Source: https://law.justia.com/cases/federal/appellate-courts/F2/713/1272/149603/
Timestamp: 2019-12-07 12:32:28
Document Index: 305235754

Matched Legal Cases: ['§ 1961', '§ 1964', '§ 1', '§ 15', '§ 1331', '§ 19', '§ 20', '§ 19', '§ 20', '§ 49', '§ 1', '§ 1', '§ 1964', '§ 1962', '§ 1961', '§ 1961', '§ 1961', '§ 1961', '§ 1341', '§ 1952', '§ 1964', '§ 1962', '§ 1962', '§ 1964', '§ 1962', '§ 1964', '§ 1964', '§ 1963', '§ 1963', '§ 1964', '§ 1962', '§ 1963', '§ 1964', '§ 1962']

Bunker Ramo Corporation, a Delaware Corporation, Plaintiff-appellee, v. United Business Forms, Inc., an Illinois Corporation, Andedward M. Reif, Defendants-appellants,andmarvin H. Cywan, Defendant, 713 F.2d 1272 (7th Cir. 1983) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Seventh Circuit › 1983 › Bunker Ramo Corporation, a Delaware Corporation, Plaintiff-appellee, v. United Business Forms, Inc.,...
Bunker Ramo Corporation, a Delaware Corporation, Plaintiff-appellee, v. United Business Forms, Inc., an Illinois Corporation, Andedward M. Reif, Defendants-appellants,andmarvin H. Cywan, Defendant, 713 F.2d 1272 (7th Cir. 1983)
US Court of Appeals for the Seventh Circuit - 713 F.2d 1272 (7th Cir. 1983) Argued Dec. 10, 1982. Decided July 26, 1983
Defendants U.B.F. and Reif moved pursuant to Fed. R. Civ. P. 12(b) (1) and 12(b) (6) to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. On April 2, 1981, Judge Aspen dismissed the complaint. Bunker Ramo Corp. v. Cywan, 511 F. Supp. 531 (N.D. Ill. 1981).
On May 5, 1981, Bunker Ramo moved, pursuant to Fed. R. Civ. P. 60(b), for leave to amend the complaint to add new claims which were based on newly discovered facts. In Judge Aspen's absence the Emergency Judge continued the motion until May 12, 1981, when it could be heard by Judge Aspen.
Also on May 5, 1981, apparently fearing that the statute of limitations might run on some of their claims before the request for leave to file an amended complaint could be acted upon, Bunker Ramo filed the second suit against the defendants. Counts I and II of this seven count complaint allege that the defendant's conduct violated Title IX of the Organized Crime Control Act of 1970 (Racketeer Influences and Corrupt Organizations), Pub. L. No. 91-452, 84 Stat. 922, 941-948 (codified at 18 U.S.C. §§ 1961-1968) [hereinafter RICO]. The RICO counts were brought pursuant to 18 U.S.C. § 1964(c). Count III of the complaint alleges that the defendants' conduct violated section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The Sherman Antitrust Act claim was brought pursuant to 15 U.S.C. § 15. Jurisdiction for the federal claims was asserted under 28 U.S.C. §§ 1331 and 1337. The remaining counts were asserted under the court's pendent jurisdiction and charge all the defendants with fraudulent misrepresentation and conspiracy, and charge Cywan individually with breach of fiduciary duty.
On May 12, 1981, Judge Aspen denied Bunker Ramo's Fed. R. Civ. P. 60(b) motion for leave to file an amended complaint in the first suit because the subject matter of the proposed amended complaint was covered by the complaint in the second suit.
On June 26, 1981, defendants U.B.F. and Reif filed a motion to dismiss the second suit on the ground that the action was barred by the doctrine of res judicata. Defendant Cywan joined the motion on July 24, 1981. On August 5, 1981, Judge Aspen denied the motion to dismiss the action on res judicata grounds. U.B.F. and Reif, on August 14, 1981, moved pursuant to Fed. R. Civ. P. 59(e) to amend Judge Aspen's order of August 5, 1981, to allow an immediate appeal. Shortly thereafter the case was reassigned to Judge Parsons.
On September 11, 1981, Cywan filed a motion to dismiss the second complaint urging several grounds for dismissal. On September 14, 1981, U.B.F. and Reif moved pursuant to Fed. R. Civ. P. 12(b) (1) and 12(b) (6) to dismiss the complaint. U.B.F. and Reif argued that the court lacked subject matter jurisdiction to hear the RICO and Sherman Antitrust claims and that, even if the court had jurisdiction, the complaint failed to state a claim upon which relief can be granted. Additionally, they argued that the pendent claims should be dismissed for lack of subject matter jurisdiction.
Defendants' motion to dismiss this action as barred by principles of res judicata is denied. This Court's prior dismissal of Bunker Ramo Corporation's lawsuit against these same defendants for lack of subject matter jurisdiction, Bunker Ramo Corporation v. Cywan, (N.D. Ill. 1981), reported in 511 F. Supp. 531 (1981), was not on the merits as that term is used within the context of the res judicata doctrine. Accordingly, our prior order only precludes relitigation of the jurisdictional and justiciability issues decided therein.
The Memorandum Opinion and Order Judge Aspen entered on the same day, however, is not as clear. Although in the Memorandum Opinion Judge Aspen ultimately dismissed the complaint for a lack of subject matter jurisdiction, he also reasoned that the complaint was defective because it did not allege the type of competitive injury that is cognizable under the Robinson-Patman Act. Bunker Ramo Corp. v. Cywan, 511 F. Supp. 531, 533-34 (N.D. Ill. 1981). The Memorandum Opinion and Order stated:In the case at bar, Bunker Ramo, a manufacturer of electronic and mechanical products, does not compete in any sense of the term with UBF, a distributor of office and business forms. Their relationship is one of buyer and seller, and regardless of any common law cause of action Bunker Ramo may have against UBF or Reif for fraudulent misrepresentation, commercial bribery, or conspiracy to induce a breach of fiduciary duty, the clear import of the cases cited above is that Bunker Ramo's injury is not cognizable under section 2(c) of the Robinson-Patman Act....
A valid final judgment on the merits is res judicata and is an absolute bar to a subsequent action between the same parties on the same cause of action. Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 398, 101 S. Ct. 2424, 2427, 69 L. Ed. 2d 103 (1981); Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S. Ct. 715, 719, 92 L. Ed. 898 (1948); Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939, 943-45 (7th Cir. 1981); Trujillo v. Colorado, 649 F.2d 823, 825 (10th Cir. 1981). The prior judgment is conclusive not only as to the issues that were decided but also as to issues that could have been raised. Federated Department Stores, Inc., 452 U.S. at 398, 101 S. Ct. at 2427; Harper Plastics, Inc., 657 F.2d at 945. 1B Moore's Federal Practice p 0.405 (2d ed. 1982).
A final judgment, however, will have full res judicata effect only if it is on the merits. Harper Plastics, Inc., 657 F.2d at 943; FTC v. Food Town Stores, Inc., 547 F.2d 247, 249 (4th Cir. 1977); Thomas v. Consolidation Coal Co., 380 F.2d 69, 79 (4th Cir. 1967). See Restatement (Second) of Judgments § 19 comment a (1982). A dismissal other than one on the merits merely precludes relitigation of the issues decided. Harper Plastics, Inc., 657 F.2d at 943; 1B Moore's Federal Practice p 0.405. A dismissal for lack of subject matter jurisdiction is not on the merits and consequently will not bar a later suit. Costello v. United States, 365 U.S. 265, 284-88, 81 S. Ct. 534, 544-46, 5 L. Ed. 2d 551 (1961); Harper Plastics, Inc., 657 F.2d at 943; Boone v. Kurtz, 617 F.2d 435, 436 (5th Cir. 1980). See Restatement (Second) of Judgments §§ 20(1) (a), 13 comment d. A dismissal for failure to state a claim upon which relief can be granted, however, is a dismissal on the merits and is res judicata. Federated Department Stores, Inc., 452 U.S. at 399 n. 3, 101 S. Ct. at 2428 n. 3. See Restatement (Second) of Judgments § 19 comment d; 1B Moore's Federal Practice p 0.409.
The defendants argue that Judge Aspen's characterization that the April 2, 1981, dismissal "was not on the merits as the term is used within the context of the res judicata doctrine" is incorrect. They argue that on April 2, 1981, Judge Aspen issued two holdings and not just one. The first holding, that Bunker Ramo had not alleged an injury cognizable under the Robinson-Patman Act, was a ruling on the merits and thus res judicata. The second holding, that the court lacked subject matter jurisdiction, was not on the merits. The defendants admit in their opening brief that Judge Aspen was correct in dismissing the first suit for lack of subject matter jurisdiction. Appellant's Opening Brief at 15. The defendants also argue that reading Judge Aspen's opinion as a whole, Judge Aspen examined the merits of Bunker Ramo's claim and consequently it should receive res judicata effect. The defendants rely on Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 101 S. Ct. 2424, 69 L. Ed. 2d 103 (1981), and Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939 (7th Cir. 1981), to support their arguments.
In Federated Department Stores, seven plaintiffs had previously filed antitrust actions against the defendants in the United States District Court for the Northern District of California. The District Court dismissed all of the complaints, "in their entirety" for failure to allege a competitive injury to business or property within the meaning of section 4 of the Clayton Act. 452 U.S. at 396-97, 101 S. Ct. at 2427. In its Memorandum and Order the District Court stated:
Weinberg v. Federated Department Stores, Inc., 426 F. Supp. 880, 886 (N.D. Cal. 1977). Five of the plaintiffs appealed the dismissal, but two of the plaintiffs refiled their actions in state court. Federated Department Stores, 452 U.S. at 396, 101 S. Ct. at 2426. The defendant removed the state actions to the District Court for the Northern District of California, where the actions were dismissed as barred by res judicata. The Court of Appeals for the Ninth Circuit reversed, feeling that res judicata must give way to "public policy" and "simple justice," it having previously reversed the District Court dismissal as to the five plaintiffs that appealed. Id. The Supreme Court reversed the Ninth Circuit, strictly applying the doctrine of res judicata. Id. at 398-402, 101 S. Ct. at 2427-29.
The defendants argue that the dismissal in Federated Department Stores and Judge Aspen's April 12, 1981, dismissal were on identical grounds: lack of standing because of the absence of competitive injury. Therefore, the defendants argue, since the dismissal in Federated Department Stores was on the merits, Judge Aspen's dismissal was also on the merits and res judicata. This court does not find the cases to be as parallel as defendants urge. The Supreme Court, in Federated Department Stores, was confronted with whether it should endorse an exception to the doctrine of res judicata that had been recognized by the Ninth Circuit. It is clear from the Supreme Court opinion that it believed the district court dismissed the seven antitrust actions under Fed. R. Civ. P. 12(b) (6) for failure to state a claim upon which relief can be granted and thus, the Supreme Court did not have to consider whether the dismissal had been on the merits. See 452 U.S. at 399 n. 3, 101 S. Ct. at 2428 n. 3. The Supreme Court was not confronted with a situation where the district court dismissed an action for lack of subject matter jurisdiction and dealt with the merits.
In the present case, the initial complaint alleged only one federal question claim and Judge Aspen specifically ruled that the court did not have subject matter jurisdiction to hear that claim. In our opinion, the finding that the court did not have subject matter jurisdiction controls here. Once a court expresses the view that it lacks jurisdiction, the court thereafter does not have the power to rule on any other matter. Muscardin v. Brownell, 227 F.2d 31, 32 (D.C. Cir. 1955); Arrowsmith v. United Press International, 320 F.2d 219, 221 (2d Cir. 1963). Any finding made by a court when the court has determined that it does not have subject matter jurisdiction carries no res judicata consequences. See Madden v. Perry, 264 F.2d 169 (7th Cir. 1959); Sachs v. Ohio National Life Insurance Co., 148 F.2d 128 (7th Cir.), cert. denied, 326 U.S. 753, 66 S. Ct. 92, 90 L. Ed. 452 (1945); Smith v. Pittsburgh Gage and Supply Co., 464 F.2d 870 (3d Cir. 1972); American Guaranty Corp. v. United States, 401 F.2d 1004, 185 Ct. Cl. 502 (Ct. Cl. 1968). Accord Restatement (Second) of Judgments § 20 comment e; Restatement of Judgments § 49 comment c (1942); 1B Moore's Federal Practice p 0.405. Therefore, since Judge Aspen ruled that the court did not have subject matter jurisdiction, any other findings made by him or consideration of the merits have no res judicata effect. For this reason we affirm Judge Aspen's order of August 5, 1981, denying defendant's motion to dismiss Bunker Ramo's complaint as barred by res judicata.
The Sherman Antitrust Act prohibits " [e]very contract, combination ..., or conspiracy, in restraint of trade or commerce among the several States...." 15 U.S.C. § 1. This language defines both the conduct proscribed by the statute and its jurisdictional reach. Crane v. International Health Care, Inc., 637 F.2d 715, 720 (10th Cir. 1980). See Berardinelli v. Castle & Cooke, Inc., 587 F.2d 37, 38 (9th Cir. 1978). The jurisdictional question is whether defendants' conduct had a sufficient relationship to interstate commerce to subject it to regulation, and the substantive question is whether the defendant participated in anticompetitive conduct included within the term "restraint of trade." Berardinelli v. Castle & Cooke, Inc., 587 F.2d at 38.
The "interstate commerce" requirement of the Sherman Act is satisfied by a showing that the challenged activity occurred in interstate commerce or if the activity is wholly local in nature, by a showing that interstate commerce was substantially affected. McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 241, 100 S. Ct. 502, 508, 62 L. Ed. 2d 441 (1980); Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 743, 96 S. Ct. 1848, 1851, 48 L. Ed. 2d 338 (1976); Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S. Ct. 2004, 44 L. Ed. 2d 572 (1975). The interstate commerce nexus must be asserted in a practical sense. Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. at 745 n. 3, 96 S. Ct. at 1852 n. 3; Goldfarb v. Virginia State Bar, 421 U.S. at 784 n. 11, 95 S. Ct. at 2011 n. 11. See also Williams v. St. Joseph Hospital, 629 F.2d 448, 454 (7th Cir. 1980); Crane v. International Health Care, Inc., 637 F.2d at 721-22.
The District Court refused to dismiss the complaint under either Fed. R. Civ. P. 12(b) (1) or 12(b) (6) for failure to meet the interstate commerce requirement. The court found that "paragraphs 2, 4 and 23 of the complaint sufficiently allege defendants' activities as having the necessary nexus to interstate commerce [,]" and that with "$200,000 of alleged injury ... these sales and nondelivery of business forms could possibly have entered the stream of commerce in some context." In reaching its conclusion that there was a sufficient allegation of a nexus with interstate commerce, the District Court relied on Western Waste Services Systems v. Universal Waste Control, 616 F.2d 1094 (9th Cir.), cert. denied, 449 U.S. 869, 101 S. Ct. 205, 66 L. Ed. 2d 88 (1980), which interpreted the Supreme Court's decision in McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 100 S. Ct. 502, 62 L. Ed. 2d 441 (1980).
In McLain, an action had been brought against real estate brokers in the New Orleans area under section 1 of the Sherman Antitrust Act for conspiring to fix brokers' fees. The district court dismissed the complaint for failure to meet the interstate commerce requirement of the Act, 432 F. Supp. 982 (E.D. La. 1977). The Fifth Circuit affirmed the dismissal for lack of subject matter jurisdiction, 583 F.2d 1315 (5th Cir. 1978). In addressing the allegations that were necessary to establish the interstate commerce nexus, the Supreme Court stated:
To establish the jurisdictional element of a Sherman Act violation it would be sufficient for petitioners to demonstrate a substantial effect on interstate commerce generated by respondents' brokerage activity. Petitioners need not make the more particularized showing of an effect on interstate commerce caused by the alleged conspiracy to fix commission rates, or by those other aspects of respondents' activity that are alleged to be unlawful. The validity of this approach is confirmed by an examination of the case law. If establishing jurisdiction required a showing that the unlawful conduct itself had an effect on interstate commerce, jurisdiction would be defeated by a demonstration that the alleged restraint failed to have its intended anticompetitive effect. This is not the rule or our cases. See American Tobacco Co. v. United States, 328 U.S. 781, 811 [66 S. Ct. 1125, 1139, 90 L. Ed. 1575] (1946); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 225, n. 59 [60 S. Ct. 811, 846, n. 59, 84 L. Ed. 1129] (1940). A violation may still be found in such circumstances because in a civil action under the Sherman Act, liability may be established by proof of either an unlawful purpose or an anticompetitive effect. United States v. United States Gypsum Co., 438 U.S. 422, 436, n. 13 [98 S. Ct. 2864, 2873, n. 13, 57 L. Ed. 2d 854] (1978); see United States v. Container Corp., 393 U.S. 333, 337 [89 S. Ct. 510, 512, 21 L. Ed. 2d 526] (1969); United States v. National Assn. of Real Estate Boards, 339 U.S. 485, 489 [70 S. Ct. 711, 714, 94 L. Ed. 1007] (1950); United States v. Socony-Vacuum Oil Co., supra, [310 U.S.] at 224-25, n. 59 [60 S. Ct. at 844-46, n. 59].
444 U.S. at 242-43, 100 S. Ct. at 509. The Court also stated:
To establish federal jurisdiction in this case, there remains only the requirement that respondents' activities which allegedly have been infected by a price-fixing conspiracy be shown "as a matter of practical economics" to have a not insubstantial effect on the interstate commerce involved. Hospital Building Co. v. Rex Hospital Trustees, 425 U.S., at 745 [96 S. Ct. at 1852]; see Goldfarb v. Virginia State Bar, [421 U.S.] at 784, n. 11 [95 S. Ct. at 2011, n. 11]; Burke v. Ford, 389 U.S. 320, 321-322 [88 S. Ct. 443, 444, 19 L. Ed. 2d 554] (1967).
Id. at 246, 100 S. Ct. at 511. In Western Waste Services Systems, the Ninth Circuit interpreted the Supreme Court's holding in McLain as follows:
In Crane v. Intermountain Health Care, Inc., 637 F.2d 715 (10th Cir. 1980), the Tenth Circuit interpreted McLain and rejected the view adopted by the Ninth Circuit in Western Waste. In Crane, the Tenth Circuit stated:
An allegation that defendant's overall business has a general effect on interstate commerce is neither a necessary nor a sufficient condition for Sherman Act jurisdiction.... [It] is not a sufficient condition because even though the defendant's overall business may impact interstate commerce greatly, the challenged activity may in every practical economic sense be unrelated to interstate commerce. A mere allegation that the defendant's general or overall business affects interstate commerce falls short of alleging the required "critical relationship," for it leaves the court--impermissibly, under McLain, see 444 U.S. at 242, 100 S. Ct. at 509--to "presume" the nexus between the challenged activity and interstate commerce.
637 F.2d at 723-24. In Cordova & Simonpietri Insurance Agency, Inc., v. Chase Manhattan Bank, 649 F.2d 36 (1st Cir. 1981), the First Circuit, likewise, adopted a narrow reading of McLain. In Cordova, the First Circuit stated:
This Court does not find it necessary at this time to choose between the various interpretations of McLain. Dismissals in antitrust cases should not be granted lightly. See McLain v. Real Estate Board of New Orleans, Inc., supra; Hospital Building Co. v. Trustees of Rex Hospital, supra. An action should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which will entitle him to relief. McLain, 444 U.S. at 246, 100 S. Ct. at 511; Hospital Building Co., 425 U.S. at 746, 96 S. Ct. at 1853; Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d 549, 553 (7th Cir. 1980). In antitrust cases, dismissals prior to giving the plaintiff an opportunity for discovery should be granted very sparingly. Hospital Building Co., 425 U.S. at 746, 96 S. Ct. at 1853. See also Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962); Williams v. St. Joseph Hospital, 629 F.2d 448 (7th Cir. 1980). The impact the defendants' activities may have upon interstate commerce is a question of fact not normally susceptible of determination without scrutiny of the proof that may be offered. Williams, 629 F.2d at 454. Bunker Ramo has alleged that the conspiracy had the effect of restraining interstate commerce and that plaintiff's and defendants' businesses were in interstate commerce. It may well be that Bunker Ramo can demonstrate a substantial effect on interstate commerce as a matter of practical economics, and at this point we cannot say beyond doubt that Bunker Ramo can prove no set of facts to show the required effect on interstate commerce. Thus we conclude that dismissal of the Sherman Antitrust claim, for lack of a nexus with interstate commerce, at this point in the proceeding, would be premature. See McLain, supra; Hospital Building Co., supra; Williams v. St. Joseph Hospital, supra; Crane v. International Health Care, Inc., supra.
A complaint will not state a cause of action under the antitrust laws unless the alleged conduct is the type of conduct the antitrust laws were intended to protect against. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S. Ct. 690, 697, 50 L. Ed. 2d 701 (1977). See also In re Industrial Gas Antitrust Litigation: Bichan v. Chemetron Corp., 681 F.2d 514 (7th Cir. 1982). When deciding whether a complaint states a claim for relief, this should be the initial area of critical inquiry.
On its face, section 1 of the Sherman Antitrust Act prohibits "Every contract, combination ..., or conspiracy, in restraint of trade or commerce...." 15 U.S.C. § 1 (emphasis added). Although this language is literally all encompassing, the courts have construed it as prohibiting only those combinations which unreasonably restrain competition. Northern Pacific Railway v. United States, 356 U.S. 1, 4-5, 78 S. Ct. 514, 517-18, 2 L. Ed. 2d 545 (1958); Sitkin Smelting & Refining Co. v. FMC Corp., 575 F.2d 440, 446 (3d Cir.), cert. denied, 439 U.S. 866, 99 S. Ct. 191, 58 L. Ed. 2d 176 (1978). See Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d 549, 554 (7th Cir. 1980). See also Apex Hosiery Co. v. Leader, 310 U.S. 469, 493 n. 15, 60 S. Ct. 982, 992 n. 15, 84 L. Ed. 1311 (1940) (The Sherman Antitrust Act addresses "business competition" and was designed to prevent restraints which had a significant effect on such competition).
The "rule of reason" is the established standard of analysis for determining whether an antitrust violation has been stated. Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49, 97 S. Ct. 2549, 2557, 53 L. Ed. 2d 568 (1977); United States v. Topco Associates, Inc., 405 U.S. 596 at 606-607, 92 S. Ct. 1126 at 1133, 31 L. Ed. 2d 515; Standard Oil Co. v. United States, 221 U.S. 1, 31 S. Ct. 502, 55 L. Ed. 619 (1911). Under this rule the fact finder weighs all the circumstances of a case to decide whether a restrictive practice should be prohibited as imposing an "unreasonable restraint on competition." Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. at 49, 97 S. Ct. at 2557; United States v. Topco Associates, Inc., 405 U.S. at 607, 92 S. Ct. at 1133. It is necessary under the rule of reason to show anticompetitive effects, or actual harm to competition, to establish an antitrust violation and a cause of action. Independence Tube Corp. v. Copperweld Corp., 691 F.2d 310, 322 (7th Cir. 1982); Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun Dealers' Advertising Association, 672 F.2d 1280, 1287 (7th Cir. 1982); Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d at 554-59. It is not the unfair means the defendants employed that is to be the focus of the inquiry, but whether those means "lessened competition." Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun Dealers' Advertising Association, 672 F.2d at 1288; Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d at 558.
Certain types of conduct are so destructive of competition that they are considered per se violations of the Sherman Antitrust Act. United States v. Topco Associates, Inc., 405 U.S. at 607-608, 1133-1134. See Northern Pacific Railway v. United States, 356 U.S. at 5, 78 S. Ct. at 518. When a per se offense is alleged, a showing of anticompetitive effect is not required to establish a Sherman Antitrust Act violation--the conduct is considered anticompetitive without an inquiry into the precise harm caused. Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. at 49-50, 97 S. Ct. at 2557; Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d at 555; Sitkin Smelting & Refining Co. v. FMC Corp., 575 F.2d at 446. Some of the activities that have been accepted as per se offenses are price fixing, group boycotts, market allocation, and certain types of tying agreements. See Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d at 555. See also United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S. Ct. 811, 84 L. Ed. 1129 (1940); Sitkin Smelting & Refining Co. v. FMC Corp., 575 F.2d at 447.
Recently this court has cautioned against over-zealous application of the per se doctrine and has noted a judicial reluctance to extend its use. Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun Dealers' Advertising Association, 672 F.2d at 1284-85; Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d at 555-56. A particular course of conduct will not be termed a per se violation of the Sherman Antitrust Act until the courts have had considerable experience with that type of conduct and application of the rule of reason has inevitably resulted in a finding of anticompetitive effects. United States v. Topco Associates, Inc., 405 U.S. at 607-608, 1133; Havoco of America, Ltd. v. Shell Oil Co., 626 F.2d at 555; Evans v. S.S. Kresge Co., 544 F.2d 1184, 1191 (3d Cir. 1976), cert. denied, 433 U.S. 908, 97 S. Ct. 2973, 53 L. Ed. 2d 1092 (1977). See Northwest Power Products, Inc. v. Omark Industries, Inc., 576 F.2d 83, 87-88 (5th Cir. 1978), cert. denied, 439 U.S. 1116, 99 S. Ct. 1021, 59 L. Ed. 2d 75 (1979). Additionally, only conduct that is "manifestly anticompetitive" will be considered a per se offense. Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. at 49-50, 97 S. Ct. at 2557; Phil Tolkan Datsun, Inc. v. Greater Milwaukee Datsun Dealers' Advertising Association, 672 F.2d at 1285.
The civil remedies provisions of RICO are contained in 18 U.S.C. § 1964. Section 1964(c)3 creates a private right of action with a treble damage recovery for " [a]ny person injured in his business or property by reason of a violation of section 1962...." Section 1962, the proscriptive provision of RICO, establishes what conduct is illegal under RICO. 18 U.S.C. § 1962.
The definitions of the terms that are the key concepts in the proscriptive provisions of RICO are contained in 18 U.S.C. § 1961. "Enterprise," the first crucial concept, is defined as including "any individual, partnership, corporation, association, or other legal entity, ... any union or group of individuals associated in fact although not a legal entity," 18 U.S.C. § 1961(4), and any combination of them. See, e.g., United States v. Thevis, 665 F.2d 616, 625 (5th Cir. 1982), cert. denied, 456 U.S. 1008, ----, 102 S. Ct. 2300, 3489, 73 L. Ed. 2d 1303, 1370 (1982); United States v. Huber, 603 F.2d 387, 393-94 (2d Cir. 1979), cert. denied, 445 U.S. 927, 100 S. Ct. 1312, 63 L. Ed. 2d 758 (1980). The next concept, "pattern of racketeering activity" is defined as "at least two acts of racketeering activity," which occurred within ten years of one another, with one of the acts occurring after the effective date of RICO. 18 U.S.C. § 1961(5).4 The last concept, "racketeering activity" is defined in 18 U.S.C. § 1961(1) by listing predicate offenses that are considered racketeering activity. The list includes acts made punishable by state law, such as "murder, kidnapping, gambling, arson, robbery, bribery, extortion," and certain drug offenses; as well as specific federal offenses including mail fraud (18 U.S.C. § 1341) and interstate travel or transportation in aid of racketeering (18 U.S.C. § 1952), both of which are alleged in this case.
In United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), cert. denied, 420 U.S. 925, 95 S. Ct. 1121, 43 L. Ed. 2d 395 (1975), this Court upheld the civil remedies in section 1964, recognizing that Congress has the authority to provide for both civil and criminal enforcement of a statute. In USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94 (6th Cir. 1982), the Sixth Circuit specifically held that a criminal conviction is not required before a civil action can be maintained under RICO. 689 F.2d at 95 n. 1. The Sixth Circuit stated:
We find nothing in the plain language of RICO to suggest that civil liability under § 1964(c) is limited only to those already convicted or charged with criminal racketeering activity. Section 1964(c) states that an action for damages may be maintained by any person injured in his business or property by reason of a violation of § 1962. Bennett v. Berg, 685 F.2d 1053 (8th Cir. 1982). Section 1962 merely describes acts that are "unlawful" under RICO. Section 1963 provides that violations of § 1962 are criminal, just as § 1964(c) provides that violations of § 1962 create a private right of action for damages. If Congress had intended to limit liability under § 1964(c) only to those convicted of or charged with RICO crimes, it would have done so within § 1964(c) by referring to § 1963 or by otherwise specifically indicating that a conviction under § 1963 is a basis for civil damages. By referring in § 1964(c) only to the unlawful acts of § 1962, Congress has created a civil remedy that is independent of criminal proceedings under § 1963. We believe this literal reading of RICO is consistent with the approach of United States v. Turkette, 452 U.S. 576, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981), and the Supreme Court's recognition in that case that Congress intended that RICO be liberally construed to effectuate its remedial purposes.
Id. We agree with the Sixth Circuit. See also Parnes v. Heinhold Commodities, Inc., 487 F. Supp. 645, 647 (N.D. Ill. 1980); Farmers Bank v. Bell Mortgage Co., 452 F. Supp. 1278, 1280 (D. Del. 1978).
Defendants argue next that the RICO claim is insufficient because Bunker Ramo has not adequately alleged a "competitive injury." Defendants urge that the plaintiff must have suffered a competitive injury to have a claim under section 1964(c).6 Defendants rely on North Barrington Development, Inc. v. Fanslow, 547 F. Supp. 207 (N.D. Ill. 1980), to support their argument. In North Barrington Development, the district court held that a "plaintiff must allege how it was injured competitively by the RICO violation in order to state a cause of action under § 1964(c)."
This specific issue was decided by this Court in Schacht v. Brown, 711 F.2d 1343 at 1357-58 (7th Cir. 1983). In Schacht, we found that requiring competitive injury before a RICO civil claim is stated did not agree with the plain language of the statute nor fulfill the purposes of RICO or the Congressional intent. Id., at 1357, 1358. Consequently, this court held that competitive or commercial injury is not required in order to state a RICO civil claim. Id. As pointed out in Schacht, other courts and commentators have also reached this conclusion. See e.g. Bennett v. Berg, 685 F.2d 1053, 1059 (8th Cir. 1982), reh'g en banc granted Sept. 17, 1982; D'Iorio v. Adonizio, 554 F. Supp. 222, 230 n. 5 (M.D. Pa. 1982); Note, Civil RICO: The Temptation and Impropriety of Judicial Restriction, 95 Harv. L. Rev. 1101, 1109-14 (1982).
In Hellenic Lines, Ltd. v. O'Hearn, 523 F. Supp. 244 (S.D.N.Y. 1981), the district court rejected the argument that competitive injury is required to state a civil RICO claim, in a suit where the fact situation is strikingly similar to the one pled here. The plaintiff alleged that the defendants paid kickbacks to various employees of the plaintiff to induce them to accept padded bills. 523 F. Supp. at 246. The defendants challenged the sufficiency of the complaint, arguing that the plaintiff could show no competitive injury and thus a civil RICO claim had not been stated. The district court rejected the argument that competitive injury was required and found the complaint sufficient in this respect to state a claim under RICO. Id. at 248. The court stated:
Finally, defendants argue that the complaint fails to allege that the enterprise was engaged in, or that its activities affected, interstate commerce as required by section 1962. The complaint alleges only that the enterprise engaged in a pattern of racketeering activity and this activity affected interstate commerce. This allegation is irrelevant, according to defendants, since it is the enterprise that must affect interstate commerce, not the racketeering activity. Additionally, defendants argue that the activities that are the subject of the complaint are wholly intrastate in nature; asserting that the claim is based on the fact that "no goods at all moved" and there is no allegation that any person traveled across a state line to perform any act. Defendants cite United States v. Nerone, 563 F.2d 836 (7th Cir. 1977), cert. denied, 435 U.S. 951, 98 S. Ct. 1577, 55 L. Ed. 2d 800 (1978), as supporting this argument. Finally, defendants assert that it is irrelevant that Bunker Ramo or U.B.F. are engaged in interstate commerce or that their activities affect interstate commerce, since neither of them is the alleged enterprise.
Defendants' argument that it is the enterprise, isolated from the racketeering activity, that must affect interstate commerce is not supported by the law. To establish a violation of RICO, a plaintiff must establish that the enterprise either engaged in or pursued activities affecting interstate commerce. 18 U.S.C. § 1962. See United States v. Nerone, 563 F.2d at 852. Several cases do contain language to the effect that it is the activity of the enterprise and not the acts of racketeering themselves that must have an effect on interstate commerce. See, e.g., United States v. Long, 651 F.2d 239, 241 (4th Cir.), cert. denied, 454 U.S. 896, 102 S. Ct. 396, 70 L. Ed. 2d 212 (1981); United States v. Altomare, 625 F.2d 5, 8 n. 8 (4th Cir. 1980); United States v. Rone, 598 F.2d 564 (9th Cir. 1979), cert. denied, 445 U.S. 946, 100 S. Ct. 1345, 63 L. Ed. 2d 780 (1980); United States v. Vignola, 464 F. Supp. 1091, 1097, 1100 (E.D. Pa.), aff'd., 605 F.2d 1199 (3d Cir. 1979), cert. denied, 444 U.S. 1072, 100 S. Ct. 1015, 62 L. Ed. 2d 753 (1980). The language in these cases, however, is in response to the argument that each act of racketeering activity must affect interstate commerce for there to be a RICO violation. See United States v. Rone, 598 F.2d at 573; United States v. Vignola, 464 F. Supp. at 1097. We do not read these cases to mean that an enterprise that has an effect on interstate commerce through its racketeering activities does not satisfy the statutory requirement. The interstate commerce nexus requirement of RICO is satisfied if an enterprise affects interstate commerce through its activities, even if it is the racketeering activities of the enterprise that affect interstate commerce.
We believe that the complaint sufficiently alleges that the enterprise affected interstate commerce. The complaint alleges the existence of an enterprise that engaged in a pattern of racketeering activity and had an effect on interstate commerce. We cannot say, at this stage, that Bunker Ramo can prove no set of facts to show the enterprise affected interstate commerce; especially in light of the minimal criteria for finding a nexus with interstate commerce. See United States v. Nerone, 563 F.2d at 851, 854; United States v. Rone, 598 F.2d at 573; D'Iorio v. Adonizio, 554 F. Supp. at 231. The complaint adequately alleges a nexus between the enterprise and interstate commerce to state a claim under RICO.
(5) "pattern of racketeering activity" requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity [.]
In conjunction with the competitive injury argument, defendants also pronounce that they "UBF and Reif are hardly racketeers." If by raising this point, defendants are trying to argue that some connection with "organized crime" is required before a person can be subject to the provisions of RICO, such an argument is specious. It is well-established that RICO does not require proof that the defendant or the enterprise are connected with organized crime. United States v. Aleman, 609 F.2d 298, 303-304 (7th Cir. 1979), cert. denied, 445 U.S. 946, 100 S. Ct. 1345, 63 L. Ed. 2d 780 (1980); Bennett v. Berg, 685 F.2d 1053, 1063 (8th Cir. 1982), reh'g en banc granted Sept. 17, 1982; United States v. Vignola, 464 F. Supp. 1091, 1095-96 (E.D. Pa. 1979), aff'd., 605 F.2d 1199 (3d Cir. 1979), cert. denied, 444 U.S. 1072, 100 S. Ct. 1015, 62 L. Ed. 2d 753 (1980); Parnes v. Heinhold Commodities, Inc., 487 F. Supp. 645, 646 (N.D. Ill. 1980); D'Iorio v. Adonizio, 554 F. Supp. 222, 230 (M.D. Pa. 1982)