Opinion ID: 10010
Heading Depth: 2
Heading Rank: 2

Heading: Racketeering Claims

Text: 12 The Church alleges the defendants violated 18 U.S.C. § 1962(c) and (d) of the Racketeer Influence and Corrupt Organization Act (RICO), 18 U.S.C. §§ 1961-1968. Subsection 1962(c) prohibits persons employed by or associated with any enterprise from conducting or participating in the enterprise's affairs through a pattern of racketeering. 2 2 Subsection 1962(d) prohibits a conspiracy to violate 18 U.S.C. § 1962(a), (b), or (c). Under both subsections, RICO claims require 1) a person who engages in 2) a pattern of racketeering activity, 3) connected to the acquisition, establishment, conduct, or control of an enterprise. In re Burzynski, 989 F.2d 733, 741-42 (5th Cir.1993) (quoting Delta Truck & Tractor, Inc. v. J.I. Case Co., 855 F.2d 241, 242 (5th Cir.1988), cert. denied, 489 U.S. 1079, 109 S.Ct. 1531, 103 L.Ed.2d 836 (1989)). 13 The central issue on appeal is whether the Church sufficiently pled a pattern of racketeering activity. 3 Racketeering activity consists of two or more predicate offenses, defined by the statute to include acts violating federal wire or mail fraud statutes. 18 U.S.C. § 1961. To establish a pattern of racketeering activity, the Supreme Court explained in H.J. Inc. v. Northwestern Bell Telephone, Co. 492 U.S. 229, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989), that a plaintiff must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. Id. at 239, 109 S.Ct. at 2900 (emphasis added). The element of relatedness is established if the acts have the same or similar purposes, results, participants, victims, or methods of commission. Id. at 240, 109 S.Ct. at 2901 (internal quotation and citation omitted). To establish continuity, plaintiffs must prove continuity of racketeering activity, or its threat. Id. at 241, 109 S.Ct. at 2902. This may be shown by either a closed period of repeated conduct, or an open-ended period of conduct that by its nature projects into the future with a threat of repetition. Id. at 241, 109 S.Ct. at 2902. A closed period of conduct may be demonstrated by proving a series of related predicates extending over a substantial period of time. Id. at 242, 109 S.Ct. at 2902. An open period of conduct involves the establishment of a threat of continued racketeering activity. Id. This may be shown where there exists a specific threat of repetition extending indefinitely into the future, or where it is shown that the predicates are a regular way of conducting defendant's ongoing legitimate business. Id. at 242-43, 109 S.Ct. at 2903. The Court stated that in enacting RICO, Congress was concerned with long-term criminal conduct. Id. at 242, 109 S.Ct. at 2902. 14 Defendants do not contest the relatedness element of the pattern of racketeering requirement. Issue is joined by the parties over the continuity of ABC's alleged conduct: the Church contends it pled both a closed period of conduct and an open period of conduct as described in H.J. Inc. We disagree, as three of this court's precedents foreclose the establishment of continuity. 15 In the first case, a doctor alleged that during the course of a lawsuit with an insurance company over payment of claims, the insurance company and others committed many fraudulent acts, including sending letters to other insurers to dissuade them from paying on the doctor's claims; creating a company to generate negative reviews of the doctor's methods of treatments; and goading government agencies into investigating the doctor. In re Burzynski, 989 F.2d 733 (5th Cir.1993). This court concluded that the doctor failed to plead the continuity element of a pattern of racketeering: 16 All of the alleged predicate acts took place as part of the Burzynski I litigation, which has ended. In [Delta Truck & Tractor, Inc. v. J.I. Case Co., 855 F.2d 241 (5th Cir.1988), cert. denied, 489 U.S. 1079, 109 S.Ct. 1531 [103 L.Ed.2d 836] (1989) ], we affirmed the dismissal of a RICO claim where the plaintiff alleged multiple acts of fraud that were part and parcel of a single, discrete and otherwise lawful commercial transaction. In Delta, the lawful transaction was a merger; here, it is the defense of a lawsuit--which is now over. The conduct did not constitute or threaten long-term criminal activity. 17 In re Burzynski, 989 F.2d at 743. 18 Similarly, in Calcasieu Marine Nat'l Bank v. Grant, 943 F.2d 1453 (5th Cir.1991) the court found a lack of continuity. The plaintiff, Mrs. Grant, sued her former husband for depriving her of her community property interest in a partnership in which he had been an active member. To establish continuity, Mrs. Grant claimed a closed period of conduct. The court held, however, that 19 there is no threat here of continued criminal acts. [Mr.] Grant's acts which were alleged to have deprived Mrs. Grant of a property interest were, when completed, without threat of repetition. Short-term criminal conduct is not the concern of RICO. 20 Calcasieu, 943 F.2d at 1464. 21 The earliest case that discusses the element of continuity under RICO, albeit before the Supreme Court's decision in H.J. Inc., is Delta Truck & Tractor, Inc. v. J.I. Case Co., 855 F.2d 241 (5th Cir.1988), cert. denied, 489 U.S. 1079, 109 S.Ct. 1531, 103 L.Ed.2d 836 (1989). Delta Truck, an International Harvester dealer, alleged that International Harvester, J.I. Case Co., and Tenneco, Inc. had committed numerous predicate acts of wire and mail fraud in connection with the acquisition of International Harvester by Case and Tenneco. The district court dismissed the complaint. This court affirmed, focusing on the concept of continuity as incorporated in the enterprise element of RICO. The court stated: 22 Delta has attempted to state a RICO claim by alleging multiple acts of fraud that were part and parcel of a single, discrete and otherwise lawful commercial transaction. This claim fails to state a RICO cause of action as a matter of law because the pleadings do not assert that the corporate defendants posed a continuous threat as a RICO person. Delta has alleged as a pattern of racketeering activity nothing more than numerous predicate acts which were necessary segments of an otherwise legitimate and singular commercial endeavor. 23 Id. at 244. 24 It is unnecessary to delve into the arcane concepts of closed-end or open-ended continuity under RICO. Burzynski, Calcasieu, and Delta Truck make clear that where alleged RICO predicate acts are part and parcel of a single, otherwise lawful transaction, a pattern of racketeering activity has not been shown. In this case, the alleged predicate acts occurred during the production and airing of PrimeTime broadcasts concerning Tilton and his Church. The alleged acts were all part of a single, lawful endeavor--namely the production of television news reports concerning a particular subject. We agree with the district court that the Church has failed to plead a continuity of racketeering activity, or its threat. H.J. Inc., 492 U.S. at 241, 109 S.Ct. at 2902. 4 25 The Church alternatively contends that it is ABC's regular pattern of conducting business to use illegal means to further its TV production, citing to newspaper reports and to several lawsuits brought by parties dissatisfied with their portrayal in ABC news programs. However, in the case whose facts are most similar to those present here, the district court found that the plaintiff failed to establish continuity and dismissed the RICO claims. Food Lion, Inc. v. Capital Cities/ABC, Inc., 887 F.Supp. 811, 819-20 (M.D.N.C.1995). Pleading the mere existence of lawsuits is not the same as pleading the facts that demonstrate predicate illegal acts as the defendant's regular way of doing business. The Church has not in this respect sufficiently alleged a continued threat of illegal activity by ABC.