Court Opinion

ID: 8971977
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:35:47.0997+00
Date Added: 2024-06-11T17:10:26.894293
License: Public Domain

WINTER, Circuit Judge,
dissenting:
Acknowledging the difficulty of the question at issue, I respectfully dissent.
Our recent decisions in United States v. Indelicato, 865 F.2d 1370 (2d Cir.1989) (en banc) and Beauford v. Helmsley, 865 F.2d 1386 (2d Cir.1989) (en banc), teach that the existence of the relatedness and continuity requisite to a finding of a pattern of racketeering activity is to be determined by viewing the facts or allegations as a whole and without the application of mechanical tests such as requirements of multiple or open-ended schemes or separation of temporal acts. Id. at 1391. My disagreement with my colleagues stems from their holding that any allegation of multiple related acts separated in time is, without more, enough to establish continuity.
The fact that multiple acts separated in time may not by themselves be sufficient was one reason that Indelicato and Beau-ford distinguished between enterprises that are inherently criminal and those that are not. In the case of the former, multiple acts in furtherance of the enterprise necessarily carry with them the threat of continuing illegal activity even if simultaneous. In the case of the latter, multiple acts even if separated in time do not necessarily carry with them that threat. Id. We thus held in Beauford that a complaint stated a valid civil RICO claim where there had been thousands of fraudulent mailings to an indeterminate number of largely unrelated victims — all persons who might be interested in purchasing one of several thousand apartments — and there was an expectation based on the anticipated rate of sales and the need to update offering papers that “similarly fraudulent mailings would be made over an additional period of years.” 865 F.2d at 1392.
The present case is very different, however. First, in Beauford there were vastly greater numbers of fraudulent acts and there was an explicit intention to continue the mailings. Second, the sole victims of the fraud in the present case are two corporations working essentially as principals in a joint venture to complete a single construction project. In contrast, the victims in Beauford were a segment of the general public. It simply belies belief that the racketeering acts alleged here — misrepresentations to Procter & Gamble and River-view as to expertise, cost estimates, actual costs and various diversions of funds with regard to one project — were not inherently self-limiting. The defendants surely had testable expectations as to progress in the construction that would be directly affected by the fraudulent acts. The length and breadth of the plaintiffs’ allegations being those acts, these defendants and that *20project, I have no hesitation in labeling the conduct here “isolated.”
To be sure, it was the case in Beauford that the fraud would ultimately cease, but only because of the wisdom in Lincoln’s dictum that you can fool some of the people some of the time but not all of the people all of the time. Where the enterprise is not inherently criminal, fraudulent acts directed to large numbers of unrelated people entail a far different risk of a continuation of illegal acts than do acts directed at a small number of related commercial entities capable of quickly learning the true facts. This distinction is of considerable importance in the RICO context. If adopted, it would limit civil RICO to those cases most likely to involve sustained harm to the public and would avoid transforming every private dispute over a periodic performance contract into a RICO claim. It may be that the line I am seeking to draw is neither bright nor straight, but it is a line that is discernible and of usefulness in limiting civil RICO to situations in which the threat of continuing activity truly exists. Moreover, I fear that my colleagues have adopted a test that may turn out to be no line at all. If, for example, a lumber yard selling to the Riverview project were to deliver five loads of lumber in each of which one two-by-four was missing and then mail five bills for the full amount, a civil RICO claim could be alleged under their theory.
I therefore respectfully dissent.