Opinion ID: 2998688
Heading Depth: 5
Heading Rank: 1

Heading: Loss of Employment Income

Text: Evans initially claims—most creatively we must admit but nevertheless without merit—that he has established RICO standing as evinced by his loss of income during the period of time while he was lawfully and properly incarcerated because he was unable to seek or obtain gainful No. 03-3844 17 employment. The crux of Evans’ argument is that, due to the fact that he was allegedly maliciously prosecuted and falsely imprisoned, he thus lost the ability to pursue gainful employment and also lost potential income from that employment. As such, his claim must fail.21 The loss of income as a result of being unable to pursue employment opportunities while allegedly falsely imprisoned22—similar to monetary losses flowing from the loss of consortium, loss of security and peace, wrongful death and similar claims sounding in tort—are quintessentially pecuniary losses derivative of personal injuries arising under tort law. See, e.g., Doe, 958 F.2d at 770. Under Illinois law, which in this instance defines the scope of tort law, both malicious prosecution and false imprisonment constitute traditional tort claims which result in a personal injury. See Swick v. Liautaud, 169 Ill.2d 504, 512 (Ill. 1996) (malicious prosecution); Cruthis v. Firstar 21 We note that, while this case is before this court on summary judgment and all facts must be taken in the light most favorable to Evans, the record suggests that Evans was lawfully incarcerated at all times pertinent to this suit. 22 Because Evans’ complaint was dismissed on summary judgment, we view the evidence in the light most favorable to him. See Hottenroth, 388 F.3d at 1026. However, it is worth noting that Evans’ claim that he was falsely imprisoned borders on the absurd. There is no dispute that Evans was found guilty to one charge of possession of a controlled substance and pled no contest to another. Therefore, even if we were to find that loss of potential employment income provided standing pursuant to 18 U.S.C. § 1964(c), Evans’ claim would fail the “but for” causation test enumerated by the Supreme Court in Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992). This is due to the fact that Evans would be unable to establish that “but for” the acts of the officers he would have been able to gain employment, because he was lawfully imprisoned at the time he alleges he suffered those injuries. 18 No. 03-3844 Bank, N.A., 354 Ill.App.3d 1122, 1136 (Ill. App. Ct. 2004) (false imprisonment). These torts often result in personal injuries, such as those enumerated above, including the inability to pursue or obtain gainful employment. Evans’ claim of loss of employment income is nothing more than an indirect, or secondary effect, of the personal injuries that he allegedly suffered, the inability to seek or obtain employment, and therefore such a claim does not constitute a cognizable injury to “business or property” within the meaning of § 1964(c). Doe, 958 F.2d at 770 (holding that “Doe’s loss of earnings . . . are plainly derivatives of her emotional distress—and therefore reflect personal injuries which are not compensable under RICO”) (citing Rylewicz, 888 F.2d at 1180). To illustrate the point that personal injuries and incidental monetary losses flowing from them do not confer § 1964(c) standing further, it is helpful to employ an analogous situation. In the oft-cited case, Grogan v. Platt, the Eleventh Circuit held that the plaintiffs had failed to establish RICO standing by pleading economic loss and loss of employment income related to the wrongful death of their loved ones. See Grogan, 835 F.2d at 846-47. The Grogan court concluded that “pecuniary losses are so fundamentally a part of personal injuries that they should be considered something other than injury to ‘business or property.’ ” Id. at 847. Like the plaintiffs in Grogan, Evans has failed to allege anything more than pecuniary losses antecedent to a personal injury. The fact that Grogan was premised on a tort claim of wrongful death and Evans’ case is premised on false imprisonment and malicious prosecution is of no import. The real question is whether Congress intended RICO laws to compensate plaintiffs for pecuniary losses, such as loss of income, stemming from what is essentially a personal injury like the inability to work or seek employment. We are of the opinion that Congress did not intend to do so. See infra p. 24 n.21. This No. 03-3844 19 is particularly true given the “restrictive significance” of the RICO standing requirement, which was adopted directly from the Clayton Act. See Reiter, 442 U.S. at 339; see also infra, p. 20 n.23. Indeed, we are inclined to agree with the United States District Court for the District of Columbia’s statement in Morrison v. Syntex Labs. that “[h]ad Congress intended to create a federal treble damages remedy for cases involving bodily injury, injury to reputation, mental or emotional anguish, or the like, all of which will cause some financial loss, it could have enacted a statute referring to injury generally, without any restrictive language.” 101 F.R.D. 743, 744 (D.D.C. 1984), cited with approval in Grogan, 835 F.3d at 847 (citation omitted) (emphasis in original). In Doe v. Roe, this court held that the loss of income resulting from the personal injury of emotional distress was not sufficient to establish standing under § 1964(c). 958 F.2d at 765-67. In doing so, we noted that “[m]ost personal injuries—loss of earnings, loss of consortium, loss of guidance, mental anguish, and pain and suffering, to name a few—will entail some pecuniary consequences.” Id. at 770. However, we concluded that although “the economic aspects of such injuries could, as a theoretical matter, be viewed as injuries to ‘business or property,’ . . . engaging in such metaphysical speculation is a task best left to philosophers, not the federal judiciary.” Id. Likewise, although the economic aspects of Evans’ alleged loss of employment income injury could conceivably be regarded as affecting “business or property,” Congress specifically foreclosed this possibility by adopting the civil RICO standing requirement and its “restrictive significance” from the Clayton Act. See Reiter, 442 U.S. at 339, see also infra p. 20 n.23. This is not to say that a plaintiff may never recover under RICO for loss of an employment opportunity. Where an employee is able to establish that he has been unlawfully deprived of a property right in promised or contracted for wages, the courts have been amenable to classifying the loss 20 No. 03-3844 of those wages as injury to “business or property.” See, e.g., Williams v. Mohawk, Industries, Inc., 411 F.3d 1252, 1260 (7th Cir. 2005). However, Evans does not claim that he was engaged in a lawful business enterprise or activity which was interfered with by the City or the officers who allegedly harassed him. Cf. Rosario v. Livaditis, 963 F.2d 1013, 102021 (7th Cir. 1992). In addition, he does not claim that he was discharged from his employment as the result of his refusal to participate in a racketeering scheme. Cf. Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162-63 (3d Cir. 1989). Indeed, Evans only claims that he was effectively prevented from “seek[ing] temporary day labor work.” Personal injuries such as these are most decidedly not the type of injury that the RICO laws were designed to address.23 23 The RICO laws were developed as “an aggressive initiative to supplement old remedies and develop new methods for fighting crime.” Sedima, 473 U.S. at 498. The United States Congress envisioned a set of laws that would facilitate the “irradication of organized crime in the United States, by strengthening the legal tools in the evidence-gathering process, by establishing new penal prohibitions and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in organized crime.” 116 Cong. Rec. 35216 (1970) (remarks of Rep. Donohue). It is unlikely that the legislature would have had the foresight to see the law being utilized in an action against a municipality or its police officers; however, the law was “aimed at keeping organized crime out of legitimate businesses” as well as illegitimate criminal enterprises. Id. at 35200; see also United States v. Turkette, 452 U.S. 576, 587 (1981) (holding that the civil RICO statute applies to criminal as well as legitimate enterprises). Also, as the Supreme Court recognized in Sedima, “RICO is to be read broadly. This is the lesson not only of Congress’ selfconsciously expansive language and overall approach, but also of its express admonition that RICO is to ‘be liberally construed to effectuate its remedial purposes.’ ” Sedima, 473 U.S. at 497-98 (continued...) No. 03-3844 21 Thus, our holding is limited to plaintiffs such as Evans, whose claims of injury are framed in terms of pecuniary losses incurred as a result of what can only properly be classified as a personal injury—such as the inability to seek or obtain employment opportunities arising out of false imprisonment or malicious prosecution tort claims. See Grogan, 835 F.2d at 847. 23 (...continued) (quoting Pub. L. 91-452, § 904(a), 84 Stat. 947.) (internal quotations and citations omitted). However, it would be contrary to the intent of Congress for this court to construe the statute so broadly that we completely read the “restrictive significance,” see Reiter, 442 U.S. at 339, of the “business or property” standing requirement out of 18 U.S.C. § 1964(c). As illustrated above, the provision incorporated into § 1964(c) was adopted directly and expressly from § 4 of the Clayton Act, 15 U.S.C. § 15. See supra p. 18-19 n.19. Congressional lawmakers well understood that adopting the Clayton Act’s standing requirement would magnify the “clarity and [reinforce the] contours of the title’s procedural provisions.” 116 Cong. Rec. 35227 (remarks of Rep. Steiger). The denouement—whether good or bad—of increased “clarity” in this instance was the adaptation of the Clayton Act’s standing requirement that a prospective plaintiff be injured in his “business or property” and the “restrictive significance” that those words retain. See Reiter, 442 U.S. 339. Although Congress may have been concerned with “a private litigant [who] would have to contend with a body of precedent . . . setting strict requirements on questions such as ‘standing to sue’ and ‘proximate cause,’ ” that is exactly what was inherited by incorporating the Clayton Act’s standing requirement. Sedima, 473 U.S. at 498 (quoting 115 Cong. Rec. 6995 (1969)). While this consequence may have been unintended, we are bound by the words of the statute, which exclude personal injuries as grounds for standing under the civil RICO statute. See Reiter, 442 U.S. 339. Expanding the class of injuries sufficient to confer standing under the statute is a job best left up to the United States Congress, not the federal courts. 22 No. 03-3844 Our conclusion is bolstered by the fact that Illinois law also does not recognize the right to seek out employment opportunities as a cognizable property right. Often, courts will look to state law to determine the meaning of a “property” right pursuant to federal statutes such as RICO. See Doe, 958 F.2d at 768 (“While federal law governs most issues under RICO, whether a particular interest amounts to property is quintessentially a question of state law.”). This has indeed proved to be an acceptable and appropriate method for determining the meaning that should be given to property interests. See Ledford v. Sullivan, 105 F.3d 354, 357 (7th Cir. 1997) (stating that “[p]roperty interests ‘are not created by the constitution’ . . . [r]ather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law . . . .”) Pertinent here is the fact that the Illinois Supreme Court has specifically held that a person has a property interest in employment only where that person has a legitimate expectation of continued employment. See Fumarolo v. Chicago Board of Ed., 142 Ill.2d 54, 107 (Ill. 1990) (holding that “a property interest in employment as a tenured teacher can be created where there is a legitimate expectation of continued employment”). In addition, under Illinois law, to state a claim for “interference with prospective economic advantage” which is essentially what Evans claims the City and the officers did by allegedly falsely imprisoning him thereby denying him the opportunity to seek or obtain gainful employment, “a plaintiff must allege (1) a reasonable expectancy of entering into a valid business relationship, (2) the defendant’s knowledge of the expectancy, (3) an intentional and unjustified interference by the defendant that induced or caused a breach or termination of the expectancy, and (4) damage to the plaintiff resulting from the defendant’s interference.” Anderson v. Vanden Dorpel, 172 Ill.2d 399, 406-07 (Ill. 1996) (citing Fellhauer v. City of Geneva, 142 Ill.2d 495, 511 (1991)). Evans has proffered no evidence, much less case No. 03-3844 23 law that could or would lead us to conclude that, by lawfully prosecuting and imprisoning him, the City or the Officers, in any way, interfered with his “legitimate expectation of continued employment,” nor has he alleged that he had a “reasonable expectancy of entering into a valid business relationship.” There is no question that the State of Illinois has the right, and indeed the obligation, to arrest and incarcerate individuals that violate the State’s drug laws, as Evans did by possessing a controlled substance. The fact that this precluded him from seeking employment was merely a derivative of his criminal behavior, and does not constitute the deprivation of a property right.24 Therefore, looking to state law to define “property” in this context does not help Evans’ claim, for he is still unable to establish that he was injured in his “business or property” based on the fact that he was denied the opportunity to seek work while incarcerated.25 Accordingly, we reaffirm our holding in Doe v. Roe, and in doing so reiterate this court’s understanding that personal injuries, and the pecuniary losses flowing from those injuries, are insufficient to establish standing under the 24 Indeed, aside from conclusory allegations of police misconduct, Evans does not offer any evidence that he was either falsely imprisoned or maliciously prosecuted. Also, it is undisputed that the convictions the State gained against Evans in Cook County Circuit Court are valid and have not been overturned. See supra p. 7-9. As such, Evans’ claim that he was somehow denied a property interest by being incarcerated borders on the ridiculous. 25 It should be noted, however, that we need not adopt a state law definition of “business or property” which is so broad that it contravenes Congress’ intent in enacting the RICO law. See Reconstruction Finance Corp. v. Beaver County, 328 U.S. 204, 208 (1946) (holding that federal courts are justified disregarding state law if the Congressional purposes underlying federal law would be undermined). 24 No. 03-3844 civil RICO, § 1964(c).26 We also hold that foregone 26 We are cognizant of the fact that our decision today is at odds with that of the United States Court of Appeals for the Ninth Circuit in Diaz v. Gates, 420 F.3d 897 (9th Cir. 2005) (en banc). The Diaz majority, however, blurs the distinction between whether an alleged injury satisfies the statutory definition of “business or property” and whether a “business or property” injury was proximately caused by a predicate RICO act. This is evinced by the court’s statement that: “Diaz suffered two types of injuries: (1) the personal injury of false imprisonment and (2) the property injury of interference with current or prospective contractual relations. Treating the two as separate, and denying recovery for the first but letting the suit go forward on the second, is both analytically cleaner and truer to the language of the statute.” Id. at 902. This analysis is equal parts mischaracterization of the RICO statute and red herring. For one thing, in the Diaz case, false imprisonment would not be a “personal injury,” as the Ninth Circuit characterized it; instead, it would be a cause of action in tort, which would give rise to a personal injury such as loss of employment, loss of consortium, etc. See, e.g., Guaranty Nat. Ins. Co. v. International Ins. Co., 994 F.2d 1280, 1285 (7th Cir. 1993). Also, simply because a personal injury—in Diaz’s case “interference with current or prospective contractual relations”—entails some pecuniary consequence, does not mean that RICO standing has been established, for it is part and parcel of the underlying personal injury, i.e., it flows from it. See id. And as the Supreme Court has made clear, the phrase “ ‘business or property’ . . . exclude[s] personal injuries suffered.” Reiter, 442 U.S. at 339. Diaz’s loss of employment and the related monetary losses he suffered merely represent pecuniary losses derivative of a underlying, non-compensable personal injury, and as such those losses cannot constitute an independent grounds for RICO standing. See id.; Roe, 958 F.2d at 770. In addition, the Ninth Circuit’s decision seems to weigh significantly on that court’s understanding of what constitutes a “property interest” pursuant to California law. For example, court concluded that the loss of income stemming from the (continued...) No. 03-3844 25 earnings stemming from the lost opportunity to seek or gain employment are, as a matter of law, insufficient to satisfy § 1964(c)’s injury to “business or property” requirement where they constitute nothing more than pecuni- ary losses flowing from what is, at base, a personal injury. See Doe, 958 F.2d at 770. Thus, because Evans’ claims of loss of earnings due to the inability to seek out or obtain employment constitute pecuniary losses stemming from personal injury, he lacks standing under RICO to advance this portion of his claim and the district court did not err in granting the defendant’s motion for summary judgment.