Opinion ID: 548692
Heading Depth: 2
Heading Rank: 2

Heading: The Town's RICO Claim.

Text: 66 To state a claim for damages under RICO a plaintiff has two pleading burdens. Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir.1983), cert. denied, 465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984). First, the plaintiff must assert that the defendant has violated 18 U.S.C. Sec. 1962 (1988), the substantive RICO statute. Specifically, it must be alleged: 67 (1) that the defendant (2) through the commission of two or more acts (3) constituting a pattern (4) of racketeering activity (5) directly or indirectly invests in, or maintains an interest in, or participates in (6) an enterprise (7) the activities of which affect interstate or foreign commerce. 18 U.S.C. Sec. 1962(a)-(c) (1976). 68 Moss, 719 F.2d at 17. The plaintiff's second pleading burden is to allege that he was  'injured in his business or property by reason of a violation of section 1962.'  Id. (quoting 18 U.S.C. Sec. 1964(c)). 69 The Town claims that the racketeering activity which occurred in this case consisted of acts of extortion violative of the Hobbs Act, 18 U.S.C. Sec. 1951 (1988). Section 1951 states in pertinent part that: 70 (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both. 71 (b) As used in this section-- 72    73    74 (2) The term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 75 Emphasis added. 76 The primary theory of the Town's RICO claim, as expressed in its complaint, is that defendants undertook activities designed to extort from the Town (1) a softened response to future protest activities, and (2) the reduction or abandonment of charges against those arrested in connection with the protests that occurred on April 1 and June 17, 1989. As a somewhat subordinate theme, however, the complaint also claims that the defendants extorted the Center by impeding its performance of abortions, and that this extortion is somehow actionable by the Town. 77 The Town's response to the district court's RICO Case Order summarized these contentions as follows: 78 Operation Rescue, as well as the other named defendants acting in conjunction with others, have repeatedly extorted or attempted to extort from providers of abortion services a closure of their facilities. In addition, the defendants have attempted to extort, on repeated occasions, softened police response to their criminal actions in furtherance of their goal of closing abortion facilities. 79 The district court made a similar assessment: 80 The gravamen of plaintiff's complaint is that defendants seek by these occupations to extort from the Center its right and ability to conduct its activities and to extort from the Town its ability to protect the rights of the Center, its patients, and the Town's citizens. 81 726 F.Supp. at 376. 82 Both in its brief on appeal and at oral argument of the appeal, the Town emphasized the contention that defendants' goal was extortion of the Center, rather than the Town. In either event, the Town claims that defendants' alleged extortion is actionable by the Town. We accordingly consider both contentions in turn. 83 1. Direct Extortion of the Town. 84 As earlier stated, extortion, as defined in 18 U.S.C. Sec. 1951(b) (1988), means the obtaining of property from another by wrongful means. It is not surprising that, on appeal, the Town has backed away from the primary theory of its complaint, that defendants sought by their activities a softened response to their protests. It is obvious that the realization of this goal would not constitute an obtaining of the Town's property within any coherent meaning of those terms. 85 The definition of property under the Hobbs Act is admittedly expansive. The Act speaks in broad language, manifesting a purpose to use all the constitutional power Congress has to punish interference with interstate commerce by extortion, robbery or physical violence. Stirone v. United States, 361 U.S. 212, 215, 80 S.Ct. 270, 272, 4 L.Ed.2d 252 (1960). Further, property under the Act includes, in a broad sense, any valuable right considered as a source or element of wealth, including a right to solicit business. United States v. Tropiano, 418 F.2d 1069, 1075-76 (2d Cir.1969), cert. denied, 397 U.S. 1021, 90 S.Ct. 1262, 25 L.Ed.2d 530 (1970); see also Northeast Women's Center, Inc. v. McMonagle, 868 F.2d 1342, 1350 (3d Cir.), (Rights involving the conduct of business are property rights.), cert. denied, --- U.S. ----, 110 S.Ct. 261, 107 L.Ed.2d 210 (1989). 86 The Act's requirement that property be obtain[ed] is given a similarly broad construction. There is no requirement that the perpetrator of an extortion receive the benefit of his act. See, e.g., United States v. Clemente, 640 F.2d 1069, 1079-80 (2d Cir.) ([W]hether a Hobbs Act defendant personally receives any benefit from his alleged extortion is largely irrelevant for the purpose of determining guilt under that Act.), cert. denied, 454 U.S. 820, 102 S.Ct. 102, 70 L.Ed.2d 91 (1981). 87 Nonetheless, however broadly the statute is read, the term property cannot plausibly be construed to encompass altered official conduct. The contention is so blatantly implausible that its rejection requires no aid from the rule of lenity, which is clearly pertinent to the construction of this criminal statute. See Hughey v. United States, --- U.S. ----, 110 S.Ct. 1979, 1985, 109 L.Ed.2d 408 (1990); Crandon v. United States, --- U.S. ----, 110 S.Ct. 997, 1001-02, 108 L.Ed.2d 132 (1990); Rewis v. United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 1059, 28 L.Ed.2d 493 (1971). 88 We note that both the Town's complaint, see id. p 83, and the district court opinion, see 726 F.Supp. at 376, mention that the Town incurred overtime police expense as a result of defendants' activities. In our view, this does not provide a colorable basis to claim a Hobbs Act violation. Virtually any conduct that elicits a governmental response will require activity by one or more salaried government employees. It is simply not tenable to translate the activation of such a response into a Hobbs Act obtention of property, and it is not surprising that the Town has not pressed such a theory in this litigation. 89 We note further that it would be difficult to construe the defendant's activities as described in the complaint, consisting of resistance to police efforts to clear protesters from the Center and assertedly false accusations of police brutality in doing so, as the wrongful use of actual or threatened force, violence or fear within the meaning of section 1951(b). We also note the first amendment implications of any ruling that, for example, the publication of a paid advertisement alleging police brutality (see complaint p 80) violates a federal statute which defines a felony punishable by twenty years imprisonment and a fine of $10,000. 90 2. Extortion of the Center Actionable by the Town. 91 This theory is equally untenable. Assuming arguendo that interference with the Center's operations constituted extortion of the Center, the role of the Town was, through its police agencies, to terminate the interference and the resulting extortion of the Center. The Town apparently is attempting to contend that (1) by endeavoring to impede or delay the Town's efforts to terminate defendants' extortion of the Center, (2) defendants used the Town to extort the Center, thereby (3) extorting the Town. See e.g., the Town's brief on appeal at 23 (defendants ... seek to take a benefit away from [the Center], to use the Town ... in the process, and to turn the entire affair to their advantage). So bizarre a construction of the Hobbs Act affronts common sense, much less the rule of lenity. 92 The district court made clear that, despite the grant of the Center's motion to intervene subsequent to the hearing on the Town's motion for a preliminary injunction, [p]reliminary relief is here considered only as a question of entitlement of [the Town]. 726 F.Supp. at 373 n. 1. The Town, nonetheless, in its brief and argument on appeal, stresses defendants' alleged extortion of the Center. 93 We addressed a similar contention in State of N.Y. by Abrams v. Seneci, 817 F.2d 1015 (2d Cir.1987), also a civil RICO case, where we said: 94 A state that sues as parens patriae must seek to redress an injury to an interest that is separate from the interests of particular individuals. The state cannot merely litigate as a volunteer the personal claims of its competent citizens. Where the complaint only seeks to recover money damages for injuries suffered by individuals, the award of money damages will not compensate the state for any harm done to its quasi-sovereign interests. Thus, the state as parens patriae lacks standing to prosecute such a suit. 95 Id. at 1017 (citations omitted). 96 So here, whatever RICO claim the Center may have against these defendants, there is no plausible basis for its assertion by the Town. 97 3. Injury to Business or Property. 98 The Town's inability to assert any plausible Hobbs Act violations against it results in a failure to establish racketeering activity within the meaning of 18 U.S.C. Sec. 1962(c) (1988). 18 U.S.C. Sec. 1964(c) (1988) poses still another obstacle to the Town's RICO claim, for it provides a civil remedy only to [a]ny person injured in his business or property by reason of a violation of section 1962. 99 Both RICO and the Clayton Act, 15 U.S.C. Sec. 15 et seq. (1988), aim to compensate the same type of injury; each requires that a plaintiff show injury 'in his business or property by reason of' a violation. Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 151, 107 S.Ct. 2759, 2764, 97 L.Ed.2d 121 (1987) (quoting Sec. 1964(c)). Furthermore, [t]he close similarity of the two provisions is no accident. The 'clearest current' in the legislative history of RICO 'is the reliance on the Clayton Act model.'  Malley-Duff, 483 U.S. at 151, 107 S.Ct. at 2764 (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 489, 105 S.Ct. 3275, 3281, 87 L.Ed.2d 346 (1985)). In light of this history, cases interpreting the meaning of business or property in the Clayton Act context have applicability in the RICO area, as well. 100 In Hawaii v. Standard Oil Co. of California, 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972), the State of Hawaii claimed damages for an injury to its general economy allegedly attributable to an antitrust violation. The Supreme Court rejected the state's claim, stating: 101 Like the lower courts that have considered the meaning of the words 'business or property,' we conclude that they refer to commercial interests or enterprises. When the State seeks damages for injuries to its commercial interests, it may sue under Sec. 4 [of the Clayton Act, codified at 15 U.S.C. Sec. 15 (1988) ]. But where, as here, the State seeks damages for other injuries, it is not properly within the Clayton Act. 102 Support for this reading of Sec. 4 is found in the legislative history of 15 U.S.C. Sec. 15a, which is the only provision authorizing recovery in damages by the United States, and which limits that recovery to damages to 'business or property.' The legislative history of that provision makes it quite plain that the United States was authorized to recover, not for general injury to the national economy or to the Government's ability to carry out its functions, but only for those injuries suffered in its capacity as a consumer of goods and services. 103 405 U.S. at 264-65, 92 S.Ct. at 892 (emphasis added, footnote and citations omitted). The Court subsequently explained that [t]he phrase 'commercial interests' was used [in Hawaii ] as a generic reference to the interests of the State of Hawaii as a party to a commercial transaction. Reiter v. Sonotone Corp., 442 U.S. 330, 341-42, 99 S.Ct. 2326, 2332, 60 L.Ed.2d 931 (1979). 104 The Town contends that the present action is consistent with Hawaii, stating: 105 The Town has already suffered reduced ability to respond to police and fire emergencies on two separate occasions. The Town has already twice suffered from having its contracted emergency paramedic services impaired. The Town has already suffered from being forced to have its police officers work in an unnecessarily impaired level of alertness; resulting in injury to at least one police officer. Further, if nothing else, the Town has already suffered from overtime wage expenses, which it otherwise would not have incurred. Those expenses totalled over $42,000. These are not the type of damages for injury to [the Town's] general economy for which the Court has prohibited recovery under the Clayton Act, let alone RICO. See Standard Oil Co., 405 U.S. at 264 [92 S.Ct. at 892]. These damages are quantifiable, tangible and, in at least two respects, contractual. The damages already suffered by the Town, and threatened for the future as a direct result of the defendants' conduct are entirely proprietary in nature. They are, in effect, damages to its business rather than damages to its more amorphous governmental interests or powers. 2 106