in the future.”  Local

560, 581 F. Supp. at 337.  

In that regard, the district court removed the Executive Board of Local 560, who were

found to have violated RICO, and the district court appointed a trustee to administer and oversee

the affairs of Local 560, and ordered new elections for Local 560’s offices.  See App. B at 3-4;

Section VIII(C)(1) above.  Therefore, it was necessary to retain Local 560 as a nominal defendant

because the relief granted directly effected Local 560 and was necessary to cure the ill effects on

Local 560 caused by the defendants’ wrongdoing. 

  See also United States v. Local 1804-1, Int’l Longshoremen’s Ass’n, 812 F. Supp.282

1303, 1308, n.2 (S.D.N.Y. 1993) (The district court noted in passing that “[t]he union locals, thewaterfront employers, and the employers’ organizations were not named as RICO violators, butas nominal defendants in order to effectuate complete relief.”);  United States v. Local 359,United Seafood Workers, Smoked Fish & Cannery Union, 1991 WL 230613 (S.D.N.Y. Oct. 24,

(continued...)266

In United States v. Dist. Council of New York City and Vicinity of the United Bhd. of

Carpenters and Joiners of America, 778 F. Supp. 738, 752, n.7 (S.D.N.Y. 1991), the district court

rejected a defendant’s argument that the RICO complaint should be dismissed against him

because he was not charged with committing any racketeering acts.  The district court explained

that the defendant “is a nominal defendant who must be included to ensure effective relief.”  Id.

at 752, n.7.  Similarly, in United States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388, 1401-02

(S.D.N.Y. 1989), the district court rejected the pre-trial argument of the General Executive Board

(“GEB”) of the IBT that the RICO complaint should be dismissed against it because the GEB

was charged only as a nominal defendant, was not charged with any wrongdoing, and was not a

“person” within the meaning of RICO that could be charged as a defendant.  The district court

explained that if the evidence demonstrated that the GEB is not a proper defendant because it is

in fact not a person under 18 U.S.C. § 1963(3), then the GEB could not be included as a nominal

defendant, and the RICO complaint would be dismissed against the GEB.  Id. at 1402.  

 In United States v. Local 1804-1, Int’l Longshoremans Ass’n, 831 F. Supp. 192, 194-99

(S.D.N.Y. 1993), the district court approved a consent decree between the Government and the

New York Shipping Association’s (“NYSA”) employers which imposed equitable relief against

the NYSA employers who were nominal defendants, including the appointment of court officers

to take necessary actions to remove and prohibit organized crime figures and other corrupt

persons from employment on the alleged waterfront RICO enterprise.282

(...continued)282

1991) (denying motion of nominal defendants Benefits Funds for an award of attorneys’ fees andcost, finding that the Government acted with reasonable justification in naming the Benefit Fundsas nominal defendants to effectuate the prospective equitable relief it sought).

267

In sum, courts may order relief against unions and other entities that are named as

nominal defendants even though they are not accused of, or found liable for, RICO violations in

order to enable the United States to obtain full and effective relief against defendants found to

have committed RICO violations.  This is especially the case when it is necessary to impose

relief to cure the adverse effects upon unions by corrupt union officials and their conspirators

found to have violated RICO, such as ordering new, untainted elections for union officials and

appointing officers to administer and oversee union operations to eliminate corruption and

prevent future corruption within unions.

E. Specific Issues in Government Civil RICO Cases Involving Labor Unions

1. State Action and Due Process Considerations

a. It is well established that the constitutional guarantees of due process of law and

most other constitutional rights “are protected only against infringement by governments,” and

such rights afford no protection against purely private conduct.  Lugar v. Edmonson Oil Co., 457

U.S. 922, 936 (1982), quoting Flagg Bros, Inc. v. Brooks, 436 U.S. 149, 156 (1978).  Accord

Blum v. Yaretsky, 457 U.S. 991, 1002-03 (1982); Moose Lodge No. 107 v. Irvis, 407 U.S. 163,

171-73 (1972); Shelley v. Kraemer, 334 U.S. 1, 13 (1948).  Therefore, a person claiming that his

constitutional rights have been violated must establish that the alleged violation was “fairly

attributable” to “state action” before he is entitled to relief for such violations.  See, e.g., Lugar,

457 U.S. at 936-39. Accord Blum, 457 U.S. at 1002-05.

268

The Supreme Court has adopted a two-part approach to determine whether an alleged

deprivation of a constitutional right is “fairly attributable” to the requisite “state action”:

First, the deprivation must be caused by the exercise of some rightor privilege created by the State or by a rule of conduct imposed bythe State or by a person for whom the State is responsible . . . .Second, the party charged with the deprivation must be a personwho may fairly be said to be a State actor.  This may be because heis a State official, because he has acted together with or hasobtained significant aid from State officials, or because his conductis otherwise chargeable to the State.

Lugar, 457 U.S. at 937.

Moreover, “‘[t]he mere fact that a business is subject to state regulation does not by itself

convert its action into that of the state for purposes’” of establishing the requisite state action. 

Blum, 457 U.S. at 1004 quoting Jackson v. Metro Edison Co., 419 US 345, 350 (1974).  “The

complaining party must also show that ‘there is a sufficiently close nexus between the state and

the challenged action of the regulated entity so that the action of the latter may be fairly treated as

that of the State itself.’”  Blum, 457 U.S. at 1004 quoting Jackson, 419 U.S. at 350-51.  Likewise,

“[m]ere approval of or acquiescence in the initiative of a private party is not sufficient to justify

holding the State responsible for those initiatives” for purposes of establishing the requisite state

action.  Blum, 457 U.S. at 1004-05.  However, “the required nexus may be present if the private

entity has exercised powers that are ‘traditionally the exclusive prerogative of the state.’”  Blum,

457 U.S. at 1005 quoting Jackson, 419 U.S. at 353.

b. Applying these principles, courts repeatedly have held in the Teamsters Union

civil RICO case brought by the United States that various actions by the court-officers appointed

by the district court pursuant to the Teamsters Union Consent Decree did not constitute the

requisite “state action,” and therefore could not provide the basis for alleged violations of

269

complainants’ constitutional rights.  For example, in United States v. Int’l Bhd. of Teamsters,

941 F.2d 1292, 1294-97 (2d Cir. 1991), the Investigations Officer (“IO”) appointed by the district

court pursuant to the Teamsters Union Consent Decree found, after an evidentiary hearing, that

two officials of IBT Locals (Dominic Senese and Joseph Talerico) had violated the IBT

Constitution by conducting themselves in a manner to bring reproach upon the IBT in that they,

inter alia, knowingly associated with members of the LCN.  As sanctions, the Independent

Administrator (“IA”) permanently removed the two officials from all of their IBT positions,

expelled them from the IBT, and prohibited them from drawing any money from the IBT or its

affiliated entities.

Senese and Talerico argued that the IA’s imposition of sanctions violated their First,

Fifth, and Eighth Amendment rights under the United States Constitution.  The Second Circuit

held that Senese and Talerico did not establish the requisite state action, stating:

First, in sanctioning Sanese and Talerico, the IA acted pursuant tothe IBT Constitution - a private agreement - and not pursuant to a“right or privilege created by the State.”  Thus, the charges hebrought were premised on violations of Article II, section 2(a) ofthe IBT Constitution, not on violations of any federal or state law. Similarly, the IA’s authority to impose the sanctions stemmed fromthe post-Decree amendments to the IBT Constitution, whichestablished the IA and empowered him to oversee the IBT’sinternal disciplinary affairs, see United States v. InternationalBroth. of Teamsters, Chauffeurs, Warehousemen and Helpers,AFL-CIO, 905 F.2d 610, 622 (2d Cir. 1990), and not from anyprovision of federal or state law.  Thus, Senese and Talerico fail tosatisfy the first element of the definition of state action set forthabove [in Lugar].

Senese and Talerico are also unable to establish that the IA “mayfairly be said to be a state actor.”  Lugar, 457 U.S. at 937, 102 S.Ct. at 2754.  The IA has offices that are provided by the IBT, andthe IBT pays his salary.  Thus, the position is under the control ofthe IBT, and remains a private, not a governmental role.

  Accord United States v. Int’l Bhd. of Teamsters, 954 F.2d at 806-07; United States v.283

Int’l Bhd. of Teamsters, 838 F. Supp. 800, 811-12 (S.D.N.Y. 1993) (collecting cases); UnitedStates v. Int’l Bhd. of Teamsters, 791 F. Supp. 421, 425-26 (S.D.N.Y. 1992); United States v.Int’l Bhd. of Teamsters, 787 F. Supp. 345, 351 (S.D.N.Y. 1992), aff’d, 970 F.2d 1132 (2d Cir.1992); United States v. Int’l Bhd. of Teamsters, 777 F. Supp. 1123, 1126, (S.D.N.Y. 1991);United States v. Int’l Bhd. of Teamsters, 777 F. Supp. 1133-1138 (S.D.N.Y. 1991);  UnitedStates v. Int’l Bhd. of Teamsters, 764 F. Supp. 797, 801 (S.D.N.Y. 1991), aff’d 956 F. 2d 1162(2d Cir. 1992) (Table).

  Other courts have likewise ruled in the alternative that the challenged conduct did not284

constitute “state action,” and in any event did not violate the claimants’ rights to due process (seeSection VIII(B)(4)(b) above) or rights guaranteed by the First Amendment.  See Section VIII(E)(2) below.

270

United States v. Int’l Bhd. of Teamsters, 941 F.2d at 1296.  The Second Circuit also ruled that

the district court’s affirmance of the IA’s disciplinary action and the “governmental oversight of

a private institution does not convert the institution’s decisions into those of the State, as long as

the decision in question is based on the institution’s independent assessment of its own policies

and needs.”  Id. at 1297.  The Second Circuit concluded that “because the IA’s decision to

sanction Senese and Talerico was based on the policies and procedures embodied in the IBT’s

own Constitution, and not on state or federal law, the decision was not state action.”  Id. at

1297.   In any event, the Second Circuit also ruled that “Senese and Talerico’s constitutional283

claims are entirely without merit.”  Id.284

2. First Amendment Issues

Union members and officers have substantial First Amendment protections, involving

their rights to associate together in a union to further their common interests and to participate in

internal union affairs.  See Section VIII(F) below and cases cited below in this Section. 

However, courts have repeatedly held in Government civil RICO cases involving labor unions

that such First Amendment rights “may be curtailed” to further the Government’s “compelling

  See generally Nat’l Society of Prof’l Eng’r v. United States, 435 U.S. 679 (1978),285

where the Court stated:

“[T]he District Court was empowered to fashion appropriaterestraints on the Society’s future activities both to avoid arecurrence of the violation and eliminate its consequences. . . .While the resulting order may curtail the exercise of liberties thatthe Society might otherwise enjoy, that is a necessary and, in casessuch as this, unavoidable consequence of the violation. . . . TheFirst Amendment does not “make it . . . impossible ever to enforcelaws against agreements in restraint of trade.” 

Id. at 697 quoting Giboney v. Empire Storage & Ice Co., 336 U.S. 490, 502 (1949) (internalcitations omitted).

  See, e.g., Carson, 52 F. 3d at 1179, 1185; United States v. Private Sanitation Indus.286

Ass’n, 995 F. 2d 375, 377-78 (2d Cir. 1993); United States v. Local 560 of the Int’l Bhd. ofTeamsters, 974 F.2d at 321, 339-46; United States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388,1392-94 (S.D.N.Y. 1989); United States v. Mason Tenders Dist. Council of Greater New York,1995 WL 679245 at * 11-12 (S.D.N.Y. Nov. 15, 1995).

  See, e.g., United States v. Int’l Bhd. of Teamsters, 19 F.3d 816, 819, 823 (2d Cir.287

1994); United States v. Int’l Bhd. of Teamsters, 998 F.2d at 124-27, n.4; United States v. Int’lBhd. of Teamsters, 941 F.2d at 1295, 1297; United States v. Int’l Bhd. of Teamsters, 838 F.Supp. 800, 811-12 (S.D.N.Y. 1993), aff’d, 33 F. 3d 50 (2d Cir. 1994) (Table); United States v.

(continued...)271

interest in eliminating the public evils of crime, corruption, and racketeering in union activity.” 

United States v. Int’l Bhd. of Teamsters, 941 F. 2d at 1297 (citations and internal quotations

omitted).285

For example, courts have upheld, against First Amendment challenges, injunctions

prohibiting union members and officials from knowingly associating with union members,

organized crime members and others associated with organized crime, or from participating in

union affairs,  and have upheld disciplinary sanctions for such knowing association and other286

misconduct, including contempt and removal and permanent bar from holding union membership

or union office.   Courts have also rejected First Amendment challenges to equitable relief287

(...continued)287

Int’l Bhd. of Teamsters, 764 F. Supp. at 800-801.  Cf. Hotel and Rest. Employees & Bartendersv. Read, 597 F. Supp. 1431, 1446-48 (D.N.J. 1984).

  See, e.g., United States v. Dist. Council, 778 F. Supp. at 762-64; United States v. Int’l288

Bhd. of Teamsters, 742 F. Supp. 94, 99-100 (S.D.N.Y. 1990), aff’d as modified, 931 F.2d 177(2d Cir. 1991).  Cf. United States v. Int’l Bhd. of Teamsters, 803 F. Supp. at 784-788.

272

involving holding new union elections and imposition of union election procedures.288

3. Equitable Relief in Government Civil RICO Cases Does Not Violate, And IsNot-Pre-empted By, The NLRA, The LMRDA or Other Labor Laws

a. General Principles

Courts have repeatedly rejected claims that various federal labor laws pre-empt charges

and relief in Government civil RICO cases.  The general principles governing such pre-emption

claims are well established.  “It is a cardinal principle of construction that repeals by implication

are not favored.  When there are two [federal] acts upon the same subject, the rule is to give

effect to both if possible . . . the intention of the legislature to repeal must be clear and manifest.” 

United States v. Borden Co., 308 U.S. 188, 198 (1939)(citations and internal quotations omitted). 

Moreover, to trigger pre-emption the two statutes must:

be in “irreconcilable conflict” in the sense that there is a positiverepugnancy between them or that they cannot mutually coexist.  Itis not enough to show that the two statues produce differing resultswhen applied to the same factual situation, for that no more thanstates the problem.  Rather, when two statutes are capable of co-existence, it is the duty of the courts . . . to regard each as effective.

Radzanower v. Touche Ross & Co., 426 U.S. 148, 155 (1976) (citations and internal quotations

omitted).  Accord United States v. Batchelder, 442 U.S. 114, 122 (1979).

In making these determinations, courts consider various factors, including the primary

purposes of the statutes, the degree of overlap in the statutory provisions, evidence of Congress’

273

clear intent to repeal, and whether the statutes are irreconcilably inconsistent such that it is

necessary to pre-empt one to make the other work.  See, e.g., Batchelder, 442 U.S. at 118-22;

Radzanower, 426 U.S. at 155-58; Borden Co., 308 U.S. at 198-203.

These factors weigh heavily against pre-emption of RICO charges.  RICO was enacted in

1970 (Pub. L. No. 91-452, 84 Stat. 941 (1970)), and its principal, although not exclusive, purpose

was “to seek the eradication of organized crime in the United States . . . by establishing new

penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the

unlawful activities of those engaged in organized crime.”  See 84 Stat. 922-23; United States v.

Turkette, 452 U.S. 576, 588-89 (1981); see also, Sections II(B) and VIII(A)(2) above.  To that

end, RICO created new and expansive offenses – participating in the affairs of an enterprise

through a pattern of racketeering activity, and conspiring to do so (18 U.S.C. 

§§ 1962(c) and (d)).  By definition, the pattern of racketeering activity includes an extensive list

of state and federal offenses, (see 18 U.S.C. § 1961 (1)), thereby indicating that Congress

intended RICO to augment existing remedies.

The legislative history to RICO likewise firmly establishes that Congress adopted the

civil and criminal remedies of RICO to add to, not subtract from, existing remedies.  See

Turkette, 452 U.S. at 589 (observing that Congress stated that it intended RICO to provide

“enhanced sanctions and new remedies,” which expressly denotes Congress’ intent that RICO

add remedies to existing ones.).  See generally United States v. Sutton, 700 F.2d 1078, 1080-81

(6th Cir. 1983); United States v. Hartley, 678 F.2d 961, 992 (11th Cir. 1982), abrogated on other

grounds, United States v. Goldin Indus, Inc., 219 F.3d 1268 (11th Cir. 2000).  Moreover,

Congress explicitly mandated that RICO “shall be liberally construed to effectuate its remedial

   See also United States v. Kragness, 830 F.2d 842, 864 (8th Cir. 1987) (“[n]othing in289

[RICO] shall supersede any provision of Federal  . . . law imposing criminal penalties . . . inaddition to those provided for in [RICO].”)(quoting Pub. L. No. 91-452, §§ 904(b), 84 Stat. 947);United States v. Deshaw, 974 F.2d 667, 671-72 (5th Cir. 1992)(“RICO’s statutory languagereflects congressional intent to supplement, rather than supplant, existing crimes and penalties.”);Nat’l Asbestos Workers Med. Fund v. Philip Morris, 74 F. Supp.2d 221, 235-36 (E.D.N.Y. 1999)(“There are alternative remedies for every injury caused by the predicate acts of racketeers.  Avictim whose window or arm was broken by racketeering has a number of alternative tort claimsfrom which to choose.  The purpose of RICO was to superimpose another layer of remedies inorder to deter racketeering.  As the statute’s preface states, RICO is designed to ‘seek theeradication of organized crime in the United States . . . by providing enhanced sanctions andnew remedies.’ Pub.L. No. 91-452, §§ 1, 84 Stat. 922, 923 (1970)”)(emphasis added).

274

purposes.”  Turkette, 452 U.S. at 587, quoting 84 Stat. 947.  In sum, RICO’s broad purposes and

legislative history compels the conclusion that,  as a general rule, Congress did not intend RICO

to be supplanted by other available remedies.289

b. The NLRA Does Not Pre-empt Government Civil RICO Lawsuits

In San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 240-44 (1959), the

Supreme Court held under federal supremacy analysis that Congress intended, as a general rule,

to vest the National Labor Relations Board (NLRB) with exclusive authority to decide: (1)

whether an employee’s rights under Section 7 of the NLRA (29 U.S.C. § 157) to join a union, “to

bargain collectively . . . and to engage in other concerted activities” were violated, and (2)

whether an unfair labor practice was committed in violation of Section 8 (29 U.S.C. 

§ 158) of the NLRA.  In that regard the Court stated:

When it is clear or may fairly be assumed that the activities whicha State purports to regulate are protected by § 7 of the NationalLabor Relations Act, or constitute an unfair labor practice under §8, due regard for the federal enactment requires that statejurisdiction must yield.

  The Supreme Court has recognized several exceptions to the general rule announced290

in Garmon.  See Tamburello v. Comm-Tract Corp., 67 F.3d 973, 977 (1st Cir. 1995); Linn v.United Plant Guard Workers, 383 U.S. 53 (1966); Smith v. Evening News Ass’n, 371 U.S. 195(1962).

275

359 U.S. at 244 (emphasis added).290

The Supreme Court, however, has cautioned that the doctrine of NLRA pre-emption is

grounded in the specific congressional intent underlying the NLRA and “special factors” which

do not readily apply to other regulatory schemes.  See English v. Gen. Elec. Co., 496 U.S. 72, 86-

87, n.8 (1990).  Moreover, in United States v. Palumbo Bros. Inc., 145 F.3d 850, 861-76 (7th Cir.

1998), the Seventh Circuit held that well-established pre-emption principles compel the

conclusion that the NLRA and other federal labor laws do not pre-empt a federal criminal RICO

case (as distinguished from pre-empting state law) brought by the United States to vindicate the

public’s interest in enforcement of the criminal laws, especially because of the differences in

various statutes’ purposes, scope and remedies.  Cf. Smith v. Nat’l Steel & Shipbuilding Co., 125

F.3d 751, 755 (9th Cir. 1997)(“the Supreme Court has indicated on several occasions that

Garmon pre-emption is not implicated where the potential conflict is with federal law.”); United

States v. Int’l Bhd. of Teamsters, 948 F.2d at 105 (“where federal laws and policies other than

the NLRA are implicated, the Garmon rule is frequently considered inapplicable”). 

In any event, the Garmon pre-emption doctrine is somewhat limited.  Under Garmon and

its progeny, the NLRA pre-empts a civil RICO charge “only when the Court would be forced to

determine whether some portion of the defendant’s conduct violated [the NLRA] before a RICO

predicate act would be established.”  Tamburello v. Comm-Tract Corp., 67 F.3d 973, 978 (1st

Cir. 1995)(citations omitted).  Accord Brennan v. Chestnut, 973 F.2d 644, 646 (8th Cir.

1992)(“If the Court must look to the [NLRA] to define the fraud, then pre-emption applies.”).

  See, e.g., Palumbo, Bros. Inc., 145 F.3d at 871-76 (holding that RICO predicate acts291

of mail fraud, based upon employers’ scheme to defraud their employees of monetary benefitsobtained through collective bargaining within the ambit of the NLRA, were not pre-empted sincethe unlawfulness of the charged conduct is determined by “the scope of the mail fraud statute”;the court stated (145 F.3d at 875) that “[t]he unfair labor practices implicated in the indictmentcannot be defined solely in relation to federal labor law and policy; rather, that conduct also mustbe defined and analyzed in the context of the criminal offenses charged in the indictment”);United States v. Boffa, 688 F.2d 919, 930 (3d Cir. 1982)(holding that the NLRA did not pre-empt mail fraud and RICO charges where employees were defrauded of property rightsindependently derived from their rights under a collective bargaining agreement even thoughsuch rights “may have been obtained as a result of employees’ exercise of rights guaranteed bysection 7 of the NLRA”); United States v. Thordarson, 646 F.2d 1323, 1330-31 (9th Cir.1981)(holding that the NLRA did not pre-empt RICO predicate acts involving union violenceeven if “the federal labor laws do reach union violence” where the charged conduct was madeunlawful by criminal statutes independent of the NLRA); Mariah Boat, Inc.  v. Laborers Int’lUnion, 19 F. Supp.2d 893, 899 (S.D. Ill. 1998)(holding that mail and wire fraud predicate actsnot pre-empted since the charged conduct was not illegal solely because of the NLRA); A. TerziProductions, Inc. v. Theatrical Protective Union, 2 F. Supp.2d 485, 502-04 (S.D.N.Y.1998)(same as to extortion predicate acts); Teamsters Local 372 v. Detroit Newspapers, 956F.Supp. 753, 761 (E.D. Mich. 1997) (“predicate acts alleging robbery, arson, destruction ofproperty . . . do not require an interpretation of labor law” and are not pre-empted); Nat’l Elec.Benefit Fund v. Heary Bros. Lightning Prot. Co., 931 F. Supp. 169, 185 (W.D.N.Y. 1995)(“whilethese allegations also describe conduct proscribed by the NLRA as unfair labor practices . . . theyare not pre-empted by the NLRA because they state RICO claims which do not require theresolution of labor law questions”).  See also O’Rourke v. Crosley, 847 F. Supp. 1208, 1212-13(D.N.J. 1994); Hood v. Smith’s Transfer Corp., 762 F. Supp. 1274, 1286-87 (W.D. Ky. 1991).

276

Conversely, courts have repeatedly held that the NLRA does not pre-empt a RICO case

where either the right or legal duty at issue is derived from law independent of the NLRA or the

court is not required to determine whether the charged conduct violated the NLRA, even if the

charged conduct violated both the NLRA and RICO’s definition of unlawful racketeering

activity.   Put another way, “civil RICO charges may survive Garmon pre-emption if the291

predicate acts are violative of federal law independent of the NLRA.  However, if the predicate

acts are only illegal because of the proscriptions of the NLRA, then the civil RICO charge

must fail.”  Mariah Boat, Inc. v. Laborers Int’l Union of North America, 19 F. Supp.2d 893, 899

(S.D. Ill. 1998)(emphasis added).

277

In accordance with the foregoing authority, in United States v. Int’l Bhd. of Teamsters,

948 F.2d at 105-106, the Second Circuit held that provisions of the NLRA, 29 U.S.C. §§ 157 and

158(a)(1), did not vest exclusive jurisdiction in the NLRA and did not pre-empt a decision by the

Independent Administrator, appointed by the district court pursuant to the Teamsters Union

Consent Decree, “that granted non-employee members of the IBT access to premises of [an

employer] to campaign for union office, and denied [the employer’s] application for declaratory

and injunctive relief from that determination.”  Id. at 99.  See also, United States v. Private

Sanitation Indus. Ass’n, 793 F. Supp. 1114, 1153-54 (E.D.N.Y. 1992) (holding that the NLRA

did not pre-empt a Government civil RICO lawsuit against a labor union and other defendants);

United States v. Int’l Bhd. of Teamsters, 708 F. Supp. 1388, 1394-95 (S.D.N.Y. 1989) (same).

c. The LMRDA Does Not Pre-empt Government Civil RICO Lawsuits

The Labor Management Reporting and Disclosure Procedure Act, 29 U.S.C. § 401-531

(“LMRDA”), guarantees union members the rights to vote in secret and to participate in fair and

honest union elections, and provides causes of action to vindicate these rights.  In particular, 29

U.S.C. §§ 411(a)(1) and (2) provide as follows:

(a)(1)  Equal Rights

Every member of a labor organization shall have equal rights andprivileges within such organization to nominate candidates, to votein elections or referendums of the labor organization, to attendmembership meetings, and to participate in the deliberations andvoting upon the business of such meetings, subject to reasonablerules and regulations in such organization’s constitution andbylaws.

278

(a)(2)  Freedom of Speech and Assembly

Every member of any labor organization shall have the right tomeet and assemble freely with other members; and to express anyviews, arguments, or opinions; and to express at meetings of thelabor organization his views, upon candidates in an election of thelabor organization or upon any business properly before themeeting subject to the organization’s established and reasonablerules pertaining to the conduct of meetings:  Provided, Thatnothing herein shall be construed to impair the right of a labororganization to adopt and enforce reasonable rules as to theresponsibility of every member toward the organization as aninstitution and to his refraining from conduct that would interferewith its performance of its legal or contractual obligations.

29 U.S.C. § 412 provides as follows:

Any person whose rights secured by the provisions of thissubchapter have been infringed by any violation of this subchaptermay bring a civil action in a district court of the United States forsuch relief (including injunctions) as may be appropriate.  Anysuch action against a labor organization shall be brought in thedistrict court of the United States for the district where the allegedviolation occurred, or where the principal office of such labororganization is located.

29 U.S.C. §§ 481(a), (b), (d), and (e) provide as follows:

(a) Officers of national or international labor organizations; manner ofelection

Every national or international labor organization, except afederation of national or international labor organizations, shallelect its officers not less often than once every five years either bysecret ballot among the members in good standing or at aconvention of delegates chosen by secret ballot.

(b) Officers of local labor organizations; manner of election

Every local labor organization shall elect its officers not less oftenthan once every three years by secret ballot among the members ingood standing.

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(d) Officers of intermediate bodies; manner of election

Officers of intermediate bodies, such as general committees,system boards, joint boards, or joint councils, shall be elected notless than once every four years by secret ballot among the membersin good standing or by labor organization officers representative ofsuch members who have been elected by secret ballot.

(e) Nomination of candidates; eligibility; notice of election; votingrights; counting and publication of results; preservation of ballotsand records

In any election required by this section which is to be held bysecret ballot a reasonable opportunity shall be given for thenomination of candidates and every member in good standing shallbe eligible to be a candidate and to hold office (subject to section504 of this title and to reasonable qualifications uniformlyimposed) and shall have the right to vote for or otherwise supportthe candidate or candidates of his choice, without being subject topenalty, discipline, or improper interference or reprisal of any kindby such organization or any member thereof.  Not less than fifteendays prior to the election notice thereof shall be mailed to eachmember at his last known address.  Each member in good standingshall be entitled to one vote.  No member whose dues have beenwithheld by his employer for payment to such organizationpursuant to his voluntary authorization provided for in a collectivebargaining agreement shall be declared ineligible to vote or be acandidate for office in such organization by reason of alleged delayor default in the payment of dues.  The votes cast by members ofeach local labor organization shall be counted, and the resultspublished, separately.  The election officials designated in theconstitution and bylaws or the secretary, if no other official isdesignated, shall preserve for one year the ballots and all otherrecords pertaining to the election.  The election shall be conductedin accordance with the constitution and bylaws of suchorganization insofar as they are not inconsistent with the provisionsof this subchapter.

29 U.S.C. § 501(a) and (c) provide as follows:

(a) Duties of Officers; exculpatory provisions andresolutions void

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The officers, agents, shop stewards, and other representatives of alabor organization occupy positions of trust in relation to suchorganization and its members as a group.  It is, therefore, the dutyof each such person, taking into account the special problems andfunctions of a labor organization, to hold its money and propertysolely for the benefit of the organization and its members and tomanage, invest and expend the same in accordance with itsconstitution and bylaws and any resolutions of the governingbodies adopted thereunder, to refrain from dealing with suchorganization as an adverse party or in behalf of an adverse party inany manner connected with his duties and from holding oracquiring any pecuniary or personal interest which conflicts withthe interests of such organization for any profit received by him inwhatever capacity in connection with transactions conducted byhim under his direction on behalf of the organization.  A generalexculpatory provision in the constitution and bylaws of such alabor organization or a general exculpatory resolution of agoverning body purporting to relieve any such person of liabilityfor breach of the duties declared by this section shall be void asagainst public policy.

(c) Embezzlement of assets: penalty

Any person who embezzles, steals, or unlawfully and willfullyabstracts, converts to his own use or, or the use of another, any ofthe moneys, funds, securities, property, or other assets of a labororganization of which he is an officer, or by which he is employed,directly or indirectly, shall be fined not more than $10,000 orimprisoned for not more than five years, or both.

Defendants in various Government civil RICO cases involving labor unions have argued

that equitable relief in those cases (such as disciplinary procedures and sanctions, ordering new

union elections, and procedures governing union elections) contravenes the rights and procedures

set forth in the above-referenced provisions of the LMRDA, and that the LMRDA pre-empts

such equitable relief because the LMRDA is the exclusive vehicle for vindicating the rights

guaranteed by the LMRDA.  Courts have uniformly rejected these claims under the pre-emption

  See, e.g., United States v. Int’l Bhd. of Teamsters, 19 F.3d 816, 823 (2d Cir. 1994);292

United States v. Local 560 of the Int’l Bhd. of Teamsters, 974 F.2d 315, 346-47 (3d Cir. 1992);United States v. Int’l Bhd. of Teamsters, 931 F.2d 177, 188-89 (2d Cir. 1991); United States v.Local 560 of the Int’l Bhd. of Teamsters, 780 F.2d at 282-83; United States v. Int’l Bhd. ofTeamsters, 838 F. Supp. at 812; United States v. Private Sanitation Indus, Ass’n, 793 F. Supp. at1153-54; United States v. Int’l Bhd. of Teamsters, 782 F. Supp. 243, 249-250 (S.D.N.Y. 1992);United States v. Int’l Bhd. of Teamsters, 708 F. Supp. at 1394.  

  Cf. United States v. Philip Morris Inc., 263 F. Supp.2d 72 (D.D.C. 2003) (holding that293

the Government’s civil RICO suit against manufacturers of cigarettes and other tobacco-relatedentities was not pre-empted by Congress’ regulatory scheme governing tobacco products,including the Federal Trade Commission Act (15 U.S.C. §§ 1331-40)).

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principles set forth in Section VIII(E)(3)(a) and (b) above.292

d. Other Labor Laws Do Not Pre-empt Government Civil RICOLawsuits

Courts have likewise held that other labor laws do not pre-empt Government civil RICO

lawsuits.  See, e.g., Local 1814 v. New York Shipping Ass’n, 965 F.2d 1224, 1231-39 (2d Cir.

1992) (holding that the anti-injunction provisions of the Norris-LaGuardia Act (29 U.S.C. §§

101-115), which divests courts of jurisdiction to issue any injunction in a case involving or

growing out of a labor dispute, did not pre-empt injunctive relief to further RICO’s civil remedial

purposes); United States v. Int’l Bhd. of Teamsters, 954 F.2d 801, 807-10 (2d Cir. 1992)

(holding that the binding arbitration provisions of the Labor-Management Relations Act, 29

U.S.C. § 185, did not pre-empt the decisions of the Independent Administrator appointed by the

district court pursuant to the Teamsters Union Consent Decree); United States v. Local 560 of the

Int’l Bhd. of Teamsters, 694 F. Supp. 1158, 1187 (D.N.J. 1988) (holding that 29 U.S.C. § 504,

which prohibits certain persons from holding union office, was not “the exclusive means by

which a court can bar a person from holding union office,” and hence did not pre-empt such

relief in a Government civil RICO suit).293

  It bears repeating that statutory protections, such as the LMRDA, may create property294

rights.  See Section VII(D) above.

  The Hobbs Act, 18 U.S.C. § 1951(b)(2), provides, in relevant part, that:295

The term “extortion” means the obtaining of property fromanother, with his consent, induced by wrongful use of actual orthreatened force, violence, or fear, or under color of official right.

  See 89 Cong. Rec. 3227 (1943); 91 Cong. Rec. 11, 900, 11, 906, 11, 910 (1945).  See296

Scheidler v. Nat’l Org. For Women, Inc., 537 U.S. 393, 403 (2003); Evans v. United States, 504 U.S. 255, 261-62, 269 n.9, 264 (1992); United States v. Enmons, 410 U.S. 396, 406 n.16(1973).

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F. Extortion Of Union Members’ Rights To Free Speech and To Participate InInternal Union Democracy Guaranteed By The LMRDA

In many of its civil RICO lawsuits involving labor unions, the Government has alleged

that LCN figures and corrupt union officials have extorted union members’ rights to democratic

participation in internal union affairs, as guaranted by the LMRDA, in violation of the Hobbs

Act, 18 U.S.C. § 1951.  See Section VIII(A)(1) above.   Such alleged violations raise two294

significant issues: (1) whether such rights of union members constitute “property” within the

meaning of the Hobbs Act; and (2) under what circumstances does a defendant “obtain” or “seek

to obtain” such property rights within the meaning of the Hobbs Act.295

1. Union Members’ Rights Under the LMRDA Constitute Intangible PropertyWithin The Meaning of the Hobbs Act

a. The Hobbs Act, enacted in 1946, was modeled on two New York sources:  the

Penal Code of New York and the Field Code, a 19  Century Model Penal Code.   New Yorkth 296

law then defined extortion as “the obtaining of property from another, with his consent, induced

by a wrongful use of force or fear” and further provided that “[f]ear . . . may be induced by a

threat . . . [t]o do an unlawful injury to . . . property.”  N.Y. Penal Code §§ 850, 851 (Consol.

283

1909); accord Commissioners of the Code, Proposed Penal Code of the State of New York 

§§ 613 and 614 (1865).  By the time the Hobbs Act was adopted, it was well-established that the

meaning of “property” under New York’s extortion statute broadly extended to “real and

personal property, things in action, money, bank bills and all articles of value,” as well as to

intangible property; and that an injury to a business in the form of work stoppages occasioned by

a strike constituted an “injury to property.”  See People v. Barondes, 31 N.E. 240, 241-42 (N.Y.

1892).  Accord People v. Hughes, 137 N.Y. 29, 37-39, 32 N.E. 1105 (N.Y. 1893)(head of union

who threatened manufacturer that he would compel retail dealers to cease doing business with

manufacturer unless the manufacturer hired union apprentices and paid him money threatened the

requisite “injury to [manufacturer’s] property” and committed extortion);  People v. Weinseimer,

117 A.D. 603, 102 N.Y.S. 579, 614 (1st Dept. 1907)(“an injury to one’s business is an injury to

property within the provisions of the Penal Code defining the Crime of extortion, and that a loss

resulting from the suspension or interruption of business would constitute an injury to

property.”); People ex rel Short v. Warden of City Prison, 145 A.D. 861, 130 N.Y.S. 698, 700

(1st Dept. 1911), aff’d, 206 N.Y. 632 (N.Y. 1912)(“Property” under the extortion statute, Penal

Law § 850, “is intended to embrace every species of valuable right and interest whatever tends in

any degree, no matter how small, to deprive one of that right, or interest, deprives him of his

property.”); People v. Wisch, 58 Misc. 2d 766, 296 N.Y. S. 2d 882, 885-86 (N.Y. Sup. Ct.

1969)(holding that “intangible property may be the subject of Extortion” under N.Y. Penal Law 

§ 850, “[a] milk route which has a pecuniary value is property and may be the subject of an

extortion,” and that threats to put milk dealers out of business are sufficient to support a charge

of extortion).  See also People v. Spatarella, 34 N.Y. 2d 157, 160, 162, 356 N.Y.S. 2d 566 (N.Y.

  By 1946, the Supreme Court had likewise held in a variety of contexts that “property”297

included intangible rights.  See, e.g., Dorchy v. State of Kansas, 272 U.S. 306, 311 (1926) (“Theright to carry on business - be it called liberty or property - has value.  To interfere with this rightwithout just cause is unlawful.”); Duplex Printing Press Co. v. Deering, 254 U.S. 443, 465(1921) (holding that the “complainant’s business of manufacturing printing presses and disposingof them in commerce is a property right.”).  See also Carpenter v. United States, 484 U.S. 19, 26-27 (1987) (holding that property under the mail and wire fraud statutes (18 U.S.C. §§ 1341 and1343) includes the “right to exclusive use” of confidential business information, includingcontrol over the timing of the release of the information, “for exclusivity is an important aspectof confidential business information and most private property for that matter.”).  See also fn.303 below.

  See generally Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992) (stating298

that when Congress enacted civil RICO, it is presumed to know the interpretations courts hadgiven earlier statutes that served as the model for civil RICO); Estate of Cowart v. NicklosDrilling Co., 505 U.S. 469, 479 (1992) (noting “basic canon of statutory construction thatidentical terms within an Act bear the same meaning”).

284

1994)(stating that the foregoing New York decisions have “consistently held” that the term

“property” under the New York extortion statute includes “intangible rights,” such as a demand

under threat of force that a business “give up a business customer”).297

By using New York extortion law as the model for the Hobbs Act, Congress specifically

understood that “[i]t is a cardinal principle of the law, that a law when adopted in another state,

or when being construed, it it [sic] be a state law, by a Federal court, carries with it all reasonable

constructions placed upon it by the courts of the state of its origins.”  See 89 Cong. Rec. 3197

(1943).   Therefore, it must be presumed that Congress intended the Hobbs Act to embrace the298

expansive meaning of property that was within the ambit of New York extortion law as

established in the foregoing cases, which includes “everything of value” such as the intangible

property rights to conduct one’s business and control its assets free from interruption caused by

wrongful threats of force, violence or fear.  Indeed, in accordance with the broad meaning of

“extortion” under New York State law, federal courts have long interpreted “property” covered

  See, e.g., United States v. Gotti, 459 F.3d 296, 320-21 (2d Cir. 2006); United States v.299

Bellomo, 176 F.3d 580, 592-93 (2d Cir. 1999); United States v. Debs, 949 F.2d 199, 201-02 (6thCir. 1991), cert. denied, 504 U.S. 975 (1992); United States v. Local 560 of the Int’l Bhd. ofTeamsters, 780 F.2d 267, 281-282 (3  Cir. 1985), cert. denied, 476 U.S. 1140 (1986), affirming,rd

581 F. Supp. 279, 311-316 (D.N.J. 1984); United States v. Dist. Council of New York City andVicinity of the United Bhd. of Carpenters and Joiners of America, 778 F. Supp. 738, 753-56(S.D.N.Y. 1991), cert. denied, 112 S. Ct. 975 (1992); United States v. International Brotherhoodof Teamsters, 708 F. Supp. 1388, 1397-99 (S.D.N.Y. 1989); United States v. Local 560 of theInt’l Bhd. of Teamsters, 694 F. Supp. 1158, 1188-90 (D.N.J.), aff’d, 865 F.2d 252 (3d Cir. 1988),cert. denied, 489 U.S. 1068 (1989); Rodonich v. House Wreckers Union, Local 95, 627 F. Supp.176, 178-79 (S.D.N.Y. 1985); United States v. Local 560 of the Int’l Bhd. of Teamsters, 550 F. Supp. 511, 513-525 (D.N.J. 1982).  But see United States v. DeFries, 129 F.3d 1293, 1304(D.C. Cir. 1997)(ruling that ‘union members’ right to a fair [union] election is an ‘ethereal’interest that does not constitute ‘property’ under [the mail fraud statute]”).

285

by the Hobbs Act broadly to encompass “any valuable right or interest considered primarily as a

source or element of wealth.”  Bianchi v. United States, 219 F.2d 182, 189 (8th Cir. 1955)

(quoting Webster’s New Int’l Dictionary (2d Ed. 1936).

b. The LMRDA guarantees the rights of union members to, inter alia, vote in secret

in union elections, participate in fair and honest union elections, nominate candidates, attend

membership meetings, meet and assemble freely with other members, and to express any views,

arguments or opinions in such union meetings and union elections.  See Section 

VIII(E)(3)(c) above.  The Second, Third and Sixth Circuits and district courts in the Second and

Third Circuits have held that such LMRDA rights constitute intangible “property” within the

meaning of the Hobbs Act on the ground that such rights constitute “a source or element of

wealth” since the exercise of these rights enable union members to secure financial benefits

through collective bargaining, and corrupt deprivation of these rights may cause union members

economic deprivation through loss of livelihood and/or reduced benefits.299

The rationale underlying these decisions is firmly supported by the scope of New York

extortion law that served as the model for the Hobbs Act, discussed above, as well as by the

  1 W. Russell, Crimes and Misdemeanors, 573-574 (8th ed. 1923) (“Extortion . . .300

signifies the unlawful taking by any officer, by colour of his office, of any money or thing ofvalue.”); 2 J. Bishop, Criminal Law § 401, at 331-332 (9th ed. 1923) (“In most cases, the thingobtained is money . . . . But probably anything of value will suffice.”); 3 F. Wharton, A Treatiseon Criminal Law § 1898, at 2095 (1912) (“it is enough if any valuable thing is received”); 2 E.Coke, Institutes of the Laws of England pt. 1, at 368b (1832) (“Extortion . . . is a greatmisprision, by wresting or unlawfully taking by any officer, by colour of his office, any money orvaluable thing.”); 4 W. Blackstone, Commentaries *141 (extortion is “an abuse of public justice,which consists in an officer’s unlawfully taking, by colour of his office, from any man, anymoney or thing of value.”). The phrase “thing of value” is a term of art that includes intangiblerights. See, e.g., United States v. Girard, 601 F.2d 69, 71 (2d Cir. 1979); cf. Bell v. United States,462 U.S. 356, 360 (1983).

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LMRDA’s legislative history, the Supreme Court’s decision noting that union members’

LMDRA rights are economic rights designed to secure union members’ economic interests, and

the common law understanding that extortion broadly encompassed the taking of any “thing of

value.”300

In that respect, both the Senate and House Reports accompanying the LMRDA adopted

the same statement of the purpose concerning the election provisions:

It needs no argument to demonstrate the importance of free anddemocratic union elections.  Under the National Labor Relationsand Railway Labor Acts the union which is the bargainingrepresentative has power, in conjunction with the employer, to fix aman’s wages, hours, and conditions of employment.  Theindividual employee may not lawfully negotiate with his employer. He is bound by the union contract.  In practice, the union also hassignificant role in enforcing the grievance procedure where a man’scontract rights are enforced.  The Government which gives theunion this power has an obligation to insure that the officials whowield it are responsive to the desires of the men and women whothey represent.  The best assurance which can be given is a legalguaranty of free and periodic elections.   

SEN. REP. NO. 187, 86th Cong., 1st Sess., at 20 (1959); H.R. REP. No. 741, 86th Cong., 1st Sess.,

at 15 (reprinted in 1 National Labor Relations Board, Legislative History of the Labor-

Management Reporting and Disclosure Act of 1959 at 417, 773 (1959)).  Further, in floor debate,

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senators specifically underscored the economic nature of the rights created by the LMRDA:  

Sen. Carroll: They are economic rights, as I have said.  They arise from economicproblems and deal with economic democracy.  They are not constitutionalrights arising under the 14th amendment, dealing with political democracy.

Sen. Kennedy: The Senator is correct.

105 CONG. REC. 5919 (daily ed. April 22, 1959)(reprinted in 1 National Labor Relations Board,

Legislative History of the Labor-Management Reporting and Disclosure Act of 1959 at 1111

(1959)).

Moreover, in Finnegan v. Leo, 456 U.S. 431, 435-36 (1982), the Supreme Court stated

that the LMRDA protects “the rights of union members to freedom of expression without fear of

sanctions by the union, which in many instances could mean the loss of union membership and in

turn loss of livelihood.”  See also Rodonich v. House Wreckers Union, 

627 F. Supp. 176, 179 (S.D.N.Y. 1985)(court rejected defendants’ contention that union

members’ rights were “any less a ‘source of wealth’ than ordinary rights to do business.  To the

contrary, it would appear that LMRDA rights provide union members with a source of

livelihood.”).  It is also particularly significant that by the time the Hobbs Act was enacted in

1946, New York law recognized that union members’ rights to union democracy constituted

“property.”  For example, in Dusing v. Nuzzo, 177 Misc. 35, 29 N.Y.S. 2d 882 (N.Y. Sup. Ct.),

aff’d, 263 A.D. 59, 31 N.Y.S. 2d 849 (3d Dept. 1941), the court held that union members’ right

to union elections constituted a “property” right which entitled the union members to an

injunction mandating that a proper election be held.  The court explained:

[A] labor union is not a social club.  It is an economicinstrumentality conceived in the necessity of making a living . . . The right to membership in a union is empty if the correspondingright to an election guaranteed with equal solemnity in the

  See also Carroll v. Electrical Workers, IBEW, Local 269, 133 N.J. Eq. 144, 147, 31301

A.2d 223, 225 (N.J. 1973) (the court stated that without union democracy union members “wouldbe deprived of their constitutional right to earn a livelihood.”); Dorrington v. Manning, 135 Pa. Super. 194, 201, 4 A.2d 886, 890 (Pa. Sup. Ct. 1939)(“The right to work . . . constitutes aproperty right” which union officials may not interfere with); Bianco v. Eisen, 190 Misc. 609,610, 75 N.Y.S.2d 914, 916 (N.Y. Sup. Ct. 1944) (holding that the right to be elected to a union’sexecutive board constitutes property since the executive board has authority to “make decisionsaffecting . . . the economic interests of its members.”).

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fundamental law of the union is denied.  If a member has a“property right” in his position on the roster, I think he has anequally enforceable property right in the election of men who willrepresent him in dealing with his economic security and collectivebargaining where that right exists by virtue of express contract inthe language of a union constitution.  Where an election is requiredby the law of a union, the member denied the right to participate isdenied a substantial right which is neither nebulous nor ephemeral.

29 N.Y.S.2d at 884.  Accord United States v. Local 560 of the Int’l Bhd. of Teamsters, 

780 F.2d at 281.301

In sum, union members’ rights guaranteed by the LMRDA constitute economic rights and

“a source or element of wealth,” and hence constitute intangible property within the meaning of

the Hobbs Act.

c. In McNally v. United States, 483 U.S. 350 (1987), the Supreme Court held that a

citizen’s intangible right to honest state government did not constitute “property” under the mail

fraud statute, 18 U.S.C. § 1341.  The Supreme Court explained that it read the mail fraud statute

narrowly in that case to avoid adverse effects upon the due regard for federalism, stating:

Rather than construe the statute in a manner that leaves its outerboundaries ambiguous and involves the Federal Government insetting standards of disclosure and good government for local andstate officials, we read § 1341 as limited in scope to the protectionof property rights.

McNally, 483 U.S. at 360.

289

McNally, however, involved an interpretation of the mail fraud statute, and did not

address the scope of “property” under the Hobbs Act.  More fundamentally, union members’

rights under the LMRDA are significantly different from a citizen’s “political” right to fair and

honest elections for public officials involved in McNally because LMRDA rights are essentially

“economic rights” which constitute “a source or element of wealth,” which has long been

recognized to be an important attribute of a “property” right.

Moreover, the federalism concerns that were paramount in the Supreme Court’s analysis

in McNally are not implicated by a ruling that union members’ LMRDA rights constitute

property under the Hobbs Act.  As one court perceptively ruled, rejecting McNally’s application

to the Hobbs Act and LMRDA rights:

First, assuming property carries the same meaning in the mail andwire fraud statutes as in the Hobbs Act, in McNally the SupremeCourt was clearly concerned with federalism.  The Court read thestatute narrowly in order to prevent the federal government from“setting standards of disclosure and good government for local andstate officials.” [483 U.S. at 360].

McNally’s federalism rationale has no analogue in the union arena. With regard to the federal-state balance in this case, there is nodoubt that Congress has had a longstanding interest in regulatingthe affairs of labor unions.  McNally therefore cannot control thefederal government’s obligations toward the conduct of unionbusiness.

Second, the intangible right to honest government at issue inMcNally is substantially different from the right to participate inunion elections.  Honest government is subject to control by aninformed electorate operating in a vital two-party system.  Thefederal government need not impose its will where a regime ofpolitical accountability is already in place.

By contrast, union politics is more like one-party government.  Thestatutory right to participate in union government is not heldaccountable by anything remotely like a thriving two-party system. 

  Accord, United States v. Int’l Bhd. of Teamsters, 708 F. Supp. at 1399, where the302

court stated:

Even assuming McNally . . . were to apply in the Hobbs Actcontext, the court finds that the rights guaranteed by the LMRDAto union members are “property” within the meaning of the HobbsAct . . . . The holding of McNally is limited to the “standards ofdisclosure and good government for local and state officials.” McNally, supra, 107 S.Ct at 2881.  In the instant case, there is nodoubt as to the standards to which labor officials ought to be held;the LMRDA sets forth with particularity the standards of disclosureto which labor leaders must adhere and the fiduciary nature oflabor leaders position.  Thus, characterizing those rights created bythe federal labor statutes as “property” does not involve the federalgovernment in setting arbitrary standards for conduct in the waythat the same characterization of the ethereal and changeablenotions of “good government” or “honest and faithful services”would.

290

Here, the federal legislature and courts have a greater duty tocombat labor corruption and electoral vice.  The Hobbs Act is animportant instrument in service of this democratic objective.  Forall of these reasons, LMRDA rights are property under the HobbsAct.

United States v. Debs, 949 F.2d 199, 201-02 (6th Cir. 1991).302

2. A Defendant “Obtains” or Seeks to “Obtain” Intangible Property RightsFrom A Victim Within The Scope of the Hobbs Act When He UsesExtortionate Means In Order to Exercise Those Rights For Himself or aThird Party in a Way That Would Profit Them Financially

a. In Scheidler v. Nat. Org. for Women, Inc., 537 U.S. 393 (2003), the Supreme

Court reversed the Seventh Circuit’s holding that the plaintiffs (an organization that supports

availability of abortion services and two clinics that provide medical services including

abortions) were entitled to a permanent injunction against the defendants (individuals and

organizations engaged in anti-abortion activities) and treble damages under RICO’s civil

remedies, 18 U.S.C. § 1964.  The Seventh Circuit ruled that the defendants had committed a

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pattern of Hobbs Act and state extortions arising from their use of force, violence and fear to

cause the plaintiffs “‘to give up’ property rights, namely, ‘a woman’s right to seek medical

services [i.e., abortion services] from a clinic, the right of the doctors, nurses or other clinic staff

to perform their jobs, and the right of the clinics to provide medical services free from wrongful

threats, violence, coercion and fear.’” Id.  at 400 n.4, quoting the jury instructions.  The Seventh

Circuit had also ruled that “as a legal matter, an extortionist can violate the Hobbs Act without

either seeking or receiving money or anything else.  A loss to, or interference with the rights of,

the victim is all that is required.”  Id. at 399-400 (citation and internal quotations omitted).

The Supreme Court granted certiorari to decide two questions: (1) whether private

litigants may obtain injunctive relief in a civil RICO action pursuant to 18 U.S.C. § 1964; and (2)

whether the defendants “obtained” or sought to obtain “property” in violation of the Hobbs Act,

18 U.S.C. § 1951.  The Supreme Court explicitly stated that it need not address the first question

because it reversed the Seventh Circuit’s decision on the second question.  Scheidler, 537 U.S. at

397.

Regarding the Hobbs Act question, the Supreme Court also did not decide whether the

matters the defendants sought constitute “property” within the meaning of the Hobbs Act.  Id. at

401-02.  The Court then decided that the defendants did not “obtain” or seek to obtain property

within the meaning of the Hobbs Act, stating:

But even when [the defendants’] acts of interference and disruptionachieved their ultimate goal of “shutting down” a clinic that performedabortions, such acts did not constitute extortion because [defendants] didnot “obtain” [plaintiffs’] property. [Defendants] may have deprived orsought to deprive [plaintiffs] of their alleged property right of exclusivecontrol of their business assets, but they did not acquire any such property.[Defendants] neither pursued nor received “something of value from”[plaintiffs] that they could exercise, transfer, or sell.  United States v.

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Nardello, 393 U.S. 286, 290, 89 S. Ct. 534, 21 L.Ed. 2d 487 (1969).  Toconclude that such actions constituted extortion would effectively discardthe statutory requirement that property must be obtained from another,replacing it instead with the notion that merely interfering with ordepriving someone of property is sufficient to constitute extortion.

Scheidler, 537 U.S. at 404-05.  The Court further explained that:

Eliminating the requirement that property must be obtained to constitute extortionwould not only conflict with the express requirement of the Hobbs Act, it wouldalso eliminate the recognized distinction between extortion and the separate crimeof coercion -- a distinction that is implicated in these cases.  The crime ofcoercion, which more accurately describes the nature of [defendants’] actions,involves the use of force or threat of force to restrict another’s freedom of action. Coercion’s origin is statutory, and it was clearly defined in the New York PenalCode as a separate, and lesser offense than extortion when Congress turned toNew York law in drafting the Hobbs Act.  New York case law applying thecoercion statute before the passage of the Hobbs Act involved the prosecution ofindividuals who, like [defendants], employed threats and acts of force andviolence to dictate and restrict the actions and decisions of businesses.  See, e.g.,People v. Ginsberg, 262 N.Y. 556, 188 N.E. 62 (1933)(affirming convictions forcoercion where defendant used threatened and actual property damage to compelthe owner of a drug store to become a member of a local trade association and toremove price advertisements for specific merchandise from his store’s windows);People v. Scotti, 266 N.Y. 480, 195 N.E. 162 (1934)(affirming conviction forcoercion where defendants used threatened and actual force to compel amanufacturer to enter into an agreement with a labor union of which thedefendants were members); People v. Kaplan, 240 App. Div. 72, 269 N.Y.S. 161(1934)(affirming convictions for coercion where defendants, members of a laborunion, used threatened and actual physical violence to compel other members ofthe union to drop lawsuits challenging the manner in which defendants werehandling the union’s finances).

Scheidler, 537 U.S. at 405-06 (footnotes omitted).

The Court explained the distinction between “extortion” and “coercion,” stating:

Under the Model Penal Code § 223.4, Comment 1, pp. 201-202,extortion requires that one “obtains [the] property of another”using threat as “the method employed to deprive the victim of hisproperty.”  This “obtaining” is further explained as “bring[ing]about a transfer or purported transfer of a legal interest in theproperty, whether to the obtainer or another.”  Id., § 223.3,Comment 2, at 182, Coercion, on the other hand, is defined as

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making “specified categories of threats . . . with the purpose ofunlawfully restricting another’s freedom of action to hisdetriment.” Id., § 212.5, Comment 2, at 264.

Scheidler, 537 U.S. at 408 n.13.  The Court added that:

[W]hile coercion and extortion certainly overlap to the extent thatextortion necessarily involves the use of coercive conduct to obtainproperty, there has been and continues to be a recognizeddifference between these two crimes, see, e.g., ALI, Model PenalCode and Commentaries §§ 212.5, 232.4 (1980) . . .  and we find itevident that this distinction was not lost on Congress informulating the Hobbs Act.

Id. at 407-08.  Accordingly, the Supreme Court concluded that the defendants “did not obtain or

attempt to obtain property from [the plaintiffs].”  Id. at 409. 

Scheidler establishes a general rule that a defendant does not “obtain” or seek to obtain

property within the meaning of the Hobbs Act by merely interfering with or depriving someone

of property, or by merely depriving or seeking to deprive someone of his “exclusive control of

[his] business assets.”  Id. at 404-05.  However, the Supreme Court did not foreclose the view

that a violation of the Hobbs Act may be based upon a defendant’s obtaining or attempting to

obtain for himself or a third party the exercise of a victim’s intangible property rights in such a

way that would profit the defendants or his cohorts financially.

For example, the Court stated:

We need not now trace what are the outer boundaries of extortionliability under the Hobbs Act, so that liability might be based onobtaining something as intangible as another’s right to exerciseexclusive control over the use of a party’s business assets.

. . .  Accordingly, the dissent is mistaken to suggest that our decisionreaches, much less rejects, lower court decisions such as UnitedStates v. Tropiano, 418 F.2d 1069, 1076 (1969), in which theSecond Circuit concluded that the intangible right to solicit refusecollection accounts “constituted property within the Hobbs Act

  It was settled when Congress passed the Hobbs Act in 1946 that the term “property”303

includes the exclusive right to control the use of business assets, such as buildings andequipment, in any legitimate manner. It is “elementary” that “[p]roperty is more than the merething which a person owns,” and “consists of the free use, enjoyment, and disposal of a person’sacquisitions without control or diminution save by the law of the land.” Buchanan v. Warley, 245 U.S. 60, 74 (1917) (citing 1 W. Blackstone, Commentaries 127 (Cooley’s Ed. 1872)). Inother words, the “bundle of rights,” Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979), thatconstitutes property includes the exclusive “power over [the] use” of physical assets. Marsh v.Nichols, Shepard & Co., 128 U.S. 605, 612 (1888).

Because “[t]here can be no conception of property aside from its control and use,” 73 C.J.S. Property § 5, at 170 (1983), the Supreme Court has recognized in a variety of contextsthat the intangible right to use property is itself property. See, e.g., United States v. Craft, 535 U.S. 274, 280 (2002)(observing that “essential property rights” include “the right to use theproperty”); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982)(“Property rights in a physical thing have been described as the rights ‘to possess, use, anddispose of it.’”) (quoting United States v. Gen. Motors Corp., 323 U.S. 373, 378 (1945)); Cranev. Comm’r of Internal Revenue, 331 U.S. 1, 6 (1947) (observing that “ordinary, everyday”understanding of “property” includes “the aggregate of the owner’s rights to control and disposeof [a physical] thing”); Dobbins v. City of Los Angeles, 195 U.S. 223, 236 (1904) (describingconstitutional rights “to use and enjoy property”); Carpenter v. United States, 484 U.S. 19, 26-27(1987) (holding that property under the mail and wire fraud statutes includes the ‘right toexclusive use’ of confidential business information).

Accordingly, federal courts have repeatedly held that “property” within the ambit of theHobbs Act includes intangible rights to conduct one’s business and to control it free from thewrongful use or threat of force, violence, or fear.  See, e.g,, United States v. Gigante, 39 F. 3d 42,45-46 (2d Cir. 1994); United States v. Lewis, 797 F.2d 358, 363-64 (7th Cir. 1986); UnitedStates v. Zemek, 634 F.2d 1159 (9th Cir. 1980); United States v. Santoni, 585 F.2d 667, 673 (4thCir. 1978); United States v. Franks, 511 F.2d 25, 31-32 and n. 8 (6th Cir. 1975); United States v.Glasser, 443  F.2d 994, 1007 (2d Cir. 1971).

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definition.”

Id. at 402 and n.6.303

These statements indicate that the Scheidler Court did not necessarily reject Tropiano’s

holding.  In Tropiano, the defendants, who were partners in C&A Refuse Removal Company

(“C&A”), were convicted of attempted and completed Hobbs Act extortion offenses arising from

their threats of force, violence and fear to competitor refuse removal dealers, including one

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Leonard Caron, to induce Caron to stop attempting to take away any of the defendants’

customers and to stop competing with the defendants in soliciting any business in Milford,

Connecticut.

The defendants conceded that “rubbish removal accounts which are purchased and sold

are probably property,” but argued that “the right to solicit business” did not constitute

“property.”  Tropiano, 418 F. 2d at 1075.  The Second Circuit rejected this argument, stating:

Obviously, Caron [the victim] had a right to solicit business fromanyone in any area without any territorial restrictions by the[defendants] and only by the exercise of such a right could Caronobtain customers whose accounts were admittedly valuable.  Someindication of the value of the right to solicit customers appearsfrom the fact that when the C&A accounts were sold for $53,135,C&A’s agreement not to solicit those customers was valued at anadditional $15,000.

Id. at 1076.

Tropiano is distinguishable from Scheidler in that the defendants in Tropiano sought to

“obtain” or “acquire” for themselves “property” from the victim -- i.e., “the right to solicit

customers,” -- and that “property” was “something of value. . .  that [the defendants] could

exercise, transfer or sell.”  The interpretation of “obtain” under Scheidler, therefore, was

satisfied.  In contrast, the defendants in Scheidler did not seek to obtain for themselves

something of value from the plaintiffs’ abortion clinics; rather they merely wanted to shut down

the clinics and interfere with the clinics’ business.

b. In United States v. Gotti, 459 F.3d 296, 320-26 (2d Cir. 2006), the Second Circuit

held that Tropiano was still good law in light of the Scheidler decision, and that union members’

rights guaranteed by the LMRDA constitute “property” within the ambit of the Hobbs Act.  The

Second Circuit also held that the defendants, members and associates of the LCN, “obtained”

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union members’ LMRDA rights when the defendants used extortionate means to cause “the

relinquishment of the union members’ LMRDA rights . . . in order to exercise those rights for

themselves . . . in a way that would profit them financially.”  Gotti, 459 F.3d at 325.

The Second Circuit ruled that the indictment alleged facts which satisfied Scheidler’s

requirement that a defendant must obtain or seek to obtain property for himself or a third party. 

For example, the Second Circuit stated:

[T]he indictment alleged that the defendants sought to obtain, anddid obtain, the union members’ LMRDA rights to free speech anddemocratic participation in union affairs as well as their LMRDArights to loyal representation by their officers, agents, and otherrepresentatives.  It further stated that the defendants sought toexercise those rights themselves, by telling various delegates whomto vote for in certain leadership positions, and by controllingvarious elected officials’ performance of their union duties.  Webelieve that these allegations satisfy our interpretation of ScheidlerII. 

. . .Similarly, as to the MILA-related extortion counts, the indictmentalleges that the defendants sought to obtain, and did obtain, theMILA participants’ and beneficiaries’ rights to have the MILAtrustees contract with the service provider of prescription drugs ofthe trustees’ choice, and to have MILA trustees and fiduciariesdischarge their duties in MILA’s best interest.  The indictmentfurther asserts that the defendants sought to exercise these rightsfor themselves by telling the MILA trustees which service providerto support, and thereby ensuring the selection of a Gambino-associated enterprise (GPP/VIP) that would pay kickbacks.  Here,too, the allegation is that the defendants exercised the rights inquestion in order to profit themselves.  Thus, the MILA-relatedHobbs Act extortion counts satisfy the dictates of Scheidler II.

Gotti, 459 F.3d at 325-26.  The Second Circuit also stated:

[T]he indictment alleges that the defendants obtained Alayev’sintangible property rights to make various business decisions (suchas whether to keep illegal gambling machines on the premises) freefrom outside pressure.  As the government aptly states in its brief,“[t]he defendants did not seek merely to ‘shut down’ Alayev’s

297

business but essentially made themselves his silent partners andexercised his rights to their own advantage.”  Because here theallegation is that the defendants sought to exercise for themselvesAlayev’s rights in a manner that would profit them, the AlayevCounts survive Scheidler II.

. . . Finally, the Seagal Counts also satisfy the Scheidler II standard. Here it is alleged that the defendants sought to exercise forthemselves Seagal’s right to make his own business decisions, bythreatening him with possible violence unless he worked with JulesNasso again.  Thus, here the defendants sought to exercise forthemselves Seagal’s intangible right to decide with whom to work,in order to secure profit for themselves.  This constitutes HobbsAct extortion under Scheidler II.

Id. at 327.

The Second Circuit also held that the district court’s jury instructions satisfied the

requirements of Scheidler.  In that respect, the district court identified the alleged property that

was the subject of the extortion charges, and instructed the jury, among other matters, that:

[Y]ou should find the defendant guilty of extortion provided thegovernment has proven that as a consequence thereof the defendantobtained money or something else of value from the victims thatthe defendant could exercise and transfer or sell.

In other words, merely interfering and depriving someone ofproperty is insufficient to constitute extortion.  You have to be [sic]the obtaining of money or something else of value from the victimsthat the defendant could exercise, transfer or sell as well.

. . .Before you can find the defendant guilty of extortion under thesesub parts, you must find the government has proven that as a resultof wrongfully inducing the victim to part with the property rightidentified in those sub parts, the defendant obtained money as [sic]something else of value from the victim that the defendant couldexercise, transfer or sell.  So, in other words, it is not enough justto discourage somebody or coerce somebody from not selling hisbusiness, you have to get something because of that type ofactivity.

Gotti, 459 F. 3d at 327-28.

298

OCRS agrees with the Second Circuit’s analysis in Gotti.  Moreover, the ruling of Gotti is

supported by the legislative history to RICO and the Hobbs Act, which makes clear that Congress

intended those statutes to provide new and expansive remedies to eliminate organized crime’s

corrupt control and influence over labor unions, which the LCN obtained through extortion.  See

Sections VIII(A)(1) and (2) and VIII(F)(1)(a) above.

299

IX

GOVERNMENT CIVIL RICO CASES NOT INVOLVING LABOR UNIONS

The United States has brought at least seventeen civil RICO cases seeking equitable relief

that did not involve labor unions.

1. For example, in United States v. Philip Morris, Civ. No. 1:99 CV 02496 (filed

September 22, 1999, D.D.C.), the United States brought a civil RICO suit against nine tobacco

companies and two affiliated entities, alleging a pattern of mail and wire fraud predicate offenses

from the early 1950’s to the date the complaint was filed to defraud consumers of tobacco

products through false and misleading information about, among other matters, the health effects

of smoking, tobacco products’ addictiveness and the targeting of underage consumers to buy

tobacco products.

Following a nine month non-jury trial, the district court issued its 945-page final opinion. 

See United States v. Philip Morris USA, Inc., 449 F. Supp.2d 1 (D.D.C. 2006).  Regarding

liability, the district court found that the Government established the alleged enterprise and that

each defendant was liable for a substantive RICO violation (18 U.S.C. § 1962(c)) and that each

defendant, except for one defendant, was liable for conspiring to violate RICO (18 U.S.C. 

§ 1962(d)).  Id. at 851-52, 867-73, 901-907.  The district court found that the Government proved

an overarching scheme to defraud the public, stating: 

[O]ver the course of more than 50 years, Defendants lied,misrepresented, and deceived the American public, includingsmokers and the young people they avidly sought as “replacementsmokers,” about the devastating health effects of smoking andenvironmental tobacco smoke, they suppressed research, theydestroyed documents, they manipulated the use of nicotine so as toincrease and perpetuate addiction, they distorted the truth aboutlow tar and light cigarettes so as to discourage smokers from

  The district court ruled that remedies were not available against defendants The304

Liggett Group, Inc. (“Liggett”), The Council for Tobacco Research - U.S.A., Inc. (“CTR”), andthe Tobacco Institute, Inc. (“TI”).  See Philip Morris USA, Inc., 449 F.Supp. 2d at 915-19.  Thedistrict court reasoned that corporate defendants CTR and TI had been dissolved and were no

(continued...)300

quitting, and they abused the legal system in order to achieve theirgoal -- to make money with little, if any, regard for individualillness and suffering, soaring health costs, or the integrity of thelegal system.

. . .

In order to carry out this scheme, Defendants made the followingfalse and fraudulent statements in a number of areas, including: (1)deceiving consumers into starting and continuing to buy and smokecigarettes by misrepresenting and concealing the adverse healtheffects caused by smoking and exposure to environmental cigarettesmoke, by maintaining that there was an “open question” as towhether smoking cigarettes causes disease and other adverseeffects, despite the fact that Defendants knew otherwise, and byensuring that their research, development, and marketing ofcigarettes remained consistent with these core public positions (seeFindings of Fact V(A)); (2) deceiving consumers into becoming orstaying addicted to cigarettes by maintaining that neither smokingnor nicotine is addictive, despite the fact that Defendants knewthese positions were false (see Findings of Fact V(B)); (3)deceiving consumers into becoming or staying addicted tocigarettes by manipulating the design of cigarettes and the deliveryof nicotine to smokers, while at the same time denying that theyengaged in such efforts (see Findings of Fact V(C)); (4) deceivingconsumers, particularly parents and young people, by denying thatthey marketed to youth, while engaging in such marketing andadvertising with the intent of addicting young people and enticingthem to become lifelong smokers (see Findings of Fact V(F)); and(5) deceiving consumers through deceptive marketing and cigarettedesign modifications to exploit smokers’ desire for less hazardousand “low tar” cigarettes which Defendants knew to be no safer thanfull-flavor cigarettes (see Findings of Fact V(G)).

Id. at 852-53.

The district court ordered various injunctive relief against all but three of the

defendants,  including the following:304

(...continued)304

longer able to continue their past RICO violations.  See id. at 915-18.  The district court alsofound that there was no reasonable likelihood of defendant Liggett’s committing future violationsbecause it had withdrawn from the RICO conspiracy.  See id. at 906-07, 918-19.

301

(1) Finding that the defendants fraudulently marketed certain cigarettes as “low tar,”

“light,” “mild” and similar terms as being less harmful than other “full flavor” cigarettes, id. at

923-24, the district court “prohibited [defendants] from using any descriptors indicating lower tar

delivery -- including, but not limited to, “low tar,” “light,” “mild,” “medium,” and “ultra light” --

which create the false impression that such cigarettes are less harmful to smokers.”  Id. at 925.

(2) Finding that defendants made numerous false and deceptive public statements

regarding smoking and health issues, the district court ordered defendants “to make corrective

statements about addiction (that both nicotine and cigarette smoking are addictive); the adverse

health effects of smoking (all the diseases which smoking has been proven to cause); the adverse

health effects of exposure to ETS [Environmental Tobacco Smoke] (all diseases which exposure

to ETS has been proven to cause); their manipulation of physical and chemical design of

cigarettes (that Defendants do manipulate design of cigarettes in order to enhance the delivery of

nicotine); and light and low tar cigarettes (that they are no less hazardous than full-flavor

cigarettes).”  Id. at 928; see also id. at 938-41. 

(3) Defendants were required to “create and maintain document depositories and

websites which provide the Government and the public with access to all industry documents

disclosed in litigation from this date forward.”  Id. at 928.  This requirement included: (a) making

“public the documents [defendants] produce or use in future litigation or administrative actions”,

id. at 929; (b) maintaining previous depository obligations in other litigation (the Minnesota and

Guildford Depositories) for an additional 15 years (id. at 930); (c) maintaining public websites

  The district court refused to impose several other proposed remedies, including the305

appointment of court officers.   See Philip Morris USA, Inc., 449 F. Supp.2d at 933-37.  Appealsfrom the district court’s decision by the defendants and the United States are pending before the

(continued...)302

for all documents which have been produced in litigation for fifteen years, id. at 930-31; (d)

requiring defendants “to provide accurate and updated indices of all documents they are

withholding on grounds of privilege or confidentiality” and “regularly-updated information

concerning all waivers and losses of privilege and confidentiality.”  id. at 931; (e) to prevent

defendants from youth marketing, requiring “Defendants to provide their disaggregated 

marketing data to the Government according to the same schedule on which they provide it to the

FTC.”  Id. at 932; see also id. at 941-44.

(4) The district court also entered an injunction stating:

Defendants will be ordered to refrain from engaging in any act ofracketeering, as defined in 18 U.S.C. § 1961(1) relating in any wayto manufacturing, marketing, promotion, health consequences orsale of cigarettes in the United States.

Defendants will also be ordered not to participate in themanagement and/or control of any of the affairs of CTR, TI, CIAR,or any successor entities.

Defendants will also be ordered not to reconstitute the form orfunction of CTR, TI, or CIAR. 

Finally, because this is a case involving fraudulent statementsabout the devastating consequences of smoking, Defendants willbe prohibited from making, or causing to be made in any way, anymaterial, false, misleading or deceptive statement or representationconcerning cigarettes that is disseminated in the United States.

Id. at 932-33, 938.

The district court also required Defendants to pay costs pursuant to Rule 54, 

FED. R. CIV. P.  Id. at 937.305

(...continued)305

United States Court of Appeals for the District of Columbia.  See United States v. Philip MorrisUSA, Inc., Appeal Nos. 06-5267-5272.

303

2. In United States v. International Boxing Federation (IBF), Civ. No. 99-5442

(JWB) (filed November 22, 1999, D.N.J.), the United States brought a civil RICO lawsuit against

the International Boxing Federation, United States Boxing Association (“USBA”) and the

Executive Committee of the International Boxing Federation (“IBF”)/United States Boxing

Association, as nominal defendants, and against Robert W. Lee, Sr., Robert W. Lee, Jr., Don

William Brennan and Francisco Fernandez.  The alleged enterprise was a group of entities

associated in fact consisting of the USBA, the IBF non-profit, IBF for-profit and the IBF

International, including its leadership, members and associates.  The complaint alleged that the

defendants falsely represented that the enterprise maintained fair and unbiased systems for

ratings of boxers and, based on these false representations, the defendants obtained annual dues

from the IBF - USBA memberships, registration fees from boxing promoters, sanction fees from

boxers and their promoters and other contributions.  However, in truth, the defendants solicited

and accepted bribes from certain boxing promoters and managers and others in order to alter

these ratings and to provide other favorable treatment to those who paid bribes.

The suit sought a permanent injunction and an order requiring the defendants to divest

their interests in the enterprise and to disgorge all the proceeds of their violations.  On January

12, 2000, the district court granted a preliminary injunction restraining the defendants from,

among other matters, committing any act of racketeering, and the court appointed a monitor to

conduct the legitimate business of the enterprise. 

304

Subsequently, the district court entered a Consent Decree permanently barring Robert W.

Lee, Sr. and Robert W. Lee, Jr., from affecting the affairs of the IBF and any other boxing

organization or entity.  Whereupon, the IBF installed new leadership and worked with the IBF

Monitor to eliminate corruption within the IBF.

On September 29 2004, the district court entered a Consent Decree that dissolved the IBF

Monitorship, finding that “the IBF has substantially improved its internal financial and

accounting controls and has instituted many reforms including a Code of Conduct, compliance

with extant Congressional enactments and regulations including the implementation of a fair and

honest rating system (with grievance rights for boxers), a corporate restructuring, regularly

scheduled open annual meetings of members, Board of Directors’ meetings, Director and Officer

elections and updated its corporate documentation with new Articles of Incorporation and new

By-Laws.”  Consent Decree at 3, United States v. Int’l Boxing Fed., Civ. No. 99 CV5442 (filed

September 29, 2004 D.N.J.).

The district court retained jurisdiction over the parties and signatories to the Consent

Decree which was binding on the “current and future officers and others holding positions of

trust in the IBF, current and future employees, agents, representatives, members, committee

members of the IBF and any and all persons in active concert or participation with any or all of

them.”  Id. at 4.

The Consent Decree also provided that:

[1] The IBF shall hereafter be operated exclusively as a not-for-profit entity under the laws of the State of New Jersey.

[2] The IBF shall permanently maintain and enforce its Code ofConduct as well as its Internal Control Procedures insubstantially the same form as they currently exist.

305

[3] The IBF shall promptly establish and maintain for aminimum of five (5) years from its establishment, anIndependent Review Board (the “Board”).  The purpose ofthe Board shall be to review complaints and conducthearings whenever necessary regarding, (a) all mattersarising under the IBF’s Code of Conduct, and (b) allmatters relating to compliance with the injunctiveprovisions of this Consent Decree.  The Board shall becomprised of three individuals who are independent of theIBF (for example, persons who are not officers, ExecutiveBoard members, agents, employees, representatives and/orother persons holding positions of trust in the IBF).  TheIBF, upon prior notice to the United States, shall have thepower to appoint persons to the Board, provided, that theUnited States shall have the power to veto any appointmentto the Board.  The Board shall have the right and power,inter alia, to impose discipline including removal,suspension or expulsion.  The IBF shall be responsible tofund the activities of the Board, including providingreasonable compensation to is members.  The Board or anymember thereof shall have the power to refer matters to theUnited States Attorney for appropriate action.  The Boardshall also have the power to refer matters to the IBF forappropriate action.  The Board shall provide the IBF andthe United States a comprehensive written report of itsactivities at least once per year for the next three (3) years.

[4] The Board, the IBF, as well as its directors, officers, agents,employees, representatives, other persons holding positionsof trust in the IBF or members of the IBF shall have thepower to refer matters to the United States Attorney’sOffice for the District of New Jersey for appropriate actionat any time.

Id. at 4-5.

The Consent Decree also permanently enjoined all persons bound by the Consent Decree

from directly or indirectly:

a. committing any crime under the laws of the State of NewJersey and of the United States, including, but not limitedto any crime listed in 18 U.S.C. § 1961(1);

  The Consent Decree provided that:  “As used in this Consent Decree, a ‘barred306

person’ is: (a) Robert W. Lee, Sr., Robert W. Lee, Jr., Don Brennan and/or Francisco Fernandez,(b) any person prohibited from participating in the affairs of the IBF pursuant to or by operationof an Order in this matter or other court order, administrative order or statute, or (c) any personunder disciplinary suspension or other action or order by any federal or state boxing commissionor other similar authority, including authorities that may come into existence under the laws ofthe United States or any state.”  Id. at 7.

306

b. soliciting, accepting, or attempting to accept any money,fee, compensation, commission, credit, gift, gratuity, and/orany other thing of value or of any kind whatsoever for anyofficial action of the IBF, including, but not limited to,actions which have any direct or indirect relation to rankingof boxers;

c. soliciting, accepting, or attempting to accept any money,fee, compensation, commission, credit, gift, gratuity, and/orany other thing of value or of any kind whatsoever wheresuch actions may directly or indirectly (i) be adverse to theinterests of the IBF, or (ii) be contrary to the remedialobjectives of this Consent Decree;

d. permitting any “barred person”[ ]to exercise any control306

or influence, directly or indirectly, in any way or degree, inthe conduct of the affairs of the IBF; and 

e. obstructing or otherwise interfering, directly or indirectly,with the efforts of anyone effectuating or attempting toeffectuate the terms of this Consent Decree.

Id. at 6.

The Consent Decree also provided that: (1) if any person bound by the Consent Decree

violates it, “in addition to other sanctions or penalties, be subject to removal, suspension or

expulsion from office and/or the IBF by the Court,” and be subject to contempt; and (2) “Upon a

showing to the Court pursuant to any application by the United States that probable cause exists

to believe that: (a) the IBF’s Independent Review Board (as described [above]) has ceased to

function, is functioning ineffectively or is otherwise not functioning as set forth [above], (b) there

  See: (1) United States v. Leonard L. Cappetto, Civ. No. 74-C-503 (filed February 22,307

1974, N.D. Il.); United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), cert. denied, 420 U.S.925 (1975); (2) United States v. Winstend, Civ. No. 76-C-2513 (filed July 1976, N.D.Il.); and (3)United States v. Lummi Indian Tribe, Civ. No. C83-94C (filed January 27, 1983, W.D. Wash.).

  See United States v. Larry D. Barnette, Civ. No. 85-0754-Civ-J-16 (filed May 16,308

1985, M.D. Fla.); United States v. Barnette, 10 F.3d 1553 (11th Cir.), cert. denied, 513 U.S. 816(1994).

  See United States v. Ianniello, Civ. No. 86 Civ. 1552 (LSH) filed February, 1986,309

S.D.N.Y.); United States v. Ianniello, 646 F. Supp. 1289 (S.D.N.Y. 1986), aff’d, 824 F.2d 203(2d Cir. 1987).

307

exists corruption in the IBF and/or (c) the remedial objectives of this Consent Decree are not

being met, the Court may order such relief as is necessary and proper, including reinstatement of

the Monitorship.”  Id. at 7-8.

3. Other civil RICO lawsuits brought by the United States to obtain equitable relief

include suits to enjoin illegal gambling businesses,  to recover money obtained through307

defrauding the United States,  and to enjoin defendants from operating restaurants and to divest308

their interests in a restaurant (Umberto’s Clam House) from which they skimmed proceeds.309

  See Sedima, 479 U.S. at 488-93.310

308

X

MISCELLANEOUS ISSUES

A. Prior or Parallel Criminal Proceeding

Although a defendant’s prior criminal conviction for a RICO violation or a predicate

racketeering offense is not required before a civil RICO action may be filed against a

defendant,  Congress contemplated that the United States likely would bring civil RICO310

lawsuits against defendants following a defendant’s conviction on related offenses or

simultaneously with criminal prosecutions for related criminal conduct.  In that regard, the

Senate Report regarding RICO states that civil RICO was designed to provide new and powerful

civil remedies to augment criminal remedies, especially where prior criminal prosecutions had

not fully succeeded in eliminating corruption within an organization or enterprise.  See, e.g., 

S. REP. No. 91-617 at 78-83.  The Senate Report added that:

Where an organization is acquired or run by defined racketeeringmethods, then the persons involved can be legally separated fromthe organization, either by the criminal law approach of fine,imprisonment and forfeiture, or through a civil law approach ofequitable relief broad enough to do all that is necessary to free thechannels of commerce from all illicit activity.

Id. at 79.  See also cases cited n.289 in Section VIII(E)(3)(b) above.

Moreover, 18 U.S.C. § 1964(d) explicitly authorizes the Government to invoke collateral

estoppel to prove its civil RICO charges by providing that a defendant’s prior criminal conviction

“shall estop the defendant from denying the essential allegations of the criminal offense in any

subsequent civil proceeding brought by the United States.”  See Section III(D) above.  Therefore,

Congress clearly contemplated that, under some circumstances, civil RICO charges would be

  A comprehensive discussion of the law governing electronic surveillance is beyond311

the scope of this Manual.  Rather, this Section is limited to a brief discussion of the use of court-authorized electronic surveillance in Government civil RICO cases.

309

brought against a defendant following a defendant’s conviction on a related criminal offense.

In accordance with the foregoing authority, the Government may bring either civil or

criminal RICO actions, or both, against a defendant for the same or overlapping unlawful

conduct.  See, e.g., Dist. Council of N.Y. City and Vicinity, 778 F. Supp. at 763; United States v.

Bonanno Organized Crime Family of La Cosa Nostra, 683 F. Supp. 1411, 1450 (E.D.N.Y. 1988);

see also cases cited Section III(D) above.

B. Use of Court-Ordered Electronic Surveillance

Procedures for the interception and use of wire, oral or electronic communications

(hereinafter “court-authorized electronic surveillance”) are set forth in 18 U.S.C. §§ 2510-

2522.   Court-authorized electronic surveillance is an extremely important source of evidence in311

both criminal and civil RICO cases brought by the United States.  In that respect, 18 U.S.C. 

§ 2516 empowers the Government to obtain court-authorized electronic surveillance when “such

interception may provide or has provided evidence of ” violations of the RICO statute (“Section

1963 (violations with respect to racketeer influenced and corrupt organizations”)) and many

criminal violations that are also predicate acts of racketeering under RICO (18 U.S.C. § 1961(1)).

Title 18, United States Code, Section 2517(1) and (2) provide as follows:

(1) Any investigative or law enforcement officer who, by anymeans authorized by this chapter, has obtained knowledge of thecontents of any wire, oral, or electronic communication, orevidence derived therefrom, may disclose such contents to anotherinvestigative or law enforcement officer to the extent that suchdisclosure is appropriate to the proper performance of the officialduties of the officer making or receiving the disclosure.

  See 18 U.S.C. § 2516 which specifies the Government attorneys authorized to apply312

to the district court for an electronic surveillance order and which provides that such authorizedinterceptions may be made “by the Federal Bureau of Investigation, or a federal agency havingresponsibility for the investigation of the offense as to which the application is made.”  See also18 U.S.C. § 2510 (7) which defines “Investigative or law enforcement officer.”

  18 U.S.C. § 2518(8)(a) requires the judge issuing an electronic surveillance order to313

seal the original recordings of intercepted conversations “[i]mmediately upon the expiration ofthe period of the order.”  However, that section also provides that “[d]uplicate recordings may bemade for subsections (1) and (2) of Section 2517 of this chapter for investigations.”  See UnitedStates v. Maldonado-Rivera, 922 F.2d 934, 954 (2d Cir. 1990)(“duplicate tapes need not bejudicially sealed”).

310

(2) Any investigative or law enforcement officer who, by anymeans authorized by this chapter, has obtained knowledge of thecontents of any wire, oral, or electronic communication or evidencederived therefrom may use such contents to the extent such use isappropriate to the proper performance of his official duties.

Pursuant to these provisions, duly authorized Government attorneys and law enforcement

officers  who are handling a civil RICO matter may, without a court-disclosure order, use312

evidence derived from court-authorized electronic surveillance and disclose such evidence “to

another investigative or law enforcement officer” to the extent that such use or disclosure “is

appropriate to the proper performance of the official duties of the officer making or receiving the

disclosure.”313

However, such a duly authorized Government attorney or other law enforcement officer

may not disclose evidence derived from such court-authorized electronic surveillance while

giving testimony in a civil RICO proceeding without a court-order authorizing such disclosure. 

In that respect, 18 U.S.C. §§ 2517(3) and (5) provide as follows:

(3) Any person who has received, by any means authorized by thischapter, any information concerning a wire, oral, or electroniccommunication, or evidence derived therefrom intercepted inaccordance with the provisions of this chapter may disclose thecontents of that communication or such derivative evidence while

  But see In Re High Fructose Corn Syrup Antitrust Litig., 46 F. Supp.2d 819, 828-32314

(C.D. Ill. 1999).

311

giving testimony under oath or affirmation in any proceeding heldunder the authority of the United States or of any State or politicalsubdivision thereof.

. . . (5) When an investigative or law enforcement officer, whileengaged in intercepting wire, oral, or electronic communications inthe manner authorized herein, intercepts wire, oral, or electroniccommunications relating to offenses other than those specified inthe order of authorization or approval, the contents thereof, andevidence derived therefrom, may be disclosed or used as providedin subsections (1) and (2) of this section.  Such contents and anyevidence derived therefrom may be used under subsection (3) ofthis section when authorized or approved by a judge of competentjurisdiction where such judge finds on subsequent application thatthe contents were otherwise intercepted in accordance with theprovisions of this chapter.  Such application shall be made as soonas practicable.

First, Section 2517(3) of Title 18 authorizes the use of evidence derived from court-

authorized electronic surveillance by an authorized Government official “while giving testimony

under oath or affirmation in any proceeding held under the authority of the United States or of

any state or political subdivision thereof,” which includes a civil proceeding.  (emphasis added).

See, e.g., In Re Electronic Surveillance Evidence, 990 F.2d 1015, 1018-20 (8th Cir. 1993)

(holding that 18 U.S.C. § 2517 authorizes Government officials to use evidence derived from

court-authorized electronic surveillance in civil proceedings, but does not authorize pretrial

disclosure of such evidence to private civil RICO litigants); Nat’l Broad. Co. v. United States

Dept. of Justice, 735 F.2d 51, 53-55 (2d Cir. 1984) (same);  S. Rep. No. 91-617 at 161 (stating314

that “18 U.S.C. § 2517 [permits] evidence obtained through the interception of wire or oral

  See United States v. Private Sanitation Indus. Ass’n, 811 F. Supp. 808, 815-17315

(E.D.N.Y. 1992) (admitting evidence derived from court-authorized electronic surveillance in aGovernment civil RICO lawsuit).  Moreover, courts have allowed evidence derived from lawfulcourt-authorized electronic surveillance to be used in civil tax enforcement proceedings.  See, e.g., Dickens v. United States, 671 F.2d 969 (6th Cir. 1982); Griffin v. United States, 588 F.2d 521, 523-26 (5th Cir. 1979); Fleming v. United States, 547 F.2d 872, 873-75 (5th Cir. 1977);United States v. Iannelli, 477 F.2d 999, 1001 (3d Cir. 1973).  See also Matter of ElectronicSurveillance, 596 F. Supp. 991 (E.D. Mich. 1984) (allowing disclosure of evidence derived fromcourt-authorized electronic surveillance to the Grievance Administrator of the Michigan AttorneyGrievance Commission).

312

communications under court order to be employed in civil actions.”)315

However, a disclosure order is required to disclose evidence obtained from court-ordered

electronic surveillance while giving testimony in a civil RICO proceeding because 18 U.S.C. 

§ 2516 authorizes electronic surveillance only to obtain evidence of criminal offenses specified

in Section 2516, and not to obtain evidence of civil violations.  Therefore, a civil RICO violation

constitutes an offense “other than those specified in the order of authorization or approval”

within the meaning of Section 2517(5) and a disclosure order is required.

Moreover, one court has held that private plaintiffs in a civil action were entitled to

subpoena the Government to obtain tape recordings that were derived from court-authorized

electronic surveillance which “were admitted into evidence and played in open court” on the

rationale that “[o]nce the material has been [publicly] revealed, however, the purpose of Section

2517(3) ceases and the requirements of that section no longer govern.”  County of Oakland by

Kuhn v. City of Detroit, 610 F. Supp. 364, 368 (E.D. Mich. 1984).

313

C. Federal Rule of Criminal Procedure 6(e)

1. A Government Attorney May Not Disclose “A Matter Occurring Before theGrand Jury” Unless It Falls Within An Exception Set Forth in Rule 6(e)(3)

Rule 6(e)(2)(B)(vi), FED. R. CRIM. P. prohibits “an attorney for the government” from

disclosing “a matter occurring before the grand jury,” unless such disclosure falls within one of

the exceptions set forth in Rule (6)(e)(3).  Rule 6(e) does not define “a matter occurring before

the grand jury.”  Courts have noted that the phrase “a matter occurring before the grand jury”

“encompasses ‘not only what has occurred and what is occurring, but also what is likely to

occur,’ including ‘the identities of witnesses or jurors, the substance of testimony as well as

actual transcripts, the strategy or direction of the investigation, the deliberations or questions of

jurors, and the like.’”  In Re Sealed Case No. 99-3091, 192 F.3d 995, 1001 (D.C. Cir. 1999),

quoting In Re Motions of Dow Jones & Co., 142 F.3d 496, 500 (D.C. Cir. 1998).  Accord In Re

Special Grand Jury 89-2, 450 F.3d 1159, 1175-77 (10th Cir. 2006).

However, courts have warned that the above-quoted phrase from Rule 6(e) should not be

given an unduly broad reading, and that Rule 6(e) does not require a “veil of secrecy to be drawn

over all matters occurring in the world that happen to be investigated by a grand jury.”  In Re

Sealed Case No. 99-3091, 192 F.3d at 1001-02, quoting Securities & Exch. Comm. v. Dresser

Indus., Inc., 628 F.2d 1368, 1382 (D.C. Cir. 1980)(en banc).  The majority of courts that have

considered the issue have held that Rule 6(e) does not per se prohibit disclosure of records

subpoenaed by or presented to the grand jury which were created independently of the grand jury. 

In a leading case, United States v. Interstate Dress Carriers, Inc., 280 F.2d 52 (1960), the Second

Circuit explained:

  The following cases adopted the majority rule, finding that normal business records316

and other documents that were created independently of a grand jury investigation and were notsought to learn what took place before the grand jury were not protected from disclosure underRule 6(e):  First Circuit Cases:  Capitol Indem. Corp. v. First Minn. Constr. Co., 405 F. Supp.929, 930-31 (D. Ma. 1975); In Re Grand Jury Proceedings, 505 F. Supp. 978, 982 (D. Me. 1981);Second Circuit Cases:  United States v. Interstate Dress Carriers, Inc., 280 F.2d 52, 54 (2d Cir.1960); DiLeo v. Commissioner of IRS, 959 F.2d 16, 19-20 (2d Cir. 1992); Third Circuit Cases: In Re Grand Jury Matter, 640 F. Supp. 63, 65 (E.D. Pa. 1986); United States v. OMTSupermarket, Inc., 995 F. Supp. 526, 531-32 (E.D. Pa. 1998); In Re Grand Jury Investigation,630 F.2d 996, 1000-01 (3d Cir. 1980); United States v. Chang, 47 Fed. Appx. 119, 121-22 (3dCir. 2002); Fourth Circuit Cases:  United States v. Reiners, 934 F. Supp. 721, 723-24 (E.D. Va.1996); Sixth Circuit Cases:  Matters of Grand Jury Investigation, (90-3-2), 748 F. Supp. 1188,1208 (E.D. Mich. 1990); Rugiero v. United States Department of Justice, 257 F.3d 534, 549 (6thCir. 2001); Seventh Circuit Cases:  Dexia Credit Local v. Rogan, 395 F. Supp. 2d 709, 715-19(N.D. Ill. 2005); United States v. Sandford, 589 F.2d 285, 290-91 (7th Cir. 1978); In the Matterof Special March 1981 Grand Jury, 753 F.2d 575, 577-79 (7th Cir. 1985); Ninth Circuit Cases: United States v. Dynavac, Inc., 6 F.3d 1407, 1411-14 (9th Cir. 1993); Kersting v. United States,206 F.3d 817, 821 (9th Cir. 2000); Tenth Circuit Cases:  United States ex rel. Woodard v. Tynan,757 F.2d 1085, 1087-88 (10th Cir. 1985); District of Columbia Circuit Cases:  SEC v. DresserIndus., 628 F.2d 1368, 1382-83 (D.C. Cir. 1980)(en banc).    

314

[I]t is not the purpose of the Rule [6(e)]to foreclose from all futurerevelation to proper authorities the same information or documentswhich were presented to the grand jury.  Thus, when testimony ordata is sought for its own sake – for its intrinsic value in thefurtherance of a lawful investigation – rather than to learn whattook place before the grand jury, it is not a valid defense todisclosure that the same information was revealed to a grand juryor that the same documents had been, or were presently being,examined by a grand jury.

Id. at 54.

The above-referenced rationale of the majority rule is especially true of normal business

records that are routinely created independently of a grand jury investigation and maintained in

the normal course of business.   However, the courts have not taken a uniform approach to this316

issue, and have indicated that in some circumstances disclosure of such records subpoenaed by or

presented to the grand jury may be prohibited by Rule 6(e), in the absence of an appropriate

  See, e.g., Fourth Circuit Cases:  In Re Grand Jury Disclosure, 550 F. Supp. 1171,317

1176-77 (E.D. Va. 1982); Sixth Circuit Cases:  In Re Grand Jury Subpoenas, 454 F.3d 511, 522(6th Cir. 2006); In Re Grand Jury Proceedings, 851 F.2d 860, 862-67 (6th Cir. 1988); FDIC v.Ernst & Whinney, 921 F.2d 83, 87 (6th Cir. 1990); Eighth Circuit Cases:  In Re Milk ProductsAntitrust Litigation, 84 F. Supp. 2d 1016, 1026-27 (D. Minn. 1997), aff’d on other grounds, 195 F.3d 430 (8th Cir. 1999); In Re Grand Jury Proceedings Relative To Perl, 838 F.2d 304, 307(8th Cir. 1988); Eleventh Circuit Cases:  In Re May 6, 1997 Grand Jury, 76 F. Supp. 2d 1262,1268-69 (M. D. Ala. 1999).

315

disclosure order.317

2. A Government Attorney Who Has Had Lawful Access to a Matter OccurringBefore a Grand Jury May Use Such Matter in Handling a Civil RICOAction, But May Not Disclose Such Matter, Without a Court-DisclosureOrder, to Another Person to Assist in Handling a Civil Action

It is not unusual for a Government attorney to participate in both a criminal prosecution

and a related civil action, and hence the question arises whether and under what circumstances

may a Government attorney use information or evidence that is protected from disclosure by

Rule 6(e), FED. R. CRIM. P., in connection with a civil RICO investigation or lawsuit.  In sum, a

Government attorney who has had lawful access to matters protected from disclosure by Rule

6(e) may use such matters without a court-disclosure order in connection with a civil RICO

investigation or lawsuit, but may not disclose such matter, without a court-disclosure order, to

another person to assist in handling a civil RICO investigation or lawsuit.

In United States v. Sells Eng’r, Inc., 463 U.S. 418 (1983) (“Sells”), after a defendant pled

guilty to participating in a conspiracy to obstruct the Internal Revenue Service (“IRS”),  the

Government moved under Rule 6(e) for disclosure of all grand jury materials relating to the case

to attorneys in the Civil Division of the Justice Department and their staff assistants for use in

preparing and conducting a possible civil suit against the defendant.  The district court granted

the Government’s motion on the ground that Government attorneys in the Civil Division were

316

entitled to automatic disclosure as a matter of right without a court-disclosure order under Rule

6(e)(3)(A)(i), which authorized disclosure of a grand jury matter to “an attorney for the

government for use in performing such attorney’s duty.”  See Sells, 463 U.S. at 421-22, 426. 

The Supreme Court rejected the Government’s contention that all attorneys in the Justice

Department qualify for automatic disclosure of grand jury materials under 

Rule 6(e)(3)(A)(i) regardless of the nature of the litigation in which they intend to use the

materials.  The Supreme Court stated:

We hold that (A)(i) disclosure is limited to use by those attorneyswho conduct the criminal matters to which the materials pertain. This conclusion is mandated by the general purposes and policiesof grand jury secrecy, by the limited policy reasons whyGovernment attorneys are granted access to grand jury materialsfor criminal use, and by the legislative history of Rule 6(e).

Sells, 463 U.S. at 427.  The Supreme Court added that “Rule 6(e) was never intended to grant

free access to grand jury materials to attorneys not working on the criminal matters to which the

materials pertain.”  Id. at 429.  Accordingly, the Supreme Court concluded:

“Federal prosecutors” are given a free hand concerning use ofgrand jury materials, at least pursuant to their “duties relating tocriminal law enforcement;” but disclosure of “grand jury-developed evidence for civil law enforcement purposes” requires a(C)(i) court order . . . . Congress did not intend that “attorneys forthe government” should be permitted free civil use of grand jurymaterials.

Id. at 441-42.

Subsequently, in United States v. John Doe, Inc. I, 481 U.S. 102 (1987) (hereafter “John

Doe, Inc. I”), the Supreme Court held that a Government attorney who had conducted a criminal

anti-trust investigation before a grand jury could, without prior court-authorization, continue to

utilize the evidence obtained by the grand jury in a subsequent civil anti-trust and False Claims

317

Act investigation.  In John Doe, Inc. I, attorneys from the Anti-Trust Division of the Department

of Justice conducted a grand jury investigation into alleged price fixing by three corporations.  At

the conclusion of the investigation, the attorneys concluded that, although there had been

violations of the Sherman Anti-Trust Act, these violations were not sufficient to warrant criminal

prosecution.  Thereafter, without seeking a court order authorizing them to do so, the same

attorneys reviewed the evidence they had developed in the grand jury for the purpose of

determining whether a civil suit should be filed and took various steps pursuant thereto.  In the

course of their review of the grand jury evidence, the attorneys concluded that in addition to the

Sherman Act violations, there were potential violations of the False Claims Act and other

statutes.  Therefore, they obtained court orders pursuant to Rule 6(e), authorizing the disclosure

of the grand jury material to additional Anti-Trust Division Attorneys and to Civil Division

Attorneys.  The team of attorneys, including the attorneys who had conducted the grand jury

investigation, thereafter prepared and filed a civil complaint against the three corporations and

various individuals.  Significantly, the complaint did not contain or refer to any of the grand jury

materials.  See John Doe, Inc. I, 481 U.S. at 104-110.  

Upon the defendants’ claim that the use of the evidence developed in the grand jury to

prepare the civil case violated Rule 6(e), the Second Circuit held that review of the evidence by

the attorneys who conducted the grand jury investigation for the purpose of determining whether

a civil suit should be filed constituted a further “disclosure” of matters occurring before the grand

jury under Rule 6(e) and that the Government had not made a sufficient showing of

particularized need to warrant the additional disclosure to the new Anti-Trust and Civil Division

attorneys.  The Second Circuit therefore, held that the civil suit should be dismissed.  United

318

States v. John Doe, Inc., 774 F.2d 34 (2d Cir. 1985).

In reversing the decision of the Second Circuit, the Supreme Court held that the

Government’s attorneys who had conducted the grand jury investigation could lawfully review

and continue to use the evidence developed in the grand jury, provided the attorneys did not

disclose any matter occurring before the grand jury to others not authorized by Rule 6(e) to have

access to such evidence.  The Supreme Court stated:

Rule [6(e)] does not contain a prohibition against the continued useof information by attorneys who legitimately obtained access to theinformation through the grand jury investigation.  The Court ofAppeals’ reasoning is unpersuasive because it stretches the plainmeaning of the Rule’s language much too far.  

John Doe, Inc. I, 481 U.S. at 108.

The Supreme Court also rejected the argument that the Government attorneys, who had

conducted the grand jury investigation, had violated Rule 6(e) by using the grand jury material in

drafting the civil complaint, since the attorneys’ consideration of the grand jury material did not

involve any further disclosure of grand jury matters to others.  Noting that the complaint did not

refer to any grand jury material, the Supreme Court stated:

A Government attorney may have a variety of uses for grand jurymaterial in a planning stage, even thought the material will not beused, or even alluded to, in any filing or proceeding.  In this vein, itis important to emphasize that the issue before us is only whetheran attorney who was involved in a grand jury investigation (and ispresumably familiar with the “matters occurring before the grandjury”) may later review that information in a manner that does notinvolve any further disclosure to others.

John Doe, Inc. I, 481 U.S. at 110-11 (footnote omitted). 

Thus, John Doe, Inc. I makes clear that a Government attorney who participated in a

grand jury investigation may continue to review and consider grand jury materials for civil law

  Former Rule 6(e)(3)(C)(i) is set forth in Rule 6(e)(3)(E)(i) without material change.318

319

enforcement purposes.  However, the Supreme Court emphasized that under “Sells [such

attorney] could not disclose [grand jury] information to previously uninvolved attorneys from the

Civil Division or the United States Attorney’s office without a court order pursuant to Rule

6(e)(3)(C)(i).”   John Doe, Inc. I, 481 U.S. at 111.  318

Courts following Sells and John Doe, Inc. I, have allowed Government personnel to use

lawfully obtained grand jury evidence and information in civil matters, without a court-disclosure

order, provided that such use did not involve disclosure of grand jury matters to another person

who did not have lawful access to such grand jury matters.  For example, in DiLeo v.

Commissioner of Internal Revenue, 959 F.2d 16, 21 (2d Cir. 1992), the Second Circuit held that

a Special Agent of the Criminal Investigations Division of the IRS who had participated in a

grand jury investigation leading to a criminal prosecution could also participate in a later trial

before the Tax Court regarding the civil tax liability of the same defendants and assist attorneys

for the Commissioner during that civil tax trial.  The Second Circuit stated that the defendant’s

claim that the participation of the IRS Special Agent in the Tax Court proceeding violated Rule

6(e):

is inconsistent with the principle that a government employee whohas participated in a criminal prosecution may participate in thecivil phase of the dispute without obtaining a court order to do sounder Rule 6(e).

. . . 

There is no evidence that [the IRS Special Agent] disclosed anyRule 6(e) information to counsel for the Commissioner.  There wastherefore nothing improper about his presence as a representativeof the Commissioner at the trial.

DiLeo, 959 F.2d at 21.

320

In In Re of Grand Jury Subpoena of Rochon, 873 F.2d 170 (7th Cir. 1989), the Seventh

Circuit held that the Attorney General, who was named as a defendant in his official capacity in a

civil suit, could participate in a related civil rights grand jury investigation and could use the

information lawfully disclosed to him in the course of the grand jury investigation in the defense

of the civil suit so long as there was no disclosure to the Government’s civil attorneys not

otherwise lawfully entitled to have the information disclosed to them.  In this regard, the Seventh

Circuit stated:

Nor do we believe that [the Attorney General’s] participation in thegrand jury investigation will inevitably result in a Rule 6(e)violation.  Rule 6(e) prohibits those participating in a criminalinvestigation from disclosing grand jury information to others notauthorized to receive it under the rule. . . . It does not prevent anattorney from using information that he or she legitimately obtained during a grand jury investigation.

873 F.2d at 175.  See also In Re Grand Jury Sub. February 28, 2002, March 26, 2003 and

October 4, 2004, 472 F.3d 990, 996-1000 (8th Cir. 2007) (holding that simultaneous work by a

federal special agent, as lead agent in a grand jury investigation of a corporation and head of a

related civil investigation into one of the corporation’s companies, did not in itself violate Rule

6(e)); United States v. Archer-Daniels-Midland Co., 785 F.2d 206, 211-13 (8th Cir. 1986)

(holding that assignment of Justice Department attorneys to a civil antitrust suit against two

corporations after those attorneys participated in a grand jury investigation of the corporations

and the attorneys’ use of grand jury matters in the civil suit without first obtaining a court-

disclosure order did not violate Rule 6(e), absent evidence that those attorneys disclosed a grand

jury matter to someone not authorized to obtain such access).

Based on the foregoing analysis, OCRS concludes that under Rule 6(e)(3)(A)(i), a

  In Bank of Nova Scotia v. United States, 487 U.S. 250 (1988), the Supreme Court319

stated: [A] knowing violation of Rule 6 may be punished as a contempt of court.  SeeFed. R. Crim. Proc. 6(e)(2).  In addition, the court may direct a prosecutor to showcause why he should not be disciplined and request the bar or the Department ofJustice to initiate disciplinary proceedings against him.  The court may alsochastise the prosecutor in a published opinion.

Id. at 263.  Accord McQueen v. Bullock, 907 F.2d 1544, 1551 & n.20 (5th Cir. 1990).321

Government attorney who has had lawful access to grand jury material protected from disclosure

by Rule 6(e) may:

(1) without a court-disclosure order continue to review and usesuch grand jury material for his own deliberative process inconnection with a civil RICO investigation or lawsuit; and 

(2) without a court-disclosure order may disclose such grand jurymaterial to an attorney for the Government to assist such attorney’sduties in handling a criminal matter which pertains to the grandjury matter, but may not disclose such grand jury material to aGovernment attorney or other Government personnel to assist in acivil proceeding without a prior court-disclosure order.

Accordingly, any Government personnel participating in a civil RICO investigation or

lawsuit who either did not participate in a related grand jury investigation or was not otherwise

authorized to have access to such grand jury matters, should be shielded from such grand jury

matters, unless a prior court-disclosure order is obtained.319

3. A District Court May Order Disclosure of a Grand Jury Matter Preliminaryto or in Connection With a Judicial Proceeding

a. Rule 6(e)(3)(E)(i), provides as follows:

(E) The court may authorize disclosure -- at a time,in a manner, and subject to any other conditions thatit directs -- of a grand-jury matter: (i) preliminary toor in connection with a judicial proceeding.

In United States v. Baggot, 463 U.S. 476, 480-81 (1983), the Supreme Court held that an

  See, e.g., John Doe, Inc. I, 481 U.S. at 111-117 (approving a 6(e) disclosure order to320

provide grand jury materials to Justice Department attorneys in the Civil Division to decidewhether to proceed with a civil suit).  

  See, e.g., Atlantic City Elec. Co. v. A.B. Chance Co., 313 F.2d 431, 434 (2d Cir.321

1963); In Re Grand Jury Investigation, 55 F.3d 350, 353-55 (8th Cir. 1995); In Re Grand Jury(continued...)

322

IRS investigation to determine a taxpayer’s civil tax liability was not “preliminary to or in

connection with a judicial proceeding” within the meaning of Rule 6(e).  The Court explained:

[T]he purpose of the audit is not to prepare for or conductlitigation, but to assess the amount of tax liability throughadministrative channels.  Assuming, arguendo, that this audit willinevitably disclose a deficiency on Baggot’s part . . . there is noparticular reason why that must lead to litigation, at least from theIRS’s point of view.  The IRS’s decision is largely self-executing,in the sense that it has independent legal force of its own, withoutrequiring prior validation or enforcement by a court.  The IRS neednever go into court to assess and collect the amount owed; it isempowered to collect the tax by nonjudicial means (such as levy onproperty or salary, 26 U.S.C. §§ 6331, 6332), without having toprove to a court the validity of the underlying tax liability.  Ofcourse, the matter may end up in court if Baggot chooses to take itthere, but that possibility does not negate the fact that the primaryuse to which the IRS proposes to put the materials it seeks is anextrajudicial one- - the assessment of a tax deficiency by the IRS.

Id. at 480-81 (footnote omitted).

By contrast, a Government civil RICO investigation is not a “self-executing,”

independent administrative proceeding, but rather is a preliminary step necessary to decide

whether to file a civil RICO lawsuit, and hence falls within the scope of Rule 6(e)(3)(E)(i), and,

therefore, a district court may issue a Rule 6(e) disclosure order in connection with a civil RICO

investigation.   Moreover, Rule 6(e)(3)(E)(i) authorizes a district court to issue a disclosure320

order in connection with a filed civil RICO lawsuit since such a suit manifestly constitutes a

“judicial proceeding” within the meaning of Rule 6(e)(3)(E)(i).321

(...continued)321

Proceedings GJ-76-4 & GJ-75-3, 800 F.2d 1293 (4th Cir. 1986).  See generally In Re North, 16 F.3d 1234, 1244 (D.C. Cir. 1994) (“A judicial proceeding [under Rule 6(e)] includes everyproceeding of a judicial nature before a competent court or before a tribunal or officer clothedwith judicial or quasi-judicial powers”) (citations omitted).

323

b. The Supreme Court requires “a strong showing of particularized need for grand

jury materials before any disclosure will be permitted.”  Sells, 463 U.S. at 443 (collecting cases). 

In particular, the Supreme Court has ruled that:

Parties seeking grand jury [material] under Rule 6(e) must showthat the material they seek is needed to avoid a possible injustice inanother judicial proceeding, that the need for disclosure is greaterthan the need for continued secrecy, and that their request isstructured to cover only material so needed.

Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 222 (1979).  Accord Sells, 463 U.S. at

443; United States v. Campbell, 294 F.3d 824, 827 (7th Cir. 2002)(the person seeking disclosure

must demonstrate “a compelling need for the material”).  The Supreme Court explained that: 

Such a showing must be made even when the grand jury whosetranscripts are sought has concluded its operations. . . . For inconsidering the effects of disclosure on grand jury proceedings, thecourts must consider not only the immediate effects upon aparticular grand jury, but also the possible effect upon thefunctioning of future grand juries.  Persons called upon to testifywill consider the likeliehood that their testimony may one day bedisclosed to outside parties.  Fear of future retribution or socialstigma may act as powerful deterrents to those who would comeforward and aid the grand jury in the performance of its duties. Concern as to the future consequences of frank and full testimonyis heightened where the witness is an employee of a companyunder investigation.  Thus, the interests in grand jury secrecy,although reduced, are not eliminated merely because the grand juryhas ended its activities.

Douglas Oil Co., 441 U.S. at 222. 

324

Significantly, the Supreme Court has noted that “[t]he Douglas Oil standard is a highly

flexible one” and “accommodates any relevant considerations, peculiar to Government movants,

that weigh for or against disclosure in a given case.”  Sells, 463 U.S. at 445.  For example, the

Supreme Court explained that “a district court might reasonably consider that disclosure to

Justice Department attorneys poses less risk of further leakage or improper use than would

disclosure to private parties or the general public;” or “the district court may weigh the public

interest, if any, served by disclosure to a governmental body. . . .”  Sells, 463 U.S. at 445 (citation

omitted).  Moreover, in John Doe, Inc. I, 481 U.S. at 113, the Supreme Court sanctioned

disclosure of grand jury materials to Justice Department attorneys in the Civil Division “to make

a decision on whether to proceed with a civil action,” where the disclosure “could have had the

effect of saving the Government, the potential defendants, and witnesses the pains of costly and

time-consuming depositions and interrogatories which might have later turned out to be wasted if

the Government decided not to file a civil action after all.”

Applying the foregoing standards, courts have authorized disclosure of grand jury

materials to be used by Government attorneys and others in connection with civil proceedings. 

See, e.g., John Doe, Inc. I, 481 U.S. at 111-17; In Re Grand Jury Proceedings Relative to Perl,

838 F.2d 304, 306-08 (8th Cir. 1988); In Re Grand Jury Proceedings GJ-76-4 & GJ-75-3, 800

F.2d at 1298-1305; In Re of Petitions for Disclosure of Documents, 617 F. Supp. 630, 631-32

(S.D. Fla. 1985).

- cric.pdf
1. A Defendant’s Liability For A Racketeering Act May Be Based On “Aiding and Abetting”
-  3. A Corporation’s or Labor Union’s Scienter May Be Established By The Collective Knowledge of The Corporation’s or Labor Union’s Employees and Representatives
1. 
2. Issues of Intent Generally are Ill-Suited for Summary Judgment

- appxa.pdf
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