# Petition for Writ of Certiorari — Delta Truck & Tractor, Inc. v. J. I. Case Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1989
- **Citation:** 489 U.S. 1079

## Text

NO.

SUPREME COURT OF THE UNITE
OCTOBER TERM, 1988

DELTA TRUCK & TRACTOR, INC.,
PETITIONERS
VERSUS

\
44);

J.1. CASE COMPANY

TENNECO, INC.
NAVISTAR INTERNATIONAL CORPORATION
(FORMERLY INTERNATIONAL HARVESTER COMPANY)

RESPONDENTS

ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

HENRY B. BRUSER, III

POST OFFICE BOX 6118
ALEXANDRIA, LA 71307-6118
(318) 445-6471

JACK _N. PRICE
410 CONGRESS AVENUE
AUSTIN, TX 78701

ATTORNEYS FOR PETITIONERS

I. THE QUESTIONS PRESENTED FOR REVIEW:

1. Has petitioner alleged an enterprise, or
must petitioner assert in its pleadings as a
matter of law that the defendants posed a
continuous threat as RICO persons?

2. Can an associated-in-fact enterprise engage
in a pattern of racketeering activity
effectively infiltrating hundreds of
legitimate businesses and nonetheless fall
outside RICO’s ambit because the enterprise
does not display sufficient "ongoing
continuity"?

3. Must an association-in-fact enterprise be
alleged to have an existence separate and
apart from the racketeering activity in
which it engages or may the enterprise be in
effect, no more than the sum of the
predicate acts?

Il. THE LIST OF ALL PARTIES:

Petitioner: Delta Truck and Tractor, Inc.
Respondents: J.I. Case Company; Tenneco, Inc.;

Navistar International Corporation (formerly
International Harvester Company)

a er

IItl. TABLE OF CONTENTS:

The Questions Presented for Review........... i
The List of All PartiesS.....ccccccccccccvcces i
TABLES GE COMEONCS. 2. clecccccccccasccsccssecs ii
Designation of Corporate Relationships...... ii
Table of Authorities. .....ccccccccccccccces iii

Reference to Official & Unofficial

ED PERM gow cc cceeesesceecsceeceseceos vi
The Jurisdiction of the Court............... vi
Tee BOA ASCOMLS SCACUCES. 2 ccc ccccccnsevsecess vi
A Concise Statement of the Case.............. 1
PNG s ccc esccccecses SCOSCHS DEES OOK OSE SE HOHOS 9
PE e sa can cccccces peas eeeeeeeeedawascae’ 31

"A" Delta Truck & Tractor, Inc. v.
J.I. Case Co., 855 F.2d 241
(Sth Cir. 1988)

Designation of Corporate Relationships

Delta Truck & Tractor, Inc. is not owned by
any parent corporations, does not have an
Ownership interest in any subsidiaries, and

does not have any affiliates.

- 24 =

IV. TABLE OF AUTHORITIES:

Associated General Contractors Of California,
Inc. vs. California State Council Of

Carpenters, 459 U.S. 519, 525, 103 S.Ct. 897,
902, 74 L. Ed. 2d 723 (1983) . » « 6-2 3-8 eee

Barticheck vv. Fidelity Union Bank/First
National State, 832 F.2d 36 (3rd Cir. 2967) « «

Any B2”E9

Beauford v. Helmsley, 843 F.2d 103 (2nd Cir.
19663 6 6 6 6 oR ek ee eee ee eee

Beck v. Manufacturers Hanover Trust Co., 820
F.2d 46 (2nd Cir. 1987), cert denied, __ U.S.
, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988) o« ae

Cohen v. United States, __ U.S. __, 107 S.Ct.
3229, L.Ed.2d __ (1987)].

. dl id dl . . 7 7 . . * dl . . * 7 . . 2 . . 23

Conley vs. Gibson, 355 U.S. 41, 45-46, 78 S.Ct.
99, 101-102, 2 L. Ed. 20 (31957) . « «© «© «© « « ©

Creative Bath Products, Inc. v. Conn. General
Life Ins. Company, 837 F.2d 561 (2nd Cir.
1988), petition for cert. filed, 56 U.S.L.W.
3755 (U.S. Apr. 19, 1988) (No.87-1738) ... 24

Delta Truck & Tractor v. J.I.Case, et al, 855
P.2a@ 241, 244 (Sth Cir. 1968) . + « » « « ay SO

Mo és Inc. v. Northwestern Bell Telephone
Company, 829 F.2d 648 (8th Cir. 1987), cert
granted, 56 8.8.L.48- 3647 (U.S. Mar. ahs
£968) (06. O7-42308) Poss 6s Ss ee ee

Hofstetter v, Fletcher, RICO Bus.Disp.Guide
Par. 7065 (6th Cir.1988) ee lee ee oe 17

Lewis v. Sporck, 612 F. Supp. 1316 (N.D. Cal.
arr eas er ee

Liquid Air Corporation v. Rodgers, 834 F.2d

1297 (7th Cir. 1987), petition for cert. filed,
56 U.S.L.W. 3531 (U.S. Jan. 28, 1988) (No.87-

1262) . . a . . . . . . . . . . . . * . . 9, 10

Manax v. McNamara, 842 F.2d 808 (5th Cir. 1988)
23

Marshall-Silver Construction Company, Inc. v.
Mendel, 835 F.2d 63 (3rd Cir. 1987), petition
for cert. filed, 56 U.S.L.W. 3592 (U.S. Feb.

55 aees Cs CPPS as ko i ele es
McNally v. United States, 483 U.S. 5 eae
$.C&. 2875, 2681, 97 L.Ba.24 292 (1987) ...8

Moss vs. Morgan Stanley, Inc., 719 F.2d 5, 22
(2nd Cir. 1983), cert. denied, 465 U.S. 1025,

104 S.Ct. 1280, 79 L.Ed. 2d 684 (1984) . « $oee

R.A.G.S. Couture, Inc. vs. Hyatt, 774 F.2d
1350, 1353 (5th Cir. 1985) a oe a a oe ee ee

Sedima, S.P.R.L. vs. Imerex Company, Inc., 473
U.S. 479, 105 &§.Ct. 3275, 87 Le Bd.20 346

co: er ar a ae or
Seville Industrial Machinery Corp. vs.
Southmost Machinery Corp., 742 F.2d 786, 790
(32g Cir. Se ae ee ee 20, 22

Terra Du Lac Association, Inc. v. Terra Du Lac,
Inc., 834 F.2d 148 (8th Cir. 1987), petition
for cert. filed, 56 U.S.L.W. 3755 (U.S. Apr.
21,1988) (No. 87-1742) a ae a a a a a ee 12

U.S. vs. DeRosa, 670 F. 2d 889, 895-96 (9th
Cir. 1982), cert. denied, 464 U.S. 856, 104 S.
Ct. 175, 78 L.Ed. 2d 157 (1983) “ In Bargaric, the court noted

that they have applied RICO to situations
where an enterprise was no more than the sum
of the predicate acts:

These decisions reflect the common sense
recognition that a group of individuals may
join together, and therefore be ’associated
in fact’, although not a_ legally cognizable
entity in one of the traditional forms,
solely for the purpose of conducting their
activities.

Id., 706 F.2@ @ SS.

These circuits have seized on Turkette’s

"coalesce" language to apply RICO "to
Situations where’ the enterprise was, in

effect, no more than the sum of the predicate

racketeering acts." United States vs. Bledsoe,
674 F.2d 647, 665 (8th Cir. 1982), cert.
denied, 459 U.S. 1040 (1983). It is

respectfully argued that Turkette certainly

stands for the proposition that the existence
of the separate enterprise element must be
proved, but that it may be proved with the same

evidence that is used to prove the distinct

pattern element. No language in Turkette

begins to indicate a complaint would be
inadequate if there was no allegation such as
was required herein by the Fifth Circuit. As

was noted in R.A.G.S. Couture, Inc. vs. Hyatt,

774 F.2d 1350, 1353 (5th Cir. 1985):

The Supreme Court’s Sedima decision
cautions us not to place barriers before
RICO plaintiffs that are not found in the
text of the statute. Moreover, the court
has held that an enterprise may be organized
Solely for illegitimate purposes, and that
evidence of the existence of the enterprise
may coalesce with evidence of the underlying
pattern of racketeering.

Id., 774 F.2a @ 1353.
The Fifth Circuit decision at issue has done

just what Sedima and R.A.G.S. caution them not

to do: it has erected barriers before this
RICO plaintiff not found in the text of the
statute.

In Seville Industrial Machinery Corp. vs.

Southmost Machinery Corp., 742 F.2d 786, 790

(3rd Cir. 1984) the Third Circuit overruled a
district court, holding it had "confused what
must be pleaded with what must be proved."

Citing the proposition that the Federal Rules

— >

of Civil Procedure were designed to eliminate
the vagaries of technical pleading that once
plagued complainants, and to replace them with
the considerably more liberal requirements of
so-called "notice" pleading, the court held it
is enough that a complaint put the defendant
on notice of the claims against him. The
pleading of a valid RICO claim should not
place a plaintiff in the posture of a medieval
necromancer seeking to summon some demon from

the darkness through rigid adherence to some

exact word-for-word incantation. As was noted
in Weft, Inc. vs. G.c. Investment Associates,
630 F.Supp. 1138 (E.D. N.C. 1986), such a

requirement is unnecessary. The Weft court
stated this as follows:

"Although the complaint does not use
the terms contained in RICO, it is
clear that the plaintiffs have alleged
elements two and six or, in other
words, the existence of an enterprise
conducted through two or more acts
constituting a pattern of
racketeering...Although plaintiffs did
not use the word "enterprise" to
describe the actions of defendants, it
is clear that they have alleged enough
facts to constitute an enterprise

Thus, the same facts which constitute
the “unlawful acts" also establish the

iid hernia i

"enterprise" requirement. Moss vs.
Morgan Stanley, Inc., 719 F.2d 5, 22
(2nd Cir. 1983), cert. denied, 465 U.S.
1025, 104 S.Ct. 1280, 79 L.Ed. 2d 684
(1984)." Weft, supra, 630 F. Supp. at
1142.

Id., 630 F.Supp. @ 1142.

In Lewis v. Sporck, 612 F. Supp. 1316 (N.D.
Cal. 1985), the court dealt with the

particularity with which a plaintiff must plead

the enterprise:

As to the pleading of the
"enterprise", defendants assert that
the complaint must describe with
specificity an organized entity that
has an on-going existence that is
separate and apart from the
racketeering activity which it is
alleged to have performed. [citations
omitted ] However, the Third Circuit
has recently held that a civil
plaintiff need not plead all these
attributes with specificity. Seville,
Supra at 790. The Ninth Circuit does
not require such a detailed showing of

an “enterprise". United States vs.
Bagnariol, 665 F.2d 877, 891 (9th Cir.
1981). Absent a special reason to

impose a stringent standard on the
pleading of a RICO enterprise, the
basic liberal pleading rule set forth
in Rule 8 must govern.

Id., 612 F. Supp. @ 1324.
Rule 8 should have governed the instant

dispute. The 12(b)(6) motion should have been

denied.

-25-

THE A ie} x F CIRCU

The Fifth Circuit cited several prior

decisions of the Fifth Circuit as authority,

including Manax _v. McNamara, 842 F.2d 808 (5th

Cir. 1988). Of great interest to petitioner is

the citation by Manax of Beck v.
Manufacturers Hanover Trust Co., 820 F.2d 46
(2nd Cir. 1987), cert denied, __ U.S. __, 108

S.Ct. 698, 98 L.Ed.2d 650 (1988) as

persuasively reasoned authority. Manax, supra,

842 F.2d @ 812. Petitioner wishes to point out

that Beck recognized the following important

premise:

As Ianniello recognized, whether one looks
for the requisite continuity and relatedness
by examining the pattern or the enterprise
is really a matter of form, not substance.

Id., 820 F.2d @ 51 [citing United States v.
Ianniello, 808 F.2d 184, 191 (2nd Cir. 1986),
cert denied sub nom Cohen v. United States, _
U.S. __, 107 S.Ct. 3229, __ L.Ed.2d __ (1987) ].

Petitioner urges this Court to place substance
over the form. The Second Circuit has granted
en banc rehearing to reconsider its law on the

continuing enterprise doctrine in Beauford v.

Helmsley, 843 F.2d 103, RICO Bus.Disp.Guide

-?6-

6900, 6919 (2nd Cir. 1988). As was noted in

Beauford:
Although ... we speak in terms of
"enterprise" rather than "pattern", we

nonetheless require continuity in any event,
and find insufficient evidence of continuity
in a single criminai episode regardless how
many fraudulent acts it entails. In other
words, a single criminal episode or scheme
does not charge a claim under RICO because
it lacks sufficient continuity to constitute
an enterprise, even if its fraudulent acts
constitute a pattern.

Id. @ 110.

The continuing enterprise requirement is also

placed at issue in Creative Bath Products, Inc.

v. Conn. General Life Ins. Company, 837 F.2d

561 (2nd Cir. 1988), petition for cert. filed,

56 U.S.L.W. 3755 (U.S. Apr. 19, 1988) (No.87-
1738). This doctrine must be addressed.
CONCLUSION

It is respectfully submitted that the
“continuing enterprise" theory used by both the
Second Circuit and now the Fifth Circuit must
be addressed. It is respectfully argued that
if the continuity requirement of an enterprise
is focused on whether the continuing activity

of the enterprise is of the sort allowing

successful infiltration of legitimate
businesses, then the inquiry must be resolved
in petitioner’s favor. Congress spread a broad
but tightly meshed net with RICO. As noted in

Sedima, supra, 105 S.Ct. @ 3286, RICO is to be

read broadly, due to both the express
admonition mandating liberal construction and
due to Congress’ self-consciously expansive
language and overall approach. The RICO
statute does not impose the artificial
requirement at the pleading stage erected in
this case. This august body must not allow a
group of persons such as respondents to avoid
RICO exposure for accomplishing a _ complex,
multi-million dollar scheme to defraud
terminated franchisees of their businesses and
assets , merely because petitioner’s complaint
does not allege conclusionary language that
tenmanianin pose a continuing threat of
conducting such activities in the future
and/or other racketeering schemes perpetrated
by defendants. The conduct which RICO was

enacted to punish has been accomplished in

=

this case - legitimate businesses have been
effectively invaded.

Continuity requirements for purposes of
pleading an enterprise should not become
artificial barriers releasing enterprises from
RICO liability because multiple racketeering
schemes/episodes (each composed of a pattern of
racketeering activity) have not been asserted.
This should not be allowed under either the
"pattern" or "enterprise" element of RICO. If
such is the law, enterprises like respondents
will bloom secure in the knowledge that they
will escape, if nothing else, RICO liability.
In the shadow of such blooms will lie hundreds
of legitimate businesses who have been
infiltrated by enterprises whose _ persons
allegedly did not pose the threat of continuing
harm.

Petitioner wishes to clearly articulate it
has not asserted and does not assert nor
aquiesce in the proposition that the
enterprise it sues has concluded or

accomplished its goals. The enterprise is

=29=

AA alti dec deed Ss pe

ongoing and injuries continue to be sustained
by petitioner to this very date. It is
respecfully submitted that even assuming the
scheme was completed on the date suit was
filed, the remedial’ purposes of RICO are
nonetheless implicated by the infiltration of
hundreds of legitimate businesses.
Accordingly, and with all due respect,
Petitioner Delta Truck and Tractor Inc. humbly
prays for relief.
Respectfully submitted,

GOLD, WEEMS, BRUSER, SHARP,
SUES & RUNDELL

Zhan, (3 Jehan

a B. Bruser,

P.O. Box 6118
Alexandria, LA 71307
(318) 445-6471

LAW OFFICE OF JACK N. PRICE

Jack N. Price
410 Congress Avenue
Austin, TX 78701

ATTORNEYS FOR DELTA TRUCK &
TRACTOR, INC.

~ 3x

CERTIFICATE

I hereby certify that a copy of the above
and foregoing has been served by mailing the
Same upon opposing counsel of record, Mr. Miles
P. Clements and Mr. Michael Fischer by United
States Mail, First Class postage prepaid.

Alexandria, Louisiana this 19th day of

December, 1988.

OS One

SF COUNSEL

DELTA TRUCK & TRACTOR, INC.,
Plaintiff-Appellant

Vv.

ON ee ae

J.I. CASE COMPANY, et al
Defendants-Appellees

No. 87-4449

United States Court of Appeals
Fifth Circuit

Sept. 20, 1988

Franchisee brought civil RICO action against
franchisor, corporation which acquired
franchisor, and parent of acquiring
corporation. The United States District Court
for the Western District of Louisiana, Nauman
S. Scott, J., dismissed, and franchisee
appealed. The Court of Appeals, Clark, Chief
Judge, held that franchisee’s allegations were
insufficient to state RICO cause of action
because pleadings did not assert that

defendants posed continuous threat as RICO

GS a ee ee OY. es

persons.
) Affirmed.

Reavley, Circuit Judge, concurred in the

result.

=3ia

1. Commerce 82.71

Civil sanctions of RICO were not
intended to extend to fraudulent commercial
transactions affecting interstate commerce.
18 U.S.C.A. Sections 1962(a-d), 1964(c).
2. Commerce 82.70

RICO “person" must be one that either
poses or has posed continuous threat of
engaging in acts of racketeering; "continuous
threat" requirement may not be satisfied if no
more is pled than that person has engaged in
limited number of predicate racketeering acts.
18 U.S.C.A: Section 1961(3).

See publication Words’ and

Phrases for other judicial

constructions and definitions.
3. Commerce 82.71

Critical features of RICO pattern of
racketeering activity-continuity and
relationship-cannot exist in pattern of
racketeering activity alone, and are instead
reciprocal values that must function with at
least one of the other essential elements of a

RICO claim. 18 U.S.C.A. Section 1961(5).

-32-

4. Commerce 82.71

Acts of mail and wire fraud that were
part of single, otherwise lawful corporate
merger could constitute pattern of
racketeering activity under RICO. 18 U.S.C.A.
Section 1961(5).
5. Commerce 82.70

Under RICO, association-in-fact
enterprise must have existence separate and
apart from pattern of racketeering, must be
ongoing organization, and its members’. must
function as continuing unit as_ shown by
hierarchical or consensual decision-making
structure, enterprise must not be one that
briefly flourishes and _ fades. is vU.8.C.A.
Section 1962.
6. Commerce 82.72

Franchisee’s allegations against
franchisor, corporation which acquired
franchisor, and acquiring corporation’s parent,
failed to state RICO cause of action as matter
of law because pleadings did not assert that

corporate defendants posed continuous threat as

ihe

‘ICO persons; franchisee alleged as pattern of
‘acketeering activity nothing more than
umercus predicate acts which were necessary
segments oof otherwise lawful commercial
ndeavor, and claim that method of franchise
ermination fraudulently violated contractual
‘ights or legal duties did not plead RICO
riolation. is wee 2 Sections 1961(3, 4),

962(a-d), 1964(c).

Appeal from the United States District Court
‘or the Western District of Louisiana.

Before CLARK, Chief Judge,
-EAVLEY, Circuit Judge, and
UNTER, District Judge

CLARK, Chief Judge:
Delta Truck & Tractor, Inc. (Delta) appeals

he district court’s dismissal of its civil
ICO action.! We affirm.

1 The Racketeering, Influence and Corrupt
Organizations Act (RICO), 18 U.S.C.
Sections 1961-1968, creates a civil
cause of action under section 1964(c)
against those injured by violations of

section 1962(a)-(d). The portions of
section 1962 relevant to this case can
be abstracted as’ follows. Section

1962(a) makes it "unlawful for any

person who has received any income

derived ... from a pattern of
(continued...)

othe

he

Review of a dismissal on the pleadings
requires that we accept as true the non-moving
party’s well-pleaded allegations. Delta, a
company involved in the,’sale and repair of farm
equipment, operated under a franchise agreement
with International Harvester Company (IH), a
manufacturer of farm machinery. The dispute in
this case arises out of the acquisition of IH
By J.t; Case Company (Case), itself a
manufacturer of agricultural equipment, and its
parent company, Tenneco, Inc. (Tenneco). As
part of the merger, Case, Tenneco and IH sought
to create one cohesive dealership network by
eliminating duplicative Case and IH dealers.
The gravamen of Delta’s RICO claim alleges that

these three corporate defendants consolidated

1(.. continued)
racketeering activity ... to use or
invest ... any part of such income

in acquisition of any interest in, or
the establishment or operation of, any
enterprise." Section 1962(c) makes it
"unlawful for any person employed by
Or associated with any enterprise ...
to conduct or participate ... in the
conduct of such enterprise’s affairs
through a pattern of racketeering activity."

-35-

the dealerships through numerous acts of wire

and mail fraud designed to appropriate the
business assets of Delta and over 400 other
terminated Case and IH dealers. After twice
allowing Delta to amend its complaint, the
district court granted the defendant’s motion
to dismiss.

II.

[1] Congress wrote RICO in broad, sweeping
terms to combat the many, varied, anfractuous
ways in which racketeers operate. Reduced to
its three essentials, a civil RICO claim must
involve: (1) a person who engages in (2) a
pattern of racketeering activity (3) connected
to the acquisition, establishment, conduct, or
control of an enterprise. The Act’s sanctions,
however, were not intended to extend to
fraudulent commercial transactions affecting
interstate commerce. In the following ways,
the principle of continuity limits the types of
persons, patterns and enterprises that civil

RICO actions may reach.

-36-

eae ennai

A.

[2] The object of all civil and criminal
RICO actions is the RICO "person," the
defendant. RICO defines person broadly to
include "any individual or entity capable of
holding a legal or beneficial interest in
property." 18 U.S.C. Section 1961(3). If we
are to restrict RICO to the type of conduct
Congress intended to proscribe, the RICO person
must be one that either poses or has posed a
continuous threat of engaging in acts of
racketeering. In most cases, pleading the
existence of a "pattern of racketeering
activity" will supply this element of
continuity to the RICO person. The continuous
threat requirement may not be satisfied if no
more is pled than that the person has engaged
in a limited number of predicate racketeering
acts. Two isolated acts of racketeering have
been held sufficient to constitute a pattern

under this Circuit’s unique precedent. @ But

two such acts alone may fail to satisfy the

2 See infra Part IIB of this opinion.

-37-

continuous threat requirement. Cf. Mastercraft

Indus., v. Breining, 664 F.Supp. 859, 861

(S.D.N.Y. 1987) ("plaintiff has alleged no
continuing enterprise other than the
defendants’ lawful business, of which the
particular fraud alleged is at best a minor

part"); Proctor & Gamble Co. v. Big Apple

Indus. Bldgs., Inc., 655 F.Supp. 1179, 1184

(S.D.N.Y. 1987) ("[{T]he RICO defendants in this
case were engaged in a single lawful project of
finite scope and duration-constructing a
television studio for a customer. Allegations
of numerous instances of fraud in carrying out
this project does not bring it within the scope
of the RICO statute.").
B.

[3] A pattern of racketeering activity
"requires at least two acts of racketeering."
18 U.S.C. Section 1961(5). Predicate acts of
racketeering are defined to include wire and
mail fraud. Id. at Section 1961(1) (B). In

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479,

496 n. 14, 105 S.Ct. 3275, 3285 n. 14, 87

-38-

L.Ed.2d 346 (1985), the Supreme Court noted
that "while two acts [of racketeering] are
necessary, they may not be sufficient." The
critical features of a pattern of racketeering
activity are continuity and relationship. Id.
This continuity and relationship cannot exist
in the pattern of racketeering activity alone.
Continuity and relationship are reciprocal
values that must function with at least one of
the other essential elements of a RICO claim.
[4] One ground given by the district court
for dismissing Delta’s complaint was’ the
failure to plead a pattern of racketeering
activity. In any circuit other than ours, it
may have been proper to dismiss Delta’s
complaint on the ground that the, numerous
alleged acts of mail and wire fraud were parts
of a single, otherwise lawful corporate merger
not constituting a pattern of racketeering.

But in R.A.G.S. Couture, Inc. v. Hyatt, 774

F.2d 1350, 1355 (5th Cir. 1985), a panel of
this court held that two acts of mail fraud

that related to a single business transaction

«Pm

PO ENED,

constituted a pattern of racketeering activity.

The district court declined to follow R.A.G.S.

because of its lack of analysis and because of
the statement in Armco Industrial Credit Corp.
v. SLT-Warehouse Co., 782 F.2d 475, 481 (5th
Cir. 1986), that the "’pattern of racketeering
activity’ language" in the RICO statute is
something that must be interpreted in "the
future." Several panels of this court have

been critical of R.A.G.S.,2 but each has been

bound as we are by the fule of R.A.G.S. A

request to reconsider R.A.G.S. "can only be

made to the entire court sitting en banc, not

to another panel." Smith v. Cooper/T. Smith
Corp., 846 F.2d 325, 329 (5th Cir. 1988)

[vacated by August 1, 1988 order for rehearing

en banc]. The district court was not free to
depart from R.A.G.S. We must assume a
3

See e.g., Crocker v. FDIC, 826 F.2d
347, 348 n. 2 (5th Cir. 1987) cert. denied,

U.S. P 108 §.Cct. 1075, 99 L.Ed.2a 35
(1988); Montesano v. Seafirst Commercial Corp.,
818 F.2d 423, 426 (5th Cir. 1987). In our

view, the criticism is warranted.

wha

sufficient pattern of racketeering activity
was alleged.
is

[5] The concept of continuity as a means of
controlling the scope of RICO has also been
incorporated into the enterprise element of
section 1962. An enterprise "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." is U.S.C.

Section 1961(4). In United States v. Turkette,

452 U.S. 576, 583, 101 S.Ct. 2524, 2528-29, 69
L.Ed.2d 246 (1981), the Supreme Court stressed
that continuity is a necessary attribute of an
association-in-fact enterprise. We have
incorporated this notion of continuity into our
definition of such enterprises. An
association-in-fact enterprise (1) must have an
existence separate and ipart from the pattern
of racketeering, (2) must be an_= ongoing
organization and (3) its members must function

as a continuing unit as shown by a hierarchical
wh tn

eee

or consensual decision making structure. Manax

v. McNamara, 842 F.2d 808, 811 (5th Cir. 1988);

Foval v. First Nat’l Bank of Commerce, 841 F.2d

126, 129-30 (5th Cir. 1988); Montesano _v.

Seafirst Commercial Corp., 818 F.2d 423, 426-27

(Sth Cir. 1987); Atkinson v. Anadarko Bank &

Trust Co., 808 F.2d 438, 440-41 (5th Cir.),

cert. denied, U.S. , 307 -$.68. 3276, BF

L.Ed.2d 780 (1987); Shaffer _ v. Williams, 794

F.2d 1030, 1032 (5th Cir. 1986). Thus, the

enterprise must not be one that briefly

flourishes and fades. It must be one that, in
the words of Turkette, "functions as a
continuing unit." 452 U.S. at 583, 101 $.Ct.
at 2528.

Iii.

[6] The district court properly dismissed
Delta’s second amended complaint. Delta has
attempted to state a RICO claim by alleging
multiple acts of fraud that were part and
parcel of a single, discrete and otherwise
lawful commercial transaction. This claim

fails to state a RICO cause of action as a

mi to

matter of law because the pleadings do not

assert that the corporate defendants posed a
continuous threat as RICO persons. Delta has
alleged as a pattern of racketeering activity
nothing more than numérous predicate acts which
were necessary segments of an otherwise
legitimate and singular commercial endeavor-the
Case/Tenneco aceaieltion of IH and related
efforts to combine the dealer network. Delta’s
claim that the method of termination of one or
all dealerships fraudulently violated
contractual rights or legal duties does not
plead a RICO violation.

The judgment appealed from is

AFFIRMED.

REAVLEY, Circuit Judge, concurs in the result.

oh 3=

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0780%3A1. Public record. Not legal advice.