Opinion ID: 492033
Heading Depth: 2
Heading Rank: 2

Heading: Respondeat Superior and Aiding and Abetting Liability Under Sec. 1962(c)

Text: 48 We begin with Count III, with respect to which Western's arguments have most force. As the above chart shows, Count III of the complaint is brought under Sec. 1962(c) and alleges that Western is an enterprise. Western is not named as a person, however, and Count III is not brought against Western as a defendant. See note , at 1358. So long as it operates only on its own, rather than in tandem with Counts XI and XII, Count III is consistent with the rule in Enright, because under it plaintiffs seek recovery only from the individual defendants and not from the Sec. 1962(c) enterprise. Section 1962(c) provides: 49 It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt. 50 We explained in Enright that Sec. 1962(c) was drafted in such a way that Congress must have intended the person and the enterprise to be distinct entities under that provision. Under the language of that provision, we held, 51 the person must be employed by or associated with an enterprise. The Enright Refining Company, Inc. clearly is not employed by the Enright Refining Company, Inc.; nor is it logical to say that the Enright Refining Company, Inc. is associated with the Enright Refining Company, Inc. Thus the language contemplates that the person must be associated with a separate enterprise before there can be RICO liability on the part of the person. 52 We therefore held that Sec. 1962(c) was intended to govern only those instances in which an innocent or passive corporation is victimized by the RICO persons, and either drained of its own money or used as a passive tool to extract money from third parties. See 751 F.2d at 633-34; see also Judge Cudahy's thoughtful opinion in Haroco, 747 F.2d at 399-402, which explains the rationale for this rule in very helpful detail, and upon which we relied in Enright. 53 Western argues that Counts XI and XII have the effect of making Western, which is named as an enterprise in Count III, responsible as a perpetrator for the acts complained of in Count III. It claims further that such liability is inconsistent with our recognition that Sec. 1962(c) enterprises may not be forced to make whole the third parties which were victimized along with or through the enterprise. 54 We agree with Western that respondeat superior and aiding and abetting liability would disrupt the intended operation of Sec. 1962(c), by making the Sec. 1962(c) enterprise--the victim, as Enright tells us, of the racketeering activity--liable. Respondeat superior would have that effect because it renders the employer--i.e. the enterprise--responsible for the acts of the employees--i.e. the persons. Respondeat superior liability under Sec. 1962(c) is therefore foreclosed by the rationale in Enright insofar as it would make the enterprise liable for the RICO violations which victimized it. 11 See Schofield v. First Commodity Corp., 793 F.2d 28, 32-33 (1st Cir.1986), which reaches the same conclusion we do here, in reliance on similar reasoning; see also Luthi v. Tonka Corp., 815 F.2d 1229 (8th Cir.1987). Aiding and abetting would have the same effect when the aider and abettor is also the Sec. 1962(c) enterprise. For this reason the dismissal of Counts XI and XII will be affirmed insofar as they purport to hold Western liable for the liabilities of other defendants under Count III. 55