Opinion ID: 3051440
Heading Depth: 2
Heading Rank: 3

Heading: Dismissal by the District Court

Text: Defendants filed motions to dismiss the County’s complaint, challenging both the County’s standing under RICO and the adequacy of the County’s allegations of substantive RICO violations. The district court granted defendants’ motions and dismissed the complaint in its entirety. It held that the County lacked statutory standing to bring its federal RICO claims because it had not been injured in its business or property by the alleged conduct constituting the RICO violations. 5 The complaint also charges Pacheco with violations of the Idaho Racketeering Act, Idaho Code §§ 18-7801 to 18-7805. 2742 CANYON COUNTY v. SYNGENTA SEEDS In evaluating whether the County had alleged injuries of a type cognizable under § 1964(c), the district court first discussed the tort doctrine known as the “municipal cost recovery rule,” drawing on our decision in City of Flagstaff v. Atchison, Topeka & Santa Fe Ry., 719 F.2d 322 (9th Cir. 1983). In City of Flagstaff, we held that, under Arizona law, a municipality could not recover the cost of public services for fire or safety protection from a negligent tortfeasor. Id. at 323. We did, however, recognize several exceptions to the “municipal cost recovery rule,” including exceptions allowing municipal recovery “where it is authorized by statute or regulation” and “where the acts of a private party create a public nuisance which the government seeks to abate.” Id. at 324. Noting that the County appeared “to concede the existence of the municipal cost recovery rule,” the district court rejected the County’s argument that its claims fit within either the exception for suits to abate a public nuisance, or the exception for suits authorized by statute. First, the district court stated that the County was not acting in its governmental capacity to abate a nuisance, but suing for treble damages under civil RICO. It then considered the County’s argument that the RICO statute itself authorized its recovery. The court rejected this contention, citing what it characterized as “extensive persuasive authority” from other circuits to the effect that a municipality may not recover under RICO for alleged injuries to its governmental functions. Thus, relying on the municipal cost recovery rule and on case law from other circuits, the district court concluded that the County’s claim for the costs of municipal services did not qualify as an injury to business or property within the meaning of RICO. On this basis, the court dismissed the federal RICO claims against all defendants and entered judgment against the County.6 The County timely appealed. 6 Upon dismissing the federal RICO counts against all defendants, the court also dismissed the Idaho Racketeering Act claims against Pacheco without prejudice to refiling those claims in state court. CANYON COUNTY v. SYNGENTA SEEDS 2743