Source: cases/18usc1962/f3d-80-1293-chang-v-chen.case
Case source: https://www.neochart.com/catalog/cases/f3d/volume_80/1293_01/index.html
We hold that a RICO enterprise must have an ascertainable structure separate and apart from the structure inherent in the conduct of the pattern of racketeering activity.
Rather, it is sufficient to show that the organization has an existence beyond that which is merely necessary to commit the predicate acts of racketeering.
Appellants have not alleged a structure to the organization beyond that which was inherent in the alleged acts of racketeering-activity.
This lone statement that the Gabryches directed Lin’s actions is insufficient to establish that there was an enterprise separate and apart from the predicate acts.
establishing the existence of an associated-in-fact enterprise requires proof (1) of an ongoing organization, formal or informal, and (2) that the various associates function as a continuing unit.
The second amended complaint adequately alleged that Appellees, as associates, functioned as a continuing unit.
It is true that the involvement of a corporation, which has an existence separate from its participation in the racketeering activity, can satisfy the enterprise element’s requirement of a separate structure.
Thus, the mention of George Realty in the description of the alleged enterprise fails to satisfy the separate structure requirement.
Without a proper allegation of an enterprise, neither the § 1962(c) nor the § 1962(d) claims can survive Appellees’ motion to dismiss.
casedsl 1 case /f3d/80/1293-01 name Chang v. Chen cite 80 F.3d 1293 (1996) court United States Court of Appeals for the Ninth Circuit date 1996-04-04 url catalog/cases/f3d/volume_80/1293_01/index.html source ir/caselaw/f3d_80.jsonl sha1=256c8d7928085bf8dcae196968b3f873d9a5c6cf chars=27491 law 18usc1962 (c),(d) role applied posture civil; second amended complaint dismissed under 12(b)(6) without leave to amend for failure to allege an enterprise; plaintiffs appeal; affirmed result claimant-lost element enterprise : not-satisfied [pleaded] party Lin and the two Gabryehs (sellers + sales agent) theory association-in-fact structured only by the repeated land-fraud transactions variant association-in-fact/no-structure-beyond-predicate-acts fact @4539..4784 [supports] | According to the second amended complaint, Appellee Eddie Lin, Appellee Eugene Gabryeh, Appellee Marian Gabryeh and George Realty formed a RICO enterprise by associating in fact to conduct the above described fraudulent real estate transactions. fact @4785..4938 [supports] | Each Appellee allegedly was in charge of and played a vitally important role in controlling and managing a specific phase of the enterprise’s activities. fact @19639..19743 [cuts-against] | Each Appellee conducted his or her role in the alleged fraudulent real estate transactions autonomously. fact @21324..21427 [cuts-against] | The proceeds were allocated to Appellees in a manner consistent with ordinary real estate transactions. rule @1065..1235 | We hold that a RICO enterprise must have an ascertainable structure separate and apart from the structure inherent in the conduct of the pattern of racketeering activity. rule @17926..18071 [quoted] | The structure should provide “some mechanism for controlling and directing the affairs of the group on an ongoing, rather than an ad hoe, basis.” rule @18362..18517 | Rather, it is sufficient to show that the organization has an existence beyond that which is merely necessary to commit the predicate acts of racketeering. held @19041..19177 | Appellants have not alleged a structure to the organization beyond that which was inherent in the alleged acts of racketeering-activity. held @20225..20388 | This lone statement that the Gabryches directed Lin’s actions is insufficient to establish that there was an enterprise separate and apart from the predicate acts. gloss Same roles repeated across ~31 transactions (same modus operandi) is not structure: no decision-making apparatus, no separate mechanism for distributing proceeds. One allegation that sellers "directed" the agent shows at most a conspiracy, and a conspiracy is not an enterprise. Adopts the then-majority "separate ascertainable structure" test (later relaxed by Boyle v. United States, 2009 -- not in this opinion). element enterprise.continuing-unit : satisfied [pleaded] variant continuing-unit/same-participants-repeated-transactions fact @2893..3112 [supports] | The complaint described in detail three land transactions between Appellants and Appellees, and referred to twenty-eight additional transactions involving Appel-lees and buyers who are not parties to the present action. rule @7959..8155 | establishing the existence of an associated-in-fact enterprise requires proof (1) of an ongoing organization, formal or informal, and (2) that the various associates function as a continuing unit. held @8187..8298 | The second amended complaint adequately alleged that Appellees, as associates, functioned as a continuing unit. gloss Turkette prong 2 met; the claim fails on prong 1 (organization/structure) alone. element enterprise : not-satisfied [pleaded] theory separate structure supplied by naming the non-party brokerage George Realty as a member variant association-in-fact/passive-corporation-named-as-member fact @23320..23629 [cuts-against absent] | The second amended complaint alleged that George Realty was part of the enterprise, but did not name George Realty as a defendant and did not explain George Realty’s relationship to or participation in the alleged enterprise, except to note that Eddie Lin was the real estate agent representing George Realty. fact @23630..23792 [cuts-against absent] | Although George Realty had a legal existence separate from the racketeering activity, Appellants did not allege that it participated in the racketeering activity. rule @21908..22116 | It is true that the involvement of a corporation, which has an existence separate from its participation in the racketeering activity, can satisfy the enterprise element’s requirement of a separate structure. held @24413..24545 | Thus, the mention of George Realty in the description of the alleged enterprise fails to satisfy the separate structure requirement. gloss A corporate member supplies separate structure only if it actually plays a role (shield, front, conduit for proceeds); merely listing a legal entity does not. element conspiracy : not-satisfied [pleaded] variant derivative-of-substantive-claim/no-enterprise-alleged held @25246..25380 | Without a proper allegation of an enterprise, neither the § 1962(c) nor the § 1962(d) claims can survive Appellees’ motion to dismiss. gloss (d) claim falls with the (c) claim; no independent analysis of agreement. element racketeering : not-reached gloss District court also found two predicate acts not pleaded with particularity against two defendants; the panel expressly declined to resolve that. element pattern : not-reached element conduct : not-reached gloss Dictum only: had the brokerage itself been pleaded as the enterprise, the sellers could not be defendants absent management/control over it (Reves). element person : not-reached misfit The holding is a RELATION between two elements (enterprise must be structurally separate from the pattern of racketeering), same shape as the person/enterprise distinctness misfit in Cedric Kushner; recorded under `enterprise` with a failure-mode variant. The .law file now has both a sub-element enterprise.distinct-from-pattern and a constraint on (enterprise, pattern); these blocks were left on the bare id, and a block cannot attach to a constraint. misfit The Turkette two-prong test (ongoing organization / continuing unit) splits the element and the court decides the prongs oppositely. `enterprise.continuing-unit` is now declared in the .law file, but prong 1 has no sub-id (enterprise.organization) and sits on the bare `enterprise` id. misfit The rule announced here (ascertainable structure beyond the predicate acts) was later abrogated/relaxed (Odom v. Microsoft, 9th Cir. 2007 en banc; Boyle, 2009); the notation has no field for "rule superseded" or temporal validity of a `rule` line. misfit Circuit-split survey (six circuits vs two) is the bulk of the opinion; no construct for "court chose interpretation A over B", only the resulting `rule`. misfit Denial of leave to amend (procedural, futility) is part of the result but has no place in the element model.