Opinion ID: 758809
Heading Depth: 3
Heading Rank: 2

Heading: Participation in the conduct of the affairs of the enterprise

Text: 18 We now turn our attention to the third element essential to a RICO conviction--namely, whether the government's evidence demonstrated that Parise Jr. participated in the conduct of the affairs of the enterprise. Our analysis of this claim must begin with an examination of the definition of participation under § 1962(c) as clarified by the Supreme Court in Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). In Reves, the Court endorsed the operation or management test to determine whether a defendant participated in the conduct of an enterprise's affairs. Id. at 184, 113 S.Ct. 1163. According to Reves, [i]n order to 'participate, directly or indirectly, in the conduct of such enterprise's affairs,' one must have some part in directing those affairs. Id. at 179, 113 S.Ct. 1163. However, one need not hold a formal position within an enterprise in order to participate in its affairs. Id. at 179, 113 S.Ct. 1163. Further, the operation or management test does not limit RICO liability to upper management because an enterprise is 'operated' not just by upper management but also by lower-rung participants in the enterprise who are under the direction of upper management. Id. at 184, 113 S.Ct. 1163. In so holding, the Court made clear that RICO liability may extend to those who do not hold a managerial position within an enterprise, but who do nonetheless knowingly further the illegal aims of the enterprise by carrying out the directives of those in control. 19 In applying Reves, we have stated that the operation or management test is designed to limit RICO liability under § 1962(c) to those situations in which the government can demonstrate a nexus between the person and the conduct in the affairs of an enterprise. University of Maryland at Baltimore v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1539 (3d Cir.1993). 5 The First Circuit has stated that RICO liability extends to those plainly integral to carrying out the enterprise's activities. See United States v. Shifman, 124 F.3d 31, 36 (1st Cir.1997) (citation omitted), cert. denied, --- U.S. ----, 118 S.Ct. 1053, 140 L.Ed.2d 116 (1998). 20 It is clear that Parise Jr. participated in the conduct of the affairs of the NMU Enterprise for several years before he was given the formal title of co-administrator of the LSP. In his role as investigator for the Sacks law firm, Parise Jr. was integral to the enterprise's plan to funnel personal injury cases to Sacks in order to reap a percentage of the money generated. Parise Jr. traveled to port cities paying off the union agents and informing them that Sacks was the official NMU attorney for the East Coast. Thus, even before he had a formal role within the LSP, Parise Jr. was deeply involved in--and integral to--the operation of the NMU Enterprise. The government produced evidence that Parise Jr. was acting at the direction of his father, the union President--clearly upper level management--to carry out the illegal activities of the NMU Enterprise. As a result of Parise Jr.'s work, his father, the head of the enterprise, received substantial kickbacks from Sacks. 21 In 1992, in furtherance of the scheme and reflective of his important role in the enterprise, Parise Jr. became coadministrator of the LSP. Through this official position, he maintained and expanded his role in operating the NMU Enterprise. In addition to continuing the payoff arrangement with port agents, he also coordinated the effort of the LSP to select local attorneys to do the routine legal work for union members--and to channel more lucrative cases to attorneys selected by Parise Sr. 22 Reves focused on the RICO liability of those outside an enterprise who may assist in furthering the illegal activities of the enterprise. 507 U.S. at 183-85, 113 S.Ct. 1163. The Court did not reach the issue of the liability of those inside, specifically declining to determine how far § 1962(c) extends down the ladder of operation. Id. at 184 n. 9, 113 S.Ct. 1163. However, we need not dwell on this issue because Parise Jr.'s substantial involvement in the criminal activities of the NMU Enterprise does not present a close case. We are not concerned with improperly extending RICO liability to a low-level employee who was unaware of the criminal activities of the larger enterprise. See United States v. Viola, 35 F.3d 37, 43 (2d Cir.1994) (reversing conviction of defendant who did light clean-up and maintenance work on the ground that the government had failed to show that he exercised any discretionary authority or that he was even aware of the broader enterprise). Sacks testified that Parise Jr. was present during the original meeting where the bribery plan was discussed. The fact that he continued to play an essential role in implementing the scheme was well documented during the trial. Parise Jr. does not contend on appeal that he was an unwitting--or unwilling--actor. 23 From the extensive evidence presented at trial, the jury could easily conclude that the government established a nexus between Parise Jr. and the affairs of the NMU Enterprise. Parise Jr. played a role in directing the affairs of the NMU Enterprise as required by Reves and could be found criminally liable under RICO.