Seville Industrial Machinery Corp. v. Southmost Machinery Corp.

567 F. Supp. 1146 (1983) United States District Court for the District of New Jersey 1983-07-08

civil; district court; defendants' motion to dismiss the RICO count under Rules 9(b) and 12(b)(6) (result: claimant-lost)

Facts

2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
The Third Circuit held that the first requirement of an “ongoing organization” is a showing that a structure exists for group decision making, whether it be hierarchial or consensual.
2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
First, plaintiff merely asserts that “defendants Southmost, Tri-State, Gellman and Alfieri are enterprises” (eomplaint, First Count, ¶ 17) without clarifying whether all four defendants comprise one enterprise or whether each defendant constitutes an “enterprise.”
2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
Aside from assertions that the four defendants conspired with each other and committed numerous fraudulent acts, plaintiff does not mention any identifiable structure which would encompass all four defendants.
2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
If it were to be determined that an “enterprise” is sufficiently pleaded whenever a plaintiff avers that any two or more otherwise unassociated individuals agree to commit two or more acts of business fraud, this would effectively eliminate the enterprise element of RICO and drastically expand federal jurisdiction over all business torts which involve use of the mails or telephones.
2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
In fact, defendant Alfieri is only alleged to be an officer and controlling person of defendant Southmost and is not alleged to have any connection with defendant Tri-State.
2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
For all the above reasons, I find that the First Count of plaintiff’s complaint is deficient since it fails to allege the existence of an “ongoing organization” which is the first element of the RICO “enterprise” requirement.
6 Pattern of racketeering activity (§ 1961(5)): at least two predicate acts with relatedness and continuity not pleaded
It appears from the definition of “pattern of racketeering activity” that any combination of two listed offenses may constitute a “pattern” for RICO purposes.
6 Pattern of racketeering activity (§ 1961(5)): at least two predicate acts with relatedness and continuity not pleaded
The First Count of plaintiff’s complaint will be dismissed because it fails to allege at least two acts of racketeering activity with sufficient particularity and thus fails to allege that defendants engaged in a “pattern of racketeering activity” as required by 18 U.S.C. § 1962.
11 Conspiracy to violate § 1962(a), (b), or (c) (§ 1962(d)) not pleaded
The Court stated that an agreement merely to commit the predicate offenses would not be sufficient to support a RICO conspiracy.
11 Conspiracy to violate § 1962(a), (b), or (c) (§ 1962(d)) not pleaded
Although plaintiff does allege that defendants conspired to commit mail fraud and wire fraud, plaintiff fails to allege a RICO conspiracy since it does not state that defendants made their agreement in order to further the affairs of a RICO “enterprise.”
11 Conspiracy to violate § 1962(a), (b), or (c) (§ 1962(d)) not pleaded
Therefore, the First Count of plaintiff’s complaint fails to allege that defendants violated Section 1962(d), the conspiracy subsection of RICO.
12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
In the instant case, plaintiff alleges that it has suffered business and property damages of $759,039.
12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
However, this judicially imposed requirement of a “racketeering enterprise injury” seems artificial and unwarranted by the language of the RICO statute.
12 Civil RICO injury to business or property (18 U.S.C. § 1964(c)) satisfied pleaded
The First Count of the complaint clearly alleges that plaintiff suffered direct injury from defendants’ alleged racketeering activity and will not be dismissed for its failure to allege a separate and distinct “racketeering injury.”