# Amicus Curiae Brief — Sedima, S. P. R. L. v. Imrex Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1985
- **Citation:** 469 U.S. 1157

## Text

Nos. s4-688 sesed”) ae tok US

FILE
IN THE FEB 36 1985
Supreme Cont of the United cn v STEVAS.
A
October Term, 1984 —_ CLERK es
No. 84-648
SEDIMA, S.P.R.L.,
Petitioner,
v.
IMREX COMPANY, INC., et al.,
Respondent.

On Writ of Certiorari to the United States Court of
Appeals for the Second Circuit

No. 84-822

AMERICAN NATIONAL BANK AND TRUST CO.
OF CHICAGO, et al.,
Petitioner,

v.

HAROCO, INC., et al.,
Respondent.

On Writ of Certiorari to the United States Court of
Appeals for the Seventh Circuit

——
—__—_—— ----

BRIEF OF AMICUS CURIAE
COUNTY OF SUFFOLK, NEW YORK

— — --— ———__—_——— —-
a ——_———— a

MARTIN BRADLEY ASHARE

Suffolk County Attorney

H. Lee Dennison Building
Veterans Memorial Highway
Hauppauge, New York 11788

(516) 548-3500
Mark D. CoHEN
LAURENCE La POINTE
James J. O’RourKE
Special Assistant County Attorneys
Of Counsel

TABLE OF CONTENTS

PAGE

Interest of Amicus devas 1
Summary of Argument 2

Argument—The remedial provisions of civil RICO
i18 U.S.C. 1964(c)] should be liberally construed
to reject a requirement of proof of a prior convic-
tion and so-called ‘‘racketeering injury’’ as a
prerequisite to suit

Gs

A. The Previous Conviction Requirement 3

B. The ‘‘Racketeering Injury’’ Requirement 10

Conclusion 13

If

TABLE OF AUTHORITIES
PAGE

Cases:

Alcorn County v. United States Interstate Supplies,

Inc., 731 F.2d 1160 (Sth Cir. 1984). ........ 8
Alexander Grant and Co. v. Tiffany Industries, Ine.,

742 F.2d 408 (Sth Cir. 1984) err... 7
Bankers Trust v. Rhoades, 741 F.2d 511 (2d Cir.

||) EMU 10, 11, 12
Bennett v. Berg, 685 F. 2d 1053 (Sth Cir. 1982), aff’d,

710 F.2d 1361 (Sth Cir. 1983) (en bane) . 17, 9, 12
Bennett v. E. F. Hutton Co., Ine., 597 F.Supp. 1547

(D.N.Ohio 1984) 7
Bunker Ramo Corp. v. United Business Forms, Inc.,

713 F.2d 1272 (7th Cir. 1982) ieee 6
City of New York v. Arnmart Wholesale Beer Distrib-

utors, Inc., 83 Civ. 9263 (S.D.N.Y. 1983) ............. ; 8
City of New York v. Bandolene Fuels, Inc., 81 Civ.

1340 (B.D.N.X. IGE) .............0ee 8
City of Milwaukee v. Hansen, Civ. No. ‘17- 246 (ELD.

aa \ <
County of Cook v. Lynch, 560 F. Supp. 136 (N.D.I.

) |: ) &
County of Cook v. Mideon Corp. 574 F.Supp. 902

O, AN RB ) 8
County of Suffolk v. Tempera, et al., 82 Civ. 2194

(E.D.N.Y.; filed July 26, 1982) ............000000 1

County of Suffolk v. Estate of Walsh, et al., 81 Civ.
257 (E.D.N.Y.; filed January 27, 1981) (filed sub

nom., County of Suffolk v. Walsh, et al.) 1,8
Farmers Bank of State of Delaware v. Bell Mortgage

Corp., 452 F.Supp. 1278 (D.C.Del. 1978) 6
Flora v. United States, 357 U.S. 63 (1958) 000... 4
Furman v. Cirrito, 741 F.2d 524 (2d Cir. 1984), appli-

cation for cert pending, No. 84-604 0... 9, 10

Iil

PAGE
Gerace v. Utica Veal Co., 580 F.Supp. 1465 (N.D.N.Y.)
1984) | | | | 8

Haroco, Ine. v. American National Bank and Trust Co.
of Chicago, 747 F.2d 384 (7th Cir. 1984), cert.

granted, US. (1985) (No. 84-822). 2, 3, 11, 12
Matter of District Attorney of Suffolk County, 58

N.Y.2d 436 (1983) | ye accascssvenssosess> 8
Maryland v. Buzz Berg Wrecking Co., 496 F. Supp.

245 (D.Md. 1980) . 8

Moss v. Morgan Stanley, Inc., 719 F.2d 5 (Qa Cir.
1983), cert. denied sub nom., Moss v. Newman,

— US. ——, 104 S.Ct. 1280 (1984) ; 6
Municipality of Anchorage v. Hitachi Cable, Ltd., 547
F.Supp. 633 (D.Alaska 1982) . | 8

Owl Construction Co., Ine. v. Ronald Adams Con-
tractor, Inec., 727 F.2d 540 (Sth Cir. 1984) | 7

People v. Tempera, 94 A.D.2d 987 (2d Dep’t 1983) 7,8

Reiter v. Sonotone Corp., 442 U.S. 330 (1979) ............ 5
Russell v. United States, ——- U.S. —-, 104 S.Ct.

| aa 3
Schacht v. Brown, 711 F.2d 1343 (7th Cir), cert. de-

nied, —— U.S. ——, 104 S.Ct. 508 (1983)... 9
Sedima, 8.P.R.L. v. Imrex Co., Inc., 741 F.2d 482 (2d

Cir. 1984), cert. granted, ——- U.S. —— (1985)

Cee no ssscccucssenevecesacencceseeees passim
State Farm Fire & Cas. Co. v. Caton, 540 F. Supp. 673,

(N.D.Ind. 1982) . 4
State of New York v. O’Hara, 595 F. F.Supp. 1101 ( Ww. D.

N.Y. 1984) . Seitbicees sass Ee 8

USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d
Nee cnn. cccacessuccececsecsensercaseeseee, 6, 7
United States v. Borden Co., 347 U.S. 514 (1954) _.. 5

IV

PAGE
United States v. Cappetta, 502 F.2d 1351 (7th Cir.
1974), cert. denied, 420 U.S. 925 (1975) 5
United States v. Frumento, 563 F.2d 1083 (3d Cir.
1977), cert. denied, 484 U.S. 1072 (1978) 4
United States v. Parness, 503 F.2d 480 (2d Cir. 1974),
cert. denied, 419 U.S. 1105 (1975) = 5
United States v. Sells Engineering, Inc., —— US.
, 103 S.Ct. 3133 (1983) . ER eae Cee 8

United States v. Turkette, 452 U.S. 576, 586- 587 (1981) 3,4
United States v. Walsh, 700 F.2d 846 (2d Cir.), cert.
denied, US. , 104 S.Ct. 984 (1983) ..... | 7

Waste Recovery Corp. v. Mahler, 566 F.Supp. 1466,

(S.D.N.Y. 1983) . ae
Williamette Savings & Leas Vv. Blake & N eal Finance
Co., 577 F.Supp. 1415 (D.Ore. 1984) : 11

Other Authorities:

Blakey, The Civil RICO Fraud Action in Context:
Reflection on Bennett v. Berg, 58 Notre Dame
L.Rev. 237, 249-250 (1982) 2.000000. 7

Blakey & Gettings, Racketeer Influenced and Corrupt
Organizations (RICO): Basic Concepts, Crim-
imal and Civil Remedies, 53 seit L.Rev. 1009,
1014-1015 (1980)

McClellan, The Organized Crime Control Act ( 8. 30)
or Its Critics: Which Threatens Civil Liberities?,
46 Notre Dame L.Rev. 55 (1970) ...........

Note, Civil RICO: The Temptation and Impropriety
of Judicial Restrictions, 95 Harv.L.Rey. 1101,
1118-1121 (1982) ................. 9

Shaw, Use of RICO’s Civil Remedies by State, Local
Governments, New York Law Journal, June 14,

1982 at pp. 1 and 3 | Bee PINON ea EN ITER ONCE A 8,9

Strafer, Massimi and Skolnick, Civil RICO in the
Public Interest: ‘*‘Everybody’s Darling’’, 19
American Criminal L.Rev. 655 (1982) .............. 9

~

~]

Interest of Amicus*

In recent years, governments on all levels—federal,
state and local—have increasingly recognized the remedial
value of civil sanctions to combat pervasive fraud com-
mitted against the public. No longer satisfied with the
mere imposition of criminal penalties against wrong-doers,
municipal entities are now seeking to return the ill-gotten
gains of those who corrupt our institutions to the public
treasury. Toward that end, Amicus, County of Suffolk,
has initiated two civil lawsuits pursuant to, im 2r alia, the
Racketeer Influenced and Corrupt Organizations Act of the
Organized Crime Control Act of 1970 (RICO) [18 U.S.C.
1961, et seq.]. In County of Suffolk v. Estate of Walsh,
et al., 81 Civ. 257 (E.D.N.Y.; filed January 27, 1981) [filed
sub nom., County of Suffolk v. Walsh, et al.|, Amicus
sought damages and recision of certain engineering and
construction contracts in a 260 million dollar fraud action
which was based on a pattern of corruption and kickbacks
in the planning and construction of a billion dollar public
works project known as the Suffolk County Southwest
Sewer District. Similarly, in County of Suffolk v. Tempera,
et al., 82 Civ. 2194 (E.D.N.Y.; filed July 26, 1982), Amicus
sought approximately four million dollars in damages and
recision of certain educational and training contracts as
well as recision of certain salary monies paid to a local gov-
ernment official in connection with a pattern of bribery and
kickbacks in the award and execution of public contracts
funded by the United States Department of Labor.

In these cases, Suffolk County, a municipal corporation
and political subdivision of the State of New York, located
on the eastern two-thirds of Long Island, New York, with a

* The filing of this brief is pursuant to Rule 36(4) of the Court.

2

population of approximately 1.4 million persons, has at-
tempted to both relieve the financial burden on taxpayers
and in its own behalf and as fiduciary for the United States
of America, recoup monies illegally obtained by the wrong-
ful conduct alieged in these suites.

The broad policy question presented in both cases on
review herein is the scope and application of the civil RICO
statute. As we outline in our argument, the majority opin-
ion in Sedima, S.P.R.L. v. Imrex Co., Inc., 741 F.2d 482
(2d Cir. 1984), cert. granted, U.S. —— (1985) (No.
84-648), has, with virtually no statutory or case law prece-
dent, improvidently narrowed the intended reach of RICO
by engrafting a prior conviction prerequisite to civil suit
under the statute. This decision constitutes an unwar-
ranted restriction on the ability of local and state govern-
ment to recoup illegally obtained taxpayers’ money. Ad-
ditionally, the Sedima majority’s engrafting of a so-called
‘‘racketeering injury’’ as an element which the prospective
civil RICO plaintiff must prove was an inappropriate en-
actment of judicial legislation which was correctly rejected
in Sedima’s companion case, before the Court, Harco, Inc.
v. American National Bank and Trust Co. of Chicago, 747
F.2d 384 (7th Cir. 1984), cert. granted, —— U.S. ——
(1985) (No. 84-822).

Summary of Argument

The scope and purpose of the provisions of RICO and
in particular, its civil provisions, 18 U.S.C. 1964(c) is
clear—to strip those who engage in racketeering activity
of their ill-gotten fruits and thus, provide a remedy to

ad
0

those innocent parties harmed by such illicit conduct. See,
United States v. Turkette, 452 U.S. 576, 586-587 (1981);
see also, Russello v. United States, —— US. . -
—, 104 S.Ct. 296, 302-303 (1983). Notwithstanding the
majority’s holding in Sedima, S.P.R.L. v. Imrex Co., Inc.,
No. 84-648, the legislative history and developing case law
under this provision demonstrate no requirement of a prior
criminal conviction as a prerequisite to suit. Similarly,
any judicial attempt to legislate a requirement that plain-
tiffs in such suit prove a ‘‘racketeering injury’’ as an ele-
ment of proof precedent to recovery should be rejected.
Compare, Haroco, Inc. v. American National Bank and
Trust Co. of Chicago, No. 84-648 with Sedima, supra.

ARGUMENT

The remedial provisions of civil RICO [18 U.S.C.
1964(c)] should be liberally construed to reject a re-
quirement of proof of a prior conviction and so-called
“racketeering injury” as a prerequisite to suit.

A. The Previous Conviction Requirement

The remedy provided in 18 U.S.C. 1964(c) must, of
course, be viewed in light of the statute’s legislative history
and case law construction. On this basis, Amicus urges a
previous criminal conviction plainly is not a prerequisite to

suit under RICO.

18 U.S.C. §1964(¢c) provides:

‘Any person injured in his business or property by
reason of a violation of section 1962 of this chapter
may sue therefor in any appropriate United States
district court and shall recover threefold the damages

4

he sustains and the cost for the suit, including a rea-
sonable attorney’s fee.’’ (emphasis added).

Analyzing RICO’s ‘‘language’’ [United States v. Tur-
kette, 452 U.S. 576, 580 (1981)] and ‘‘literal meaning of
the words employed,’’ [Flora v. United States, 357 U.S. 63,
65 (1958) ], Section 1964(c) refers to a ‘‘violation’’ of the
standards of Section 1962, and not to the criminal penalties
of Section 1963. Sectic.: 1963 states that acts in violation
of it are ‘‘unlawful,’’ not criminal.' Criminal and civil
sanctions are supplied to violations of Section 1962 by Sec-
tion 1963 (criminal) and Section 1964 (civil).

Accordingly, Amicus respectfully maintains that any
construction of RICO which requires a prior ‘‘RICO con-
viction’’ as defined in 18 U.S.C. 1962 is an incorrect nar-
rowing of the statute’s scope and purpose. Simply stated,
there is no reason to ‘‘depart ... from and limit... the stat-
utory language.’’ United States v. Turkette, 452 U.S. 576,
981 (1981) (apropos of scope of ‘‘enterprise’’). Thus, the
broad construction suggested by petitioner Sedima with
respect to the prior conviction question ‘‘is neither absurd
nor surprising.’’ ZJd. at 537.*

1. Contrary to the Sedima majority's inference [741 F.2d at
501-502] civil RICO is not a criminal statute in any sense. It does
not make criminal, conduct that before its enactment was innocent,
since its application depends on the existence of “racketeering activ-
ity” that violates an independent criminal statute. Its standards of
“unlawful” conduct are in fact sanctioned by criminal and civil rem-
edies. RICO is, in short, a “remedial” statute. 84 Stat. 947 (1970)
(“remedial purposes” warrant “liberal” construction). See, United
States v. Frumento, 563 F.2d 1083, 1090-1091 (3d Cir. 1977), cert.
denied, 434 U.S. 1072 (1978); see also, e.g., State Farm Fire &
Cas. Co. v. Caton, 540 F.Supp. 673, 675 (N.D.Ind. 1982).

2. Indeed, any other construction of Section 1964 flies, not only
i nthe face of the liberal construction directive noted supra at fn. 1,
but also RICO’s explicit statement of findings and purpose. 84 Stat.

(footnote continued on next page)

0

Congress intended that civil litigants (‘‘persons’’) be
given a cause of action for relief in cases in which a defend-
ant, through an ‘‘indictable’’ or ‘‘chargeable’’ ‘‘pattern of
racketeering’’ [18 U.S.C. 1961(1)(a) and (b) (emphasis
supplied) ] had caused injury to a plaintiff. Simply stated,
these words ‘‘mean just what they say’’ [Sedima, 741 F.2d
at 504 (Cardimone, J. dissenting) | ; there is no requirement
that either a United States Attorney or a state » ‘osecutor
have obtained a conviction as a threshold requirement to
suit under this statute.

Thus, the narrow holding of Sedima would, at the
very least, be wholly inconsistent with the case law as it
has developed since RICO’s enactment in 1970. For ex-
ample, in United States v. Cappetto, 502 F.2d 1351 (7th Cir.
1974), cert. denied, 420 U.S. 925 (1975), one of the first re-
ported civil RICO cases, the Government began an injunc-
tive action against the defendant under Section 1964 (a)
and (b). Section 1964(a) grants equity jurisdiction to fed-
eral courts to prevent and restrain ‘‘violations of Section
1962.’’ The Government in Section 1964(b) is explicitly

922-23 (“illegal use of . . . fraud” “enhanced sanctions and new rem-
edies”). Thus, if this Court accepts such a construction on Section
1964 cases, the class of injured persons entitled to sue even outside
those in the publi¢ sector as noted, infra, would be sharply curtailed.
In following the antitrust model by providing a cause of action for
injured persons, Congress “created . . . the civil suit under Section
. .. [1964] precisely for the purpose of encouraging private challenges
to violation.” Reiter v. Sonotone Corp., 442 U.S. 330, 344 (1979)
(emphasis in original) (apropos of section 4 of the Clayton Act).
“Private suits” were thought to “provide a significant supplement to
the limited resources available to the Department of Justice .. .”
(emphasis added). Jd. See, United States v. Borden Co., 347 U.S.
514, 518 (1954) (private suits under section 4 “designated to be
cumulative, not mutually exclusive’) (emphasis added). A narrow
construction of Section 1964 would undermine those “salutary pur-
poses.” United States v. Parness, 503 F.2d 430, 439 (2d Cir. 1974),
cert. denied, 419 U.S. 1105 (1975) (apropos of “‘enterprise’’).

6

authorized to ‘‘institute proceedings’’ under Section 1964
(a). No prior criminal conviction had been obtained.
The court observed :

‘‘TA]ets which may be prohibited by Congress may be
made the subject of both criminal and civil proceed-
ings, and the prosecuting arm of the government may
be authorized to elect whether to bring a civil or crim-
inal action, or both. A civil proceeding to enforce those
acts is not rendered criminal in character by the fact
that the acts are also punishable as crimes... The
relief authorized by .. . [Section 1964].’’ 502 F.2d at
1357.

Similarly, in Farmers Bank of State of Delaware v. Bell
Mortgage, Corp., 452 F.Supp. 1278 (D.C.Del. 1978), a pri-
vate civil damage action was brought under Section 1964.
The defendant objected that he had ‘‘not [been] con-
victed ...’? 452 F.Supp. at 1279. The court held:

‘*Section 1964(c) ... does not condition ... [a] cause of
action in any way upon a previous conviction under the
criminal provisions of the statute. It is only necessary
that the plaintiff provide elements of the Act by a
preponderance of the evidence in order to be awarded
damages in a civil action.’’ 452 F.Supp. at 1280.

Interestingly enough, prior to Sedima, the Second Cir-
cuit at least in dicta held that eriminal convictions were
not necessary [Moss v. Morgan Stanley, Inc., 719 F.2d 5,
19, fn. 15 (2d Cir. 1983), cert. denied, sub nom., Moss v.
Newman, —— U.S. ——, 104 S.Ct. 1280 (1984)], which
determination was specifically reached as holding in the
Sixth and Seventh Circuits. Bunker Ramo Corp. v. United
Business Forms, Inc., 713 F.2d 1272, 1287 (7th Cir. 1983),
USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94,

7

95 fn. 1 (6th Cir. 1982) ; see also, Bennett v. Berg, 685 F.2d
1053, 1063-1064 (8th Cir. 1982), aff’d 710 F.2d 1361 (8th
Cir. 1983) (en banc) ; Owl Construction Co., Inc. v. Ronald
Adams Contractor, Inc., 727 F.2d 540, 542 (5th Cir. 1984) ;
ef., Alexander Grant and Co. v. Tiffany Industries, Inc.,
742 F.2d 408, 413, fn. 11 (8th Cir. 1984) (issue not reached).
Indeed, the Sedima majority conceded that virtually every
prior case to have definitively ruled on the question held
that a previous criminal ‘‘RICO”’ conviction was not neces-
sary as a pre-condition to the filing of an efficacious civil
RICO suit. Sedima, 741 F.2d at 496-498 and cases cited
at fns. 42-43; see also, Cardimone, J., dissenting in Sedima
at 504-505) ; see also, Bennett v. FE. F. Hutton Co., Inc., 597
F.Supp. 1547, 1556-1558 (N.D.Ohio 1984) (rejecting
Sedima).

The Sedima majority’s announcement of the previous
conviction requirement would seem to have been based, at
least in part, on a reaction to a perceived flood of so-called
‘‘garden variety’’ civil-RICO lawsuits [see, Sedima, 741
F.2d at 408, 503]. We suggest that such a theory inappro-
priately serves to judicially repeal civil RICO in many
cases contrary to strong Congressional intent® and thus,
in essence ‘‘throw the baby out with the bathwater.’”

3. See analysis of civil RICO’s legislative history contained in
McClellan, The Organized Crime Control Act (S.30) or its Critics:
Which Threatens Civil Liberties?, 46 Notre Dame L.Rev. 55 (1970) ;
Blakey & Gettings, Racketeer Influenced and Corrupt Organizations
(RICO): Basic Concepts, Criminal and Civil Remedies, 53 Temple
L.Rev. 1009, 1014-1015 (1980); see also, Blakey, The Civil RICO
Fraud Action in Context: Reflections on Bennett v. Berg, 58 Notre
Dame L.Rev. 237, 249-250 (1982).

4. We note that there, in fact, are predicate criminal convictions
underlying the racketeering activity complained of in both civil RICO
cases filed by the Amicus Suffolk County in the civil RICO cases it
is a party litigant [United States v. Walsh, 700 F.2d 846 (2d Cir.),
cert. denied, —— U.S. ——, 104 S.Ct. 984 (1983); and People v.

(footnote continued on next page)

8

Amicus, along with various other municipalities and
state governments, suing as ‘‘persons’’ under 18 U.S.C.
1964(c), has sought to utilize the civil RICO’s provisions in
the civil forum for the public interest [see e.g., United
States v. Sells Engineering, Inc., US. _- , 103
S.Ct. 3133, 3161-3162 (1983), (Burger, C.J., dissenting) ;
Matter of District Attorney of Suffolk County, 58 N.Y.2d
436, 445 (1983)] to recover ill-gotten monies to the tax-
payers and thus strip violators of the fruits of their crim-
inal activities. See, e.g., Alcorn County v. United States
Interstate Supplies, Inc., 731 F.2d 1160 (5th Cir. 1984) ;
State of New York v. O’Hara, 595 F.Supp. 1101 (W.D.N.Y.
1984) ; Gerace v. Utica Veal Co., 580 F.Supp. 1465 (N.D.N.Y.
1984) ; County of Cook v. Midcon Corp., 574 F.Supp. 902
(N.D.II1. 1983); County of Cook v. Lynch, 560 F.Supp. 136
(N.D.ILL. 1982) ; Municipality of Anchorage v. Hitachi Cable,
Ltd., 547 F.Supp. 633 (D.Alaska 1982); Maryland v. Buzz
Berg Wrecking Co., 496 F.Supp. 245 (D.Md. 1980); City
of New York v. Arnmart Wholesale Beer Distributors, Inc.,
83 Civ. 9263 (S.D.N.Y. 1983) ; City of New York v. Bando-
lene Fuels, Inc., 81 Civ. 1240 (E.D.N.Y. 1981) ; City of Mil-
waukee v. Hansen, Civ. No. 77-246 (E.D.Wisc. 1981); see
also, Shaw, Use of RICO’s Civil Remedies by State, Local
Tempera, 94 A.D.2d 987 (2d Dep’t 1983)]. Nonetheless, in County
of Suffolk v. Estate of Walsh, supra, the District Court has stayed
all proceedings pending the resolution of the cases, sub judice in this
Court. However, “limit|ing] private RICO” because there are no
“prosecutorial guidelines” as in criminal RICO [Sedima, supra at
497], should not be a function of our appellate courts when Congress
has clearly spoken to the contrary. Such a restriction with absolutely
no guidance as to its ultimate scope [see, Sedima, supra at 503],
would, with virtually no precedent, precondition all civil RICO suits,
on prosecutorial discretion. This in turn is a function of a commit-
ment of limited resources in cases where a government’s priorities and

responsibilities may necessarily differ in either the criminal or civil
forum.

9

Governments, New York Law Journal, June 14, 1982 at pp.
1 and 3.

Thus, while we are certainly not persuaded that in at
least public sector litigation, as one court has noted in gen-
eral, RICO has ‘‘created a runaway treble damage bonanza
for the already excessively litigious’’ [Schacht v. Brown,
711 F.2d 13438, 13861 (7th Cir.), cert. denied, —— U.S. .
104 S.Ct. 508 (1983) ; see also, Sedima, supra, at 786], where
Congress has spoken in ‘‘clear and unambiguous terms’’ on
the matter [cf., Furman v. Cirrito, 741 F.2d 524, 532 (2d
Cir. 1984), application for cert. pending, No. 84-604], stat-
utory enactment by bald judicial fiat to narrow civil RICO
on this question is plainly inappropriate.

As Judge Cardimone [dissenting in Sedima, 741 F.2d at
505) succinctly observed, ‘‘the simple explanation for [the]
resounding rejection of any prior conviction requirement,’’
{in all previous cases] is that ‘‘it does not appear in the
statute’’ (emphasis supplied).

It is for this reason, we respectfully maintain, that
only days after Sedima, a different Second Circuit panel
suggested that Sedima had improvidently and without au-
thority, restricted the plain meaning and intent of civil
RICO as enacted by Congress. Furman v. Cirrito, 741 F.2d
at 531-532; see, Note, Civil RICO: The Temptation and Im-
propriety of Judicial Restrictions, 95 Harv.L.Rev. 1101,
1118-1121 (1982); Strafer, Massimi and Skolnick, Civil
RICO in the Public Interest: ‘‘Everybody’s Darling’’, 19
American Criminal L.Rev. 655 (1982) ; see also, Bennett v.
Berg, 685 F.2d at 1064 [‘‘it is beyond our authority to re-
strict the reach of the statute’’].

10

B. The “Racketeering Injury” Requirement

The ‘‘racketeering injury’’ requirement promulgated
in Sedima similarly has no basis in the language of the
statute or in its legislative history. Further, this require-
ment, especially as interpreted by the Second Circuit in the
companion ease of Bankers Trust v. Rhoades, 741 F.2d 511
(2d Cir. 1984) [application for cert. pending No. 84-657],
would have a negative impact on future civil RICO ae-
tions,® simply because this standing requirement is inca-
pable of any meaningful definition which does not re-intro-
duce the discredited organized crime nexus requirement
through the back door.

While the Sedima court suggested that the language of
§1964(c) is ambiguous, and therefore, open to judicial in-
terpretation [741 F.2d at 486-488], another Second Circut
panel only two days later in Furman v. Cirrito, 741 F.2d
524 (2d Cir. 1984), found that it was not:

“To us the language of §1964(c) is clear. It contains
no requirement for a ‘racketeering enterprise injury ;’
nor does it limit the protected injury to one sustained
‘by reason of’ the racketeering enterprise; it grants
civil relief for ‘injury,’ which logically includes any
injury, ‘by reason of a violation of §1962.’’’ 741 F.2d
at 528.

Indeed, as we have previously argued, it is clear that the
Sedima court based its finding of §1964(c)’s ambiguity on
nothing more than it’s own judicial unhappiness with the

5. We note that in both actions filed by Amicus County of Suf-
folk, long before Sedima, injury due to racketeering activities of the
nature suggested in that case was in fact pleaded. However, aside
from whether or not civil RICO should properly have such a stand-
ing rule, as discussed infra, Sedima has outlined no criteria for eval-
uating such a requirement.

11

impact of the statute, as written, upon alleged fraud involv-
ing ‘‘respected and legitimate enterprises.’’ 741 F.2d
at 487.

With respect to the legislative history of civil RICO
concerning this issue, the Sedima court suggested that there
is nothing but ‘‘clanging silence.’’ But see, Amicus’s brief,
supra, fn. 3. The central problem involved in the ‘‘rack-
eteering injury’’ requirement, however, lies in defining and
applying the term. As the Seventh Circuit in Haroco has
observed, those courts which have sought to impose this
requirement have been unable to formulate a meaningful
definition. 747 F.2d at 387-389. Indeed, the Sedima court
has done little more than state that a racketeering injury
is something more than the proximate results of the RICO
predicate acts, and must be caused by activity of a kind
which RICO was designed to deter. 741 F.2d at 495-496.
To mak? matters even more clouded, in the Sedima’s com-
panion case, decided one day later, Bankers Trust v.
Rhoades, 741 F.2d 511 (2d Cir. 1984) (application for cert.
pending, No. 84-657), the Second Circuit required that this
‘*something more’’ result from all of the essential elements
of the RICO violation. 741 F.2d at 515-517.

The Second Circuit’s definition of ‘‘racketeering in-
jary’’ thus offers no practical guidance to the potential gov-
ernmental or private plaintiff, or to courts faced with mo-
tions for the dismissal of otherwise meritorious civil RICO
actions. Litigants are left with little more than an ‘‘I know
it when I see it’’ standard [see, Haroco, 747 F.2d at 389,
citing Williamette Savings & Loan v. Blake & Neal Finance
Co., 577 F.Supp. 1415, 1430 (D.Ore. 1984) ; Waste Recovery
Corp. v. Mahler, 566 F.Supp. 1466, 1468-1469 (S.D.N.Y.

12

1983) ], and the implication in Sedima is that the court will
know and sustain civil RICO actions only when La Cosa
Nostra, the Mafia or similar organized crime groups are
involved. Thus, the ‘‘racketeering injury’’ requirement
has brought RICO jurisprudence full circle to the ‘‘organ-
ized crime nexus’’ requirement rejected, as noted in Haroco,
747 F.2d at 394-395, in Bennett v. Berg, 685 F.2d 1053 (8th
Cir. 1982) and those cases cited in Sedima, supra at fns. 31
and 32.

The potential damage caused by the ‘‘racketeering in-
jury’’ requirement extends even to those cases in which
‘‘mobsters’’ are involved. There is nothing magical about
the involvement of ‘‘mobsters’’ which will conjure up the
additional consequential injuries suggested as requisite to
a valid civil RICO suit by Sedima and Bankers Trust.
Even in cases in which there has been a successful criminal
RICO prosecution of a ‘‘mobster,’’ under the Sedima/
Bankers Trust rule, argument will be made that the sub-
sequent civil RICO action should fail, if, as is often the
case, the only injuries are those caused by the predicate
acts. Thus, the Sedima/Bankers Trust standard does not
even serve to focus civil liability upon those whom it iden-
tifies are the prime targets of RICO and thus, does not
fulfill RICO’s civil objectives as a statute which was
‘‘deliberately’’ drafted to be ‘‘extraordinarily broad.’’
Haroco, 747 F.2d at 390.

It is clear from the above that reversal of Sedima and
affirmance of Haroco is appropriate, both to avoid violence
to the statutory language and to preserve the civil remedy
which Congress intended to give to ‘‘persons,’’ and in par-
ticular, governmental institutions, who have been fraud-
ulently victimized by organized patterns of criminality.

13

Conclusion

Civil RICO [18 U.S.C. §1964(c)] should be liber-
ally construed as Congress intended to permit viable
causes of action without previous criminal convictions

and without pleading and proof of “racketeering
injury.”

Dated: February 15, 1985
Respectfully submitted,

MarTIN BRADLEY ASHARE
Suffolk County Attorney

Mark D. CoHEN
LAURENCE La PoINTE
James J. O’RourKE
Special Assistant County Attorneys
Of Counsel

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0347%3A07. Public record. Not legal advice.