Court Opinion

ID: 3001571
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:18:04.45487+00
Date Added: 2024-06-11T11:45:45.948946
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 07-1438
LIMESTONE DEVELOPMENT CORP.,
                                                  Plaintiff-Appellant,
                                  v.

VILLAGE OF LEMONT, ILLINOIS, et al.,
                                               Defendants-Appellees.
                          ____________
             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
             No. 05 C 4390—Virginia M. Kendall, Judge.
                          ____________
     ARGUED NOVEMBER 29, 2007—DECIDED APRIL 1, 2008
                          ____________

 Before CUDAHY, POSNER, and EVANS, Circuit Judges.
  POSNER, Circuit Judge. Limestone Development Corpora-
tion owned a 55-acre tract of land, in a rural area within
the limits of the Village of Lemont (a small town—popula-
tion 13,000—near Chicago), that it wanted to develop.
Limestone charges that the Village and other public
bodies, controlled by or acting in cahoots with the mayor,
other Village officials, and K.A. Steel Chemicals, another
Village landowner, constituted an enterprise whose affairs
were conducted through a pattern of racketeering activ-
ity, in violation of RICO, and that the Village also vio-
2                                             No. 07-1438

lated the equal protection clause of the Fourteenth Amend-
ment and thus committed a constitutional tort made
actionable by 42 U.S.C. § 1983. The defendants’ aim in
committing these unlawful acts, according to the com-
plaint, was to prevent Limestone from developing its
property. The district court dismissed the complaint for
failure to state a claim.
  Limestone had bought the tract of land, which straddles
a canal, in 1989. The tract’s northern segment, 26 acres in
size, includes an abandoned quarry in which water has
collected, forming a small lake. Limestone wanted to
develop the northern segment as a commercial marina. An
unimproved road, a section of which was owned by the
Village, provided the only land access to Limestone’s
northern parcel. In order to bring in materials for
building the marina, Limestone widened the road with-
out seeking the Village’s permission. The Village re-
sponded by locking a gate across the road, barring Lime-
stone’s use of it.
  Limestone sued the Village in state court in 1992. The
suit was resolved in 1998 by a ruling by the Illinois Ap-
pellate Court that Limestone was indeed entitled to use
the road—but not for building a commercial marina,
because of the impact that such use would have on K.A.
Steel Chemicals, which owned and used a section of the
road, and on the Village, which besides owning another
segment of the road maintained the entire road.
  Limestone sued the Village again the following year,
1999, complaining that the Village was failing to main-
tain the road. It lost. That same year, the Village sued to
condemn Limestone’s property, but in 2002 it dismissed
the suit voluntarily. These also were state court suits.
No. 07-1438                                              3

  The complaint in the present case, filed in 2005, repeats
the allegations in Limestone’s previous suits but adds the
following: The RICO enterprise was created in 1993 and
operated through 2004. When in 1993 Limestone became
delinquent in paying its Village property tax, the defen-
dants made fraudulent representations in an effort to
force the sale of the property, though they backed down
when Limestone paid the tax. At the same time, the
Lemont Park District (one of the members of the RICO
enterprise, remember) pretended to be interested in
joining with Limestone to build a canal that by con-
necting the lake on Limestone’s property to the Illinois
Sanitary and Ship Canal would facilitate the property’s
development as a marina. By stringing Limestone along,
the Park District delayed the development of the property.
In 2000, the defendants used an appraisal that they knew
to be too low to obtain the state’s required permission to
launch the eminent-domain proceeding, which they
knew would fail—for they had no intention of paying
the true market value of the property—but hoped would
impede Limestone’s development of the property.
  All these alleged frauds—“predicate acts” in RICO-
speak that if proved would establish the “pattern of
racketeering” required for liability under the statute—
occurred outside the limitations period for RICO suits,
which was four years from the date that Limestone discov-
ered (or should, if diligent, have discovered) that it had
been injured by the defendants. Agency Holding Corp. v.
Malley-Duff & Associates, Inc., 483 U.S. 143, 152-53, 156
(1987); Rotella v. Wood, 528 U.S. 549, 553-60 (2000); Perry
v. Globe Auto Recycling, Inc., 227 F.3d 950, 954 (7th Cir.
2000). But then in 2003—three years before the suit
was filed and thus within the limitations period—the
4                                              No. 07-1438

Village published in the Village News a statement by the
mayor, accompanied by a map, announcing the im-
minent creation of the “Heritage Quarries Park” without
disclosing that the park’s boundaries “included most of
Limestone’s property”; and by thus leading “the public
and potential purchasers of Limestone’s property to be-
lieve that the property was owned or controlled by the
Village,” the statement “impaired and thwarted Lime-
stone’s efforts to market its property.” Also in that year,
the defendants falsely represented (we are just reciting
allegations, remember, and not vouching for them) to
Limestone that they would conduct an appraisal of its
property to serve as a basis for negotiations for its sale
to the Village. They had no intention of conducting the
appraisal; they wished merely to cause Limestone “to
forego other efforts to market its property.”
  As a result of the defendants’ efforts to impede the
development and sale of its property, Limestone was
eventually forced to sell the property at less than its
fair market value. Oddly, the complaint does not say
when the sale took place.
  Limestone acknowledges that were it not for the predi-
cate acts committed in 2003, its RICO claim would be time-
barred. But it contends that those acts not only enable it
to escape the bar of the statute of limitations as to them,
but by virtue of the “continuing violation” doctrine—a
defense to a statute of limitations defense—enable it to
revive the time-barred predicate acts and thus obtain
redress for the harm caused by them.
  That does not make good sense, and is not the law. Klehr
v. A.O. Smith Corp., 521 U.S. 179, 186-87 (1997); McCool
v. Strata Oil Co., 972 F.2d 1452, 1466 (7th Cir. 1992).
No. 07-1438                                               5

  Like too many legal doctrines, the “continuing viola-
tion” doctrine is misnamed. Suppose that year after
year, for ten years, your employer pays you less than the
minimum wage. That is a continuing violation. But it
does not entitle you to wait until year 15 (assuming for
the sake of illustration that the statute of limitations
is five years) and then sue not only for the wages you
should have received in year 10 but also for the wages
you should have received in years 1 through 9. The
statute of limitations begins to run upon injury (or, as is
standardly the case with federal claims, upon discovery
of the injury) and is not tolled by subsequent injuries.
Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162,
2169, 2175-76 (2007); Heard v. Sheahan, 253 F.3d 316, 318-19
(7th Cir. 2001); Pollis v. New School for Social Research,
132 F.3d 115, 119 (2d Cir. 1997).
  The office of the misnamed doctrine is to allow suit to
be delayed until a series of wrongful acts blossoms into
an injury on which suit can be brought. Heard v. Sheahan,
supra, 253 F.3d at 319-20; Matson v. Burlington Northern
Santa Fe R.R., 240 F.3d 1233, 1237 (10th Cir. 2001). It
is thus a doctrine not about a continuing, but about a cu-
mulative, violation. A typical case is workplace harass-
ment on grounds of sex. The first instance of a coworker’s
offensive words or actions may be too trivial to count as
actionable harassment, but if they continue they may
eventually reach that level and then the entire series is
actionable. National Railroad Passenger Corp. v. Morgan,
536 U.S. 101, 117 (2002). If each harassing act had to be
considered in isolation, there would be no claim even
when by virtue of the cumulative effect of the acts it
was plain that the plaintiff had suffered actionable harass-
ment. As we explained at greater length in Galloway v.
6                                                 No. 07-1438

General Motors Service Parts Operations, 78 F.3d 1164, 1166
(7th Cir. 1996) (citations omitted), “Sexual harassment
serious enough to constitute unlawful discrimination
on grounds of sex is often a cumulative process rather
than a one-time event. In its early stages it may not be
diagnosable as sex discrimination, or may not cross the
threshold that separates the nonactionable from the
actionable, or may not cause sufficient distress to be
worth making a federal case out of, or may not have
gone on long enough to charge the employer with knowl-
edge and a negligent failure to take effective remedial
measures. (And such knowledge and such failure normally
are prerequisites to the employer’s being made liable
for the harassment.) . . . . If the victim of sexual harassment
sues as soon as the harassment becomes sufficiently
palpable that a reasonable person would realize she had
a substantial claim under Title VII, then she sues in time
and can allege as unlawful conduct the entire course
of conduct that in its cumulative effect has made her
working conditions unbearable.”
  One can imagine conducting a similar analysis in a
RICO case; indeed, since a course of racketeering
activity, to amount to a “pattern” and thus be actionable
under RICO, requires at least two predicate acts and some
temporal continuity, H.J. Inc. v. Northwestern Bell Telephone
Co., 492 U.S. 229, 250 (1989); Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479, 496 and n. 14 (1985); Management Computer
Services, Inc. v. Hawkins, Ash, Baptie & Co., 883 F.2d 48, 50-
51 (7th Cir. 1989), a RICO claim cannot accrue at the time of
the first predicate act. Klehr v. A.O. Smith Corp., supra, 521
U.S. at 188; McCool v. Strata Oil Co., supra, 972 F.2d at 1465.
So if that act happened to occur more than four years
before the second act, the damage caused by the first act
No. 07-1438                                                  7

would still be recoverable in a RICO suit. This is not such
a case. A pattern of trying to force out Limestone without
having to pay the fair market value of its property was well
established years before the 2003 predicate acts. If Lime-
stone wanted to include the old acts in its RICO suit, it had
to sue by 2004. A “plaintiff cannot use an independent,
new predicate act as a bootstrap to recover for injuries
caused by other earlier predicate acts that took place
outside the limitations period.” Klehr v. A.O. Smith Corp.,
supra, 521 U.S. at 190; see also McCool v. Strata Oil Co.,
supra, 972 F.2d at 1456-57; Potomac Electric Power Co. v.
Electric Motor & Supply, Inc., 262 F.3d 260, 266 (4th Cir.
2001); Love v. National Medical Enterprises, 230 F.3d 765, 772-
73 (5th Cir. 2000).
  Against this conclusion it is argued that the harm
caused by the old acts could not be quantified until Lime-
stone sold its property at a loss. That is false. Thwarting
Limestone’s efforts to develop its property as a marina,
subjecting it to the expense of having to redeem its prop-
erty to avoid foreclosure for nonpayment of taxes and
of having to defend against a baseless condemnation
proceeding, and preventing it from selling its property
at fair market value are all forms of harm for which
courts award damages. The argument is also irrelevant.
Difficulty in quantifying damages is cured not by
waiving the statute of limitations but by granting
equitable relief, which is of course available when the
plaintiff’s legal remedy (that is, damages) is inadequate.
  If the plaintiff doesn’t know or have reason to know
that he has been injured, the discovery rule clicks in and
allows him to delay suing, as we noted in our Galloway
opinion. But Limestone knew from at least 1993 that it
was being injured by the defendants, and from 2000 at
8                                                 No. 07-1438

the very latest that it was being injured by a pattern of
racketeering activity. It had no excuse for waiting six
years after that to sue.
  The district judge dismissed the complaint for failure
to state a claim, however, and since the statute of limita-
tions is a defense, and a plaintiff is not required to antici-
pate and refute defenses in his complaint, United States
Gypsum Co. v. Indiana Gas Co., 350 F.3d 623, 626, 628 (7th
Cir. 2003), the judge may seem to have jumped the gun.
Not so. If the allegations of the complaint “show that
relief is barred by the applicable statute of limitations,
the complaint is subject to dismissal for failure to state a
claim,” Jones v. Bock, 127 S. Ct. 910, 920-21 (2007), and
that is the case here, so far as the time-barred claims are
concerned.
  With the earlier frauds out of the picture, can the two
alleged frauds committed in 2003 establish the requisite
pattern of racketeering activity? They cannot, because
the allegations concerning one of them—the story
(with map) in the Village News—fail to state a claim of
fraud. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007),
teaches that a defendant should not be forced to undergo
costly discovery unless the complaint contains enough
detail, factual or argumentative, to indicate that the
plaintiff has a substantial case. (For anticipations, see
Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 347-48
(2005); Associated General Contractors of California, Inc. v.
California State Council of Carpenters, 459 U.S. 519, 528 n. 17
(1983); Pizzo v. Bekin Van Lines Co., 258 F.3d 629, 633
(7th Cir. 2001); Car Carriers, Inc. v. Ford Motor Co., 745
F.2d 1101, 1106 (7th Cir. 1984); 5 Charles Alan Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice and
No. 07-1438                                                9

Procedure § 1216, pp. 233-34 (3d ed. 2004); Asahi Glass Co.,
Ltd. v. Pentech Pharmaceuticals, Inc., 289 F. Supp. 2d 986,
995 (N.D. Ill. 2003).) The old formula—that the com-
plaint must not be dismissed unless it is beyond doubt
without merit—was discarded by the Bell Atlantic deci-
sion, 127 S. Ct. at 1969 and n. 8. And much earlier the
Supreme Court had warned against permitting a plain-
tiff “with a largely groundless claim to simply take up
the time of a number of other people, with the right to do
so representing an in terrorem increment of the settlement
value, rather than a reasonably founded hope that the
[discovery] process will reveal relevant evidence.” Blue
Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 741 (1975).
   Under Bell Atlantic, the complaint in a potentially com-
plex litigation, or one that by reason of the potential cost
of a judgment to the defendant creates the “in terrorem”
effect against which Blue Chip warned, must have some
degree of plausibility to survive dismissal. It is true that
the narrowest holding in Bell Atlantic is merely that an
antitrust complaint charging an agreement between
firms not to compete must contain “enough factual matter
(taken as true) to suggest that an agreement was made . . . .
An allegation of parallel conduct and a bare assertion
of conspiracy will not suffice.” 127 S. Ct. at 1965-66. The
Court was concerned lest a defendant be forced to con-
duct expensive pretrial discovery in order to demonstrate
the groundlessness of the plaintiff’s claim. Id. at 1967. But
the concern is as applicable to a RICO case, which resem-
bles an antitrust case in point of complexity and the
availability of punitive damages and of attorneys’ fees to
the successful plaintiff. RICO cases, like antitrust cases,
are “big” cases and the defendant should not be put to
the expense of big-case discovery on the basis of a thread-
bare claim.
10                                                No. 07-1438

   Bell Atlantic must not be overread. The Court denied
“requir[ing] heightened fact pleading of specifics,” 127
S. Ct. at 1974; “a complaint . . . does not need detailed
factual allegations.” Id. at 1964. Within weeks after de-
ciding Bell Atlantic, the Court reversed a Tenth Circuit
decision for requiring fact pleading. Erickson v. Pardus, 127
S. Ct. 2197 (2007) (per curiam). A prisoner, proceeding pro
se, had complained that he had Hepatitis C, that he was on
a one-year treatment program for it, that shortly after the
program began the prison officials withheld treatment,
and that his life was in danger as a result. That was the
context in which the Court said that “specific facts” need
not be pleaded. Id. at 2200. A complaint must always,
however, allege “enough facts to state a claim to relief
that is plausible on its face,” Bell Atlantic Corp. v. Twombly,
supra, 127 S. Ct. at 1974, and how many facts are enough
will depend on the type of case. In a complex antitrust
or RICO case a fuller set of factual allegations than found
in the sample complaints in the civil rules’ Appendix of
Forms may be necessary to show that the plaintiff’s claim
is not “largely groundless.” Phillips v. County of Allegheny,
515 F.3d 224, 231-32 (3d Cir. 2008). If discovery is likely to
be more than usually costly, the complaint must include
as much factual detail and argument as may be required
to show that the plaintiff has a plausible claim. See also
Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007).
  Threadbare is the word for the allegation that the article
in the Village News injured Limestone and is therefore
actionable. The complaint is silent, as are the plaintiff’s
briefs, on the location of Limestone’s property in rela-
tion to the proposed park. Limestone could easily have
shown this by superimposing its property lines on the
map of the park, but it did not do so and its lawyer at
No. 07-1438                                                11

the oral argument could not indicate to us how far the
boundaries of Limestone’s property overlapped with the
park. For all we know, most of the property consists of
the quarry lake and none of it will lose value by being
surrounded by public parkland. It is not uncommon for
private property to adjoin parkland and sometimes it is
even surrounded by it, and ordinarily and perhaps in
this case as well the value of that property is enhanced. It
is also far-fetched to think that potential buyers would
be deterred by the fact that a newspaper article showed
the property overlapping a public park; any implication
that the mayor was claiming that the property belonged
to the Village would be quickly scotched by a title search.
Maybe some promising prospect was scared off, but this
is sufficiently implausible to have required a fuller pre-
complaint investigation.
  The same deficiency attends another critical plead-
ing—the RICO enterprise, about which all that the com-
plaint says is that it “was an association of, between, and
among the Village of Lemont, the Lemont Park District,
and Lemont Township.” They are alleged to have con-
spired with each other, and with the K.A. Steel Chem-
icals company, to drive out Limestone. But a conspiracy
is not a RICO enterprise unless it has some enterprise-
like structure, such as that of a cartel exempt from
antitrust law (OPEC, for example—the international oil
cartel). E.g., Stachon v. United Consumers Club, Inc., 229
F.3d 673, 676 (7th Cir. 2000); Richmond v. Nationwide Cassel
L.P., 52 F.3d 640, 644 (7th Cir. 1995); United States v. Rich-
ardson, 167 F.3d 621, 625 (D.C. Cir. 1999). Nowhere in the
complaint does one find anything to indicate a structure
of any kind. There is no reference to a system of gover-
nance, an administrative hierarchy, a joint planning
12                                               No. 07-1438

committee, a board, a manager, a staff, headquarters,
personnel having differentiated functions, a budget,
records, or any other indicator of a legal or illegal enter-
prise. Jennings v. Emry, 910 F.2d 1434, 1439 (7th Cir. 1990);
compare Burdett v. Miller, 957 F.2d 1375, 1379-80 (7th Cir.
1992); United States v. Masters, 924 F.2d 1362, 1367 (7th Cir.
1991); United States v. Korando, 29 F.3d 1114, 1118-19 (7th
Cir. 1994); United States v. Blinder, 10 F.3d 1468, 1473 and
n. 3 (9th Cir. 1993). The Chicago Vice Lords would be
embarrassed to have so little structure. See United States
v. Jackson, 207 F.3d 910, 914 (7th Cir.), vacated and re-
manded for reconsideration on unrelated grounds, 531
U.S. 953 (2000).
  We grant that the view that every RICO enterprise
must have a structure is not inevitable. The statute
defines the term to include “any union or group of individ-
uals associated in fact although not a legal entity.” 18
U.S.C. § 1961(4). If emphasis is placed on “associated in
fact,” no structure is necessary, as indeed some courts
believe. See Odom v. Microsoft, 486 F.3d 541, 551 (9th Cir.
2007) (en banc), and cases cited there. But that truncates
the critical statutory phrase—“associated in fact although
not a legal entity”—misleadingly. The juxtaposition of the
two phrases suggests that “associated in fact” just means
structured without the aid of legally defined structural
forms such as the business corporation. The inference is
reinforced by the fact that before “any union or group of
individuals associated in fact” in the statute appears a list
of legal entities. Without a requirement of structure,
“enterprise” collapses to “conspiracy.”
  So one is not surprised that the Supreme Court has
said that “enterprise” is “proved by evidence of an on-
going organization, formal or informal, and by evidence
No. 07-1438                                                13

that the various associates function as a continuing unit.”
United States v. Turkette, 452 U.S. 576, 583 (1981) (em-
phasis added). Echoing this language, we said in Rich-
mond v. Nationwide Cassel L.P., supra, 52 F.3d at 644, that
“enterprise” requires proof of “an ongoing structure of
persons associated through time, joined in purpose, and
organized in a manner amenable to hierarchical or con-
sensual decision-making.” To similar effect, see Asa-Brandt,
Inc. v. ADM Investor Servs., Inc., 344 F.3d 738, 752 (8th Cir.
2003); United States v. Sanders, 928 F.2d 940, 944 (10th Cir.
1991); United States v. Tillett, 763 F.2d 628, 632 (4th Cir.
1985); United States v. Riccobene, 709 F.2d 214, 223-24 (3d
Cir. 1983).
  The allegations in the complaint, detailed though they
are, contain no hint of a structure. Questioned at oral
argument about the omission, Limestone’s lawyer was at
a loss to specify any structural features. Nor did he want
to conduct discovery on the matter; he was indifferent
to the need to prove structure.
  We move finally and very briefly to the equal protection
claim. It is a “class of one” claim. That is, there is no
suggestion of discrimination against a group to which
Limestone belongs. The claim is that the Village deliber-
ately and without justification treated Limestone
worse than other landowners, specifically K.A. Steel
Chemicals, with respect to road maintenance and access.
The statute of limitations applicable to suits for constitu-
tional torts under 42 U.S.C. § 1983 in Illinois is two
years, Savory v. Lyons, 469 F.3d 667, 672 (7th Cir. 2006),
and all the bad acts of which Limestone complains (they
are the same acts as alleged in support of the RICO claim)
occurred more than two years before the suit was filed.
14                                              No. 07-1438

Limestone claims that the harmful effects “lingered” into
the limitations period by depressing the eventual sale price
of the property. But this is another misuse of the “continu-
ing violation” doctrine. The discrimination injured Lime-
stone in 1993 and the statute of limitations began to run
then. If subsequent discriminatory acts caused additional
injury, the limitations period for suing on those acts
accrued when the additional injury was discovered. The
last of those acts occurred in 2003, more than two years
before the suit was filed, and (if the complaint can
be believed) they injured Limestone by impeding the
development and, failing that, the sale of its property at a
good price. That injury started the statute of limitations
running. As we said earlier, difficulty in quantifying
damages may sometimes be a basis for equitable tolling,
but it does not postpone the start of the limitations period.
Not the extent, but the fact, of injury starts the period
running. E.g., Goodhand v. United States, 40 F.3d 209, 212-
13 (7th Cir. 1994); Lancaster v. Norfolk & Western Ry., 773
F.2d 807, 821 (7th Cir. 1985); Mounts v. Grand Trunk Western
R.R., 198 F.3d 578, 582-83 (6th Cir. 2000); Industrial Con-
structors Corp. v. United States Bureau of Reclamation, 15
F.3d 963, 969 (10th Cir. 1994). So the district judge was
right to dismiss the entire suit.
                                                 AFFIRMED.

                    USCA-02-C-0072—4-1-08