Opinion ID: 571255
Heading Depth: 1
Heading Rank: 4

Heading: the rico schemes

Text: 13 Upholding the order of dismissal as to the Bank does not complete our task. Officers of a corporate enterprise may be personally liable for civil RICO violations if they conducted their employer's affairs through a proscribed pattern of racketeering activity. See Schofield, 793 F.2d at 30. We must, therefore, examine the particular allegations of the amended complaint as those allegations pertain to the individual defendants. 14 The pleadings, though copious, are vague and inexplicit. Read indulgently, the amended complaint and the accompanying case statement, see supra note 3, hint at RICO claims based, variously, on actual obstruction of justice and on conspiracy to obstruct justice. Miranda's appellate brief is in the same vein. At oral argument, however, Miranda's counsel seemed to confess that the only discernible pattern of racketeering activity involved the money-laundering scheme. For the sake of completeness, we overlook the inconsistencies in the appellant's presentation and explore all three theories. 15
16 In her amended complaint, Miranda alleges in substance that the defendants entered into a scheme of RICO activity, the purpose of which was to obstruct the ongoing federal investigation in violation of 18 U.S.C. § 1510 (1988). She then claims that her discharge was in furtherance of this obstruction-of-justice scheme. We believe that the effort to rest a RICO count on this jerry-built foundation possesses three significant flaws. 17 First, it is settled beyond peradventure that civil liability under 18 U.S.C. § 1962(c) requires a named defendant to have participated in the commission of two or more predicate crimes within the compendium described in 18 U.S.C. § 1961(1). See Feinstein, 942 F.2d at 41; Fleet Credit Corp. v. Sion, 893 F.2d 441, 444 (1st Cir.1990). In her case statement, Miranda, responding to the district court's request that she [l]ist the alleged predicate acts and the specific statutes which were allegedly violated, speaks only of her treatment at the defendants' hands and cites only 18 U.S.C. § 1510. 5 That statute provides in relevant part:Whoever willfully endeavors by means of bribery to obstruct, delay, or prevent the communication of information relating to a violation of any criminal statute of the United States by any person to a criminal investigator shall be fined not more than $5,000, or imprisoned not more than five years, or both. 18 18 U.S.C. § 1510(a) (1988). The appellant does not allege that she was induced through offers of money or tangible goods to mislead the federal investigators or to cease her participation in the probe. Indeed, the only averment that could possibly be construed as constituting bribery within the ambit of section 1510 is Miranda's claim that a promotion was dangled as a possible reward for steering federal investigators down the garden path. Assuming, for argument's sake, the adequacy of this averment qua bribery, more was required; proof of at least two predicate acts is needed to establish a pattern of racketeering activity. See 18 U.S.C. § 1961(5) (defining pattern of racketeering activity); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 n. 14, 105 S.Ct. 3275, 3285 n. 14, 87 L.Ed.2d 346 (1985) (noting that while two acts of racketeering activity are necessary to comprise a RICO pattern, they may not be sufficient). Thus, if the implied promise of a future promotion could be viewed as one act of bribery--a matter on which we do not opine--the requisite second act would still be wanting. For that reason, the amended complaint failed to state an actionable claim under 18 U.S.C. § 1962(c). 6 19 Second, even on the supposition that two related predicate acts could somehow be tortured from the sprawling rhetoric contained in the pleadings, the appellant, on this record, would run up against another insurmountable obstacle. To succeed on a claim under 18 U.S.C. § 1962(c), Miranda must plead and prove that the defendants' scheme amounted to, or posed a threat of, continuing criminal activity. See H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 238-39, 109 S.Ct. 2893, 2900-01, 106 L.Ed.2d 195 (1989); Feinstein, 942 F.2d at 44. The only scheme to obstruct justice that is alleged in the amended complaint is a scheme to prevent Miranda from participating in the federal indagation. There was no claim that, after Miranda had been cashiered, other obstructionist tactics were afoot or that other employees remained in similar jeopardy. 7 As the pleadings stand, once Miranda was discharged, the scheme, by definition, was at an end. Continuing racketeering activity of the type alleged, i.e., obstruction of justice, no longer persisted, nor was there any serious threat that such activity would likely be resumed. In such circumstances, the essential element of continuity could not be found. See, e.g., Feinstein, 942 F.2d at 45-46 (discussing continuity requirement); Fleet Credit, 893 F.2d at 445-46 (similar). 20 Finally, apart from the predicate act and continuity prerequisites, another crucial element of a successful RICO claim was missing from the amended complaint. In order to prevail under 18 U.S.C. § 1962(c), a plaintiff must establish a causal relationship between the racketeering predicates and her asserted injury. See Sedima, 473 U.S. at 497, 105 S.Ct. at 3285 (Any recoverable damages occurring by reason of a violation of § 1962(c) will flow from the commission of the predicate acts.). Because the injury complained of here--Miranda's loss of employment--was not the product of bribery or any other predicate crime, see generally 18 U.S.C. § 1961(1) (enumerating RICO predicates), but of her dismissal, the injury cannot be said to have occurred by reason of a RICO violation. Put another way, a claim for wrongful discharge cannot be successfully pursued under civil RICO when the injury itself is not the result of a predicate act. See Pujol v. Shearson/American Express, Inc., 829 F.2d 1201, 1205 (1st Cir.1987) (injury stemming from discharge is not actionable under RICO because it does not flow from defendant's acts of mail and wire fraud); Nodine v. Textron, Inc., 819 F.2d 347, 349 (1st Cir.1987) (similar); see also Reddy v. Litton Indus., Inc., 912 F.2d 291, 294 (9th Cir.1990), cert. denied, --- U.S. ----, 112 S.Ct. 332, 116 L.Ed.2d 272 (1991); Kramer v. Bachan Aerospace Corp., 912 F.2d 151, 154-56 (6th Cir.1990); O'Malley v. O'Neill, 887 F.2d 1557, 1561-62 (11th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 2620, 110 L.Ed.2d 641 (1990); Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1168 (3d Cir.1989); Burdick v. American Express Co., 865 F.2d 527, 529 (2d Cir.1989) (per curiam); Cullom v. Hibernia Nat'l Bank, 859 F.2d 1211, 1216 (5th Cir.1988). 21 Notwithstanding the rule that wrongful discharge claims are not ordinarily redressable under RICO, we at one time left open the possibility that a different result might inure if the firing occurred as a direct result of an obstruction-of-justice predicate act. See Nodine, 819 F.2d at 349 n. 3 (dictum). 8 By recasting her RICO claim on the fundament of a scheme to obstruct justice instead of resting it on the money-laundering scheme, Miranda was plainly laboring to bring her own situation within the confines of this dictum. She did not succeed. While it may be theoretically possible to allege a wrongful discharge which results directly from the commission of a RICO predicate act, as Nodine suggests, any such safe harbor would be severely circumscribed. 22 In any event, we need not determine here the exact dimensions of the Nodine dictum. In this case, crediting appellant's factual allegations, it is nonetheless readily apparent that Miranda was fired not as a means of obstructing justice, but in retaliation for her refusal to facilitate the cover-up. A retaliatory discharge simply does not violate 18 U.S.C. § 1510--a statute which proscribes only those actions in the nature of bribery that a defendant may utilize to impede another person's cooperation with federal law enforcement authorities. In short, Miranda has failed to bring her case within any recognized exception to the general rule governing instances of wrongful discharge. Her section 1962(c) count was, therefore, appropriately dismissed. See Pujol, 829 F.2d at 1205 (discussing RICO causal connection requirement in retaliatory discharge cases). 23
24 Invoking 18 U.S.C. § 1962(d), the appellant also alleges that the individual defendants, with others, conspired to devise a scheme of racketeering activity focused on obstruction of justice. On the record before us, we are hard pressed to see how this charge adds materially to the section 1962(c) claim. We explain briefly. 25 To succeed, a RICO conspiracy claim must charge that defendants knowingly entered into an agreement to commit two or more predicate crimes. See Feinstein, 942 F.2d at 41 ([E]ach defendant in a RICO conspiracy case must have joined knowingly in the scheme and been involved himself, directly or indirectly, in the commission of at least two predicate offenses.); United States v. Angiulo, 847 F.2d 956, 964 (1st Cir.), cert. denied, 488 U.S. 852, 928, 109 S.Ct. 138, 314, 102 L.Ed.2d 110, 332 (1988); United States v. Winter, 663 F.2d 1120, 1136 (1st Cir.1981), cert. denied, 460 U.S. 1011, 103 S.Ct. 1249, 1250, 75 L.Ed.2d 479 (1983). Here, the conspiracy allegation is perfunctory. It fails to provide any specifics as to the details of the alleged conspiracy or the predicate acts committed in the pursuit thereof. Like RICO claims generally, see supra Part II, a RICO conspiracy claim that is alleged in wholly conclusory terms will not withstand a motion to dismiss. Cf., e.g., Brennan v. Hendrigan, 888 F.2d 189, 195 (1st Cir.1989) (conclusory allegations of conspiracy are impuissant to state a claim under 42 U.S.C. § 1983); Slotnick v. Staviskey, 560 F.2d 31, 33 (1st Cir.1977) (similar), cert. denied, 434 U.S. 1077, 98 S.Ct. 1268, 55 L.Ed.2d 783 (1978). The section 1962(d) claim is, therefore, insufficient as a matter of law. 26 At any rate, even if appellant had adequately alleged the existence of an obstruction-of-justice conspiracy, her claim would not pass muster. An actionable claim under section 1962(d), like one under section 1962(c), requires that the complainant's injury stem from a predicate act within the purview of 18 U.S.C. § 1961(1). Accord Reddy, 912 F.2d at 295 (upholding dismissal of RICO conspiracy charge because injury did not result from the commission of a specified predicate act); Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 25 (2d Cir.1990) ([W]e hold that standing may be founded only upon injury from overt acts that are also section 1961 predicate acts, and not upon any and all overt acts furthering a RICO conspiracy.). Congress painstakingly enumerated a complete list of predicate acts in 18 U.S.C. § 1961(1). For judges, under a conspiracy rubric, to allow RICO damages for an injury caused other than by an enumerated predicate offense would be tantamount to rewriting the statute. Although the Court has stated that Congress intended RICO to be generously construed, see Sedima, 473 U.S. at 497, 105 S.Ct. at 3285, there are bounds to interpretive liberality. 9 27 In this instance, as already demonstrated, see supra Part IV(A), the injury Miranda alleged in consequence of the obstruction-of-justice conspiracy (her discharge) was not caused by the commission of a predicate act within the contemplation of 18 U.S.C. § 1961(1). Thus, the district court properly dismissed her section 1962(d) claim. 28
29 At oral argument, the appellant virtually abandoned the claims pleaded in the amended complaint, relying instead upon the underlying scheme to launder money to supply the needed pattern of racketeering activity under 18 U.S.C. § 1962(c). This was, of course, the theory that Miranda pursued in her initial complaint and then disowned when given leave to amend. Although we could simply refuse to consider the argument on grounds of procedural default--it was, after all, neither preserved in the lower court nor meaningfully briefed on appeal--we choose to address it. 30 Once a RICO pattern has been established, it does not follow that every malefaction a defendant commits will give rise to civil RICO liability. See Sedima, 473 U.S. at 496-97, 105 S.Ct. at 3285; Hecht, 897 F.2d at 24; Norman v. Niagara Mohawk Power Corp., 873 F.2d 634, 636 (2d Cir.1989). So, even if the amended complaint pleaded the money-laundering scheme as a pattern of racketeering activity, nothing would be gained unless the claimant could establish that her injury resulted from the RICO activity. See Sedima, 473 U.S. at 497, 105 S.Ct. at 3285; see also supra Part IV(A) and cases cited. Since Miranda was injured by the loss of her job, however, not as a direct consequence of the defendants' money-laundering activities, the requisite causal nexus was lacking in her case. The cases are legion that an employee who is fired for tattling about an employer's wrongdoing, or for refusing to participate in or conceal an illegal scheme, is not deemed to have been injured by reason of a RICO predicate act. See, e.g., Reddy, 912 F.2d at 294; Kramer, 912 F.2d at 154-56; O'Malley, 887 F.2d at 1561-62; Shearin, 885 F.2d at 1168; Burdick, 865 F.2d at 529; Cullom, 859 F.2d at 1216; Pujol, 829 F.2d at 1205; Nodine, 819 F.2d at 349.