Opinion ID: 725000
Heading Depth: 3
Heading Rank: 1

Heading: Subsection 1962(b)--RICO acquisition

Text: 22 Discon first alleges a violation of subsection 1962(b), which prohibits the acquisition or maintenance of an enterprise through a pattern of racketeering activity. Defining the relevant enterprise as NYTel, Discon claims that NYNEX and MECo controlled NYTel through a number of illegal predicate acts. It is undisputed, however, that NYNEX acquired legal control over NYTel during the 1984 divestiture. Discon does not allege any facts to support a finding that this control, which exists by virtue of stock ownership in a wholly-owned subsidiary, was acquired or maintained through a pattern of racketeering activity. 23 Moreover, Discon has not alleged the sort of acquisition injury necessary to state a claim under subsection 1962(b). We have held, in the context of subsection 1962(a), prohibiting the use or investment of income derived from a pattern of racketeering activity, that the essence of a violation of § 1962(a) is not commission of predicate acts but investment of racketeering income. Ouaknine v. MacFarlane, 897 F.2d 75, 82-83 (2d Cir.1990). In the context of subsection 1962(a), therefore, we have required that the plaintiff allege a use or investment injury that is distinct from the injuries resulting from predicate acts. 24 Similarly, other circuits have held that, in order to state a cause of action under subsection 1962(b), plaintiffs must allege an 'acquisition' injury, analogous to the 'use or investment injury' required under § 1962(a) to show injury by reason of a § 1962(b) violation. Danielsen v. Burnside-Ott Aviation Training Center, Inc., 941 F.2d 1220, 1231 (D.C.Cir.1991); accord Compagnie De Reassurance D'Ile De France v. New England Reinsurance Corp., 57 F.3d 56, 92 (1st Cir.), cert. denied, 516 U.S. 1109, 116 S.Ct. 564, 133 L.Ed.2d 490 (1995); Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1191 (3d Cir.1993); Old Time Enterprises, Inc. v. International Coffee Corp., 862 F.2d 1213, 1219 (5th Cir.1989). In this case, Discon has not alleged any injury stemming from the acquisition or maintenance of NYTel by NYNEX and MECo, only injuries resulting from the commission of predicate acts. Without a distinct acquisition injury, Discon cannot state a cause of action under subsection 1962(b).