In the

United States Court of Appeals

For the Seventh Circuit

No. 99-3938

Edward Stachon and Judy Stachon,

Plaintiffs-Appellants,

v.

United Consumers Club, Inc., et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 98 C 7020--Charles R. Norgle, Sr., Judge.

Argued April 18, 2000--Decided October 6, 2000

 Before Flaum, Chief Judge, and Ripple and Williams,

Circuit Judges.

 Williams, Circuit Judge. Plaintiffs-Appellants

Edward Stachon and Judy Stachon, on behalf of

themselves and a putative class of individuals

similarly situated, filed an Amended Class Action

Complaint charging Defendants-Appellees, United

Consumers Club, Inc. ("UCC"), and five of its

officers and/or directors, with violations of the

Racketeer Influenced and Corrupt Organizations

Act ("RICO"), 18 U.S.C. sec.sec. 1961 et seq.,

and the Illinois Consumer Fraud and Deceptive

Trade Practices Act, 815 Ill. Comp. Stat. 505/2.

Defendants-Appellees moved to dismiss the amended

complaint and the district court granted the

motion under Fed. R. Civ. P. 12(b)(6) for failure

to state a claim under RICO. After doing so, the

district court declined to maintain supplemental

jurisdiction over Appellants’ state law claim and

dismissed the action. We affirm.

I

 UCC, founded in 1978, is a "buying club," which

enters into agreements with manufacturers to sell

"first quality" merchandise to members at special

wholesale prices. Consumers join UCC by paying a

membership fee, which entitles them to purchase

merchandise from more than 700 brand name

manufacturers through UCC catalogues. UCC members

are purportedly able to obtain significant
savings on merchandise because of their

collective "buying power" in the UCC buying

system, which "eliminates the middleman and

overhead costs associated with conventional

retail, wholesale and discount houses." 

 The gist of Appellants’ RICO claim is that

Appellees have fraudulently represented that UCC

members have access to first quality merchandise

at special wholesale prices. Appellants aver that

much of the merchandise ordered by UCC members is

of an inferior quality and is sold at higher than

wholesale prices. They further claim that

Appellees have misrepresented the buying power of

UCC by overstating its membership. According to

Appellants, they and other UCC members relied on

the false representations made by Appellees in

joining UCC. 

 Appellants maintain that in furtherance of a

scheme to defraud consumers about the benefits of

UCC memberships, Appellees conducted and

conspired to conduct or participate in a pattern

of mail and wire fraud activity through an

enterprise made up of "Defendants, past and

present UCC franchisees, manufacturers and

wholesalers, and UCC members," in violation of

RICO. See 18 U.S.C. sec. 1962(c), (d)./1 The

district court ruled that Appellants failed to

plead the existence of the requisite RICO

"enterprise" and dismissed the amended complaint

under Fed. R. Civ. P. 12(b)(6) for failure to

state a claim. Appellants now challenge the

district court’s decision dismissing their RICO

claim.

II

 We review a district court’s decision to grant

a motion to dismiss under Rule 12(b)(6) de novo,

accepting the well-pleaded allegations in the

amended complaint as true and drawing all

reasonable inferences in favor of the plaintiffs,

here, the Appellants. See Biblia Abierta v.

Banks, 129 F.3d 899, 902-903 (7th Cir. 1997).

 We have previously declared that "a RICO

complaint must identify the enterprise." Richmond

v. Nationwide Cassel L.P., 52 F.3d 640, 645 (7th

Cir. 1995). Appellants allege an "association in

fact" enterprise made up of UCC, its franchisees,

its officers and/or directors, its members,

participating wholesalers, and participating

manufacturers. Appellees contend that Appellants

have not adequately alleged the existence of a

RICO enterprise.

 RICO defines an "association in fact" enterprise

as a "union or group of individuals associated in

fact although not a legal entity." 18 U.S.C. sec.

1961(4). While a RICO enterprise can be formal or
informal, some type of organizational structure

is required. See Richmond, 52 F.3d at 645;

Bachman v. Bears, Stearns & Co., 178 F.3d 930,

931 (7th Cir. 1999). A RICO enterprise must have

"an ongoing ’structure’ of persons associated

through time, joined in purpose, and organized in

a manner amenable to hierarchial or consensual

decision making." Jennings v. Emry, 910 F.2d

1434, 1440 (7th Cir. 1990) (citations omitted);

see United States v. Turkette, 452 U.S. 576, 583

(1981) (describing a RICO enterprise as "a group

of persons associated together for a common

purpose of engaging in a course of conduct" and

indicating that an enterprise is shown "by

evidence of an ongoing organization, formal or

informal, and by evidence that the various

associates function as a continuing unit").

Moreover, because a RICO enterprise is "more than

a group of people who get together to commit a

’pattern of racketeering activity,’" Richmond, 52

F.3d at 645 (internal quotation and citation

omitted); see Bachman, 178 F.3d at 932, there

must be "an organization with a structure and

goals separate from the predicate acts

themselves." United States v. Masters, 924 F.2d

1362, 1367 (7th Cir. 1991). 

 In Richmond, supra, the court dismissed a RICO

action naming a string of entities, known and

unknown, as the RICO enterprise because "a

nebulous, open-ended description of the

enterprise does not sufficiently identify this

essential element of the RICO offense."/2 52

F.3d at 645. Notably, the alleged RICO enterprise

in Richmond provided no sign of "structure,

continuity and common course of conduct," so the

court dismissed the action. Id. at 645-46. More

recently in Bachman, supra, we dismissed another

RICO action because the plaintiff inadequately

alleged a RICO enterprise. There, a group of

unrelated individuals and corporations supposedly

got together to defraud the plaintiff, and the

court found that the plaintiff’s substantive

fraud allegations merely established a

conspiracy, not a RICO "organization" (or

enterprise).

 In light of Richmond and Bachman, we cannot

accept Appellants’ vague allegations of a RICO

enterprise made up of a string of participants,

known and unknown, lacking any distinct existence

and structure. While Appellants had ample

opportunity to adequately allege a RICO

enterprise, they fail to show that the acts

complained of in this case were the "work of an

organization, however loose-knit." Bachman, 178

F.3d at 932. When we liberally construe the

allegations in the amended complaint, the most

Appellants may be able to establish is a pattern

of racketeering activity through the purported
scheme to defraud consumers. To withstand

Appellees’ motion to dismiss, however, Appellants

must present something more than this and

assertions of conspiracy; otherwise, "every

conspiracy to commit fraud that requires more

than one person to commit is a RICO organization

and consequently every fraud that requires more

than one person to commit is a RICO

violation."/3 Bachman, 178 F.3d at 932. From

Bachman, we know that is not the law.

 Appellants argue that the alleged enterprise has

a distinct structure in that UCC’s "franchisees

recruit members to purchase merchandise at

special prices from certain wholesalers and

suppliers." This argument is undercut by

Appellants’ own acknowledgment that UCC’s

franchisees act under the "strict direction" of

Appellees. Appellants submit that Appellees

provide UCC’s franchisees with pre-written sales

scripts from which to recruit members. These

sales scripts presumably contain false

representations about UCC membership, which

necessarily sustains the alleged pattern of

racketeering activity.

 This court has repeatedly stated that RICO

plaintiffs cannot establish structure by defining

the enterprise through what it supposedly does.

See Jennings, 910 F.2d at 1440 ("[A]lthough a

pattern of racketeering activity may be the means

through which the enterprise interacts with

society, it is not itself the enterprise, for an

enterprise is defined by what it is, not what it

does."). Appellants essentially do this in

failing to offer the slightest sign of a "command

structure" separate and distinct from UCC (which

is not the purported enterprise). Id. at 1440

n.14. Here, the mere fact that UCC, for nearly 21

years, had business dealings with a wide

assortment of unnamed manufacturers, wholesalers,

and members in no way establishes that they

function with UCC as a continuing unit or as an

ongoing structured organization. Aside from

naming a string of participants, the amended

complaint offers no intelligible clue as to the

scope and duration of the enterprise itself; the

duration here presumably is a function of UCC’s

existence, but that is insufficient because UCC

is not the enterprise. In any event, Appellants

offer nothing to show that this group of

participants ever functioned as an ongoing RICO

organization. As a consequence, the RICO claim is

worthy of dismissal, notwithstanding whether the

participants had a common purpose./4

 Accordingly, Appellants’ RICO claim under

section 1962(c) cannot survive Appellees’ motion

to dismiss. Since Appellants fail to establish a

violation of section 1962(c), their section
1962(d) claim based on the same facts must fail

as well. See Midwest Grinding Co. v. Spitz, 976

F.2d 1016, 1026 (7th Cir. 1992).

III

 Because we agree with the district court that

Appellants did not adequately allege a RICO

"enterprise," we AFFIRM.

/1 Section 1962(c) provides in pertinent part:

It shall be unlawful for any persons . . .

associated with any enterprise . . . the

activities of which affect interstate commerce,

to conduct or participate, directly or

indirectly, in the conduct of such enterprise’s

affairs through a pattern of racketeering

activity. . . .

Section 1962(d) makes it unlawful "for any person

to conspire to violate the provisions of

subsection . . . (c)." With respect to a "pattern

of racketeering activity," violations of the

federal mail and wire fraud statutes, 18 U.S.C.

sec.sec. 1341, 1343, qualify as predicate acts of

racketeering under 18 U.S.C. sec. 1961(1).

/2 The court in Richmond indicated that the

challenged complaint "lists the three defendants

as part of ’Nationwide Group,’ a group that

’includes at least’ four other entities . . . and

that may include other businesses, three of which

are suggested and listed [in the complaint]. The

second enterprise [is made up of] Nationwide

Group plus unnamed car dealers." 52 F.3d at 645. 

/3 We note further that the court has consistently

insisted that the RICO defendant or "person" be

separate and distinct from the enterprise, see

Richmond, 52 F.3d at 646-67, because "liability

depends on showing that the defendants conducted

or participated in the conduct of the

’enterprise’s affairs, not just their own

affairs,’ through a pattern of racketeering

activity." Reves v. Ernst & Young, 507 U.S. 170

(1993). In this respect, the alleged "enterprise"

is in no way strengthened by including UCC with

its officers and/or directors because UCC adds

nothing to the enterprise. See Bachman, 178 F.3d

at 932 ("A firm and its employees, or a parent

and its subsidiaries, are not an enterprise

separate from the firm itself"). Nor does the

inclusion of "past and present [UCC] franchisees"

benefit Appellants in establishing an enterprise.

See Fitzgerald v. Chrysler Corp., 116 F.3d 225,

226-28 (7th Cir. 1997) (plaintiff cannot

establish RICO enterprise by adding a
corporation’s franchises to the corporation); see

also Richmond, 52 F.3d at 647 (following

Brittingham v. Mobil Corp., 943 F.2d 297 (3d Cir.

1991)). 

/4 While the RICO claim fails because the enterprise

lacks the requisite structure, we nonetheless

note the questionability of whether the

participants shared a purpose "to provide an

unparalleled opportunity for consumers to save

money, save time, and ultimately improve their

quality of life." There is nothing in the amended

complaint suggesting that the business dealings

which UCC conducted with manufacturers,

wholesalers, and members promoted such a purpose;

even viewing the allegations in a light most

favorable to Appellants, diverse parties, such as

these, customarily act for their own gain or

benefit in commercial relationships. Given the

commercial nature of the various parties’

relationships with UCC and the independent

interests necessarily governing those

relationships, the amended complaint fails to

dispel the notion that the different parties

entered into agreements with UCC for their own

gain or benefit. That this fraud action was even

filed by Appellants, the supposed fraud victims,

underscores, in our view, the improbability that

the enterprise had a common purpose to benefit

consumers (or UCC members) as a whole; indeed, it

is somewhat improbable that UCC members would act

in concert with Appellees (and countless unnamed

entities) to perpetrate fraud on other

unsuspecting consumers.