Source: https://www.markmigdal.com/2017/07/qua-rico-discarding-the-fallacy-that-florida-rico-and-federal-rico-are-identical/
Timestamp: 2019-04-19 05:43:09+00:00

Document:
Often, civil plaintiffs in RICO cases will allege causes of action under both the Florida and federal RICO statutes with little thought as to the distinction between the two. Indeed, these plaintiffs can be forgiven for that oversight, as courts in Florida have routinely suggested that there is no meaningful difference between the two statutes, and any legal analysis of federal RICO will necessarily apply to Florida RICO.6 There are, however, important differences between federal and Florida civil RICO — differences that any plaintiff or defendant in a civil RICO case must be apprised of before navigating the treacherous minefield that is RICO litigation.
The four distinctions that will be addressed in this article concern: 1) the statute of limitations; 2) the applicable standard of proof; 3) the person/enterprise distinctness requirement; and 4) the application of the operation or management test to the respective statutes.
Perhaps the most significant difference between Florida and federal RICO is the limitations period and the possibility that the date the limitations period begins to run differs depending on the version of the RICO statute under which one is pursuing relief.
At least one litigant has suggested that the delayed discovery doctrine applicable to the federal statute does not apply to the Florida statute, and instead a cause of action under Florida RICO begins to run at the time of commission of the last predicate act.13 This interpretation is consistent with F.S. §95.031(1), which states that a “cause of action accrues when the last element constituting the cause of action occurs.”14 The Florida Supreme Court, in Davis v. Monahan, 832 So. 2d 708 (Fla. 2002), provides some support for this position as well, noting that other than cases of fraud, products liability, professional and medical malpractice, and intentional torts based on abuse, “there is no other statutory basis for the delayed discovery rule.”15 No Florida court has directly addressed whether the delayed discovery doctrine applies to the accrual date of Florida RICO, although one pre-Davis court did apply the injury discovery rule to a cause of action under Florida RICO.16 Certainly, if a plaintiff sues under Florida RICO and federal RICO, and is relying on delayed-discovery for its federal claim, a defendant should explore the application of F.S. §95.031(1) to argue that the delayed-discovery doctrine does not apply to Florida RICO claims.
Another potentially critical distinction is whether the “operation or management” test (and the defense of the absence of the defendant’s “operation or management”) applies to both Florida RICO and federal RICO. The “operation or management test,” coined by the Supreme Court in Reves, attempted to clarify what the terms “to participate” and “to conduct” mean under §1962(c).31 In Reves, the court explained the extent to which an outside accounting firm could be liable under §1962(c) for its activities relating to an inflated valuation of a gasohol plant on the financial statements of a farm cooperative. The court determined that the accounting firm could not be held liable because the defendant did not participate in the “operation or management of the enterprise itself.”32 Reves concluded that the word “participate” requires that a defendant have some part in directing the affairs of the enterprise. In other words, §1962(c) applies not to “any person” but “to any person associated with an enterprise who participates in the operation or management of the enterprise.”33 The U.S. Court of Appeals for the Seventh Circuit attempted to delineate the level and type of activity that could lead to conspiracy liability under RICO and further clarify the Reves operation or management test in Brouwer v. Raffensperger Hughes & Co., 199 F.3d 961 (7th Cir. 2000).34 In Brouwer, the court held that “one must knowingly agree to perform services of a kind that facilitate the activities of those who are operating the enterprise in an illegal manner. It is an agreement not to operate or manage the enterprise, but personally to facilitate the activities of those who do.”35 In other words, subsection (c) only applies to those who participate in the conduct of the enterprise through a pattern of racketeering activity.
At least one court in the Southern District of Florida has suggested that the operation or management test applies in equal force to both Florida and federal RICO. “Florida’s RICO statute uses the same language [as the federal statute] to indicate the level of involvement necessary for RICO liability. 18 U.S.C. §1962(c), F.S.A. §772.103(3). There appears to be no reason to believe that the operation or management test of Reves would not apply to Florida’s RICO statute.”44 Nonetheless, the issue is far from well established, and if relevant, the inapplicability of the operation and management test to Florida RICO is certainly an argument worth raising.
The Second District Court of Appeal in State v. Jackson, 677 So. 2d 938 (Fla. 1st DCA 1996), agreed with the Masonoff reasoning and adopted the analysis of the U.S. Court of Appeals for the Seventh Circuit, holding that the critical factor is that the enterprise be either formally (as in the case of incorporation) or practically (as when people other than the proprietor work in the organization) separate from the defendant.60 In Jackson, the court recognized that although “the charging documents do not allege that [defendant] associated with another human being, they indicate that he associated with a number of separate and identifiable entities through which he conducted his criminal activity.”61 Therefore, it was error for the trial court to dismiss the RICO charge.
Despite the fact that Florida courts often look to the federal courts for guidance in interpreting and applying the Florida RICO statute, there are noteworthy distinctions between the courts’ application of Florida and federal RICO (including some distinctions that have yet to be resolved by Florida courts). Nonetheless, the civil litigator should acquaint himself or herself with these distinctions, regardless of whether prosecuting or defending, in order to most robustly represent the client.
2 W. 79th St. Corp. v. Congregation Kahl Minchus Chinuch, 2004 WL 2187069 (S.D.N.Y. Sept. 29, 2004).
3 The Florida Racketeer Influenced and Corrupt Organizations Act, Ch. 77-334, 1977 Fla. Laws 1399, was originally codified at Fla Stat. §§943.46-.5. In 1981, those sections were renumbered as §§895.01-.06.
4 See Fla. Stat. §§772.101-772.104.
5 Katzman v. Victoria’s Secret Catalogue, 167 F.R.D. 649, 655 (S.D.N.Y. 1996). See also Directv Inc. v. Cavanaugh, 321 F. Supp. 2d 825, 839 (E.D. Mich. 2003) (noting that given the opprobrium and exposure to treble damages that a RICO claim brings to a party, courts should eliminate frivolous RICO claims at the earliest stage of litigation).
6 Because of the similarities between Florida and federal RICO acts, Florida looks to federal authority regarding the interpretation and application of its act. Palmas y Bambu, S.A. v. E.I. Dupont De Nemours & Co., Inc., 881 So. 2d 565, 583 (Fla. 3d D.C.A. 2004) (citing Lugo v. State, 845 So. 2d 74, 96 n. 39 (Fla. 2003)) (since “Florida[’s] RICO statute … is patterned after its federal counterpart … Florida courts may look to federal RICO decisions as persuasive authority”); Gross v. State, 765 So. 2d 39, 42 (Fla. 2000) (“[g]iven the similarity of the state and federal [RICO] statutes, Florida courts have looked to the federal courts for guidance in construing RICO provisions”); O’Malley v. St. Thomas University, Inc., 599 So. 2d 999, 1000 (Fla. 3d D.C.A. 1992) (“Since Florida RICO is patterned after federal RICO, Florida courts have looked to the federal courts for guidance in interpreting and applying the act. Therefore, federal decisions should be accorded great weight.”); see RLS Business Ventures, Inc. v. Second Chance Wholesale, Inc., 784 So. 2d 1194, 1195 n. 2 (Fla. 2d D.C.A. 2001) (observing “Florida courts have held that cases interpreting the federal RICO statute, title 18, United States Code, are persuasive as to the meaning of Florida’s RICO statute, chapter 895, Florida Statutes”).
8 Silverberg v. Thomson McKinnon Securities, Inc., 787 F.2d 1079 (6th Cir. 1986).
9 See, e.g., Tellis v. U.S. Fidelity & Guaranty Co., 805 F.2d 741 (7th Cir. 1986); Compton v. Ide, 732 F.2d 1429 (9th Cir. 1984).
10 Agency Holding Corp., 483 U.S. at 150.
11 Pac Harbor Capital, Inc. v. Barnett Bank, N.A., 252 F.3d 1246, 1251 (11th Cir. 2001) (citing Rotella v. Wood, 528 U.S. 549 (2000) (emphasis added)).
12 Fla. Stat. §772.17 (emphasis added).
13 See Consejo de Defensa del Estado de la Republica de Chile v. PNC Financial Services Group, Inc., et al., Case No. 09-20612-CIV-GOLD/MCALILEY, Motion to Dismiss [D.E. #39], at 5-8 (filed Oct. 1, 2009).
14 See Fla. Stat. §95.031(1).
15 Davis, 832 So. 2d at 710.
16 Jones v. Childers, 18 F.3d 899 (11th Cir. 1994).
17 In re Mack, 6:06-BK-00182-ABB, 2008 WL 4790386 (Bankr. M.D. Fla. Aug. 6, 2008) (citing South Atlantic Ltd. P’ship of Tenn., L.P. v. Riese, 284 F.3d 518, 530 (4th Cir.2002)).
19 In re Winship, 397 U.S. 358, 370 (1970) (Harlan, J., concurring).
20 Addington v. Texas, 441 U.S. 418, 423 (1979).
21 Santosky v. Kramer, 455 U.S. 745, 755 (1982).
23 Fla. Std. Jury Instr. (Civ.) 3.
24 Santosky, 455 U.S. at 755 (quoting Addington v. Texas, 441 U.S. 418, 424 (1979).
25 Fla. Std. Jury Instr. (Civ.) 3.2.1.
26 Santosky, 455 U.S. at 755 (quoting Addington v. Texas, 441 U.S. 418, 424 (1979).
27 Fla. Std. Jury Instr. (Civ.) 6.1.
28 See, e.g., Hartford Ins. Co. of the Midwest v. Miller, 681 So. 2d 301, 302 (Fla. 3d D.C.A. 1996) (noting that the burden to recover fees under Florida RICO is more lenient than Fla. Stat. §57.105 in order to “discourage frivolous RICO claims or claims brought for the purpose of intimidation because the stigma and burden of defending such claims is so great”); Doria v. Class Action Services, LLC, 261 F.R.D. 678, 686 (S.D. Fla. 2009) (“I agree with [d]efendants’ contention that civil RICO claims can have a stigmatizing effect upon defendants.”).
29 See, e.g., Waters v. Int’l Precious Metals Corp., 172 F.R.D. 479, 510 (S.D. Fla. 1996).
31 Reves v. Ernst & Young, 507 U.S. 170 (1993).
34 Brouwer, 199 F. 3d at 967.
36 18 U.S.C. §1962(c) (2000) (emphasis added).
37 Reves, 507 U.S. at 169.
39 Fla. Stat. §772.03 (emphasis added).
40 Keesling v. Beegle, 880 N.E.2d 1201, 1206 (Ind. 2008).
42 See Faillace v. Colombus Bank & Trust, Co., 269 Ga. App. 866 (Ga. App. 2004); State v. Siferd, 151 Ohio App. 3d 103 (Ohio App. 2002).
43 F.D.I.C. v. First Interstate Bank of Denver, N.A., 937 F. Supp. 1461, 1471-1472 (D. Colo. 1996).
44 Bailey v. Trenam Simmons, et al., 938 F. Supp. 825, 828 (S.D. Fla. 1996) (citing Reves and Jones v. Childers, 18 F. 3d 899, 910 (11th Cir. 1994) for the proposition that federal RICO case law informs Florida RICO law) (emphasis added).
45 See, e.g., Bennett v. U.S. Trust Co. of New York, 770 F.2d 308 (2d Cir. 1985).
46 Bennett, 770 F.2d at 315.
48 Bennett, 770 F.2d at 315 n. 2.
49 Id. See also C.A. Westel De Venezuela v. Am. Tel. & Tel. Co., 90 CIV. 6665 (PKL), 1993 WL 497971 (S.D.N.Y. 1993).
50 See, e.g., State v. Bowen, 413 So. 2d 798 (Fla. 1st D.C.A. 1982), petition denied, 424 So. 2d 760 (Fla. 1983).
51 Bowen, 413 So. 2d at 799 (internal citations omitted).
52 Masonoff v. State, 546 So. 2d 72, 74 (Fla. 2d D.C.A.), rev. dismissed, 553 So. 2d 1166 (Fla. 1989).
55 Id. See also Craver v. State, 561 So. 2d 1251 (Fla. 2d D.C.A. 1990) (motion for judgment of acquittal improperly denied under Masonoff where defendant was prosecuted as a “one-man enterprise”); and State v. Nishi, 521 So. 2d 252 (Fla. 3d D.C.A.), rev. den., 531 So. 2d 1355 (Fla. 1988) (defendant could not be employed by or associated with himself as an enterprise under RICO); Wilson v. State, 596 So. 2d 775, 780-81 (Fla. 1st D.C.A. 1992).
56 Wilson v. State, 596 So. 2d 775 (Fla. 1st D.C.A. 1992).
60 State v. Jackson, 677 So. 2d 938 (Fla. 2d D.C.A. 1996) (citing McCullough v. Suter, 757 F.2d 142, 144 (7th Cir. 1985)).
62 Cedric Kushner, 121 S. Ct. at 2091.
64 Wilson, 596 So. 2d at 781.

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