Civil Rico Prac Manual Ch5 Proced Dim of Civil Rico Litig From Discovery Practices Through Appeal

§ 5.01 OVERVIEW OF PROCEDURAL ISSUES, CIRPM s 5.
01
CIRPM s 5.01
Aspen Publishers
Civil RICO Practice Manual
Paul Batista
Copyright © 2011 Aspen Publishers, Inc., a Wolters Kluwer business
Current through the 2011 Supplement

Chapter 5: The Procedural Dimensions of Civil Rico Litigation: from Discovery Practices Through Appeal
§ 5.01 OVERVIEW OF PROCEDURAL ISSUES
Every case actually litigated in a federal court is, of course, unique. Each action has its own set of facts, its own special
adversaries, and its own tempo, pace, and texture. This uniqueness pervades all federal actions, from garden-variety personal
injury suits through age discrimination claims to civil racketeering litigation.
For all the diversity in federal cases, however, there are certain unifying elements in the procedural treatment of civil RICO
claims. This chapter has as its central purpose a discussion of the more prevalent procedural aspects of civil racketeering
claims, such as the increasingly significant role of sanctions under Rule 11 of the Federal Rules of Civil Procedure; issues
relating to the framing and service of a complaint; pretrial discovery strategy; the troubling issue of whether to assert the
Fifth Amendment Privilege against self-incrimination; the availability (or, more precisely, general unavailability) of equitable
relief such as injunctions; the trial and appellate process; and the shifting of legal fees from a successful plaintiff to a
defendant.
End of Document © 2011 Thomson Reuters. No claim to original U.S. Government Works.
© 2011 Thomson Reuters. No claim to original U.S. Government Works.

§ 5.02 SCOPE OF RULE 11 AND PROCEDURAL DIMENSIONS OF..., CIRPM s 5.02
CIRPM s 5.02
Aspen Publishers
Paul Batista

§ 5.02 SCOPE OF RULE 11 AND PROCEDURAL DIMENSIONS OF CIVIL RICO LITIGATION
In the last several years, any analysis of the full array of procedural issues relating to civil racketeering litigation must be set
in the framework of a prevalent and somewhat disturbing background: the specter of Rule 11 sanctions. As amended in 1983
and in 1993, Rule 11 of the Federal Rules of Civil Procedure was designed at least in theory to cleanse all aspects of the
litigation process in the federal courts, from the drafting of complaints and answers through the conduct of the discovery
process, pretrial motion practice, the trial process, and appellate activities.
Since 1983, the vehicle for this sweeping cleansing of the federal litigation system has become monetary sanctions and
financial penalties, leveled with increasing frequency against lawyers and, to a lesser extent, their clients for litigation
conduct violative of the standards that amended Rule 11 seeks to establish and enforce. Since every procedural aspect of a
civil RICO case, and, for that matter, all other civil lawsuits, has to be analyzed and developed at least to some extent with a
sensitivity to the concerns implicated by Rule 11, this chapter will begin with a focus on the role that the rule, as amended in
1983 and again in 1993, has played in civil racketeering litigation. With that pervasive disciplinary background placed in
context, the chapter will then turn its focus to some of the more significant specific procedural issues involved in civil RICO
litigation.

§ 5.03 SANCTIONS UNDER RULE 11 OF THE FEDERAL RULES..., CIRPM s 5.03
CIRPM s 5.03
Aspen Publishers
Paul Batista

§ 5.03 SANCTIONS UNDER RULE 11 OF THE FEDERAL RULES OF CIVIL PROCEDURE: GENERAL
OBSERVATIONS
After several years of intense debate, Rule 11 was substantially amended in 1983 for the explicit purpose of increasing the
frequency and severity with which financial sanctions are imposed on lawyers for the bad faith, inefficient, or unprofessional
conduct of civil litigation in the federal courts. The purpose of the Supreme Court in implementing this change to Rule 11 in
1983 was nothing less than the injection of the pervasive specter of monetary sanctions into federal litigation for the purpose
of controlling the volume of the federal caseload, the reduction of motion practice, and the curtailment of discovery abuse.
Rule 11 has achieved at least one of its purposes: in the years since its amendment in 1983, it has engendered a sharp increase
in the number of cases in which lawyers--and frequently their clients as well--have suffered the slings and arrows of financial
sanctions. The rule, of course, is ideally suited for civil RICO litigations, primarily since the defense side tends to consider
virtually all civil racketeering claims frivolous by definition. As a result, defense motions to dismiss or for summary
judgment routinely include a demand for Rule 11 sanctions against the plaintiff and the plaintiff’s lawyer.
Rule 11 sanctions can also be requested by plaintiffs against defendants and their attorneys, for at least in theory the rule is to
apply even-handedly to any lawyer who violates its standards. What are those standards? In relevant part, the rule as
amended in 1983 and in 1993 requires that “every pleading, written motion and other paper” of a party represented by an
attorney shall be signed “by at least one attorney” or by a pro se party.
By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other
paper, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information and belief,
formed after an inquiry reasonable under the circumstances . . . (1) it is not being presented for any improper purpose, such as
to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) the claims, defenses, and other legal
contentions . . . are warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of
existing law or the establishment of new law; (3) the allegations and other factual contentions have evidentiary support, or, if
specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or
discovery; and (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are
reasonably based on a lack of information or belief.1
After articulating this so-called certification standard, Rule 11 then bares its angry teeth:
If, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) [the certification standard]
has been violated, the court may . . . impose an appropriate sanction upon the attorneys, law firms or parties that have
violated subdivision (b) [the certification standard] or are responsible for the violation.2
The in terrorem effect of amended Rule 11 has been broadly cited in an array of cases since 1983. “Under Rule 11,” the
Second Circuit wrote, “sanctions [can] be awarded when a competent attorney could not have formed a belief after
reasonable inquiry that the claims were ‘warranted by existing law or a good faith argument for the extension, modification
or reversal of existing law.’ This objective inquiry does not require a finding of bad faith.” 3 Similar stern tones were invoked
by the Court of Appeals for the District of Columbia: “We take this opportunity to place attorneys on notice that we intend to
impose sanctions as a matter of course for such ‘harassment by litigation.” D’ 4

Also significant as a general point in evaluating Rule 11 and its implications for civil RICO litigation is that the exposure to
the risk of sanctions does not stop at the trial level in the federal district courts. Even if a district judge has concluded that
sanctions are not warranted, the appellate court can make its own independent determination, and can even conclude that
litigation conduct in the district court violates the rule where a challenge to that conduct was not suggested at the district
court level. As the Second Circuit has expressed it, the language of amended Rule 11 supports ““a broadened scope of review
by the Court of Appeals. Where the only question on appeal becomes whether, in fact, a pleading was groundless, we are in
as good a position to determine the answer and, thus, we need not defer to the lower court’s opinion.” 5 Given expressions
regarding the rule’s scope such as these, the specter of Rule 11 is not only intimidating; it is also a ghost that can never be
fully laid to rest at any stage of the litigation.
[A] The Empire Strikes Back: The Defense’s Rule 11 Assault on Civil RICO
What factual and procedural settings in a civil racketeering case can give rise to a defense motion for Rule 11 sanctions? The
answer is: virtually any, for the strictures of Rule 11 and the breadth of civil RICO create a combination of factors that invites
an aggressive striking at the plaintiff and her lawyer. In the inherently uncertain and ambiguous world of federal litigation,
Rule 11 also creates opportunities--albeit fewer opportunities--for a plaintiff to seek sanctions against a defendant and his
lawyer.
At the outset, it should be stressed that the instinctive defense temptation to move for sanctions is heightened by language in
opinions such as Saine v. A.I.A., Inc.:6
A RICO defendant . . . needs to be protected from unscrupulous claimants lured by the prospect of treble damages, and it
should be the policy of the law, within the procedural constraints of our system, to provide this protection . . . . RICO should
not be construed to give a pleader license to bully and intimidate nor to fire salvos from a loose cannon. Irresponsible or
inadequately considered allegations should be met with severe sanctions pursuant to Rule 11.
This nineteenth-century-style organ-blast of piety does in fact set the tone for many Rule 11 motions. Significant numbers of
sanctions motions--although far from all--do succeed, but not necessarily with the drumroll of rhetoric used by the court in
Saine. Other decisions awarding Rule 11 sanctions in civil racketeering cases have been more specific and understated in
delineating the pleading problems or other conduct that have led to the imposition of sanctions. These other cases, in
legitimately coming to grips with the problems and deficiencies that might warrant sanctions, are more useful than decisions
such as Saine, because they attempt, by relying on specific facts, to provide a meaningful precedent that can serve as an
instruction for a future litigant and as a fair deterrent--all of which is not to say that Saine does not contain a pietistic resource
that may flesh out a closing argument in a defendant’s motion for sanctions.
[B] Specific Facts to Support a Rule 11 Motion
Medical Emergency Service Associates v. Foulke7 provides a meaningful description of the kinds of pleading deficiencies
that can in fact lead to a Rule 11 sanction against a plaintiff and his counsel--one that, incidentally, was imposed on one of
the largest law firms in Chicago, Jenner & Block. In Foulke, the plaintiff, Medical Emergency Service Associates (MESA),
was a professional corporation engaged in the business of providing emergency room physicians to hospitals. At the heart of
MESA’s complaint in Foulke was the assertion that a group of individual physicians, including Dr. Douglas J. Foulke,
terminated their relationship with MESA, then persuaded the hospitals involved to terminate their own relationships with
MESA, and finally proceeded to provide the same emergency room services to the hospitals as had been provided by MESA.
Describing the action as “an apparent state law case” that the corporate plaintiff had sought to transform into a federal RICO
action, the district court in Foulke stressed that the corporate plaintiff’s central contention was that the group of defendant
doctors allegedly owed MESA a fiduciary duty because the doctors were all assertedly employees of MESA. The primary act
of mail fraud alleged in Foulke was that the doctors had breached their duties to MESA by failing to disclose to it the
existence of their plan to form a new business to replace MESA as the provider of emergency medical services. “All of the
defendants,” the district court summarized, “are alleged to have conspired in the plan and in the breach of fiduciary duties
owed by one or more of the doctors. Various mailings are alleged to be in furtherance of the plan and each of these is
designated a predicate act under § 1961” of RICO.8
The district court in Foulke granted the doctors’ motion to dismiss,9 finding that the complaint failed to satisfy the
requirement that a ““pattern of racketeering” activity be pleaded:
In this case there is a single wrongful transaction and a single injury. The loss to MESA occurred when the defendant doctors
broke with MESA and created [a competitive firm]. Although numerous mailings are alleged in furtherance of the scheme,
and assuming that each would constitute a separate offense and a separate predicate act, each mailing did not result in a

separate injury or separate transaction.10
It is important to emphasize that the district court in Foulke did not impose sanctions because of the complaint’s failure to
satisfy the pattern requirement. Indeed, given the conflicting and fragmented positions of the courts on the contours of the
pattern defense, it would seem inherently unfair to impose sanctions because of a complaint’s failure to satisfy the pattern
requirement, at least where some rudimentary attempt was made to plead with the strictures of the pattern defense, as
delineated in H.J. Inc.11 and Sedima,12 in mind. Sanctioning an attorney on that basis would convert Rule 11 into a lottery,
since virtually all complaints in the federal system are drafted before a lawyer knows the identity of the judge and virtually
every federal district has judges who are less demanding on the pattern requirement than other potentially available judges.
Instead, the district court in Foulke focused for Rule 11 purposes on a key factual mistake in the complaint, rather than its
failure to describe a “pattern.” More specifically, the Foulke complaint had alleged that all of the doctor-defendants were
employed by MESA and, as a result of their status as employees, allegedly owed MESA a fiduciary duty under Illinois
common law. For purposes of the Foulke litigation, the fact that each of the defendants allegedly owed a fiduciary duty of
loyalty was of vital importance to the corporate plaintiff’s mail fraud theory. “Hence,” the district court wrote, “the allegation
concerning the nature of each doctor’s relationship [with MESA] was material.”13
As a matter of fact, the three moving defendants in Foulke were not employees of the corporate plaintiff. They were instead
independent contractors of MESA to which they did not owe the fiduciary duties that could otherwise have been imposed on
them as employees under relevant common law principles. As the district court expressed it in imposing sanctions on Jenner
& Block, the plaintiff’s law firm in Foulke:
[T]he complaint erroneously alleges a specific contractual relation between each of the movants and the plaintiff, and the
contracts surely were in plaintiff’s possession before suit was filed. The contracts obviously were not read before suit was
filed, and no other explanation in support of the allegations in the complaint [is] offered by the plaintiff. Accordingly, there is
a clear Rule 11 violation and the movants shall be awarded the fees incurred in connection with investigating the facts
concerning the relationship between movants and MESA and the filing and briefing of the Rule 11 motion.14
Additional guidance on the successful use of Rule 11 sanctions was provided by the Seventh Circuit in Brandt v. Schal
Associates, Inc.,15 a litigation which should serve as a cautionary tale to any highly aggressive lawyer who invokes and
pursues a questionable RICO strategy, particularly in an action assigned to a federal district judge with a demonstrable track
record of antipathy to civil racketeering claims. In a sense, the Brandt decision also points to the importance of a “Know-
Your-Judge” rule--in other words, the need for a pragmatic recognition that a plaintiff’s litigating approach has to take into
account a rational understanding that some district judges are far more strict than others in their tolerance, or lack of
tolerance, of RICO claims and the lawyers who pursue them.
David Campbell’s disastrous voyage began in 1985 and ended seven years later in the imposition against him of a Rule 11
award of approximately $500,000, imposed by Milton I. Shadur, a highly regarded federal district judge in Chicago who had
a rigorous approach to civil RICO since the early 1980s16 and whose award of sanctions against Campbell was fully
sustained by the Seventh Circuit in Brandt in 1992. When Campbell initiated the litigation in 1985 as the attorney for a major
construction company, Crescent Corporation, he framed it as a case alleging essentially state common-law breach of contract,
fraud, and other nonfederal claims. In an effort to gain federal jurisdiction, Campbell also attempted to fashion civil
racketeering counts as well.
The inclusion of the RICO counts, as well as Campbell’s extended tenacity in continuing to press them, was a fatal flaw. As
the Seventh Circuit summarized in Brandt: “Over the . . . years of this RICO suit, Crescent filed a complaint, an amended
complaint and a second amended complaint. The [district] court dismissed the first amended complaint because it failed to
allege the prohibited pattern. . . . The second amended complaint did not vary substantially from the first amended
complaint,”17 and resulted in the dismissal of the action as against several, but not all, of the defendants. The litigation then
staggered on through more discovery until ultimately Campbell and his client were made to finally focus on the absence of
any proof that defendants’ conduct could constitute a RICO violation. After years of motion practice and discovery,
Campbell then voluntarily dismissed the federal action under Federal Rule of Civil Procedure 41.
As events turned out, Campbell did not save himself by his belated voluntary dismissal. The primary defendant, Schal
Associates, Inc., a construction management firm, moved shortly after Campbell’s voluntary dismissal for an award of
sanctions against Campbell. Because Judge Shadur (and ultimately the Seventh Circuit in Brandt) largely accepted the
defense’s description of Campbell’s multiple Rule 11 violations, and since specific examples invariably provide guideposts
for conduct, it is important to underscore the factual litany of Campbell’s Rule 11 transgressions:
For the most part, Schal argued about the essential groundlessness of Crescent’s pleadings. Campbell was the lead attorney in
this suit since its inception. He also represented . . . Crescent in a parallel state court proceeding litigating some contract
issues similar to those alleged in the federal case. Schal, in its Rule 11 motion, asserted that Campbell never had a reasonable
basis in fact to allege fraud against Schal with respect to any project associated with Schal and that his allegations of
predicate fraudulent acts in support of his RICO claim were not reasonably warranted in law. In addition, Campbell . . . was
in the practice of submitting voluminous briefs (sometimes exceeding 100 pages), thick memoranda in apparent support of
various motions (often 70-80 pages), and large, tedious affidavits.18

The Seventh Circuit in Brandt found “[i]t easy to understand” Judge Shadur’s exasperation with Campbell’s method of
litigating, “which the judge considered an abuse of process.” 19 Campbell apparently never knew the subtle arts of changing
course and relenting since, even after Judge Shadur had repeatedly criticized him for “submitting book-sized memos,” 20
Campbell responded to Schal’s Rule 11 motion with a 158-page document that provoked Judge Shadur to condemn “such an
approach” as a Rule 11 violation itself.21
Campbell found no protection in the Seventh Circuit. On appeal, that court sustained every dime of the district court’s
massive monetary sanction and its rationale for imposing it. The Seventh Circuit’s Brandt opinion characterized the sanction
as necessary both to compensate Schal for the attorneys’ fees it incurred and to deter “any similar performance” in the
future.22 “Not only does the award address the contents of the spurious complaint filed by Campbell,” the Seventh Circuit
stressed,
but it also addresses the bad-faith pursuit of the worthless complaint. Campbell inundated his opponent and the district court
with lengthy (and insubstantial) briefs, mountains of discovery (affidavits hundreds of pages long), and measures designed
simply to impede the rapid resolution of the case. Campbell’s attempt to succeed on his RICO complaint by unnecessarily
saddling his opponent with an exhausting and costly review of his submissions is an egregious and unjustified abuse of the
judicial process. Campbell’s purposeful infliction of added waste--added to what would otherwise be required to dispense
with his RICO claim--is a choice for which he must now pay a penalty. 23
[C] The Case for Not Imposing Rule 11 Sanctions
Obviously not every motion demanding Rule 11 sanctions results in an award in a defendant’s favor. This is true even in
cases in which a defendant has conclusively won either a motion to dismiss for failure to state a claim, a motion for summary
judgment, or a trial. A defendant’s victory against civil racketeering claims does not automatically mean that a complaint was
frivolous under Rule 11. The courts can and frequently do refrain from imposing sanctions after dismissing even a clearly
deficient RICO action.
McIntyre’s Mini Computer v. Creative Synergy Corp.24 involved, at its first level, a detailed analysis of a complaint that
sought to convert a rather typical theft of trade secrets dispute between two corporations into a federal civil racketeering
lawsuit. In ruling on the defendants’ motion to dismiss, Judge Pratt in Creative Synergy wreaked havoc on the complaint,
finding that it failed on virtually every ground to state civil racketeering claims: the complaint in Creative Synergy was
described as deficient for not adequately pleading a pattern of racketeering activity, the necessary distinction between the
person and the enterprise, and the allegations required to frame a conspiracy count.
The defendants in Creative Synergy, apparently tasting blood in the water and maneuvering for the kill, sought a full array of
sanctions under Rule 11. In beginning his analysis, Judge Pratt acknowledged the obvious point that he had ransacked what
he termed plaintiff’s “multi-count complaint.” 25 The court in Creative Synergy then began its sensitive, sophisticated, and
detailed analysis of whether the standards of Rule 11 had been violated by the corporate plaintiff and its lawyers.
Appropriately enough, Judge Pratt quoted Rule 11 and then dwelled on the exact language of the amended rule itself and the
words of the Advisory Committee of federal judges who, from 1980 through 1983, considered and rewrote the rule. “Rule 11
was amended in 1983,” Judge Pratt wrote in Creative Synergy, “to eliminate the requirement that there be a showing of
subjective bad faith, and the standard now applicable is an objective one: whether the position advanced by a party was
supported by a reasonable inquiry into the applicable law and the relevant facts.” 26 As the court in Creative Synergy said, the
Advisory Committee that authored the 1983 amendment to Rule 11 “made clear” the reason “for the shift to the more
stringent standard”27 when the committee said:
Experience shows that in practice Rule 11 [as it existed prior to August 1983] has not been effective in deterring abuses. . . .
The new language is intended to reduce the reluctance of courts to impose sanctions . . . by emphasizing the responsibilities
of the attorney and reenforcing those obligations by the imposition of sanctions. . . . The new language stresses the need for
some pre-filing inquiry into both the facts and the law to satisfy the affirmative duty imposed by the rule. The standard is one
of reasonableness under the circumstances [and] is more stringent than the original good faith formula and thus it is expected
that a greater range of circumstances will trigger its violation.28
After emphasizing these words--infused as they are with solemn tones of warning and admonition--Judge Pratt in Creative
Synergy then focused on the countervailing interests implicated by Rule 11: among them, the interest in fostering creativity
among attorneys in pursuing unique or even unpopular claims. Judge Pratt quoted the Second Circuit for the proposition that,
in framing this standard,
we do not intend to stifle the enthusiasm or chill the creativity that is the very lifeblood of the law. Vital changes have been
wrought by those members of the bar who have decided to challenge the received wisdom, and a rule that penalized such
innovation and industry would run counter to our notions of the common law itself. Courts must strive to avoid the wisdom
of hindsight in determining whether a pleading was valid when signed, and any and all doubts must be resolved in favor of
the signer.29
Judge Pratt attempted in Creative Synergy to balance the essentially punitive nature of Rule 11 against the need to avoid
chilling the assertion of claims that may be unorthodox but have merit. The court made the pragmatic observation that
“[m]ere lack of success on the merits cannot alone justify sanctions,” 30 for such a rule would eradicate the so-called
American rule and substitute the English rule under which the party who loses a case pays its prevailing adversary’s costs and
attorneys’ fees. On the facts of Creative Synergy--and despite his sweeping rejection of the plaintiff’s complaint for its
pleading deficiencies--Judge Pratt not only found that the plaintiff (and, more pointedly, its counsel) was not guilty of Rule
11 violations but he also delivered some counterbalancing comments on the defendants’ taste for blood and the exorbitant
costs in their pursuit of that blood.
In Creative Synergy, Judge Pratt determined that the corporate plaintiff and its counsel had conducted “a reasonable pre-filing
inquiry which produced facts allowing the reasonable inference that [defendants] engaged in misconduct.” 31 Among other
things, the corporate plaintiff and its counsel retained a private investigator who interviewed those who were believed to have
stolen the asserted trade secrets. “Given the crucial nature of the information at issue, and the obvious need to move quickly
to protect its business, it was not unreasonable for the plaintiff to infer that [defendants were] in possession of trade secrets. . .
.”32
It is a misunderstanding of Rule 11, the court asserted in Creative Synergy, for a defendant pursuing a sanction award to
contend that the plaintiff must develop, before initiating the lawsuit, “conclusive evidence that would satisfy every element of
the causes of action asserted in the complaint.” 33 Rule 11 requires a reasonable inquiry that a complaint is well grounded in
fact, and does not impose what Judge Pratt in Creative Synergy termed the “impossible burden on plaintiffs of having to have
sufficient evidence at the complaint stage to survive a motion for summary judgment or directed verdict, before formal
discovery has even begun.”34
Significantly, the court in Creative Synergy went beyond merely rejecting the demand of the defendants for Rule 11
sanctions. Judge Pratt also turned aside a defense request for additional discovery focused exclusively on the conduct of the
plaintiff’s lawyers and their attempt--or failure--to comply with the defendants’ version of the rigors of Rule 11. Drawing on
comments made in the Advisory Committee notes that accompanied the amendment of Rule 11 in 1983, Judge Pratt
repudiated the use of “satellite litigation”--motion practice and evidentiary hearings devoted exclusively to the conduct of
attorneys--and echoed a Supreme Court observation that federal litigation over attorneys’ fees “must be the least socially
productive types of litigation imaginable.”35
Finally, Judge Pratt, in the closing words of his opinion in Creative Synergy, directed a kick at the heels at the defendants’
counsel and their efforts to impose sanctions. “The court notes in passing that [defendants’] attorneys claim almost $17,000
in attorneys’ fees for a case in which their [clients were] dismissed after six weeks and that counsel claims was frivolous.” 36
Judge Pratt described the magnitude of the fees requested as “astounding” and took the opportunity “to remind counsel that
Rule 11 permits an award only of reasonable fees.”37
[D] 1993 Amendments to Rule 11: Relaxation of Sanctions Procedures and Development of “Safe Harbor” Relief
Despite the widespread popularity of proposals to control, discipline, and punish lawyers, Rule 11 was amended in December
1993 for the purpose of protecting lawyers from the regime of sanctions and penalties that began in 1983 when Rule 11 was
amended for the first time since 1938. While the 1993 amendments to Rule 11 did not radically alter the certification
standards adopted in 1983, the amendments did implement procedural and other safeguards plainly designed to give lawyers
accused of Rule 11 violations more procedural and substantive protection.
A civil racketeering plaintiff confronted after December 1993 with a claim that she violated RICO in drafting and filing the
complaint or prosecuting the action has a wider variety of arguments available for avoiding sanctions than she had during the
cold-war era of 1983 through 1993. For example, a lawyer resisting a Rule 11 motion is entitled after the 1993 amendment to
far more notice of the risk of exposure to sanctions. From 1983 through December 1993, a motion for sanctions could be
brought, as they frequently were, without any previous notice or even a suggestion that opposing counsel considered the
complaint or litigating position of her adversary to be frivolous. Among other things, the 1993 amendment to Rule 11
provides a unique, 21-day corrective period:
A motion for sanctions under this rule shall be made separately from other motions or requests and shall describe the specific
conduct alleged to violate subdivision (b) [the certification standard]. It shall be served . . . but shall not be filed with or
presented to the court unless, within 21 days after service of the motion (or such other period as the court may prescribe), the
challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected. . . .
This “safe harbor” provision was implemented, according to the 1993 Advisory Committee Notes, to give a lawyer an
opportunity to evaluate the sanctions motion and to acknowledge candidly the error of his or her ways by withdrawing the
challenged legal or factual contention; under the pre-December 1993 version of Rule 11, a challenged party was sometimes
reluctant voluntarily to abandon a questionable contention because of fear that withdrawal would itself constitute an
admission of a violation of Rule 11. The “safe harbor” provision operates to protect against that concern.

In addition to these new procedural safeguards, the December 1993 amendments infused substantive criteria that are likely to
reduce the frequency and severity of sanctions in RICO and other civil actions. In essence, the changes recognize that
sometimes a litigant may have good reason to believe that an alleged fact is true but may need discovery, formal or informal,
from opposing parties or third persons to gather and confirm the evidentiary basis for the allegation. Moreover, as the 1993
Advisory Committee Notes stress, arguments
for extensions, modifications, or reversals of existing law do not violate subdivision (b)(2) [of Rule 11] provided they are
“non-frivolous.” This establishes an objective standard, intended to eliminate any “empty-head pure-heart” justification for
patently frivolous arguments. However, the extent to which a litigant has researched the issues and found some support for its
theories even in minority opinions, in law review articles, or through consideration with other attorneys should certainly be
taken into account in determining whether [Rule 11] has been violated. Although arguments for a change of law are not
required to be specifically so identified, a contention that is so identified should be viewed with greater tolerance under the
rule.
The December 1993 amendments to Rule 11 have had their intended consequences in civil racketeering cases. In Scheiner v.
Wallace,38 for example, the district court dismissed, without any discernible hesitation, all of the plaintiff’s racketeering
claims in a litigation that essentially alleged that an insurance company had failed to provide insurance coverage. The district
court in Scheiner emphasized the “absence of viable allegations” of RICO predicate acts. 39
Although Judge Sweet left no doubt in Scheiner that the RICO counts were completely insufficient, he did not grant the
defendants’ request for sanctions. “[T]he 1993 amendments to Rule 11 are” designed, Judge Sweet wrote, ““to discourage
imposition of monetary and other sanctions under the Rule where conduct does not reach the point of clear abuse.” 40
Footnotes
1 . Fed. R. Civ. P. 11(b) (Apr. 22, 1993, eff. Dec. 1, 1993). In the decade-long period beginning with the 1983 amendment to Rule
11, violations of the certification requirement of that rule automatically required, at least in theory, a federal court to impose
sanctions. The 1993 amendment to the rule, although retaining the certification requirement, made the imposition of sanctions
more discretionary and introduced other procedural safeguards explicitly designed to make sanctions less automatic and less
severe.
2 . Fed. R. Civ. P. 1 l(c) (Apr. 22, 1993, eff. Dec. 1, 1993). For a full discussion of Rule 11 and its application to civil litigation in
general, see Batista, Carter, Cannon, Chrein, Duffy, Weiss, Sifton & Buchwald, Symposium-Amended Rule 11 of the Federal
Rules of Civil Procedure: How Go the Best Laid Plans?, 59 Fordham L. Rev. 1 (Oct. 1985); Batista, Sofaer, Katzenbach &
Fishbein, Symposium: Sanctioning Attorneys for Discovery Abuse--The Recent Amendments to the Federal Rules of Civil
Procedure: Views from the Bench and Bar, 57 St. John’s L. Rev. 671 (Spring 1983).
3 . Norris v. Grosvenor Mktg. Ltd., 803 F.2d 1281, 1288 (2d Cir. 1986).
4 . McLaughlin v. Bradlee, 803 F.2d 1197, 1206 (D.C. Cir. 1986).
5 . Eastway Constr. Corp. v. New York, 762 F.2d 243, 254 (2d Cir. 1985). See also Reliance Ins. Co. v. Sweeney Corp., 792 F.2d
1137 (D.C. Cir. 1986); American Sec. Vanlines, Inc. v. Gallagher, 782 F.2d 1056 (D.C. Cir. 1986); DiSilvestro v. United States,
767 F.2d 30, 32 (2d Cir. 1985) (per curiam) (applying an abuse of discretion standard in reviewing the district court’s decision to
impose sanctions because the action constituted “bad faith and vexatious litigation”).
6 . 582 F. Supp. 1299, 1301 (D. Colo. 1984).
7 . 633 F. Supp. 156 (N.D. Ill. 1986), aff’d, 844 F.2d 391 (7th Cir. 1988).
8 . Foulke, 633 F. Supp. at 157.
9 . Id.
10 . Id.
11 . H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989).
12 . Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S. Ct. 3275 (1985).

13 . Foulke, 633 F. Supp. 156, 158.
14 . Id. For other cases in which Rule 11 sanctions have been imposed against plaintiffs, see Bast v. Cohen, Dunn & Sinclair, P.C.,
59 F.3d 492 (4th Cir. 1995); Zissu v. Bear, Stearns & Co., 805 F.2d 75, 80 (2d Cir. 1986); Unioil, Inc. v. EF. Hutton & Co., 802
F.2d 1080, 1091 (9th Cir. 1986); Zaldivar v. City of L.A., 780 F.2d 823 (9th Cir. 1986). See also Mohammed v. Union Carbide
Corp., 606 F. Supp. 252, 261 (E.D. Mich. 1985):
Notwithstanding counsel’s duty to zealously represent his client, an attorney is obligated to refrain from raising claims without
first conducting reasonable inquiry into the underlying facts and law on which those claims are predicated. Counsel has a duty to
his client, and he has a duty to the fair administration of justice as well. . . . An attorney is obligated to dissuade his client from
pursuing specious claims, and thereby avoid possible sanctions by the court, as well as unnecessary costs of litigating a worthless
claim.
15 . 960 F.2d 640 (7th Cir. 1992).
16 . See, e.g., Northern Trust Bank/O’Hare v. Inryco, Inc., 615 F. Supp. 828 (N.D. Ill. 1985) (Shadur, J.).
17 . 960 F.2d 640, 643. The dismissal decisions of the district court in Brandt were reported as Brandt v. Schal Assocs., Inc., 121
F.R.D. 368, 369 (N.D. Ill. 1988); Brandt v. Schal Assocs., Inc., 131 F.R.D. 485 (N.D. Ill. 1990); and Brandt v. Schal Assocs.,
Inc., 131 F.R.D. 512 (N.D. Ill. 1990).
18 . Brandt, 960 F.2d 640, 643.
19 . Id. at 644.
20 . Id.
21 . Brandt v. Schal Assocs, Inc., 121 F.R.D. 368, 373-74 (N.D. Ill. 1988).
22 . Brandt, 960 F.2d 640, 647.
23 . Id.
24 . 644 F. Supp. 580 (E.D. Mich. 1986).
25 . Creative Synergy, 644 F. Supp. at 590.
26 . Id. at 591.
27 . Id.
28 . Id.
29 . Id. (quoting Eastway Constr. Corp. v. City of N.Y., 762 F.2d 243, 254 (2d Cir. 1985)).
30 . Creative Synergy, 644 F. Supp. 580, 592. See also McCandless v. Great Atl. & Pac. Tea Co., 697 F.2d 198 (7th Cir. 1983);
Victory Beauty Supply v. Lus-Ter-Oil Beauty Prods., 562 F. Supp. 786 (N.D. Ill. 1983).
31 . Creative Synergy, 644 F. Supp. 580, 592.
32 . Id.
33 . Id.
34 . Id.

35 . Id. at 593 (quoting Justice Brennan’s concurring opinion in Hensley v. Eckerhart, 461 U.S. 424, 442, 103 S. Ct. 1933, 1944, 76
L. Ed. 2d 40 (1983)).
36 . Id. at 593.
37 . Id.
38 . 860 F. Supp. 991 (S.D.N.Y. 1994).
39 . Scheiner, 860 F. Supp. at 998.
40 . Id. at 1002 (internal quotations and citations omitted). See also Knipe v. Skinner, 19 F.3d 72, 78 (2d Cir. 1994); Rodick v. City
of Schenectady, 1 F.3d 1341 (2d Cir. 1993).

§ 5.04 SANCTIONS FOR FRIVOLOUS RICO CLAIMS AND APPEALS, CIRPM s 5.04
CIRPM s 5.04
Aspen Publishers
Paul Batista

§ 5.04 SANCTIONS FOR FRIVOLOUS RICO CLAIMS AND APPEALS
A compulsive gambler not only lost his life savings but also was required to pay significant legal fees as a sanction to the
riverboat casino named by the gambler in a civil racketeering action. The message of the Seventh Circuit in Williams v. Aztar
Indiana Gaming Corp.41 is that RICO is not a vehicle for vindicating losses due to addiction against the defendant who
provides the source of the addiction.
David Williams (Williams) began visiting Casino Aztar, a riverboat casino on the Ohio River in Indiana, in 1996. Williams
became addicted quickly, and his friends soon contacted Casino Aztar, as well as the Governor of Indiana and other state and
local officials, to express concern over Williams’ gambling compulsion and his steady financial losses. After some initial
hesitation, the casino did take certain steps, including sending a “Cease Admissions” letter to Williams in which the casino
“insist[ed] that prior to gaming with us, at any time in the future, you must present us with medical/psychological information
which demonstrates that your patronage of our facility poses no threat to your safety and/or well being.” 42
Williams in fact received outpatient treatment for his gambling addiction, abstaining from casino gambling for a year.
Eventually, Williams’ addictive demons got the better of him, and he returned to Casino Aztar. He was able to gain access to
the casino without providing the information required by the casino’s earlier “Cease Admissions” letter. By the time he had
lost an additional $20,000, Aztar again took steps to ban his admission.43
[A] Utilizing RICO to Obtain Access to Federal Court: Is It Sanctionable?
Williams’ complaint against the casino contained not only RICO allegations but an array of state law claims as well. Since
RICO was the only federal cause of action, it was also the only basis on which the action could be filed in federal court. The
alternate diversity-of-citizenship basis for federal jurisdiction was not available because Williams and the casino were both
Indiana residents.
Although the Seventh Circuit in Williams was prepared to accept, without deciding, that the mailings by the casino might
have satisfied the continuity plus relationship element of RICO, the court balked at the more fundamental claim that the
casino’s mailings were in fact “mail fraud” for purposes of 18 U.S.C. § 1341. As the Williams decision stressed, “[a]
necessary element of a scheme to defraud is the making of a false statement or material misrepresentation, or the concealment
of a material fact . . . and it is here that Williams’ complaint fails.”44
As for the “Cease Admissions” letter the casino sent to Williams, the Seventh Court concluded that it contained no false
statement, misrepresentation, or omission. It was simply a letter in which the casino reserved a right to stop allowing
Williams to use the casino if it believed Williams’ gambling was not in his or the casino’s best interests. As to promotional
literature the casino mailed to Williams and the public, the Seventh Circuit concluded that it was “puffery” on which no
ordinary person would rely.45
[B] The Elements of the Sanction Award
It was not enough for the Seventh Circuit in Williams simply to dismiss the complaint; it went further, despite the fact that, on
the appeal, Williams did not even challenge the District Court’s dismissal of the RICO cause of action. Instead, the appeal
related specifically to the scope of the federal courts’ supplemental jurisdiction over the state law claims. For the Seventh
Circuit, Williams’ RICO theory was “so feeble, so transparent an attempt to move a state-law dispute to federal court . . . that

it does not arise under federal law at all.”46 In stern, almost self-righteous tones, the Seventh Circuit wrote in Williams:
At oral argument, Williams’ counsel all but conceded that he lacked a good faith basis for bringing the RICO claim (he
specifically noted that Williams was not appealing the district court’s resolution of that issue). When confronted by the
apparent inadequacy of the claim, Williams could not point to one RICO case on which he relied before filing this lawsuit
(much less an analogous case). Instead, he stated that “gambling is new in our country,” and simply reiterated the facts pled
in his complaint to substantiate how this is a “new” or “novel” invocation of RICO. We are unpersuaded by his rhetoric and
do not find this to be a “non-frivolous argument for the extension [or] modification . . . of existing law or the establishment of
new law.” Fed. R. Civ. P. 11(b)(2). Rather, we find this case to be exactly the type of bootstrapping use of RICO that federal
courts abhor.47
“Abhor” is a strong word to describe a court’s reaction to a litigant’s position. The “abhorrence” had more than verbal
consequences: the Seventh Circuit, on its own initiative, declaring the appeal “frivolous,” issued an order to show cause to
Williams “why he [and presumably his lawyer] should not be sanctioned under our Rule 38.”48
[C] Can Prevailing Defendants Recover Attorneys’ Fees?
The short answer to this often-asked question is no. The Seventh Circuit’s opinion in Sullivan v. Hunt49 explains why in the
context of a case in which it would be difficult to imagine a more slovenly approach to litigation by a civil RICO plaintiff.
The plaintiffs in Sullivan filed their original complaint, containing both securities fraud and RICO claims, in 1994. The RICO
claims were dismissed in 1997. The securities claims were dismissed in 1999. The plaintiffs apparently slept until 2002,
when they moved to vacate the dismissals.
In response, the defendants not only resisted the application to vacate the dismissals but also sought the recovery of their
attorneys’ fees under RICO § 1964(c). They succeeded in sustaining the dismissals, but failed in recovering fees.
[D] The Reasons for the Unavailability of an Award of Attorneys’ Fees to Prevailing RICO Defendants
The most fundamental reason prevailing defendants cannot recover their often very substantial legal fees is that the relevant
section of the RICO statute does not authorize it. RICO § 1964(c) provides in relevant part as follows:
Any person injured in his business or property by reason of a violation of § 1962 . . . may sue therefor in any appropriate
United States district court and shall recover three fold the damages he sustains and the costs of the suit, including a
reasonable attorney’s fee . . .
Applying this straightforward statutory provision, the Seventh Circuit in Sullivan declined the defendants’ argument that they
were injured in their “business or property” since they had to spend legal fees. Defendants are “not person[s] injured in [their]
business or property by reason of a violation of RICO, and therefore cannot receive relief under 18 U.S.C. § 1964(c).”50
Footnotes
41 . 351 F.3d 294 (2d Cir. 2003).
42 . Williams, 351 F.3d at 297.
43 . Id.
44 . Id. at 299.
45 . Id. (The literature said, among other things, that “players win” and “Casino Aztar gives you more cash, just in time for the
holidays.” Id.)
46 . Id. (citation and internal quotation marks omitted).
47 . Id. at 300.
48 . Id.
49 . 350 F.3d 664 (7th Cir. 2003).

50 . Sullivan, 350 F.3d at 666; emphasis in original.

§ 5.05 COMPLAINT, JURISDICTION, AND VENUE, CIRPM s 5.05
CIRPM s 5.05
Aspen Publishers
Paul Batista

§ 5.05 COMPLAINT, JURISDICTION, AND VENUE
The first procedural stage in the life of any civil racketeering litigation is the framing and development of the complaint. As
the discussion of Rule 11 reveals, the essentially private, prefiling activities involved in the preparation of a complaint
containing civil racketeering claims have acquired enhanced significance since 1983, when Rule 11 was first amended; in
fact, the prefiling activity of the lawyer and his client can become the subject of intense, and extremely uncomfortable,
scrutiny at a later stage of the case.
As amended in 1983 and 1993, Rule 11 at one level drives home a point that should have been clear for years: the drafting
and filing of a complaint in a federal litigation should be preceded and accompanied by a reasonable investigation of the facts
and a relatively clear understanding of the legal principles and theories that apply to those facts. This is acutely important in
the civil RICO arena, for any lawyer drafting a racketeering complaint acts at his peril if he fails to recognize that the named
defendants--stung by the stigmatizing label of racketeering 51--will turn with a vengeance on the plaintiff and the lawyer
responsible for initiating the racketeering charges.
Previous chapters of this book have dealt at length with the kinds of facts and events that should be alleged in a complaint
that contains civil RICO allegations. 52 Every person framing a complaint, of course, seeks to fashion a viable document that
will survive motions to dismiss or for summary judgment and will contain factual and legal allegations that can be proved in
the crucible of a trial, if that stage is ever reached. A complaint should also, at least in an ideal world, serve the rudimentary
function of placing the defendant or defendants on fair notice of the facts and misconduct charged against them.
Footnotes
51 . See, e.g., Ryan v. Clemente, 901 F.2d 177, 180-81 (1st Cir. 1990).
52 . See Ch. 2 and Ch. 3.

§ 5.06 SUMMARY OF THE ELEMENTS OF A COMPLAINT UNDER..., CIRPM s 5.06
CIRPM s 5.06
Aspen Publishers
Paul Batista

§ 5.06 SUMMARY OF THE ELEMENTS OF A COMPLAINT UNDER CIVIL RICO
Some of the more significant points regarding the content of a civil racketeering complaint, and the initial procedural issues
raised in a civil RICO case, should be summarized and reemphasized at this stage. As previous sections of this book have
stressed, a lawyer drafting a civil racketeering complaint must bear in mind during the drafting process the Supreme Court’s
articulation, in its Sedima decision, of the basic allegations required of a complaint:
A violation of § 1962(c), the section on which Sedima relies, requires (1) conduct (2) of an enterprise (3) through a pattern
(4) of racketeering activity. The plaintiff must, of course, allege each of these elements to state a claim. Conducting an
enterprise that affects interstate commerce is obviously not a violation of § 1962, nor is mere commission of the predicate
offenses. In addition, the plaintiff only has standing if, and to the extent that, he has been injured in his business or property
by the conduct constituting the violation. . . . Where the plaintiff alleges each element of the violation, the compensable
injury necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the
violation is the commission of those acts in connection with the conduct of an enterprise. Those acts are, when committed in
the circumstances delineated in § 1962(c), “an activity which RICO was designed to deter.” Any recoverable damages
occurring by reason of a violation of § 1962(c) will flow from the commission of the predicate acts.53
Simple and literal compliance with this relatively straightforward charter for the pleading of a civil racketeering claim
obviously is not enough to state a complaint that will survive a dismissal motion, despite the Supreme Court’s disarmingly
categorical assertion in Sedima that “the statute requires no more than this.” 54 Anyone who relies too simplistically on the
Sphinx-like brevity of this core language of Sedima will ultimately find herself entangled in the web of the pattern
requirement, the vagaries of the person-enterprise dichotomy, and other parlous pleading complexities.
[A] The “Person” for RICO Purposes
Under the syllogism developed in Sedima, the first step in stating a civil racketeering claim is to identify the guilty “person”
or “persons” for civil racketeering purposes who will be the defendants in the case. Under Sedima, a violation of subsection
(c) of § 1962 of RICO requires a showing that a person conducted an enterprise through a pattern of racketeering activity. 55
Similarly, for violations of subsection (a) of § 1962, Sedima dictates that the showing of a violation requires, among other
things, the identification of the “person” who, within the meaning of subsection (a), has received income from a racketeering
pattern and invested that tainted income in an enterprise. Moreover, for cases alleging a violation of subsection (b) of § 1962,
the focus again is on the conduct of a “person.”56
The statute, of course, contains a definition of the term “person.” Under § 1961(3), a person “includes any individual or
entity capable of holding a legal or beneficial interest in property.” 57 That definition is sufficiently clear to enable the
plaintiff to identify, in her complaint, the “person” allegedly guilty of the bad acts about which the plaintiff has a grievance.
The relatively few drafting complexities generated by the “person” element of Sedima’s formulation arise in connection with
the issues of respondeat superior and vicarious liability extensively discussed in Chapter 6. Another complexity that a
plaintiff may occasionally encounter is whether the definition of ““person” in RICO includes a corporation’s executive board
or a labor union’s steering committee--legal issues that are somewhat arcane and have not yet been fully resolved.
Viewed in perspective, those sections of the complaint that define and identify the “person” or “persons” serve nothing more

or less than the traditional function of identifying the defendants. As such, those sections typically appear at the beginning of
the pleading and should accurately and precisely identify the defendants. 58
In addition to the identification of the allegedly guilty “person,” the complaint’s preliminary sections should advance the
standard jurisdictional and venue allegations found in virtually every federal civil complaint. The introductory segments
should also provide some meaningful description of the plaintiff or plaintiffs. Although Rule 8 of the Federal Rules of Civil
Procedure calls for simplicity, conciseness, and brevity in a pleading, it is also important to remember that a complaint, like a
trial, is designed to tell a persuasive, understandable story, to be informative, and to succeed in its objectives.
[B] Basic Allegations Relating to the “Enterprise”
After the delineation of the defendants, the next element identified by Sedima59 that a complaint must satisfy is the
“enterprise” element. Delineating the enterprise is critical, as earlier sections of this book have demonstrated, 60 not merely
because Sedima so requires but because the lower federal courts have developed an extensive and frequently conflicting set
of dogmas about the enterprise element.
From a definitional standpoint, RICO does contain an attempt to define the “enterprise.” Under subsection (4) of § 1961, the
term “includes any individual, partnership, corporation, association, or other legal entity, and any union or group of
individuals associated in fact although not a legal entity.”61
Each individual drafter must focus on the question of what enterprise to allege, as well as on which violation of the three
substantive subsections of § 1962 the complaint will rest. Virtually all of the appellate courts require a separation between the
“guilty” person and the “enterprise” if the civil racketeering claim is predicated on subsection (c) of § 1962, a section that
interdicts a person’s conduct of an enterprise through a pattern of racketeering activity. 62 In contrast, in cases grounded on
subsections (a) and (b) of § 1962, other circuits do not require such a stringent separation of the guilty person and the
enterprise.63
Moreover, in focusing on the “enterprise” complexities in the actual process of drafting a complaint, the plaintiff’s lawyer
must carefully examine whether the relevant circuit requires, for pleading purposes, that the “enterprise” as defined in the
complaint differ from the “pattern of racketeering activity” alleged in the complaint. 64 That pleading differentiation is
required in the Third, Fourth, Fifth, Seventh, Eighth, and Ninth Circuits. 65 A less rigorous standard--one that expresses the
view that proof of the enterprise can “coalesce” with proof of the pattern of racketeering activity-- has been developed in the
Second and Eleventh Circuits.66
Drawing on the scant, bare language of the definition of “enterprise” in RICO, the Supreme Court in United States v.
Turkette described a racketeering enterprise as “a group of persons associated together for a common purpose of engaging in
a course of conduct” and as an “ongoing organization, formal or informal [with] various associates functioning as a
continuing unit.”67 It was the Supreme Court in Turkette that also suggested that an enterprise is ““an entity separate and
apart from the pattern of activity in which it engages.” 68 A formal enterprise, such as a corporation or other business entity,
has, by definition, an ascertainable structure apart from the challenged predicate acts of illegality. As a result, the various
complexities regarding the separation of an enterprise from the pattern of racketeering arise in cases in which the alleged
enterprise does not have a structure as formal as that of a corporation or partnership; in other words, the most frequent
battlegrounds focus on those enterprises that the statute characterizes as “associations in fact.”
More specifically, a pleader alleging an “association in fact” enterprise can assert that a series of separate corporations is such
an enterprise69 or that a combination of individuals and corporations constitutes an enterprise. 70 As an indication of the
conflicting nature of the approaches to the enterprise issue, the Seventh Circuit has held that a sole proprietorship could be an
“enterprise” with which the proprietor can be associated. 71 Finally, labor unions have been characterized as enterprises--a not
very surprising conclusion in light of the general concept of RICO’s purpose; 72 and governmental and public agencies have
also been characterized as enterprises, despite the fact that RICO’s legislative history does not even suggest this as a
possibility.73
[C] Person/Enterprise Dichotomy
In Doyle v. Hasbro, Inc.,74 the First Circuit was presented with a fact pattern which would appear to be a paradigm for a civil
racketeering claim, and certainly for a civil complaint capable of withstanding a motion to dismiss under Fed. R. Civ. P.
12(b)(6). The facts alleged in Hasbro involved the requisite duration, the usual numbers of participants in the alleged
racketeering activities, and the types of offenses ordinarily needed to pursue a viable case. Yet the First Circuit in Hasbro did
not allow the action to survive its earliest stages, dismissing the case primarily on the ground of the complaint’s perceived
failure to satisfy requirement of the person-enterprise dichotomy.
The facts alleged in Hasbro are important to an understanding of the decision’s significance and to the usefulness of the

person-enterprise defense. In essence, the plaintiff--a trucking company, H.P. Leasing, Inc. (H.P. Leasing), and its sole
shareholder, Patrick J. Doyle (Doyle)-- asserted that they had been required by executives of a major corporation, Hasbro,
Inc. (Hasbro), to pay a “commission” equal to 10 percent of the freight charges they received from Hasbro to the executives
who demanded the “commissions.”75 This kickback scheme lasted for approximately 13 years, during which Doyle and H.P.
Leasing not only were required to make the commission payments in order to continue to provide trucking services to Hasbro
but were also compelled, or so they alleged, “to pay for yearly Christmas parties for Hasbro employees, to give gift
certificates to Hasbro employees . . . and to pledge $30,000 to the Holocaust Memorial.” 76 In addition, the Hasbro executives
allegedly insisted that Doyle take the executives and their wives to dinner, “demands . . . accompanied by comments such as
‘I own you’ and ‘I can put you out of business and you won’t have a house to live in.”D’77
How did the First Circuit justify dismissal, at the pleading stage, of a complaint which appeared to have the requisite
elements of a valid RICO pleading? By finding that the plaintiffs had failed to allege “the existence of a ‘person’ distinct
from the ‘enterprise.”D’78
In what way did the Hasbro plaintiffs fail to separate the RICO “persons” who were the defendants from the RICO
“enterprise” which those defendants, for purposes of § 1962(c), allegedly conducted through a pattern of racketeering
activity? The plaintiffs’ complaint identified all the potentially liable persons as the defendants, a category that included
Hasbro, the main corporate defendant, and each of its executives. As the First Circuit noted, the “amended complaint fails to
distinguish any subset of the defendants.”79
The Hasbro complaint “never squarely identifie[d]” the enterprise, according to the First Circuit. That court obviously did
not want to suggest what might have constituted satisfactory allegations of the enterprise, thus again making clear its
underlying antipathy to the uses of civil RICO:
It may be that a sympathetic reader could infer from the complaint that Hasbro was the alleged RICO enterprise. . . .
However, the possibility that the plaintiffs considered Hasbro the “enterprise” is undermined by the complaint’s repeated
contention that Hasbro is a RICO “person.” A RICO person cannot also serve as the RICO enterprise that the person is
allegedly conducting in violation of § 1962(c).80
Nor was the First Circuit prepared to accept an argument advanced on appeal by the plaintiffs in Hasbro: the contention that
plaintiff H.P. Leasing itself was the enterprise. The First Circuit refused to adopt this approach not because it was incorrect--
indeed, the plaintiffs in Hasbro could easily have structured their complaint to identify H. P. Leasing as the enterprise, thus
readily satisfying the requirement of a distinction between the RICO defendant (that is, the “person” who has allegedly
violated the statute) and the RICO ““enterprise”--but because the court declined “to rewrite the complaint language in order
to find that plaintiffs sufficiently identified [H.P. Leasing] as a RICO enterprise.” 81
The First Circuit’s message in Hasbro is clear to both the drafter of a RICO complaint and defense counsel: more so than in
any other circuit, a plaintiff who files a civil racketeering complaint in the federal courts in Maine, Massachusetts, Puerto
Rico, Rhode Island, and New Hampshire must dot every “i” and cross every “t” as far as the formalities of RICO pleading are
concerned, since the First Circuit will not, even on the lax standards of a motion to dismiss, offer a “sympathetic read[ing]” 82
to a RICO plaintiff’s allegations and will not “rewrite the complaint language.” 83
[D] Of Predicate Acts and Racketeering Activity
Pragmatically speaking, the centerpiece of a civil racketeering complaint is its story about what the defendants allegedly did
that was wrong. Thus, the statement of facts section of the complaint should describe, in coherent detail, the conduct of the
defendants, and this must inevitably focus on the “predicate acts” and the “pattern of racketeering activity” in which the
defendants allegedly engaged.
Under Sedima’s84 formulation, the facts as pleaded must fit the mold of a violation of the statute. A complaint must, as a
result, perform a twofold function: it has to identify the “predicate acts” and the “pattern of racketeering activity” through
which those predicate acts were conducted. As the world now knows, the Supreme Court in Sedima categorically rejected the
concept that a civil defendant in a RICO case must have sustained a prior criminal conviction for the predicate offenses at
issue in the civil proceeding. As the world also knows, RICO itself contains a long and broad list of federal and state criminal
offenses that can qualify as predicate acts,85 including such exotic matters as white slave traffic and dealing in obscene
matter. For civil RICO purposes, the most significant of the predicate offenses are mail fraud and wire fraud and, to a lesser
extent, extortion. The statute requires an allegation that the civil defendants could have been indicted or charged with the
underlying predicate offense--a kind of never-never land proposition envisioning a potential basis for a criminal prosecution
that, in most cases, never happened and will never happen.
From a drafting standpoint, the pleader’s complaint should delineate each element of each underlying predicate act that will
constitute a part of the pattern of racketeering activity. For example, allegations of mail fraud should reflect the teachings of
the case law discussed earlier in this book 86 that adequate pleading of mail fraud requires (1) the specification of the scheme,
(2) the mailings, (3) the specific intent, and (4) the contemplated harm.87
The primary area with which the framer of a complaint has to concern himself or herself is the elusive, explosive “pattern”
issue. Earlier chapters have stressed the intense debate about the meaning of Sedima’s footnote 14 and H.J. Inc. and their
enigmatic statements about how many predicate acts of racketeering activity are required in order to allege a pattern. 88 The
most sensitive and difficult task confronting the writer of the complaint is to shape the factual allegations into a sufficiently
detailed, layered presentation capable of avoiding a successful motion to dismiss or for summary judgment. No definitive
rules have yet emerged; the only guideline is the cautionary view that every effort has to be devoted to plead as many acts,
schemes, and episodes as any specific set of given facts can sustain, disciplined, of course, by the requirements and risks of
Rule 11 of the Federal Rules of Civil Procedure.
[E] The Final Element: Injury
As a pleading matter, Sedima’s89 classic formulation ends with the final requirement--the elemental need to allege and prove
injury. As in any other civil litigation, a plaintiff must plead and ultimately must demonstrate some direct, causal link
between what a defendant did to her and a concomitant and quantifiable loss to her pocketbook. In any civil case, the proof of
damages at trial is frequently a difficult and sometimes an impossible task, and this general difficulty is no less significant in
civil racketeering cases than in other civil cases.
What differentiates the pleading and proof of injury in a civil RICO case from virtually all other civil or commercial matters
is the treble damage feature, that geometric progression that takes place automatically if a jury concludes that a plaintiff has
in fact sustained injury because of the racketeering conduct of the defendant. Another contribution (or, from the defendant’s
perspective, aberration) of Sedima was that the Supreme Court eschewed earlier restrictions imposed by some lower federal
courts on the type of injury for which a plaintiff could recover under RICO. Specifically, the Supreme Court in Sedima
rejected--and utilized some belittling language in the process-- the Second Circuit’s view in the same case that a plaintiff had
to prove a separate “racketeering injury.” The Supreme Court wrote:
In considering the Court of Appeals’ second prerequisite for a private civil RICO action--“injury . . . caused by an activity
which RICO was designed to deter”--we are somewhat hampered by the vagueness of that concept. Apart from reliance on
the general purposes of RICO and a reference to ““mobsters,” the court provided scant indication of what the requirement of
racketeering injury means.90
After discounting the Second Circuit’s “racketeering injury” analysis as ““unhelpfully tautological,” 91 the Sedima Court
moved to the more helpful plane of describing the kind of injury for which a plaintiff could recover. The decision’s language
is simple and instructive:
Section 1964(c) authorizes a private suit by “[a]ny person injured in his business or property by reason of a violation of §
1962.” Section 1962 in turn makes it unlawful for “any person”--not just mobsters--to use money derived from a pattern of
racketeering activity to invest in an enterprise, to acquire control of an enterprise through a pattern of racketeering activity, or
to conduct an enterprise through a pattern of racketeering activity. §§ 1962(a)-(c). If the defendant engages in a pattern of
racketeering activity in a manner forbidden by these provisions, and the racketeering activities injure the plaintiff in his
business or property, the plaintiff has a claim under § 1964(c).92
This language underscores that there are no unique mysteries to the pleading and proof of damages in civil racketeering
actions, and that, for the draftsperson, no special or oracular formulas need to be used to allege financial injury. This is not to
say that the difficult task of actually proving damages at trial in a civil racketeering case is easier than in other cases. It is not.
But the “racketeering” and “competitive” injury slogans that dominated a great deal of civil RICO litigation before Sedima’s
advent in July 1985 have been swept away, and the pleading task somewhat simplified as far as the “injury” element is
concerned.
Footnotes
53 . Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496-97, 105 S. Ct. 3275, 3285 (1985).
54 . 105 S. Ct. 3275, 3285.
55 . Id. Sample complaints in civil racketeering litigation appear as Form 1 and Form L. The samples are a synthesis of a variety of
complaints in several different federal district courts; They are designed not only to delineate and suggest the basic elements of a
complaint but also to provide a framework for meeting some of the more sophisticated defenses.
56 . The guidelines developed by the Supreme Court in Sedima relate explicitly to a violation of subsection (c) of § 1962. The
guidelines, however, readily adapt themselves with only minor variations of emphasis to cases arising under subsections (a) and
(b) of § 1962 as well.
57 . 18 U.S.C. § 1961(3)(1996).

58 . See Form 1 at Form L.
59 . Sedima, S.P.R.L. v. Imrex Co., 105 S. Ct. 3275 (1985).
60 . See Ch. 3.
61 . 18 U.S.C. § 1961(4) (emphasis added).
62 . See, e.g., Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1396-98 (9th Cir. 1986); Bishop v. Corbitt Marine
Ways, Inc., 802 F.2d 122 (5th Cir. 1986); Bennett v. United States Trust Co. of N.Y., 770 F.2d 308, 315 (2d Cir. 1985); B.F.
Hirsch v. Enright Ref. Co., 751 F.2d 628, 633 (3d Cir. 1984); Haroco, Inc. v. American Nat’l Bank & Trust Co. of Chicago, 747
F.2d 384, 400 (7th Cir. 1984); United States v. Computer Sciences Corp., 689 F.2d 1181 (4th Cir. 1982); Bennett v. Berg, 685
F.2d 1053, 1061 (8th Cir. 1982), aff’d in part and rev’d in part, 710 F.2d 1361 (8th Cir. 1983).
63 . See, e.g., Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1397 (9th Cir. 1986) ; Masi v. Ford City Bank &
Trust Co., 779 F.2d 397 (7th Cir. 1985); United States v. Dilaro, 772 F.2d 1314, 1320 (7th Cir. 1985).
64 . See Ch. 6.
65 . Id.
66 . United States v. Weinstein, 762 F.2d 1522, 1536-37 (11th Cir. 1983); United States v. Bargaric, 706 F.2d 42, 55 (2d Cir.), cert.
denied, 464 U.S. 840, 104 S. Ct. 133, 78 L. Ed. 2d 128 (1983); United States v. Mazzei, 700 F.2d 85 (2d Cir.), cert. denied, 461
U.S. 945 (1983); United States v. Cagnina, 697 F.2d 915, 921 (11th Cir. 1983).
67 . 452 U.S. 576, 583, 101 S. Ct. 2523, 69 L. Ed. 2d 246 (1981).
68 . 452 U.S. at 583.
69 . See, e.g., United States v. Huber, 603 F.2d 387 (2d Cir. 1979), cert. denied, 445 U.S. 927 (1980).
70 . United States v. Mazzei, 700 F.2d 85, 89 (2d Cir. 1983) (enterprise consisting of gamblers and basketball player associated in
fact in college basketball point-shaving scheme); United States v. Thevis, 665 F.2d 616, 625-26 (5th Cir. 1982) (defining the
enterprise as a “group of individuals associated in fact with various corporations”). As a cautionary note, it should be pointed out
that a district court in United States v. Computer Sciences, Inc., 511 F. Supp. 1125 (E.D. Va. 1981), rev’d in part on other
grounds, 689 F.2d 1181 (4th Cir. 1982), has held that associations in fact must be among human beings rather than among
business entities.
71 . McCullough v. Suter, 757 F.2d 142, 144 (7th Cir. 1985).
72 . See, e.g., United States v. Boffa, 688 F.2d 919 (3d Cir. 1982), cert. denied, 460 U.S. 1022 (1983).
73 . See, e.g., United States v. Conn, 769 F.2d 420 (7th Cir. 1985) (characterizing the Circuit Court of Cook County, Illinois, as a
potential RICO enterprise); United States v. Angelilli, 660 F.2d 23, 30-35 (2d Cir. 1981), cert. denied, 455 U.S. 910, 945 (1982).
See also Ch. 2.
74 . 103 F.3d 186 (1st Cir. 1996).
75 . Hasbro, 103 F.3d at 189.
76 . Id.
77 . Id.
78 . Id. at 190.

79 . Id. at 191.
80 . Id.
81 . Id.
82 . Id.
83 . Id. See also Discon, Inc. v. NYNEX Corp., 93 F.3d 1055, 1063-64 (2d Cir. 1996) (distinctiveness requirement not satisfied when
three corporate defendants constituting alleged enterprise, although legally separate, ““operated within a unified corporate
structure” and were “guided by a single corporate consciousness”), cert. denied, 118 S. Ct. 49 (1997); Compagnie de Reassurance
d’Ile de France v. New England Reinsurance Corp., 57 F.3d 56 (1st Cir. 1995) ; Lorenz v. CSX Corp., 1 F.3d 1406, 1412 (3d Cir.
1993) (“A RICO claim under § 1962(c) is not stated where the subsidiary merely acts on behalf of, or to the benefit of, its
parent”).
85 . 18 U.S.C. § 1961. See also Ch. 2.
86 . See Ch. 3.
87 . See, e.g., McNally v. United States, 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987) ; United States v. Dixon, 536 F.2d
1388 (2d Cir. 1976); United States v. Regent Office Supply Co., 421 F.2d 1174 (2d Cir. 1970).
88 . See Ch. 3 and Ch. 4.
90 . Id. at 3284.
91 . Id.
92 . Id. at 3285 (emphasis added).

§ 5.07 RE-PLEADING DISMISSED RICO CLAIMS, CIRPM s 5.07
CIRPM s 5.07
Aspen Publishers
Paul Batista

§ 5.07 RE-PLEADING DISMISSED RICO CLAIMS
The federal rule governing re-pleading--Fed. R. Civ. P. 15--enjoins district courts “freely” to grant permission to a plaintiff to
amend her complaint. This liberality is, at least in theory, consistent with the leniency with which a court is expected to
approach a plaintiff’s attempt to frame an adequate complaint. At a practical level, if a court determines, in response to a
motion to dismiss under Fed. R. Civ. P. 12(b)(6), that a complaint is deficient, then the plaintiff whose initial effort to write a
complaint that “sticks” has been unsuccessful will get at least one more chance to write a complaint that meets the district
court’s standards. After all, most decisions granting an early motion to dismiss articulate the ways in which a complaint fails
to reach the threshold of an adequate pleading, and the decision identifying the flaws of the first effort can provide a recipe
for writing a complaint that will meet the district court’s standards.
[A] Limitations on the Opportunity to Re-Plead
Despite the superficial liberality and leniency of Fed. R. Civ. P. 15, not every district judge will grant the plaintiff an
opportunity to amend the dismissed complaint in an effort to satisfy the court’s stated reasons for finding the complaint
deficient. In the RICO hostile environs of the First Circuit in particular, the “one-strike-and-you’re-out” approach has
emerged over several years.
For example, in North Bridge Associates, Inc. v. Boldt,93 a litigation involving real estate, the focus was on several separate
alleged schemes. The first, a so-called “time-share” scheme, related to the purchase by Ralph and Betty Scott of three time-
share condominium unit interests from Martha’s Vineyard Harbor Landings Condominium Trust (Harbor Landings Trust).
Benjamin Boldt, a trustee of Harbor Landings, loaned the Scotts $6,500 for the purchase of the units in exchange for a
promissory note executed by the Scotts and a security interest. The note barred the Scotts from transferring title to the units
and provided that transfer of the note could result in its acceleration and foreclosure on the units.94
Despite the bar on transfer, the Scotts eventually assigned title to the units to Angels Realty Trust (Angels Trust), a trust
established for the benefit of the Scotts’ children. This was not the only transfer: Boldt also assigned the note and mortgage to
the Boldt Family Trust. In 1992, Angels Trust withheld payments to the Boldt Family Trust because Boldt refused to provide
information about the corpus of the Harbor Landings Trust. In retaliation, the Boldt Family Trust in 1995 accelerated the note
on the pretext that the Scotts had improperly transferred title to Angels Trust.95
In response to Angels Trust’s request in July 1996 for a payoff figure, the Boldt Family Trust demanded approximately
$10,000 in principal, interest, and legal fees on the original $6,500 loan from Boldt to the Scotts. In addition to demanding a
$10,000 payoff figure, the Boldt Family Trust initiated foreclosure proceedings regarding the condominium units. Ultimately,
Angels Trust paid “the approximately $7,000 in principal and interest, but refused to pay ‘spurious and unsubstantiated legal
fees.”D’96 After the time-share units were sold at foreclosure, Angels Trust and the Scotts claimed that the Boldt interests
and their attorneys “fraudulently inflated legal fees for the purpose of bringing about foreclosure.” 97
The second scheme, identified as the “Lot 1 Fraud”, 98 had its genesis in a 1978 transaction in which Boldt sold the Scotts 30
acres of land located in Edgartown, Massachusetts. The Scotts’ intention was to develop and subdivide the property into
single-family homes. At the time of the purchase, the lot was not connected to a state road, and Boldt promised the Scotts that
he would provide an easement through an adjoining property he owned.
Not only did Boldt fail to fulfill the promise to grant an easement, 99 he also allegedly persuaded purchasers of property in the
development adjoining the Lot 1 site to file lawsuits designed to block the access of Lot 1 to a local highway. “Although the
litigation was ultimately unsuccessful, a lis pendens (notice of pending suit) was placed on Lot 1, prompting the bank that
had advanced funds for the development to demand immediate repayment of its loans. The loss of funding, in turn, caused
the development to fail. North Bridge [Associates, Inc., an entity controlled by the Scotts] claims that Boldt urged the
meritless suit so that he could reacquire Lot 1, which he later did at a mortgagee’s sale.” 100
[B] The Grounds for Refusing the Opportunity to Re-Plead
The racketeering allegations advanced by the Scotts and North Bridge Associates did not survive the pleading stage. After
reciting the familiar standards to pleading a claim under RICO § 1962(c)--specifically, the four basic elements of “(1)
conduct (2) of an enterprise, (3) through a pattern of (4) racketeering activity” 101--the First Circuit in North Bridge
Associates characterized the deficiencies of the pattern allegations “as both serious and irremediable.” 102 Given that
characterization, the complaint was not only dismissed but the plaintiffs were not even permitted a single opportunity to
replead.
What was it about the allegations in North Bridge that precluded the plaintiffs from even attempting to re-plead? After all, the
Scotts and their various entities identified in North Bridge Associates could be expected to survive an early motion to dismiss
under Fed. R. Civ. P. 12 (b)(6). At a minimum, a complaint containing these types of allegations of multiple events spanning
a long period would at least entitle a plaintiff to one more attempt to allege an adequate complaint even if the original one
suffered some RICO-related weaknesses.
But not in the chilly environs of the First Circuit:

By statute, a successful RICO plaintiff seeking to establish a pattern must show at least two predicate acts of “racketeering
activity” conduct that includes mail fraud and wire fraud. Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12, 15(1st Cir. 2000)
(citing 18 U.S.C. § 1961(i)(B)(5)). In addition, the plaintiff must demonstrate that the “predicate acts are related, and that
they amount to or pose a threat of continued criminal activity,” id. (quoting H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S.
229, 239, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989). Acts are “related” if they have “the same or similar purposes, results,
participants, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are not
isolated events.” Id. . . . To establish continuity, “the plaintiff must show that the related predicates ‘amounted, or posed a
threat of continued criminal activity.”D’ Feinstein [v. Resolution Trust Corp., 942 F.2d 34, 45 (1st Cir. 1991)]. . . .103
Instead of viewing the “Time Share” and “Lot 1” events as schemes that evolved over a long period of time and were
implemented, in part, by use of the mails, the First Circuit in North Bridge Associates focused solely on the two actual
mailings alleged by the plaintiffs--letters dated January 1997 and April 1997 in which Boldt demanded the payment of the
note and insisted that foreclosure proceedings would continue. By emphasizing solely the two letters identified in the
complaint, the First Circuit was able to conclude that, even if the letters were “related acts of mail fraud, they nonetheless fail
to support a RICO cause of action because continuity is wholly lacking.”104
By concentrating only on the two letters, as opposed to the more general schemes that the letters arguably implemented in
part, the court in North Bridge Associates concluded that the sending of the letters was “inadequate to establish a closed
period of continuous criminal activity. Both the number of acts (two) and the span of time over which they extended (four
months) “were minimal.”105 As to open-ended continuity, the North Bridge Associates decision viewed the alleged fraud as
ending with the foreclosure, thus precluding a finding of a prospect of “long-term criminal conduct” within the meaning of
H.J. Inc.106
Footnotes
93 . 274 F.3d 38 (1st Cir. 2001).
94 . Boldt, 274 F.3d at 40.
95 . Id.
96 . Id. at 41.
97 . Id.
98 . Id.

99 . Id.
100 . Id.
101 . Id. at 42.
102 . Id.
103 . Id. at 42.
104 . Id. at 43.
105 . Id.
106 . Id.

§ 5.08 WHEN IS A RICO AMENDMENT “FUTILE”?, CIRPM s 5.08
CIRPM s 5.08
Aspen Publishers
Paul Batista

§ 5.08 WHEN IS A RICO AMENDMENT “FUTILE”?
While acknowledging “the difficulties of pleading a RICO mail or wire fraud case,” 107 the First Circuit in North Bridge
Associates had the candor to concede that it would not extend the “generosity” 108 of some of its earlier RICO decisions in
granting permission to replead the complaint.109 According to North Bridge Associates:
[The] complaint does not present “specific allegations” of additional mail or wire fraud episodes whose details could be
expected to be exclusively within the defendants’ knowledge. Rather . . . appellants broadly allege that at least two mailings
were sent in connection with the Lot 1 fraud, but they offer no ““detailed facts that make it seem likely that interstate mail or
telecommunications facilities were used.” . . . To the contrary, the allegations strongly suggest a series of verbal
communications between Boldt and the purchasers of residential lots in the Edgartown Forest development. Though perhaps
aiding a claim of fraud, such conversations would not bolster appellants’ RICO claim. . . . Finally, it is not simply details that
appellants lack, but the substance of a RICO claim. The district court was not obliged to give appellants a second chance to
construct a pattern of racketeering activity out of two separate real estate frauds. 110
[A] Standards for Granting Leave to Amend RICO Complaints
Always more liberal than other circuits in its approach to civil racketeering litigation, the Third Circuit made clear that
plaintiffs should be allowed the opportunity to amend and re-cast even marginally viable complaints. In Warden v.
McLelland,111 the Third Circuit underscored the “freely given” language of Fed. R. Civ. P.15(a), which simply provides that
“leave to amend shall be freely given.”
Under review in Warden was a district court opinion which the Third Circuit characterized as “a minimally modified version
of one of defendants’ legal memoranda. . . .”112 This pointed criticism of a District Court’s opinion arose in the context of a
dispute between two brothers over the ownership and control of a pharmaceutical company, the Berwind Corporation
(Berwind). The family dispute had its genesis in Berwind’s 1978 acquisition of Colorcom, Inc., also a producer of
pharmaceutical products which was absorbed into the newly created Berwind Pharmaceutical Services, Inc. (BPSI). The
ownership of BPSI was divided among several distinct trusts for members of the Berwind family.
Between 1993 and 1999, Graham Berwind made several unsuccessful efforts to buy the shares of a trust controlled by his
brother, David Berwind. Graham’s efforts were rebuffed by David and, by 1999, Graham had decided to intensify pressure
on David to sell shares to Graham’s trust, a result that would have given the Graham trust full ownership of the corporation.
In an exercise of familiar hardball tactics when an aggressive purchaser wants to persuade an unwilling seller, Graham sent
David a letter--obviously drafted by Graham’s lawyers--threatening “to start a process that will result in our ownership of
BPSI at a price to be determined by us. . . . This will be a costly, time-consuming and legalistic process that we would prefer
to avoid, but one that we are prepared to undertake, if necessary.”113
Graham’s threat was no mere huffing-and-puffing. At Graham’s initiative, the directors of BPSI approved a “squeeze-out”
merger under which BPSI lost its independent status and became wholly owned by Berwind Group Partners, an entity
dominated by Graham Berwind. By this magical process, David Berwind lost his status as a stockholder of BPSI and then did
what any good victim of these kinds of aggressive maneuverings would do--he initiated a civil racketeering litigation against

Graham and his cohorts.
[B] Allegations of a RICO Complaint Stemming from “Squeeze-Out” Mergers
At the heart of David Berwind’s civil racketeering complaint were allegations that Graham and the other defendants had
schemed to defraud David and the trusts David controlled. The district court dismissed the complaint on a pre-answer motion
to dismiss under Fed. R. Civ. P.12(b)(6). In earlier appeals, the Third Circuit took the unusual step of remanding the case to
the District Court because the original dismissal decision had failed to “set[ ] forth the legal reasoning to grant the motion to
dismiss.”114 In connection with the remand, the District Court again dismissed the action, although the federal trial judge
arguably did not perform his “function in its entirety” 115 since he wrote “a minimally modified version of one of defendants’
legal memoranda.”116
[C] The Guidelines for Permitting Amendments
In essence, the complaint in Warden alleged mail and wire fraud predicate acts in connection with an alleged “scheme to
defraud the David Berwind Trust and its trustees over several years.” 117
The Third Circuit began its review of the dismissal by reciting the basic elements of a civil racketeering claim:
To establish a RICO claim, a plaintiff must show “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering
activity.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985). The statute defines
racketeering by a list of criminal activities that constitute predicate acts for purposes of RICO. Among these predicate acts
are mail fraud and wire fraud, the predicate acts plaintiffs have alleged here. See 18 U.S.C. § 1961(a). A RICO claimant must
establish a “pattern” of such predicate acts, and demonstrate the scheme caused injury.118
Although the Third Circuit in Warden acknowledged that the plaintiffs were required to plead fraud with particularity under
Fed. R. Cir. P. 9(b)--and implied that they had not done so--the Court also noted that “the complaint does provide a
reasonably clear overall picture of what has been alleged.” 119 That “reasonable clarity” required that the plaintiffs in Warden
have an opportunity to replead under Fed. R. Civ. P. 15(a).120
Footnotes
107 . Id.
108 . Id.
109 . See, e.g., Feinstein v. Resolution Trust Corp., 942 F.2d 34, 43 (1st Cir. 1991); New England Data Servs, Inc. v. Becher, 829 F.2d
286, 290-92 (1st Cir. 1987).
110 . North Bridge Assocs., 274 F.3d at 44.
111 . 288 F.3d 105 (3d Cir. 2002).
112 . Warden, 288 F.3d at 110.
113 . Id. at 109.
114 . Warden v. McLelland, 238 F.3d 105 (3d Cir. 2001) (noting that an appellate court could not “perform [its] . . . review
responsibly without the District Court first performing its function in its entirety”).
115 . 288 F.3d at 109.
116 . Id. at 110.
117 . Warden, 288 F.3d at 114.
118 . Id.
119 . Id. at 114.

120 . Id. at 115. See also Eddy v. V. I. Water & Power Auth., 256 F.3d 204, 209 (3d. Cir. 2001) (unless the opposing party will be
prejudiced, leave to amend should generally be allowed.).

§ 5.09 AVAILABILITY OF INJUNCTIVE RELIEF, CIRPM s 5.09
CIRPM s 5.09
Aspen Publishers
Paul Batista

§ 5.09 AVAILABILITY OF INJUNCTIVE RELIEF
At the outset, a plaintiff framing a complaint and devising a litigation strategy in virtually every civil case faces the question
of the extent to which, if at all, an application for injunctive relief should be made at the same time the litigation is initiated.
There are very few weapons in the procedural arsenal as powerful as injunctions under Rule 65 of the Federal Rules of Civil
Procedure.121 Simply from a strategic standpoint, a plaintiff can develop a compelling litigation position if she is able, at the
very start of a case, to assemble the facts, the legal arguments, and the initiative necessary to make a credible motion for an
injunction.
The activities that RICO is designed to deter would appear ideally suited for injunctive relief, given the right factual matrix: a
continuing course of mail and wire fraud, for example, in connection with a sale of bogus investment interests. All the
ingredients that usually come into play in connection with injunctions could well be present, such as a scheme that is in
progress, the presence of continuing harm to the plaintiffs, and the distinct probability of the repetition of the bad acts. The
usual expressions of the standards for the granting of injunctive relief vary in their precise formulation from circuit to circuit,
but they all generally express the common ingredients of irreparable injury to the movant, a substantial likelihood of success
on the merits, a weighing of equities in favor of the party requesting the injunction, and a public benefit analysis. 122
The original version of RICO when the legislation emerged in draft in Congress did not explicitly provide any relief for
private plaintiffs at all, much less injunctive relief. Eventually, a proposal to include provisions for private relief was made by
the American Bar Association and Representative Steiger to a House subcommittee. 123 The Steiger proposal in fact provided
explicitly for a private injunctive remedy, a suggestion that was ultimately rejected by the House, and the final bill was
amended to provide only for a private action for damages. 124 Not completely daunted, Representative Steiger on the House
floor again proposed adding a private injunctive remedy, but this amendment was also withdrawn. As adopted, the bill
included only the treble damages remedy for private plaintiffs. In 1972 and 1973, Congress subsequently rejected other
attempts to amend RICO to provide private injunctive remedies. 125
Given this legislative background, the rule against the availability of injunctive relief for civil RICO claims would seem
categorical. Yet a private litigant considering an application for an injunction can develop certain arguments, and rely on
some precedents, for the proposition that his particular case is one in which an injunction is appropriate. One fundamentally
simplistic but potentially compelling argument is that a federal court has inherent power to issue equitable relief, or,
alternatively, that § 1964(a) of RICO itself provides that the district courts have “. . . jurisdiction to restrain violations of §
1962 of this chapter . . .” 126 Moreover, some precedent arguably does exist to support the argument that, in an appropriate
civil RICO litigation, the district court can entertain a motion for an injunction to restrain violations of RICO. 127
Footnotes
121 . Fed. R. Civ. P. 65.
122 . See, e.g., Tri-State Generation & Transmission Ass’n, Inc. v. Shoshone River Power, Inc., 805 F.2d 351 (10th Cir. 1986) ;
Foxboro Co. v. Arabian Am. Oil Co., 805 F.2d 34 (1st Cir. 1986); Humana, Inc. v. Jacobson, 804 F.2d 1390 (5th Cir. 1986).
123 . See Subcomm. No. 5 of the House Comm. on the Judiciary, Hearings on S. 30 and Related Proposals, Relating to the Control of
Organized Crime in the United States, 91st Cong., 2d Sess. 157, 520 (proposal of Rep. Steiger), 548 (proposal of the American
Bar Association) (1970). As previously indicated, the American Bar Association, having introduced the concept of a private
§ 5.09 AVAILABILITY OF INJUNCTIVE RELIEF, CIRPM s 5.09
remedy in 1970, later took the lead after 1985 in campaigns to eliminate the same remedy.
124 . H.R. Rep. No. 1549, 91st Cong., 2d Sess., reprinted in 1970 U.S.C.C.A.N. 4007, 4010, 4034.
125 . See S. 16, 92d Cong., 2d Sess. (1972); S. 13, 93d Cong., 1st Sess. (1973).
126 . 18 U.S.C. § 1964(a).
127 . See, e.g., Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 208 (3d Cir. 1990) (injunctive relief available in RICO actions);
City of N.Y. v. Citisource, Inc., 679 F. Supp. 393, 399 (S.D.N.Y. 1988) (granting order of attachment); Aetna Casualty & Sur. Co.
v. Liebowitz, 570 F. Supp. 908, 909-10 (E.D.N.Y. 1983), aff’d on other grounds, 730 F.2d 905, 909 (2d Cir. 1984); Marshall
Field & Co. v. Icahn, 537 F. Supp. 413, 420 (S.D.N.Y. 1982). But see Lincoln House, Inc. v. Dupre, 903 F.2d 845, 848 (1st Cir.
1990); Northeast Women’s Ctr. v. McMonagle, 868 F.2d 1342, 1355 (3d Cir. 1989) (noting that availability of injunctive relief is
an open question in most courts); Trane Co. v. O’Connor Sec, Inc., 718 F.2d 26, 28 (2d Cir. 1983); Dan River, Inc. v. Icahn, 701
F.2d 278 (4th Cir. 1983).

§ 5.10 VENUE AND JURISDICTIONAL ISSUES UNDER CIVIL RICO, CIRPM s 5.10
CIRPM s 5.10
Aspen Publishers
Paul Batista

§ 5.10 VENUE AND JURISDICTIONAL ISSUES UNDER CIVIL RICO
Venue and jurisdictional principles rarely raise difficult issues in civil racketeering litigation, primarily because the venue
and jurisdictional provisions of the statute are extremely broad and were deliberately designed by Congress to be expansive
and favorable to those pursuing RICO claims. The statute’s general emphasis is on ease of access to the courts, multiple
potential locations for venue and trial, and an uncommon breadth in access to defendants and witnesses.
This breadth and ease of access are highlighted by § 1965(a) of RICO, which provides that a civil racketeering action can be
brought “against any person” in any federal district court throughout the nation “in which such person resides, is found, has
an agent, or transacts his affairs.”128
Even more sweeping is a related provision of the statute permitting any district court, “when the ends of justice require,” to
summon any nonresident person--no matter where located--to appear as a defendant in a pending action. 129 This provision is
a rare expansion of traditional concepts of jurisdiction and venue; its outer parameters have never been meaningfully tested
against the standards that ordinarily apply to the exercise of a federal court’s jurisdiction over a defendant.
Footnotes
128 . 18 U.S.C. § 1965(a).
129 . Id § 1965(b).

§ 5.11 PRETRIAL DISCOVERY AND CIVIL RICO, CIRPM s 5.11
CIRPM s 5.11
Aspen Publishers
Paul Batista

§ 5.11 PRETRIAL DISCOVERY AND CIVIL RICO
After the pleading issues have ended in a particular case--and the struggles over answers and motions to dismiss have been
resolved--the next broad procedural arena of civil RICO litigation involves that expansive territory known as pretrial
discovery.
Relatively few discovery issues are unique to civil racketeering litigation. It shares with every other type of civil case the
same sets of rules, the same ideological conflicts over the proper scope of pretrial disclosure, and the same potential for
creative uses and for abuses.
Although amended in 1993 to curb, even if slightly, the breadth of discovery under the Federal Rules of Civil Procedure,
Rule 26 remains a wide mandate for pretrial disclosure. In civil RICO litigation, as in other civil cases, broad discovery tends
to favor a plaintiff’s position, both for purposes of fact-finding and for strategic reasons. A defendant obviously can
effectively use discovery as well, but it is accurate to state that a plaintiff’s general objective, in RICO cases as in others, is to
seek and obtain the broadest possible discovery from defendants and nondefendants, while the general strategic effort of a
defendant’s discovery campaign in civil RICO is to limit discovery taken from the defendants, set parameters on the scope of
the case, and, to the maximum extent possible, utilize protective orders and other devices to confine the quest for information
and keep the discovered information confidential. 130 Historically, of course, both sides in complex civil cases have used the
breadth of discovery to wage “scorched earth” and other discovery-intensive campaigns in order to provoke settlement or to
achieve tactical advantages in the litigation.
[A] Scope of Discovery for Civil RICO Purposes
Any analysis of the scope of discovery--as well as efforts to limit disclosure--starts primarily with the basic terms of Rule 26
of the Federal Rules of Civil Procedure. As amended in 1993, the key operative provisions of the rule state:
Unless otherwise limited by order of the court in accordance with these rules, the scope of discovery is as follows:
(1) In General. Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter
involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or
defense of any other party, including the existence, description, nature, custody, condition and location of any books,
documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter.
The information sought need not be admissible at the trial if the information sought appears reasonably calculated to lead to
the discovery of admissible evidence.131
That last critical sentence has been part of the Federal Rules of Civil Procedure virtually since their adoption in 1938.
Massive numbers of decisions over the course of the last six decades have liberally construed that provision, which dispenses
with any requirement of a showing of admissibility at trial, to authorize broad pretrial disclosure of facts, all in the service of
the theoretical objective of preventing surprise at trial and opening the litigation process to fair inquiry. 132
It was that breadth of disclosure, however, that led to the reforms adopted in 1983 and in 1993, when Rule 26 was amended
along with Rule 11 to control what was broadly perceived as widespread discovery abuse. In 1983 and again in 1993, Rule 26

was altered to introduce a concept of restraint and discipline in the discovery process; that concept was imported by the
following language of amended Rule 26:
The frequency or extent of use of the discovery methods otherwise permitted under these rules . . . shall be limited by the
court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some
other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample
opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed
discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’
resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the
issues. . . . The court may act upon its own initiative after reasonable notice or pursuant to a motion under subdivision (c)
[relating to protective orders].133
The concepts of expense, balancing of interests, and restraint articulated in this addition to Rule 26 were new to the Federal
Rules as a whole when the concepts were first implemented in 1983 and again reiterated in December 1993; they have been
important in civil racketeering litigation and other types of civil lawsuits as well.
[B] Obligations of Voluntary Self-Disclosure
An entirely new approach to discovery was introduced in December 1993 by the amendments to Rule 26 of the Federal Rules
of Civil Procedure, and it is an approach likely to have more impact in the arena of civil racketeering litigation than in other
arenas. The new approach is the requirement of full, voluntary, and immediate disclosure, a kind of “you’ve-sued-me-here-
are-my-secrets” approach that is literally unprecedented in litigation in the United States.
Under Rule 26(a) as amended in December 1993, a defendant sued in a civil RICO or other litigation must, “without awaiting
a discovery request, provide to” the plaintiff (1) “the name and . . . the address and telephone number of each individual
likely to have discoverable information relevant to disputed facts” and (2) “a copy of . . . all documents, data compilations,
and tangible things in the possession, custody, or control of the party that are relevant to the disputed facts. . . .”
Although this mandate for immediate self-disclosure is reciprocal--a plaintiff, too, is required to make all relevant documents
available ““without awaiting a discovery request”--the burden of this entirely new approach falls principally on defendants,
since the defendants, after all, have in most cases been sued without prior notice that a complaint will be filed, and defendants
and defense lawyers have certainly been conditioned over the years to make plaintiffs work in order to secure information.
Immediately handing over the keys to the company’s file room is certainly not the type of reaction defendants have
experienced in the long history of federal civil litigation.
The official Advisory Committee Notes accompanying this entirely new regime introduced in December 1993 articulated the
following views in justifying it: ““Courts in Canada and the United Kingdom have for many years required disclosure of
certain information without awaiting a request from an adversary.” Furthermore, “the experience of the few state and federal
courts [in the United States] that have required pre-discovery exchange of core information such as is contemplated in Rule
26(a)(l) indicates that savings in time and expense can be achieved. . . .” According to the Advisory Committee Notes, a
“major purpose” of the revision is to accelerate the exchange of basic information about the case and “to eliminate the paper
work involved in requesting such information. . . .”
Although this radically new approach applies to all civil actions, it has the most sweeping potential consequences in civil
RICO cases. For example, since RICO has both criminal and civil applications, a relatively routine RICO claim by a
customer against a manufacturer may relate to the same subject area that a secret federal grand jury examined but on which it
declined to act. Does a defendant sued under these circumstances have an obligation immediately to identify, for the benefit
of a plaintiff who knew nothing about the criminal inquiry, all the “individual[s] likely to have discoverable information
relevant to disputed facts,” as new Rule 26(a)(l)(A) requires, such as former or present employees who might have been
targets or subjects of the criminal investigation? Does a defendant have to identify, again for the benefit of the lucky plaintiff,
agents of the Federal Bureau of Investigation who may have participated in the criminal inquiry? Does the defendant have to
produce voluntarily all documents previously produced to a federal grand jury in compliance with a subpoena? A defendant
caught in the unexpected whirlwind of the kind of massive and voluntary self-disclosure the new provisions of Rule 26(a)
impose may have to turn, and turn promptly, to requests or motions for protective orders.
[C] Role of Protective Orders in Civil RICO Actions
One of the most frequent specific discovery disputes in civil racketeering relates to the use of protective orders. Given the
December 1993 amendments to Rule 26 requiring extensive, immediate self-disclosure, contests over protective orders are
likely to become even more intense than they have been in the past. In the civil RICO area more so than in other civil cases,
the defense may have a strong desire to limit the information that can be obtained through discovery or, in the event
information is produced, to keep the information confidential or sealed.
The concept of “protecting” information or limiting access is directly authorized by Rule 26(c) of the Federal Rules of Civil
Procedure, which also specifies some of the forms that protection can take:
Upon motion by a party or by the person from whom discovery is sought, accompanied by a certification that the movant has
in good faith conferred or attempted to confer . . . in an effort to resolve the dispute without court action, and for good cause
shown, the court in which the action is pending or alternatively, on matters relating to a deposition, the court in the district
where the deposition is to be taken may make any order which justice requires to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense, including one or more of the following: (1) that the disclosure or
discovery not be had; (2) that the disclosure or discovery be had only on specified terms and conditions, including a
designation of the time or place; (3) that the discovery may be had only by a method of discovery other than that selected by
the party seeking discovery; (4) that certain matters not be inquired into, or that the scope of the disclosure or discovery be
limited to certain matters; (5) that discovery be conducted with no one present except persons designated by the court; (6)
that a deposition, after being sealed, be opened only by order of the court; (7) that a trade secret or other confidential
research, development, or commercial information not be revealed or be revealed only in a designated way; and (8) that the
parties simultaneously file specified documents or information enclosed in sealed envelopes to be opened as directed by the
court.134
Protective orders have been used with increasing frequency in civil RICO cases. Some of them are negotiated between the
parties at the outset of the litigation, sometimes under the supervision of a judge at either the initial “Discovery Conference”
authorized by Rule 26(f) or at the ““Pretrial Conference” directed by Rule 16(a), 135 while other protective orders are the
result of litigated motion activity. In fact, protective or confidentiality orders have been entered with greater frequency since
1984, when the Supreme Court, in Seattle Times Co. v. Rhinehart,136 resolved in favor of the broad use of Rule 26(c)
protective orders constitutional challenges to protective orders, which had been characterized by the District of Columbia
Circuit as “paradigmatic prior restraints.”137
Protective orders--whether entered by agreement of the parties or by the court after motion practice--generally contain certain
common ingredients.138 They typically permit parties or others producing information to designate some or all of the
produced information as “confidential” and for use only in the particular litigation. 139 In addition, the order usually provides
that only certain “qualified” persons may view or use the designated confidential materials until the court either lifts the
designation or modifies the restriction. In the typical case, the order also limits copying or distribution of confidential
information, even by those qualified to see it and use it.
In other orders, the parties or the court sometimes place information in ascending categories of protection, such as
“restricted,” “sensitive,” and ““highly confidential.” Another commonly used provision, and one of the easiest to persuade an
adversary or a judge to impose, restricts confidential information for use “only in this litigation.” Such a restriction can
become meaningful in a case that might involve disclosures to government agencies or to the media. In the RICO context,
protective orders sealing discovery in a civil proceeding until the completion of a parallel criminal proceeding have often
been ordered by courts despite opposition from adversaries in the civil action.140
At a pragmatic level, the question sometimes arises as to the meaningful enforceability of Rule 26(c) protective orders. How
potent are all the elaborate terms, conditions, and restrictions that frequently appear in intensively drafted Rule 26(c)
agreements or orders? Not surprisingly, the answers vary depending on the facts of each particular case. In Martindell v.
International Telephone & Telegraph Corp.,141 depositions were taken in a civil action pursuant to a stipulation of
confidentiality and a protective order entered by the district court. On the basis of the protective order, the district court
subsequently denied the federal government’s motion to obtain access to the deposition transcripts for the purpose of a
criminal investigation. The Second Circuit affirmed the denial of the federal government’s access to the transcripts, stressing
that the parties had testified in reliance on the court’s order and finding that the district court’s order appropriately balanced
the competing interests of the private litigants and the public.
In contrast, in Wilk v. American Medical Ass’n,142 the Seventh Circuit, emphasizing the presumptive public right to access to
“documents and information in [the court’s] possession,” granted the state of New York access to sensitive materials.
Footnotes
130 . Form 4, entitled “RICO Standing Order for Certain Pretrial Matters,” is a composite of actual orders entered in cases in several
district courts. A RICO defendant may consider urging a federal judge to impose an order such as Form 4 even before discovery
begins. The order, which is obviously tailored to serve defense objectives, requires plaintiffs to lay bare, or at least significantly
disclose, the facts as they know them prior to initiating pretrial discovery. The extent to which any particular federal judge in a
newly filed RICO case will implement an order such as that contained in Form 4 depends on a variety of factors, including the
judge’s attitude toward the legitimacy of civil racketeering lawsuits in general.

131 . Fed. R. Civ. P. 26(b)(1) (1993) (emphasis added).
132 . See, e.g., Engl v. Aetna Life Ins. Co., 139 F.2d 469 (2d Cir. 1943); Lewis v. United Air Transp. Corp., 27 F. Supp. 946 (D.
Conn. 1939).
133 . Fed. R. Civ. P. 26(b)(2) (1993).
134 . Fed. R. Civ. P. 26(c) (1993).
135 . Form 5 is a sample of the type of order that a federal district judge can enter at the outset of a RICO litigation; the purpose of
such an order is to identify those issues that are likely to become the most meaningful in the case and to follow the mandate of
Rule 16(a), as amended in 1983, which states that the court may direct “the attorneys for the parties” to appear before it for a
conference or conferences before trial for such purposes as (1) expediting the disposition of the action; (2) establishing early and
continuing control so that the case will not be protracted because of lack of management; (3) discouraging wasteful pretrial
activities; (4) improving the quality of the trial through more thorough preparation; and (5) facilitating the settlement of the case.
136 . 467 U.S. 20 (1984).
137 . In re Halkin, 598 F.2d 176 (D.C. Cir. 1979).
138 . Form 6 is a sample protective order, designed to be relatively straightforward and not unduly onerous for either party, for use in
a civil racketeering litigation.
139 . The validity of these so-called umbrella orders has been upheld in Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121-23 (3d
Cir. 1986). However, in recent years, media and public resistance to protective orders has increased. According to the Wall Street
Journal,
[a] judicial advisory committee shelved a hotly debated rule change that critics said would have made it easier to seal documents
in federal court. The proposal would have given judges the power to issue protective orders in cases where plaintiffs and
defendants agree. Currently, judges are required to find ““good cause” before ordering documents sealed, although the
requirement [is not] always strictly applied in cases where the parties consent. Consumer groups had criticized the proposal as
hastening a trend toward court secrecy.
Judicial Panel Shelves Controversial Rule Change, Wall St. J., Apr. 19, 1996, B2 at col. 6.
140 . See, e.g., Waldbaum v. Worldvision Enters., Inc., 84 F.R.D. 95 (S.D.N.Y. 1979) (Motley, C.J.); D’Ippolito v. American Oil Co.,
275 F. Supp. 310 (S.D.N.Y. 1967).
141 . 594 F.2d 291 (2d Cir. 1979).
142 . 635 F.2d 1295, 1299 (7th Cir. 1980).

§ 5.12 THE ATTORNEY-CLIENT PRIVILEGE AND CIVIL RICO, CIRPM s 5.12
CIRPM s 5.12
Aspen Publishers
Paul Batista

§ 5.12 THE ATTORNEY-CLIENT PRIVILEGE AND CIVIL RICO
Rule 26 of the Federal Rules of Civil Procedure expressly shields from discovery material that qualifies for the attorney-
client, work product or other recognized privilege. 143 While the Supreme Court has repeatedly stressed the importance of the
attorney-client and work product privileges, the existence of the privileges has continued to raise difficult issues in the
discovery process,144 in RICO litigation as in other federal cases.
Privilege problems have an extremely simple source: even highly relevant and critical documents can be exempt from
disclosure under a claim of privilege. In the real world of actual litigation, particularly cases as emotion-laden as civil RICO
lawsuits tend to be, the temptation, in responding to a document demand, is to evaluate whether a particularly sensitive
document may qualify for any conceivable claim of privilege. The temptation tends to increase with the importance of the
document, particularly if it is damaging.
The lawyer who has served a document demand may never learn of the existence of a relevant document. This occurs when
the responding party makes the decision-- clearly an incorrect one--that a privileged document is not under any circumstances
“relevant” to the litigation and, as a result, need not even be identified. Indeed, some lawyers take the position that, in
responding to a document request, it is not even necessary to disclose that relevant documents have been withheld on grounds
of privilege. For the party seeking disclosure in a RICO or other civil litigation, there are obvious and frequently
insurmountable difficulties in testing claims of privilege where an adversary has taken the position that privileged documents
are, by their nature, irrelevant.
The more frequently litigated problem develops when a lawyer concedes that relevant documents exist but are being withheld
from production because they are privileged. A bald assertion that there are privileged documents confronts the party seeking
disclosure with a series of choices. Should he or she ask the producing party to prepare a list of the privileged documents?
How detailed should such a list be? Under what circumstances should a motion be made to compel the preparation of an
adequate privilege list? Under what circumstances has a privilege been waived? When should a party request that an
adversary submit assertedly privileged documents for in camera inspection by the judge or the magistrate?
As a general proposition, claims of privilege usually involve such an opportunity for abuse that many privilege battles are
worth the effort for the party seeking discovery. This is particularly true in RICO cases in which there are concurrent private
and governmental investigations. The balance of this subsection will deal with the basic arguments for and against the waiver
of the attorney-client and work product privileges.
[A] Arguments for and Against the Waiver of the Privilege
Recent cases have revealed a steady expansion of the circumstances under which a claim of privilege will be defeated. One of
the central arguments against a privilege claim involves the concept of waiver: in effect, privileged communications can lose
their immune status under a wide variety of circumstances. In In re Subpoenas Duces Tecum to Fulbright & Jaworski,145 the
plaintiffs in a class action litigation against Tesoro Petroleum Corp. served third-party subpoenas on two law firms, Fulbright
& Jaworski and Vinson & Elkins. The subpoenas called for the production by the firms of documents that had been provided

by Tesoro to the Securities and Exchange Commission (SEC) and a grand jury in connection with a government investigation
of illegal foreign payments in which Tesoro may have been involved.
Fulbright & Jaworski had been hired by Tesoro to perform a “self-investigation” of the company as part of the SEC’s
voluntary disclosure program regarding illegal foreign corporate payments. Tesoro had disclosed the results of the law firm’s
investigation to the SEC.146 It was that report that the private class action plaintiffs sought through the subpoenas served on
the law firms.147
The law firms resisted the disclosure of the material, contending that the documents constituted both attorney-client and work
product material. As in most cases involving these privileges, the issue was the extent to which the privilege had been waived
by the prior action of the client. Waiver can occur in a variety of contexts, some of them arguably unintended. The
dissemination of a document to a person other than the lawyer and his client can result in a waiver, even if the distribution of
the document was inadvertent. In Fulbright & Jaworski, the concept of waiver was broadened to include Tesoro’s act of
providing the attorney-client and work product documents to governmental agencies. This has obvious significance in the
context of concurrent criminal and civil RICO proceedings and for strictly private RICO cases as well.
[B] Waivers of the Attorney-Client Privilege
In fact, the analysis of the waiver issue by the D.C. Circuit in Fulbright & Jaworski148 provides a compelling set of
arguments that can be utilized in virtually any attempt to defeat a privilege claim on the basis of a waiver argument. Initially,
the Fulbright & Jaworski court, in coming to terms with the issue of attorney-client privilege before the “harder question” of
work product privilege,149 restated the observation that the privilege is not absolute and that it can be waived by “any
voluntary disclosure.”150
According to Fulbright & Jaworski, there was no question that a voluntary disclosure had taken place, since the documents
had passed from the confines of the attorney-client relationship to the SEC. The law firm, however, argued that the disclosure
to the SEC constituted only a “limited waiver” of the privilege. 151 The appellate court in Fulbright & Jaworski
““emphatically”152 rejected the limited waiver argument and, in words that could apply to virtually every case in which an
attorney-client document or communication has been disclosed to any third party, said: “Appellants cannot now selectively
assert protection of those same documents under the attorney-client privilege. A client cannot waive that privilege in
circumstances where disclosure might be beneficial while maintaining it in other circumstances where non-disclosure would
be beneficial.”153 The Fulbright & Jaworski court concluded its treatment of the claim of attorney-client privilege by
declaring, in language that is important in any attack on a claim of privilege: “We believe that the attorney-client privilege
should be available only at the traditional price: a litigant who wishes to assert confidentiality must maintain genuine
confidentiality.”154
[C] Waivers of the Work Product Privilege
In general, the more critical and more enticing documents are those that the lawyer herself has created for purposes of a
particular lawsuit--in other words, documents that could qualify for attorney work product protection. Because they generally
present a more alluring temptation, the lawyer’s work papers generally involve more sensitive discovery issues. The
Fulbright & Jaworski court, for example, described as the “harder question” 155 the claims of the law firm to work product
protection for the same documents as to which an attorney-client claim was asserted.
In Fulbright & Jaworski, the parties seeking disclosure faced the substantial policy considerations that underlie attorney work
product protection. As the decision stated:
While the attorney-client privilege is intended to promote communication between attorney and client by protecting client
confidences, the work product privilege is a broader protection, designed to balance the need of the adversary system to
promote an attorney’s preparation in representing a client against society’s general interest in revealing all true and material
facts relevant to the resolution of a dispute.156
Although it accorded a more protected status to work product material, the Fulbright & Jaworski court disposed of that claim
in the same way the claim of attorney-client privilege was handled: the work product privilege was deemed waived and
production ordered. In the process of ordering disclosure, the court identified three arguments that can be widely used in any
litigation that attempts to override the privilege claim. At the outset, the court concluded that Tesoro and the law firm
claiming the privilege sought to use the privilege “in a way that is not consistent with the purpose of the privilege.” 157 This
was because disclosure of the work product material to the SEC gave an undue advantage both to Tesoro and to the SEC as
an adversary.
We are convinced that the health of the adversary system--which spawned the need for protection of an attorney’s work

product from discovery by an opponent--would not be well served by allowing appellants the advantages of selective
disclosure to particular adversaries, a differential disclosure often spurred by considerations of self-interest. 158
Moreover, the Fulbright & Jaworski court found that neither Tesoro nor the law firm was entitled to any legitimate
expectation that the documents would be treated confidentially by the SEC. The court rested its final conclusion in favor of
disclosure and the overriding of the asserted privilege on the rationale that the documents had to be rigidly protected and not
selectively disseminated. “The privilege does not protect against the manipulation of selecting a particular opponent for
selective disclosure--most probably for the discloser’s own benefit.”159
Similar waiver rules apply even to inadvertent disclosures of attorney-client or work product materials. The touchstone of the
decisions is that the confidential nature of the communications must be fully insulated, at the risk of the loss of the entire
privilege.160 As a result, any party seeking assertedly privileged material must attempt to learn all the facts surrounding the
preparation and, more important, the dissemination of such material.
[D] Fraud or Crime Exception to Privilege Treatment
Another compelling argument routinely made in appropriate cases to overcome the privilege is that the documents were
developed in the course of the client’s commission of a fraud or crime. The relevance of this argument to a RICO case is
obvious and direct, since most RICO actions plead a course of criminal conduct. While standards for establishing the
necessary level of fraud are high, they are not insurmountable. In Irving Trust Co. v. Gomez,161 the court determined that the
crime-fraud exception disqualified the Chase Manhattan Bank from asserting the work product privilege as to memoranda
and notes of meetings and interviews prepared by one of its attorneys.
We are satisfied, for purposes of this motion as to the substantiality of Bulos’ claim that Chase, at the instigation and with the
support of Irving Trust, deprived Bulos of the rightful use of his funds although it knew of no grounds to do so. We are
further persuaded that the requested documents represent communications by and between McAllister [the Chase lawyer],
other Chase and Chase International employees, and their Florida counsel in apparent furtherance of this allegedly unlawful
course of action.162
[E] The Privilege List
Crucial to the process of testing a claim of privilege is the so-called privilege list--an area that generates a substantial amount
of discovery-related litigation. Document requests in civil RICO cases should routinely demand that the discovered party
prepare a “privilege list” identifying the withheld documents that assertedly qualify for either the attorney-client or the work
product protections. In those cases in which the discovered party refuses to provide the list, it is usually essential to seek to
compel preparation of the list. The cases are relatively uniform in treating the failure to prepare a list as a discovery abuse. 163
The privilege list should, at a minimum, identify (1) the specific privilege invoked as to each document; (2) the author of
each document; (3) all the recipients of each document; and (4) the substance and subject matter of each document. 164 It is
the last category of information--the substance and subject matter of each document--that presents the most active field for
combat. The party asserting the privilege wants to describe the substance as narrowly and obliquely as possible. On the other
hand, the party contesting the privilege wants enough information in order to persuade the judge or magistrate that the
document does not qualify for protection or that there is a sufficient basis to warrant the court’s in camera inspection of the
document. As one court has noted: “It is admittedly difficult for a person seeking discovery of attorney documents to make
the required showing without having considerable information about the contents of the documents.” 165
Footnotes
143 . Rule 26(b), as amended in 1983 and in 1993, defines both the scope of discovery and its limits, and provides in part that “parties
may obtain discovery of any matter, not privileged, which is relevant to the subject matter involved in the pending action. . . .”
144 . See, e.g., Upjohn v. United States, 449 U.S. 383 (1981).
145 . 738 F.2d 1367 (D.C. Cir. 1984).
146 . Id. at 1369.
147 . The District of Columbia Circuit’s decision in Fulbright & Jaworski does not indicate whether the class action plaintiffs had
sought the documents from the SEC itself through the Freedom of Information Act--a procedure that, in analogous cases, could be
a more efficient alternative than a subpoena on a third party.

148 . 738 F.2d 1367 (D.C. Cir. 1984). See § 5.09[A].
149 . Id. at 1370. For purposes of clarity, the District of Columbia Circuit in Fulbright & Jaworski underscored the primary policy
reason supporting the attorney-client privilege: “By allowing confidentiality of the substance of client and lawyer discussions, the
privilege is held by clients as a means of encouraging their candor in discussing their circumstances with their chosen legal
representatives.” Id. at 1369.
150 . Id.
151 . Id. See also Permian Corp. v. United States, 665 F.2d 1214 (D.C. Cir. 1981); United States v. American Tel. & Tel., 642 F.2d
1285 (D.C. Cir. 1980).
152 . 735 P.2d 1367, 1370. Some circuits, however, recognize a “limited waiver” exception when a client has provided documents to a
government entity. See, e.g., Diversified Indus., Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977).
153 . 738 F.2d 1367, 1370.
154 . Id.
155 . In re Subpoenas Duces Tecum to Fulbright & Jaworski, 738 F.2d 1367, 1370 (D.C. Cir. 1984). Work product materials are
identified in the Federal Rules as “trial preparation” materials. Fed. R. Civ. P. 26(b)(3) provides:
(3) Trial Preparation: Materials. Subject to the provisions of subdivision (b)(4) of this rule, a party may obtain discovery of
documents and tangible things otherwise discoverable under subdivision (b)(1) of this rule and prepared in anticipation of
litigation or for trial by or for another party or by or for that other party’s representative (including the other party’s attorney,
consultant, surety, indemnitor, insurer, or agent) only upon a showing that the party seeking discovery has substantial need of the
materials in the preparation of the party’s case and that the party is unable without undue hardship to obtain the substantial
equivalent of the materials by other means. In ordering discovery of such materials when the required showing has been made, the
court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other
representative of a party concerning the litigation.
156 . 738 F.2d 1367, 1371.
157 . Id. See also In re Sealed Case, 676 F.2d 793 (D.C. Cir. 1982).
158 . 738 F.2d 1367, 1372.
159 . Id. See also In re Steinhardt Partners, L.P., 9 F.3d 230, 236 (2d Cir. 1993) (“Steinhardt’s voluntary submission of the
memorandum to the Enforcement Division waived the protections of the work product doctrine as to subsequent civil litigation
seeking the memorandum from Steinhardt”).
160 . See Cohn, The Work-Product Doctrine: Protection, Not Privilege, 71 Geo. L. Rev. 917 (1983); United States v. American Tel.
& Tel., 642 F.2d 1285 (D.C. Cir. 1980).
161 . 38 Fed. R. Serv. 2d 533 (S.D.N.Y. 1983).
162 . Id. at 533. See also In re Antitrust Grand Jury, 805 F.2d 155, 162-63 (6th Cir. 1986) (“All reasons for the attorney-client
privilege are completely eviscerated when a client consults an attorney not for advice on past misconduct, but for legal assistance
in carrying out a contemplated or ongoing crime or fraud”).
163 . See, e.g., International Paper Co. v. Fibreboard Corp., 63 F.R.D. 88, 93 (D. Del. 1974); Black v. Sheraton, 371 F. Supp. 97
(D.D.C. 1974).
164 . See General Foods Corp. v. Nestle Co., 38 Fed. R. Serv. 2d 521 (D.N.J. 1982).
165 . In re Grand Jury Proceedings (FMC), 604 F.2d 798 (3d Cir. 1979).

§ 5.13 SUMMARY JUDGMENT AND CIVIL RICO, CIRPM s 5.13
CIRPM s 5.13
Aspen Publishers
Paul Batista

§ 5.13 SUMMARY JUDGMENT AND CIVIL RICO
At some point in the discovery process, a lawyer representing either a plaintiff or a defendant should face and consider this
beguiling question: is the case sufficiently developed for the making of a meaningful motion for summary judgment under
Rule 56 of the Federal Rules of Civil Procedure?166 Traditionally, in commercial or civil cases of any complexity, the
conventional wisdom has been that a motion for summary judgment was, in all likelihood, not worth the effort. Until 1986,
summary judgment, while often sought, was rarely granted, since virtually any set of facts in dispute can contain a “genuine
issue of material fact,” as expressed in Rule 56 itself, thereby negating summary judgment treatment.
The conventional wisdom was changed by the Supreme Court’s 1986 Celotex and Anderson decisions.167 Both decisions
reviewed the summary judgment mechanism and created new incentives to seek summary judgment, even in cases involving
potentially complex and sophisticated securities, libel, and civil racketeering issues.
Although summary judgment, at least in theory, is available for both the plaintiff and the defendant, it is substantially more
likely to be used by the defendant in an effort to dismiss the plaintiff’s claim. Plaintiffs in civil RICO litigations are, in the
final analysis, seeking to establish that the defendants engaged in specified predicate acts for which they could have been
criminally indicted or charged, and in the final analysis the resolution of issues of potential criminality does not lend itself to
summary disposition. As a result, even with the expansion of summary judgment endorsed and encouraged by the Supreme
Court in 1986 in Celotex and Anderson, summary judgment in civil racketeering lawsuits will receive more careful attention
from the defense side.
The Supreme Court decisions in Celotex and Anderson must be assessed in any review of the strategic question of whether to
seek summary judgment in the RICO context. As far as Celotex is concerned, the Court clarified the interpretation of Rule
56(c) in Adickes v. S.H. Kress & Co.,168 a 1970 decision that placed the burden on “the moving party . . . to show initially the
absence of a genuine issue concerning any material fact.” 169 The Third Circuit, in its Celotex decision, had construed this
language to require the movant to support its motion with affidavits or other similar materials negating the opponent’s claim.
Reversing the Third Circuit in Celotex, the Supreme Court concluded: “We do not think the Adickes language . . . should be
construed to mean that the burden is on the party moving for summary judgment to produce evidence of the absence of a
genuine issue of material fact, even with regard to an issue on which the nonmoving party bears the burden of proof.” 170
Instead, the movant’s burden under Rule 56 is simply the need to show the absence of evidence to support the nonmoving
party’s case. The movant must identify those portions of “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with affidavits, if any,” to demonstrate the absence of a genuine issue of material fact. As the
Tenth Circuit asserted in Windon Third Oil & Gas v. Federal Deposit Insurance Co.: 171 “Celotex requires no more. The
moving party’s burden cannot be enhanced to require his proof of a negative; that is, not only is there no evidence in the
record, but plaintiff’s evidence need not be disproved.”172
Similarly, the Supreme Court in its companion decision in Anderson v. Liberty Lobby, Inc., addressed the issue of the amount
and quality of evidence necessary to withstand summary judgment in an action for libel. To make this determination, a trial
court must examine the substantive law to identify which facts are relevant “since materiality is only a criterion for
evaluating the evidentiary underpinnings of those disputes.” 173 Since the evidence of the nonmoving party is deemed true

and all reasonable inferences are drawn in his favor, the nonmoving party “need only present evidence from which a jury
might return a verdict in his favor.” 174 Moreover, determinations of credibility, weighing the evidence, and the drawing of
legitimate inferences from the facts remain in the preserve of the jury. As a result, when the district judge as the finder of fact
decides a motion for summary judgment based on the lack of proof of a material fact, he or she must ask, under Anderson,
whether a “fair-minded jury” could return a verdict for the plaintiff. In Anderson, as in Celotex, summary judgment was
granted under this elusive standard.
Civil RICO litigation, like the libel suit at issue in Anderson, obviously tends to be complex, but that complexity is no reason
for not considering a summary judgment motion in a racketeering case in the aftermath of Anderson and Celotex. The
defendants in McCarthy v. Recordex Service, Inc.,175 for example, had the insight and diligence to develop and present a
motion for summary judgment that resulted in the dismissal of the RICO counts from a complex racketeering and antitrust
litigation.
The underlying complaint in McCarthy was unusual, if note, remarkable. The plaintiffs were people who had filed medical
malpractice claims against hospitals in Pennsylvania. The attorneys who represented the plaintiffs in the medical malpractice
claims were required to purchase copies of hospital documents and records relevant to the underlying medical malpractice
cases from duplicating firms retained by the hospitals themselves. The contracts between the duplicating firms and the
hospitals in turn required that the duplicating firms charge the medical malpractice plaintiffs and their lawyers as much as
one dollar per page for copies of medical records.
According to the medical malpractice plaintiffs and their lawyers, the arrangements between the duplicating firms and the
hospitals constituted both racketeering and antitrust violations. The McCarthy plaintiffs alleged that the copying contracts
discriminated against malpractice claimants, by confining the reproduction of records to the designated duplicating firms, and
that ““[c]ertain ‘favored’ requestors,” such as insurance companies, “were charged a reduced rate or no fee at all.”176
The successful defense motion for summary judgment in McCarthy was focused on the argument that the so-called “direct
purchaser” doctrine--developed in the context of antitrust litigation 177--applied for RICO standing purposes as well. In effect,
the defense argued, the “direct purchaser” rule denied both antitrust and RICO standing to “downstream indirect
purchasers”178 from alleged antitrust violators. Application of this theory to the medical malpractice plaintiffs in McCarthy
operated to bar their claims, on standing grounds, since pretrial discovery had revealed that it was the plaintiffs’ lawyers, not
the plaintiffs themselves, who had paid the duplicating costs. The defense motion for summary judgment in McCarthy argued
that the actual plaintiffs--none of whom was required under his or her respective retainer agreement to reimburse the lawyers
for duplicating costs paid by the lawyers-- were not “purchasers” under the indirect purchaser rule.
The district court and the Third Circuit in McCarthy agreed, granting the hospitals’ motion for summary judgment.
“Significantly,” as the Third Circuit noted, “antitrust standing principles apply equally to allegations of RICO violations.” 179
The McCarthy decision illustrates that a defense motion for summary judgment can, in the aftermath of Celotex and
Anderson, be particularly effective where the discerning defense lawyer can isolate a legal and factual issue--such as
standing--that cuts to the heart of the plaintiff’s RICO theory and strategy. Stated differently, a scattershot defense motion
that argues that a defendant did not commit the alleged predicate acts, or had no intent to commit them, or that the plaintiff
cannot prove its claims, is less likely to succeed than a motion that carefully and selectively focuses on one or two key issues.
If a district court is presented with a massive set of affidavits and documents, urging a broad array of points, the natural
tendency of a district judge, even after Celotex and Anderson, will probably be to conclude that genuine, triable issues of fact
must lurk somewhere.
Although summary judgment is emerging as an effective defensive tool in civil RICO litigation, it is rarely successful when
invoked by a plaintiff. Indeed, the effective use of summary judgment by a plaintiff is typically confined to civil racketeering
actions in which the plaintiff is the United States government, rather than a private litigant. Moreover, even where the
government is the plaintiff, summary judgment is not likely to succeed unless a defendant has a prior criminal conviction in
connection with at least some of the events placed in issue in the civil case and invokes his or her Fifth Amendment privilege
against self-incrimination in response to the government’s discovery demands in the civil racketeering action.
United States v. Private Sanitation Industry Association 180 underscores just how potent a weapon summary judgment can be
in the hands of the federal government in a civil RICO action, particularly one in which the defendant has prior criminal
convictions and invokes his Fifth Amendment privilege. Broadly at issue in Private Sanitation was an action in which the
government, in a civil context, accused more than 100 individual and corporate defendants of having conducted the solid
waste disposal industry on Long Island as a racketeering enterprise. Specifically at issue in the Second Circuit’s Private
Sanitation opinion was one of the defendants, Salvatore Avellino, against whom the government brought a motion for

summary judgment to establish that he had violated RICO.
The government succeeded on its summary judgment motion. The Second Circuit concluded that the United States was able
to establish--through Avellino’s prior guilty pleas in state criminal proceedings alleging bribery of state officials and
Avellino’s invocation of his Fifth Amendment privilege against self-incrimination in the civil racketeering action--that he had
violated RICO:
[Avellino’s] first contention, that the Government failed to establish the requisite two racketeering acts under 18 U.S.C. §
1961(1)(A) because there is a genuine issue of fact regarding the bribery racketeering act, is meritless. The Government
submitted evidence that included Avellino’s express admission in a [state] plea allocution to bribery conspiracy, an $800
check, an entry in a cash disbursement journal authorizing the check, and the . . . testimony of government informants. Also,
an inference may be drawn from [Avellino’s] failure to testify in the present proceeding. This evidence is so overwhelming
that “there is no genuine issue as to any material fact,” and the Government was “entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). . . .181
The consequences of the entry of summary judgment in Private Sanitation were stark: Avellino was barred from the Long
Island solid waste disposal industry and from participation in his own corporations. He was also ordered to disgorge amounts
he had illegally earned from his participation in racketeering acts, although the precise amount of the disgorgement was
deferred to later stages of the action.
Footnotes
166 . Entitled “Summary Judgment,” Fed. R. Civ. P. 56 provides a basis for the “claimant” and the “defendant party” to seek summary
judgment with respect to a complaint, counterclaim, or cross-claim, typically after a responsive pleading has been served, such as
an answer to a complaint. Rule 56(c) also contemplates that the papers supporting a motion, and in opposition to the motion, will
include affidavits, “the pleadings, depositions, answers to interrogatories and admissions on file. . . .” In the event these papers
“show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law,”
summary judgment should “be rendered forthwith.”
167 . Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct 2548, 98 L. Ed. 2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 274,
106 S. Ct 2505, 91 L. Ed. 2d 202 (1986).
168 . 396 U.S. 144, 106 S. Ct. 2548 (1970).
169 . Id. at 159.
170 . 106 S. Ct. 2548, 2554.
171 . 805 F.2d 342 (10th Cir. 1986).
172 . Id. at 346.
173 . 106 S. Ct. 2505, 2510.
174 . Id. at 2514.
175 . 80 F.3d 842 (3d Cir. 1996).
176 . Id. at 846.
177 . See, e.g., Illinois Brick Co. v. Illinois, 431 U.S. 720, 744, 97 S. Ct. 2061, 2073-74, 52 L. Ed. 2d 707 (1977).
178 . 80 F.3d 842, 848.
179 . Id. at 855.
180 . 995 F.2d 375 (2d Cir. 1993).
181 . Id. at 377. See also United States v. Private Sanitation Indus. Ass’n, 44 F.3d 1082, 1083 (2d Cir. 1994):
[Defendant] had pled guilty in the Supreme Court of the State of New York to coercion in the first degree, in violation of New
York Penal Law § 135.65(1), for threatening certain private contractors with damage to their property if they bid for waste
disposal work. The district court held that the conduct underlying this conviction, as established in [defendant’s] plea allocution,
was clearly indictable under the Hobbs Act, 18 U.S.C. § 1951, and was therefore a RICO predicate act under 18 U.S.C. § 1961(1)
(B).

§ 5.14 THE TRIAL OF A CIVIL RICO CASE: GENERAL POINTS, CIRPM s 5.14
CIRPM s 5.14
Aspen Publishers
Paul Batista

§ 5.14 THE TRIAL OF A CIVIL RICO CASE: GENERAL POINTS
There is nothing inherently different about the trial of a civil RICO case. Like any other civil litigation, the development of
trial strategy and the actual conduct of the trial depend on the unique facts of the particular case, the practices of the trial
judge, the influence exerted by the presence of the jury, and the comparative abilities of the lawyers actually conducting the
trial.
Candidly described, the difference between the trial of a civil racketeering case and the trial of other civil and commercial
lawsuits is that very few civil RICO actions actually are tried. Many civil RICO claims are made and, as this book has
demonstrated, a substantial amount of the time and effort of the federal judiciary is devoted to civil racketeering litigation.
However, the chief battlegrounds on which RICO battles are waged are the fields of pleading issues, motions to dismiss,
discovery disputes, motions for summary judgment, and phases of the case other than the trial process.
Because few aspects of the trial of a RICO litigation raise unique issues in a procedural sense, the balance of the subsections
of this section will briefly address the few unique RICO issues--such as questions of the standard of proof and jury
instructions--raised by a civil racketeering trial.
[A] Standards of Proof in a Civil Racketeering Case
As with any other trial on the merits of a claim, a plaintiff in a civil racketeering case must prove his contentions. A critical
issue is the standard of proof that must be demonstrated before a defendant in a civil RICO case can be found liable. It is
indicative of the relative absence of trials in the civil RICO arena that there is no final, uniform, or dispositive answer to the
bare question of what standard of proof applies, despite the fact that RICO was enacted more than 36 years ago.
The Supreme Court in its Sedima182 decision in 1985 did refer to the debate over the appropriate standard of proof, but laid
down no conclusive rules. In Sedima, the Court considered and rejected the view expressed by the Second Circuit that the use
of civil RICO should be radically constricted because substantial practical difficulties would be engendered by the alleged
necessity of instructing the jury concerning different standards of proof for the predicate acts and the balance of the case. In
the Second Circuit’s view in Sedima, the standard for proof of the predicate acts should be the “beyond a reasonable doubt”
formulation that applies to criminal cases. As for the balance of the civil litigation--relating to proof of the enterprise, the
pattern, and the injury--the Second Circuit in Sedima expressed the point of view that a preponderance standard should
control.
The Supreme Court in Sedima, in the process of its wholesale reversal of the Second Circuit, strongly questioned the lower
court’s views as to the standard of proof, directly challenging the assertion that the criminal “beyond a reasonable doubt”
standard applied to proof of the predicate offenses in a civil racketeering case. Without resolving the issues, the Supreme
Court in Sedima suggested that, even if the standards of proof varied for different aspects of the case, appropriate jury
instructions could be fashioned explaining the applicability of different standards.
In critically questioning the assumptions made by the Second Circuit about standards of proofs, the Supreme Court noted in

Sedima:
That the offending conduct is described by reference to criminal statutes does not mean that its occurrence must be
established by criminal standards or that the consequences of a finding of liability in a private civil action are identical to the
consequences of a criminal conviction.183
Rather than rise to the challenge of delineating the standard of proof, the Supreme Court declared that “we need not decide
the standard of proof issue today.” 184 In the final analysis, then, Sedima appeared to have voiced a preference for the
preponderance of the evidence standard, but still left room for argument that the criminal standard should apply at least to the
predicate acts phase of the case.185 It should also be noted that the concept that the less stringent “preponderance” standard
applies to all phases of the case has been adopted by the substantial majority of the cases that have addressed the issue. 186
[B] RICO Jury Instructions
Jury instructions are a vital and often decisive component of trials. In the RICO context, there are relatively few decisions
addressing jury instructions in detail for the simple reason that relatively few racketeering cases actually are tried.
The Second Circuit’s decision in United States v. Quinones186.1 provides a rare articulation of key jury instructions utilized in
an actual racketeering trial. The Quinones decision’s approval of a central jury instruction is important because most jury
instructions utilized in RICO trials are derived from the guidebook Modern Federal Jury Instructions.186.2 Quinones
identified, quoted, and approved jury instructions given in a real-world litigation. Although the Second Circuit in Quinones
spoke approvingly of the RICO jury instructions that appear in Modern Federal Jury Instructions, the decision provided
explicit judicial approval to jury instructions that varied in terminology from the treatise.
[C] Jury Instructions Regarding the Elements of RICO
While Quinones was a criminal RICO case, its articulation of the elements of a jury instruction applies to civil racketeering
as well, except that a plaintiff in a civil RICO trial need not prove his case beyond a reasonable doubt.
At issue on appeal in Quinones was a defense challenge to jury instructions that included only three elements rather than the
five elements recommended by Modern Federal Jury Instructions. The Second Circuit in Quinones explained in detail the
specifics of the charge given at the actual trial and the overlap between the charge given and the instructions suggested by
Modern Federal Jury Instructions:
The challenged charge identified as the first RICO element requiring proof . . . “that a racketeering enterprise existed that
affected interstate commerce.” . . . . Modern Federal Jury Instructions charges the identical factual requirement in two
elements: “First, that an enterprise existed,” and ““Second, that the enterprise affected interstate or foreign commerce. See
Leonard B. Sand, et al., Modern Federal Jury Instructions: Criminal, Instruction, 52-19 (2003).
The challenged charge identified the second RICO element requiring proof . . . “that the defendant you are considering was
associated with that enterprise.” Modern Federal Jury Instructions states the same requirement as its recommended third
element: “Third, that the defendant was associated with or employed by the enterprise.”. . . . The . . . charge identified the
third RICO element . . . as “that on or about the dates charged the defendant unlawfully, intentionally, and knowingly
participated in the conduct of the affairs of the enterprise through a pattern of two or more specified racketeering
activities.”. . . . Modern Federal Jury Instructions states the same proof requirement in two elements: “Fourth, that the
defendant engaged in a pattern of racketeering,” and “Fifth, that the defendant conducted or participated in the conduct of the
enterprise through the pattern of racketeering activity.”. . . .186.3
Although a debate over the number of elements required in a jury charge may appear arcane, the courts have long disagreed
on this issue. Some circuits adhere strictly to the use of the precise five elements mentioned in Modern Federal Jury
Instructions.186.4 In contrast, other circuits approve the practice of identifying four RICO elements, either by combining the
enterprise and interstate commerce requirements into a single element, 186.5 or by combining the pattern and conduct
requirements into a single element. 186.6 For obvious reasons, the almost metaphysical question of how many discrete
elements must be articulated in the jury instructions in a RICO case is not nearly as important as whether the elements
contained in the instructions, “when viewed as a whole”, 186.7 adequately instruct a jury as to all factual findings necessary to
support either a verdict of liability in a civil case or a conviction in a criminal case.
Against this background, the Second Circuit in Quinones found that the District Court included in its three-element
formulation all the factual findings necessary to support the conviction. More specifically, the jury instructions defined the
term “enterprise,” explaining that the Government had to prove both the existence of the charged enterprise and its effect on
interstate commerce.186.8

As to the second element, the District Court in Quinones explained the need for proof that a defendant “not only knew the
existence of the . . . enterprise, and the general nature of its activities, but also that he purposely associated himself with it and
played some discretionary role, however modest, in its operation, management, or direction.” 186.9
The jury instruction in Quinones also adequately fulfilled the function of instructing the jury on the “pattern of racketeering.”
To establish the requisite “pattern,” the Government--as well as the civil plaintiff--had to prove “at least two specified
racketeering acts that, rather than being isolated, are related [in] the sense of having the same or similar purposes, results,
participants, victims, or methods of commission and that pose a threat of continued racketeering activity in that they were
committed as part of the enterprise’s ongoing criminal purposes.”186.10
[D] Jury Instructions in Civil RICO Cases
There are many crucial events in the life of a trial. One of the most critical decisions must be determined by the plaintiff or
the defendant at a very early stage in the litigation: should the civil racketeering claims be tried by a jury or by the federal
district judge? Rule 38 of the Federal Rules of Civil Procedure preserves the right to trial by jury but requires, as Rule 38(b)
specifies, an early and important decision on that issue: “Any party may demand a trial by jury of any issue triable of right by
a jury by serving upon the other parties a demand therefor in writing at any time after the commencement of the action and
not later than 10 days after the service of the last pleading directed to such issue.” Once made, a demand for a jury trial
cannot be withdrawn without the consent of the parties, under Rule 38(d).
In a jury trial in which the focus is a claim of civil racketeering, one of the basic means by which a plaintiff and defendant
can seek to shape and influence a jury’s response to the evidence is the jury instruction. Under the Federal Rules of Civil
Procedure, both sides have an opportunity to propose and recommend to the presiding judge the jury instructions that the
respective combatants find appropriate.187 Rule 51 of the Federal Rules of Civil Procedure provides as follows on the
procedures relating to jury instructions:
At the close of the evidence or at such earlier time during the trial as the court reasonably directs, any party may file written
requests that the court instruct the jury on the law as set forth in the request. The court shall inform counsel of its proposed
action on the requests prior to their arguments to the jury. The court, at its election, may instruct the jury before or after
argument, or both. No party may assign as error the giving or the failure to give an instruction unless that party objects
thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of the
objection. Opportunity shall be given to make the objection out of the hearing of the jury.
Some of the considerations that enter into play in determining what jury instructions to propose must be derived from the
general language of Sedima and RICO itself regarding the components of a racketeering violation. As the accompanying
proposed jury instructions reveal (see Form 11), a plaintiff’s jury instructions typically will be shaped with the broad
standards of Sedima and H.J. Inc.188 in the background and with the emphasis on relaxed standards of proof. In contrast, a
defendant’s proposed jury instructions will focus on a rigorous approach to issues such as the appropriate standard of proof,
the demonstration of a “pattern of racketeering activity,” and the demands of pleading the enterprise-person dichotomy. 189
[E] Motions for Judgment as a Matter of Law
Even in cases in which the jury has returned a verdict against a defendant, the Federal Rules leave open at least one further
avenue for attacks on the verdict at the district court level. That final avenue for attack is a motion, pursuant to Federal Rule
of Civil Procedure 50, for a judgment as a matter of law.
Although significant deference is generally given to a jury’s verdict, the Rule 50 motion for a judgment as a matter of law has
enjoyed a fair amount of success in those relatively few civil RICO cases that have resulted in a verdict against the defendant
after a trial by jury. Bosteve, Ltd. v. Marauszwski,190 for example, was a litigation in which a motion for judgment as a
matter of law was successfully invoked by a losing party; it is also a decision that succinctly re-states the basic rules that
apply to this trial-level collateral attack on a jury verdict. (Prior to 1991, motions under Rule 50 were widely known as
motions for judgment notwithstanding the verdict, or motions “j.n.o.v.” The 1991 amendments explained that the terms
“j.n.o.v.” and “directed verdict” formerly used in Rule 50 were anachronisms.)
Briefly described, the facts in Bosteve related to a contract in which the plaintiffs allegedly agreed to sell a yacht to defendant
William F. Marauszwski in return for the defendant’s assumption of the amount remaining due on the yacht’s mortgage to
Chemical Bank. As the court in Bosteve described it: “As so often happens, the deal fell apart with each side accusing the
other of breach of contract, fraudulent misrepresentations, and violations of the Racketeer Influenced and Corrupt
Organizations Act. . . .”191
As a result of pretrial motion practice in Bosteve, the plaintiff’s RICO-based complaint against the defendant was dismissed.
In contrast, the defendant was more successful during the pretrial motion practice, and his RICO counterclaim as against the
plaintiff was not dismissed. Indeed, the defendant’s success continued through the vast bulk of the ensuing jury trial, for the
defendant prevailed on his civil RICO claims when the jury returned a verdict in his favor.
Obviously stung by the jury’s decision, the losing side in Bosteve filed a Rule 50 motion to set aside the jury verdict. The
primary argument advanced in support of the motion was the logical and obvious one: that the plaintiffs could not have been
found liable for a RICO violation since they were not involved in a pattern of racketeering activity. According to the motion,
the transaction at issue involved a single scheme--an alleged agreement to sell the yacht--and did not rise to the level of a
“pattern.”
In Bosteve, as in the vast majority of other cases where a Rule 50 motion attacking the jury verdict is made, that motion
typically echoes an earlier motion for judgment made at the close of the adversary’s case during trial. Both motions are
governed by Federal Rule of Civil Procedure 50, which, as amended in 1991, provides in part that
[i]f during a trial by jury a party has been fully heard with respect to an issue and there is no legally sufficient evidentiary
basis for a reasonable jury to have found for that party with respect to that issue, the court may grant a motion for judgment
as a matter of law against that party on any claim, counterclaim, cross-claim, or third party claim. . . .
A motion for judgment as a matter of law “may be made at any time before submission of the case to the jury,” as Rule 50(a)
(2) explicitly provides, and must “specify the judgment sought and the law and the facts on which the moving party is entitled
to the judgment.”
Rule 50 creates a “doublewave” mechanism by which a defendant can seek to take a case away from a jury: a motion for
judgment as a matter of law can be made during trial, before the jury acts, and essentially the same motion can be made after
trial. As Rule 50(b) provides:
Whenever a motion for a judgment as a matter of law made at the close of all the evidence is denied or for any reason is not
granted, the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions
raised by the motion. Such a motion may be renewed . . . not later than ten days after entry of judgment.
The standards for granting a judgment as a matter of law during the trial, or a judgment after trial, present formidable
obstacles to the moving party, as the Bosteve decision correctly noted. In a related context, the Second Circuit has held that
the “trial court cannot assess the weight of conflicting evidence, pass on the credibility of witnesses, or substitute its
judgment for that of the jury.” 192 Rather, after viewing the evidence in the light most favorable to the nonmoving party--and
giving the nonmovant the benefit of all reasonable inferences--the trial court should grant a Rule 50 motion only when ““(1)
there is such a complete absence of evidence supporting the verdict that the jury’s finding could only have been the result of
sheer surmise and conjecture, or (2) there is such an overwhelming amount of evidence in favor of the movant that
reasonable and fair-minded men could not arrive at a verdict against him.”193
In the view of the Bosteve court, the RICO liability verdict of the jury was so defective that, even under these rigorous
standards for a motion pursuant to Rule 50, the verdict had to be nullified and the RICO claim dismissed. The Bosteve court
predicated this result on its view that the evidence “reveals but a single scheme to defraud.” 194
The lesson of the decision in Bosteve serves to underscore again the principal strategic framework for the defense of a civil
racketeering claim: move, move, and move again (within the flexible constraints of Federal Rule of Civil Procedure 11) to
strike at the plaintiff and his complaint, even after the jury has returned with a negative verdict.
The crucial need for defense vigilance and disciplined aggression in utilizing motions to set aside verdicts under Rule 50--
together with the related need to assail a complaint with pretrial dismissal motions under Rule 12(b)(6) and motions for
summary judgment under Rule 56--is underscored by the Second Circuit’s decision in Metromedia Co. v. Fugazy.195 While
the aggressive defendant in Bosteve was rewarded for tenacity, the lax defendant in Fugazy dropped an opportunity to win
reversal of a jury’s verdict imposing RICO liability.
Fugazy had its genesis in a complex series of transactions in the communications and entertainment industry. Metromedia
Company, as plaintiff, brought an action against defendants William Fugazy, a transportation entrepreneur with an interest in
the communications and entertainment industry, and Fugazy International Corporation based on alleged defaults by the
defendants under a stock purchase agreement. The jury obviously found that Metromedia presented a compelling, although
complex, case, since it returned a verdict against Fugazy and his corporation of $46,661,792.67 for violation of RICO.
During the course of the trial, the Fugazy defendants moved for a Rule 50 judgment as to the breach of contract, securities
law, and the non-RICO aspects of Metromedia’s case. The district judge denied the motion, the Fugazy defendants then
presented their case to the jury, and the jury returned verdicts against them on the RICO as well as breach of contract and
securities law claims. In the aftermath of the jury verdict, the Fugazy defendants revived their Rule 50 motion, adding, for the
first time, the claim that they could have no liability under RICO because Metromedia had allegedly presented no evidence to
establish that the defendants acted “willfully”196 in the conduct that formed the basis of the RICO liability.
Tenacity has its rewards, and lack of tenacity its consequences. The district court, although “not[ing] that . . . appellants were
perhaps correct in their contention that willfulness was a prerequisite for use of . . . a RICO predicate,” refused to grant a new
trial “on this basis since [defendants] had failed to raise this issue before the jury began its deliberations.” 197
The Second Circuit in Fugazy agreed with the district judge that the defendants’ failure to have framed and then to have
pressed the willfulness argument constituted a “default.” 198 What made that result especially painful for the defense lawyers
was that the Second Circuit, like the district court, accepted the willfulness argument as potentially “valid,” 199 but, because

of defense counsel’s procedural failure, affirmed the $46 million jury verdict under RICO. “To the extent that appellants seek
to assert that there was no evidence of willfulness and that they were entitled to judgment . . . as a matter of law [under
Federal Rule of Civil Procedure 50], that argument is procedurally barred. Though at the close of evidence defendants moved
for a directed verdict on a number of grounds, this ground was not among them.”200
To paraphrase Barry Goldwater’s acceptance speech at the Republican National Convention in 1964, moderation in the
pursuit of attacks on a RICO case is no virtue, and extremism in moving against a RICO case is no vice. Practice under
Federal Rule of Civil Procedure 50, as described in Fugazy and Bosteve, confirms the validity of that message.
Footnotes
183 . Id. at 3283.
184 . Id.
185 . The pattern jury instructions in Form 11 assume that a ““preponderance” standard will apply to each element of a civil RICO
claim. The form also indicates alternative language that can be utilized for instructions in a case in which the “beyond a
reasonable doubt” standard appears to be required by the federal judge presiding over the case.
186 . See, e.g., United States v. Capetto, 502 F.2d 1351, 1357 (7th Cir. 1974) (government civil action under RICO controlled by civil
standard); First Nat’l Bank of Cleveland v. Smith Motor Co., Inc., 633 F. Supp. 621 (E.D. Tex. 1986); Eaby v. Richmond, 561 F.
Supp. 131, 133-34 (E.D. Pa. 1984); State Farm Fire & Casualty Co. v. Estate of Caton, 540 F. Supp. 673 (N.D. Ind. 1982) ; Parnes
v. Heinhold Commodities, Inc., 487 F. Supp. 645 (N.D. Ill. 1980).
186 . 511 F.3d 289 (2d Cir. 2008).

.1
186 . See Leonard B. Sand, et al., Modern Federal Jury Instructions: Criminal (2003).
.2
186 . See Quinones, 511 F.3d at 314.
.3
186 . See, e.g., United States v. Keltner, 147 F.3d 662, 668 (8th Cir. 1998); United States v. To, 114 F.3d 737, 747 (11th Cir. 1998).
.4
186 . See United States v. Richardson, 167 F.3d 621, 625 (D.C. Cir. 1999); United States v. Parise, 159 F.3d 790, 794 (3d Cir. 1998);
.5 United States v. Posada-Rios, 158 F.3d 832, 855 (5th Cir. 1998); United States v. Shifman, 124 F.3d 31, 35 (1st Cir. 1997).
186 . See United States v. Palumbo Brothers, Inc., 145 F.3d 850, 877 (7th Cir. 1998).
.6
186 . Quinones, 511 F.3d at 315.
.7
186 . Id.
.8
186 . Id.
.9
186 . Id.
.10
187 . See Form 11 for pattern jury instructions in a civil racketeering litigation.
188 . Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S. Ct. 3275 (1985); H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 109
S. Ct. 2893, 106 L. Ed. 2d 195 (1989).
189 . See Ch. 4.
190 . 642 F. Supp. 197 (E.D.N.Y. 1986).
191 . Id. at 198.

192 . Aaron Ferer & Sons, Ltd. v. Chase Manhattan Bank, 731 F.2d 112, 121-22 (2d Cir. 1984). See also Mazzola v. Chrysler France,
S.A., 470 F. Supp. 24, 36 (E.D.N.Y. 1978).
193 . Bosteve, Ltd. v. Marauszwski, 642 F. Supp. 197, 202 (E.D.N.Y. 1986).
194 . Id. See also Gargano v. Diocese of Rockville Ctr., 80 F.3d 87 (2d Cir. 1996).
195 . 983 F.2d 350 (2d Cir. 1992).
196 . Id. at 358.
197 . Metromedia Co. v. Fugazy, 983 F.2d 350, 359 (2d Cir. 1992).
198 . Id. at 364.
199 . Id. at 362.
200 . Id. at 363.

§ 5.15 CALCULATION OF LEGAL FEES FOR THE PREVAILING..., CIRPM s 5.15
CIRPM s 5.15
Aspen Publishers
Paul Batista

§ 5.15 CALCULATION OF LEGAL FEES FOR THE PREVAILING PLAINTIFF
RICO is one of those increasingly common federal statutes authorizing the shifting of fees to the prevailing party and against
the losing side. Like most of the other federal statutes that jettison the ordinary American rule (each side pays its own legal
fees) in favor of the English rule (the loser pays the other side’s legal fees), RICO § 1964(c) does not provide any statutory
guidance for calculating the amount of the fee award; its only standard is the elusive concept of reasonableness: “Any person
injured in his business or property by reason of a violation of section 1962 . . . may sue therefor in any appropriate United
States district court and shall recover threefold the damages he sustains and the costs of the suit, including a reasonable
attorney’s fee.”
The calculation of attorneys’ fees, in the RICO context as in other contexts in which federal law makes fee-shifting available,
is complex, elusive, and frequently hard-fought, since the loser, understandably, wants to pay nothing or as little as possible.
Typical of the methodology used to calculate legal fees, and the bitter blood shed in these battles, was the expensive contest
in Louisiana Power & Light Co. v. Kellstrom,201 an “antitrust and RICO suit” in which a Louisiana utility company,
Louisiana Power & Light Company (LP&L), claimed that several major construction companies, including L.K. Comstock &
Company and Fischbach & Moore, Inc., had “conspired to rig the electrical bids” for a major nuclear power plant project. 202
After six years of trial preparation and an eight-week trial, LP&L won a jury verdict against Fischbach but lost its claims
against Comstock, the other contractor. Although LP&L had sought $17 million in damages, the jury returned a verdict of
only $500,000 in compensatory damages, an amount that was automatically trebled to $1.5 million.
In the ensuing legal fee dispute, LP&L moved for more than $5.2 million in legal fees and $280,000 in costs against
Fischbach. The district court, although not as generous as the utility company had hoped, granted $4.1 million in legal fees
and $330,000 in costs, an amount that vastly exceeded both the compensatory damages of $500,000 awarded by the jury and
the amount of recovery after the damage award was automatically trebled to $1.5 million.203
On appeal, Fischbach challenged (1) the district court’s acceptance as the ““lodestar” amount the total hours and full hourly
rates listed by LP&L’s counsel, (2) the extent of the district court’s downward adjustment of the lodestar, and (3) the date
selected by the district court as the starting date for postjudgment interest.
The Fifth Circuit in Louisiana Power was also generous to LP&L, although it did trim, by roughly three percent, the district
court’s award of attorneys’ fees and costs. The appellate decision in Louisiana Power reiterated the prevalent rules of fee
calculation for purposes of RICO and other federal fee-shifting statutes, including the closely analogous fee-shifting
provisions of the federal antitrust laws.
[A] Determining the “Lodestar” Amount
Broadly described, a two-step procedure applies to the determination of reasonable legal fees under RICO. The first step
requires the district court to determine the reasonable number of hours expended on the litigation and the reasonable hourly
rates for the participating lawyers.204 The simple task of multiplying the reasonable hours by the reasonable hourly rates
yields the “lodestar” number. It is the “lodestar” number that a district court can accept as the amount to be awarded in favor
of the prevailing party or can adjust upward or downward in reaching the ultimate award. 205

The basic task of calculating the “lodestar” obviously does not end a court’s exercise, since a district court must determine
whether the hours claimed were “reasonably expended on the litigation.” 206 Moreover, “the fee applicant bears the burden of
establishing entitlement to an award and documenting the appropriate hours expended and hourly rates. The applicant . . .
should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims.” 207 Given the
burden placed on the applicant for fees, courts can--and they routinely do-- reduce the number of hours if the documentation
is vague, incomplete, or insufficiently detailed.208
[B] The Need for Contemporaneous Time Records
In challenging the largesse of the district court’s fee award in Louisiana Power,209 Fischbach focused on the fact that there
were significant gaps in LP&L’s time records for certain periods during the six years in which the litigation was wending its
way through pretrial discovery--in fact, the deficient documentation encompassed more than $360,000 in claimed time
charges. Although a failure to provide contemporaneous billing records “does not preclude an award of fees per se,” 210 the
failure is typically the death knell for recovery of the inadequately documented hours. According to the Fifth Circuit in
Louisiana Power, the insistence on contemporaneous, detailed records is vital because, at least in principle, a district court is
required to analyze a fee request on an hour-by-hour basis, since a district court “is not only required to determine whether
the total hours claimed are reasonable, but also whether particular hours claimed were reasonably expended.” 211
The requirement that the applicant for fees maintain reviewable, understandable time records obviously tends to reduce the
lodestar number. A related factor that works attrition on the lodestar number is the need for contemporaneous records--in
other words, adequately detailed records prepared at the time the legal services to which they relate were performed. In
general, “reconstructed, after-the-fact summaries” 212 are not acceptable, although summaries prepared on a monthly or
quarterly basis reflecting work done in that monthly or quarterly period can “support[] an award of some amount of
hours.”213
Further attrition to the lodestar number can flow from “scanty” records, even if the records are contemporaneous. 214
“Litigants take their chances when submitting fee applications” with entries such as “revise memorandum,” ““review
pleadings,” and “correspondence,” since “they provide little information from which to determine the ‘reasonableness’ of the
hours expended on tasks vaguely referred to as ‘pleadings,’ ‘documents,’ or “correspondence’ without stating what was done
with greater precision.”215
[C] Elimination of Unsuccessful Time
In a multidefendant litigation, or in a litigation with multiple claims under RICO or in which RICO is only one of several
grounds of liability, a party assailing a fee application has another avenue of attack: an argument that hours should be
excluded for litigation directed at unsuccessful claims or against other defendants. The Supreme Court in Hensley216 stressed
the obvious point that work on unsuccessful claims is not compensable under federal fee-shifting statutes such as RICO.
However, the obvious rule against compensation for legal work done on claims that did not succeed is easier to state than to
apply, and a fee applicant under RICO has several avenues of counterattack. Most litigation under RICO involves multiple
defendants and multiple claims, and a successful RICO plaintiff (even a partially successful one) can argue that its “claims
against multiple parties share a ‘common core of facts’ or ‘related legal theories”D’ and thus “may claim all hours reasonably
necessary to litigate those issues.”217
[D] The Issue of a Reasonable Hourly Rate
Still another basis for challenging a fee application relates to the hourly rates applicable to the lawyers--in other words, the
process of claiming that a lawyer’s hourly rate is too high. This is an important issue, since RICO allows recovery of a
“reasonable” attorneys’ fee, and it can also be a bruising contest. The determination of a lawyer’s reasonable hourly rate
typically reflects the attorney’s regular hourly rate at the time the specific services were performed, and a rate can fluctuate,
typically upward, in a case with a long history.
But isolating the reasonable hourly rate does not turn solely on what the attorney’s regular hourly rate is. The specific
lawyer’s rate is also evaluated against the “prevailing” hourly-rate-standard. 218
There are many variable factors that can come to bear on calculating attorneys’ fees in any given case. What happens, for
example, when the lawyer’s fees charged by the counsel to the prevailing party are not solely on an hourly basis? How is an
hourly rate calculated in a contingency fee case? Or in a case where a lawyer has charged a fee below the usual, or even
prevailing, hourly rate in exchange for a contingent percentage of the recovery? In Louisiana Power, for example, LP&L’s
lawyers reduced the hourly rate they charged in exchange for a contingent share of any recovery.
For the most part, courts still resort to the hourly norm even when the actual billing arrangement is more unorthodox. Thus,

courts still seek to determine the lodestar as though hours-multiplied-by-hourly-rate--the simple formula for calculating the
lodestar--were the actual way the party and its counsel had structured their billing arrangement. In Louisiana Power,
Fischbach, in opposing the request for counsel fees, argued that LP&L should not recover in excess of the fees actually paid,
citing the possibility of a windfall for LP&L. As the Supreme Court has said: “Congress intended that statutory fee awards be
‘adequate to attract competent counsel, but . . . not produce windfalls.”D’ 219 But the “windfall” argument did not carry the
day in Louisiana Power, since “the actual amount paid in fees is not dispositive on the question of reasonable rates.” 220
[E] Upward and Downward Adjustments to the “Lodestar”
The determination of a lodestar--with all of the factors that lead to fixing the lodestar, such as verification of records and the
reasonableness of hourly rates--is only the first of two phases of fee awards. The second, and more subjective, phase is the
departure phase: whether the lodestar should be revised upward or downward, enhanced or not enhanced. What standards
does a district court apply in the adjustment phase?
Although unwieldy because of their prolixity, the adjustment factors were delineated more than 20 years ago in the Fifth
Circuit decision in Johnson v. Georgia Highway Express, Inc.,221 and they have been cited frequently, and sometimes
critically, in cases under RICO and other federal fee-shifting statutes. The 12 factors include: (1) the time and labor required
for the litigation, (2) the novelty and complexity of the issues, (3) the skill required to properly litigate the case, (4) whether
the attorney had to refuse other engagements to litigate the case, (5) the attorney’s customary fee, (6) whether the fee is fixed
or contingent, (7) whether the client or circumstances of the action imposed any time constraints, (8) the amount involved
and the results obtained, (9) the experience, reputation, and ability of the attorney, (10) whether the case was undesirable,
(11) the type of attorney-client relationship and whether that relationship was long standing, and (12) fee awards made in
similar cases.
The application of these subjective factors can either increase or decrease the lodestar. In Louisiana Power, the factors led to
a 15 percent reduction of the lodestar solely because of what the district court decided was overstaffing by LP&L, and, on
appeal, Fischbach urged a further substantial reduction because of LP&L’s alleged “limited success, the eighth of the
Johnson factors.”222
The appellate court in Louisiana Power declined to impose a “limited success” reduction of the lodestar on a finding that it
would not disturb the district court’s exercise of its discretion against reducing the lodestar on this basis. 223 This aspect of the
Louisiana Power decision illustrates the limited role appellate courts have in reviewing fee awards, since the standard of
review is profoundly deferential. The real battlefield is at the district court level, as the Louisiana Power litigation reveals,
since LP&L--the fee applicant--managed to sustain virtually all of its fee award despite the fact that the award, $4.1 million,
was several-fold larger than the award of compensatory damages, and LP&L lost its case against one of the defendants.
Finally, the issue of when interest starts to accrue on fee awards can have significant dollar consequences. In general, 28
U.S.C. § 1961, a statute of general application, provides that postjudgment “interest shall be calculated from the date of entry
of the judgment. . . .” In the real world of federal litigation, the first judgment is the judgment on the merits of the case; the
supplemental judgment then determines the legal fee issue. Since that supplemental judgment on fees could follow the initial
judgment by a period of months, the question arises, with some frequency, whether the start date for calculating interest is the
date of the judgment on the merits or of the later supplemental judgment determining the fees.
Even on this straightforward issue, conflict reigns. In the Fifth Circuit, ““[t]he relevant judgment for purposes of determining
when interest begins to run is the judgment establishing the right to fees or costs, as the case may be. . . .” 224 Of the relatively
few other circuits that have addressed this issue, the Tenth Circuit and the Seventh Circuit have disagreed, holding that
interest on fee awards begins to run on the date fees are assessed, not on the date the original judgment on the merits is
entered even if that original judgment makes it clear that the prevailing party is entitled to fees and will be awarded them. 225
In the Eighth Circuit--apparently the only other circuit to have focused on this issue--interest begins to accrue on the date of
the underlying judgment on the merits, if it does not fix the amount of fees, as in the Fifth Circuit. 226
Footnotes
201 . 50 F.3d 319 (5th Cir. 1995).
202 . Id. at 323.
203 . Id.
204 . Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 1939, 76 L. Ed. 2d 40 (1983).
205 . Blum v. Stenson, 465 U.S. 886, 888, 104 S. Ct. 1541, 1544, 79 L. Ed. 2d 891 (1984) (defining base fee as the product of
reasonable hours and reasonable rates); Brantley v. Surles, 804 F.2d 321, 325 (5th Cir. 1986) (describing hours multiplied by rates
to be normal basis for a fee).
206 . Alberti v. Klevenhagen, 896 F.2d 927, 933-94 (5th Cir.), vacated on other grounds, 903 F.2d 352 (5th Cir. 1990).
207 . Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S. Ct. 1933, 1941, 76 L. Ed. 2d 40 (1983).
208 . Id. at 433, 103 S. Ct. at 1939 (stressing that “[w]here the documentation of hours is inadequate, the district court may reduce the
award accordingly”).
209 . Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319 (5th Cir. 1995).
210 . Id. at 325.
211 . Id. at 325.
212 . Leroy v. City of Houston, 831 F.2d 576, 585 (5th Cir. 1987).
213 . Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 325 (emphasis in original). In terms of explicit guidance, Louisiana
Power is one of the few decisions that quotes billing information criticized as inadequate. Since a negative lesson can sometimes
be as instructive as a positive one, the following summary regarding the fee application in Louisiana Power for the fourth quarter
of 1986 was ruled inadequate:
We traveled to New York and deposed defendants Comstock and LKC, Inc. We reviewed extensive documentation concerning
Fischbach & Moore’s bids to LP&L, and we deposed Fischbach & Moore in Kenner, Louisiana. We deposed Lord Electric
Company in New York City; we traveled to Lincoln, Nebraska and deposed Commonwealth Electric Company. We reviewed
transcripts of all these depositions when produced.
We brought formal discovery complaints to the Court and argued them to the Magistrate, who ordered each of the defendants to
provide supplemental discovery, which we reviewed. The Magistrate also ordered legal memorand[a] on the discovery of grand
jury materials, which were prepared after research. We reviewed the memorand[a] filed by others.
We conferred with Company personnel and employees and Ebasco Services, Inc., concerning interrogatories and requests for
documents submitted to LP&L by defendants Fischbach & Moore and Comstock. We reviewed extensive documentation
produced by Ebasco. . . . We conferred with opposing counsel and the Magistrate concerning LP&L’s production of
documents. . . .
50 F.3d 319, 325 n.9.
LP&L requested $23,900 on the basis of this relatively coherent summary, but the Louisiana Power court was not impressed:
“Unfortunately, this . . . provides no basis upon which we could determine if $23,900 or $123,900 or $2,390 was reasonably
expended for these services. There is no indication of the number of hours expended per task, by whom, for what, and at what
rate.” Id.
214 . Id. at 326; see also H.J. Inc. v. Flygt Corp., 925 F.2d 257, 260 (8th Cir. 1991) (reducing hours for entries such as “legal
research,” “trial preparation,” and “met with client”); Leroy v. City of Houston, 906 F.2d 1068, 1080 (5th Cir. 1990) (striking
hours as “not illuminating as to the subject matter” or “vague as to precisely what was done”).
215 . 50 F.3d 319, 327.
216 . Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983).
217 . Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 327. See also City of Riverside v. Rivera, 477 U.S. 561, 570, 106 S. Ct.
2686, 91 L. Ed. 2d 466 (1986) (finding common core of facts); Abell v. Potomac Ins. Co., 946 F.2d 1160, 1169 (5th Cir. 1991)
(“[w]here time spent on unsuccessful issues is difficult to segregate, no reduction of fees is required”); Nash v. Chandler, 848
F.2d 567, 572 (5th Cir. 1988) (finding no clear error where unsuccessful claims were “highly relevant” to successful claim).
218 . See Laffey v. Northwest Airlines, Inc., 746 F.2d 4, 23 (D.C. Cir. 1984) (calling for “reference to the customary billing rate
followed by comparison to the prevailing community rate to ensure that the attorney’s customary rate is reasonable”), cert.
denied, 472 U.S. 1021, 105 S. Ct. 3488, 87 L. Ed. 2d 622 (1985).
219 . City of Riverside v. Rivera, 477 U.S. 561, 580, 106 S. Ct. 2686, 2697, 91 L. Ed. 2d 466 (1986) (quoting S. Rep. No. 1011, 94th
Cong., 2d Sess. 6 (1976), reprinted in 1976 U.S.C.C.A.N. 5908, 5913).

220 . 50 F.3d 319, 328. See also Blum v. Stenson, 465 U.S. 886, 895-96, 104 S. Ct. 1541, 1547, 79 L. Ed. 2d 891 (1984) (determining
that courts should use market rates, not cost-based rates); Alizadeh v. Safeway Stores, Inc., 910 F.2d 234, 238 n.6 (5th Cir. 1990)
(suggesting that “attorneys’ fees awards are not always purely compensatory in nature”).
221 . 488 F.2d 714, 717-19 (5th Cir. 1974).
222 . 50 F.3d 319, 329.
223 . See Farrar v. Hobby, 113 S. Ct. 566, 574, 121 L. Ed. 2d 494 (1992) (identifying the degree of success as the most crucial
element in determining the amount of a reasonable fee); Hensley v. Eckerhart, 461 U.S. 424, 440, 103 S. Ct. 1933, 1943 (1983)
(“A reduced fee award is appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a
whole”).
224 . Copper Liquor, Inc. v. Adolph Coors Co., 701 F.2d 542 (5th Cir. 1983) (en banc).
225 . MidAmerican Fed. Sav. & Loan Ass’n v. Shearson/American Express, Inc., 962 F.2d 1470, 1476 (10th Cir. 1992) ; Fleming v.
County of Kane, 898 F.2d 553 (7th Cir. 1990) (awarding interest from date of awarding of fees).
226 . Jenkins v. Missouri, 931 F.2d 1273, 1276-77 (8th Cir.), cert. denied, 502 U.S. 925, 112 S. Ct. 338, 116 L. Ed. 2d 278 (1991).
See generally Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 110 S. Ct. 1570, 108 L. Ed. 2d 842 (1990).

§ 5.16 BASIC CONSIDERATIONS RELATING TO APPEALS AND..., CIRPM s 5.16
CIRPM s 5.16
Aspen Publishers
Paul Batista

§ 5.16 BASIC CONSIDERATIONS RELATING TO APPEALS AND THE APPELLATE PROCESS
Just as the trials of civil racketeering cases involve relatively few unique or special rules, the same general point applies to
appeals as well. The Federal Rules of Appellate Procedure--as well as the specialized rules of each of the circuit courts--
provide the basic guidelines and rules governing appeals of civil cases, whether they arise in the RICO context or under some
other basis for federal jurisdiction.
The more complex procedural issues relating to appeals in civil racketeering cases relate to interlocutory orders, collateral
orders, the general prohibition of “piecemeal” appeals, and the certification of some interlocutory orders under 28 U.S.C. §
1292(b). These special appellate issues all tend to develop because few civil RICO cases raise what can be considered
exclusively civil RICO issues. Most civil racketeering claims are part of, or serve as an adjunct to, other alleged federal
grounds, such as mail fraud or conduct in connection with tender offers, proxy solicitation, and even employment and race
discrimination claims.
The rules applicable to appellate procedure are clearest and most definite when all portions of a complaint are dismissed,
when summary judgment on all claims is entered in favor of one party, or when a final judgment is entered under Federal
Rule of Civil Procedure 52.227 Life in the civil RICO arena is rarely sweet and simple, and complexity on appellate
procedure rears its ugly head when only the RICO count of a multicount complaint is dismissed, or when one or more but not
all of several RICO defendants are dismissed from a case, either in the context of a pretrial motion or as a result of a directed
verdict at trial. A plaintiff who has lost his RICO-based claim before final judgment or even before trial typically has a strong
incentive to seek appellate review of the loss of that claim before or even as he proceeds with the balance of the litigation.
Conversely, of course, a defendant who has lost an attempt to dismiss the RICO-based allegation similarly has a powerful
desire to have that ruling reviewed before exposure to the rigors and expense of trial.
Neither the disappointed plaintiff nor the crestfallen defendant is likely to have any success in obtaining immediate review.
As the Sixth Circuit has stressed in a related context in Marrical v. Detroit News, Inc., 228 “congressional and judicial policy
disfavors piecemeal appeals.”229 The Supreme Court has repeatedly emphasized that the judicial exception to this policy
embodied in the collateral order doctrine applies to a “small class” of decisions and is a “narrow exception to the requirement
that all appeals under section 1291 await final judgment on the merits.” 230 It is that provision of federal law--28 U.S.C. §
1291-- that categorically establishes the general rule that the circuit courts have jurisdiction of “all final decisions of the
district courts.”
A narrowly construed exception to the general, finality-oriented edict of § 1291 is contained in 28 U.S.C. § 1292(a)(l), which
does permit interlocutory appeals from district court orders “granting, continuing, modifying, refusing or dissolving
injunctions, or refusing to dissolve or modify injunctions.” 231 However, the Supreme Court has also repeatedly stressed how
narrow this statutory exception for the appeal of injunction orders is, 232 and earlier sections of this chapter have already
discussed the general unavailability of injunctions in cases arising under civil RICO.
The “collateral order” doctrine--a judicially developed exception to the general rule of § 1291--has also been stringently
applied and provides a scant basis for attempting an interlocutory appeal of RICO-related issues resolved by the district court
before trial and final judgment. Under the general formulation developed by the Supreme Court, a decision of a district court

is appealable if it falls within “that small class which finally determine claims of right separable from, and collateral to, rights
asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate
consideration be deferred until the whole case is adjudicated.” 233
As a pragmatic and legal matter, the availability of collateral order treatment for virtually any RICO-related issue decided by
the district court before final judgment is extremely limited, for the Supreme Court has stressed that “[a] major characteristic
of the denial or granting of a claim appealable under Cohen’s ‘collateral order’ doctrine is that ‘unless it can be reviewed
before [the proceedings terminate], it can never be reviewed at all.” 234 This unreviewability concept inherent in the collateral
order exception applies-- when it applies at all--to issues such as defense claims of absolute or qualified immunity. Defenses
such as absolute immunity can qualify for treatment under the collateral order rule because the “essence” of such a defense is
“its possessor’s entitlement not to have to answer for his conduct in a civil action” 235 and his “entitlement not to stand trial
that gives rise to the interlocutory appeal, for it is that entitlement, rather than his right to be free from ultimate liability,
which would be lost unless reviewed before the proceedings terminate.”236
Most issues in a civil racketeering case resolved before final judgment fail to qualify for interlocutory appeal. A defendant
may react with deep concern and feel aggrieved by the denial of a motion to dismiss him from a broader litigation, but his
grievance does not rise to the level of an “entitlement not to stand trial” or not “to answer for his conduct” in a civil action.
Likewise, a plaintiff pursuing a multicount, diversified complaint against a group of defendants may feel aggrieved at the
pretrial dismissal of the RICO counts from his lawsuit, particularly since the possibility of recovering treble damages will
have been eliminated at the trial and the settlement stage. 237 But that grievance also does not rise to the level of an immediate
entitlement to appellate review of the decision.238
Footnotes
227 . In general, appeals of final, noninterlocutory orders and judgments must be filed within 30 days after the date of entry or
judgment from which the appeal is taken. See Fed. R. App. P. 4. Even with respect to complete and final judgments and orders,
however, there are precise and detailed timing rules that can affect the filing of an appeal. For example, Fed. R. App. P. 4(a)(4)
provides that a timely motion under Fed. R. Civ. P. 52(b) or 59 in the district court will toll the time for appeal as to all parties.
More generally, it merits emphasis that the jurisdiction of the United States Courts of Appeals is in fact narrow, is available only
in the circumstances delineated by federal law, and, as a practical matter, is rather carefully and narrowly guarded by appellate
judges and appellate panels.
228 . 805 F.2d 169 (6th Cir. 1986).
229 . Id. at 173.
230 . Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374, 101 S. Ct. 669, 66 L. Ed. 2d 571 (1981).
231 . Subsections (a)(2) and (a)(3) of § 1292 also permit appeals from interlocutory orders relating to receivers and certain admiralty
issues.
232 . See Garden v. Westinghouse Broadcasting Co., 437 U.S. 478, 480, 98 S. Ct. 2451, 2453, 57 L. Ed. 2d 364 (1978).
233 . Mitchell v. Forsyth, 472 U.S. 511, 105 S. Ct. 2806, 2815, 86 L. Ed. 2d 411 (1985).
234 . 105 S. Ct. at 2815.
235 . Id. at 2816.
236 . Marrical v. Detroit News, Inc., 805 F.2d 169, 173 (6th Cir. 1986).
237 . Form 12 is a composite of several settlement agreements that have been entered to resolve complex RICO and other federal
claims. A settlement can, of course, be reached at any stage of the litigation, from the initial pleading and even after the resolution
of a full appeal.
238 . 28 U.S.C. § 1292(b) provides one other potentially available avenue for interlocutory appeal of a district court decision and
order:
When a district judge, in making an order not otherwise appealable under this section, shall be of the opinion that such order
involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate
appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in such order.

Relatively few orders of federal district judges contain this type of certification, although a refusal to dismiss a civil RICO action
on grounds of failure to satisfy the “pattern” requirement might seem to fit the criteria of § 1292(b). Moreover, even if a district
judge were to include such a certification in her order or decision, the court of appeals has the discretion not to permit an appeal of
a certified order. Many circuit courts routinely deny permission to appeal even when a district court has certified an issue, further
underscoring the rarity of interlocutory review of even the most significant and potentially dispositive RICO-related claims.

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§ 5.01 OVERVIEW OF PROCEDURAL ISSUES, CIRPM s 5.

Copyright © 2011 Aspen Publishers, Inc., a Wolters Kluwer business

Current through the 2011 Supplement

§ 5.01 OVERVIEW OF PROCEDURAL ISSUES

© 2011 Thomson Reuters. No claim to original U.S. Government Works.

Copyright © 2011 Aspen Publishers, Inc., a Wolters Kluwer business

Current through the 2011 Supplement

§ 5.02 SCOPE OF RULE 11 AND PROCEDURAL DIMENSIONS OF CIVIL RICO LITIGATION

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Copyright © 2011 Aspen Publishers, Inc., a Wolters Kluwer business

Current through the 2011 Supplement

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[B] Specific Facts to Support a Rule 11 Motion

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separate injury or separate transaction.10

various motions (often 70-80 pages), and large, tedious affidavits.18

[C] The Case for Not Imposing Rule 11 Sanctions

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4 . McLaughlin v. Bradlee, 803 F.2d 1197, 1206 (D.C. Cir. 1986).

6 . 582 F. Supp. 1299, 1301 (D. Colo. 1984).

8 . Foulke, 633 F. Supp. at 157.

© 2011 Thomson Reuters. No claim to original U.S. Government Works.

13 . Foulke, 633 F. Supp. 156, 158.

15 . 960 F.2d 640 (7th Cir. 1992).

18 . Brandt, 960 F.2d 640, 643.

22 . Brandt, 960 F.2d 640, 647.

24 . 644 F. Supp. 580 (E.D. Mich. 1986).

25 . Creative Synergy, 644 F. Supp. at 590.

31 . Creative Synergy, 644 F. Supp. 580, 592.

© 2011 Thomson Reuters. No claim to original U.S. Government Works.

38 . 860 F. Supp. 991 (S.D.N.Y. 1994).

39 . Scheiner, 860 F. Supp. at 998.

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Copyright © 2011 Aspen Publishers, Inc., a Wolters Kluwer business

Current through the 2011 Supplement

§ 5.04 SANCTIONS FOR FRIVOLOUS RICO CLAIMS AND APPEALS

[A] Utilizing RICO to Obtain Access to Federal Court: Is It Sanctionable?

[B] The Elements of the Sanction Award

© 2011 Thomson Reuters. No claim to original U.S. Government Works.

[C] Can Prevailing Defendants Recover Attorneys’ Fees?

42 . Williams, 351 F.3d at 297.

46 . Id. (citation and internal quotation marks omitted).

49 . 350 F.3d 664 (7th Cir. 2003).

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50 . Sullivan, 350 F.3d at 666; emphasis in original.

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Current through the 2011 Supplement

§ 5.05 COMPLAINT, JURISDICTION, AND VENUE

52 . See Ch. 2 and Ch. 3.

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Copyright © 2011 Aspen Publishers, Inc., a Wolters Kluwer business

Current through the 2011 Supplement

§ 5.06 SUMMARY OF THE ELEMENTS OF A COMPLAINT UNDER CIVIL RICO

[A] The “Person” for RICO Purposes

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[B] Basic Allegations Relating to the “Enterprise”

[C] Person/Enterprise Dichotomy

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[D] Of Predicate Acts and Racketeering Activity