# 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

[ ottice-supreme Court, US.
rLED

No. 84-648 | FEB 28 1985

TREEXANBDEAHe STEVAS,

IN THE ne
SUPREME COURT OF THE UNITED STATES ;
October Term, 1984

SEDIMA, S.P.R.L.,
Petitioner,
-Vv.-
IMREX COMPANY, INC.,, et aL,
Respondents,

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

BRIEF FOR THE CITIES OF NEW YORK, CHICAGO
AND PHILADELPHIA, AMICI CURIAE

FREDERICK A.O, SCHWARZ, Jr.
Corporation Counsel of the
City of New York, Amicus Curiae.
100 Church Street
New York, NY 10007
(212) 566-4501 or 4338

LEONARD KOERNER,
MICHAEL D, YOUNG,
WALTER A, KRETZ, JR.,
MARTIN C, ARONCHICK,
Of Counsel

JAMES MONTGOMERY BARBARA W. MATHER
Corporation Counsel of City Solicitor, City of

City of Chicago, Philadelphia, Amicus

Amicus Curiae. Curiae.
121 North Lasalle St. 1520 Muni. Servs. Bldg.
Chicago, IL 60602 Philadelphia, PA 19102
(312) 744-6900 (215) 686-5233
MATTHEW J, PIERS, HANDSEL B. MINYARD,
WILLIAM JAEGER, DENISE COLLIERS,

Of Counsel. Of Counsel.

a

TABLE OF CONTENTS
Page

Table of Contents........cccccccccsscseceeceeeccsereee I
Table of Authorities..........ccccccsccoccscescereeeee il
Interest of Amici Curiae.........cccccesceceseeeere |
Summary Of Argument.......cccccccsccecssesereeesere 7
Point I - The Prior Conviction

Requirement Should

Be Rejected....... eeanecnscesccesees 8
Point Il - The Racketeering Injury

Doctrine Should
Be Rejected........cccccccsccssceees 16

IIIT, «0 saniuiicerieieameetenemenaneoussessssoenesee 2 l

TABLE OF AUTHORITIES

Cases: Page

Alcorn County v. U.S. Interstate
upp es Inc., 731 F.2d 1160
th r. ia ccisccenns 4

Bankers Trust Co. v. Rhoade
741 F.2d 511 (2d Cir. 1984)........ 18

Barker v. Underwriters at Lloyd's
London, 564 F. Supp. 357 E D.
ae 8

Bennett v. Berg, 685 F.2d 1053,
aff'd en banc, 710 F.2d

1361 (8th Cir. 1982), cert.

denied, 104 S.Ct.

527 (1983) EEE 19
Bunker Ramo Corp. v. United
Business Forms, Inc., 713

. 2d 1272 (7th Cir. 1983).......... 8

City of Chicago v. North Austin

Revi talization Corp. No.

85 0441 oO oe ’

filed Jan. 18, 1985)...........seeeeeee 6
City of Milwaukee v. Hansen,

Civ. No. 77-246 (E.D. Wis.

| an 7,18
City of New York v. Arnmart

Wholesale Beer Distributors,
ne, 83 Vv. 9263 — — ~ a

filed Dec.21, 1983)........sseseeseees 4-5, 13-14,19

-ji-

Cases: Page
City of of New ork v. Rat dotene v. Bandolene

= ne. Inc., 81 Civ. 1240.
(E.D.N. Y., filed

April 24, 198 1)... Seeeeecocesceceseeeseses 5

City of New York v. Liberman,
ndex No. 40339/85 (Sup.
Ct. of New York, filed
Feb.8, 1985).....cccccsseee spcossonccsese 5, 14-15

City of New York v. Sitzer,
81 Civ. 7116 (S.D.N.Y.,
settled March 12, 1984)............ 5

City of Philadelphia
v. Modern Tra rtation, Inc.
85 Civ. 2052

(E.D. Pa., settled Feb. 13, 1985)......... 6

County of Cook v. Lynch,
560 F. Supp. 136 (N.D.

e TLL, 1982). ..ccccccccccccccccscccccccccccees 4

County of Suffolk v. Wals
81 Civ. 0257 (E.D.N.Y.,

filed Jan. 27, 1981)........ssceeeeeees 4

Farmers Bank v. Bell Mortage
a? 52 F. Supp. 1278
= fe EN -

Gerace v. Utica Veal Co.
580 F. Supp. 1465

(N.D.N.Y. 1984)....ccccceereeccereesees 4

In re ee 583 F. Supp.

1388 (E.D. Pa. 1984).........cceeesees 18
In re Longhorn Securities

Litigation 573 F. Supp.

255 (W.D. Okla. 1983)..........00000+ 8

-iii-

Cases: Page

Kleiner v. First Nat'l Bank

526 F. Supp. 1019

(N.D. Ga. 1981),
overruled on other

grou Morosani v.

_ F.2d. 1220 (11th Cir.
EES Seeeeresesceseseeseece y

Maryland v. Buzz Berg Wrecking
0., 496 upp. 245
(D. Md. 1980)........ tT 4

Mauriber “ Shearson/A merican

~ Express, Inc., 546 F. Su upp.

391 iG A x
Moore v. Margiotta, 83 Civ. 2036

(E.D.N.Y., ied

May 19, 1983)....cccccccesessesscesceees 4

Moss v. Mo Stanley, Inc.,
719 F. 2d 5 (2d Ci 1983),

cert, denied, sub nom.

Moss v. Napman, 104 104 S.
t. 2 4 eeeeene seeeceeceeseeeceeseee 8, 19
Municipality of Anchorage v.
itachi Cable, Ltd., 547 F.

upp. 633 (D. Alaska 1982)......... 4

New York v. O'H
83 Civ. 1440 (W.D.N.Y., filed

December 21, 1983).........cecceceeee 4

Parnes v. Heinold Commoditi
Inc., 487 F. — 645 whion D.
TL 1980)..css.0+-0.. a

Ralston v. Capper, 569 F. Supp.
1575 (E.D. Mich. 1983)........0000+. 18

Cases: Page

Sedima, S.P.R.L. v. Imrex Co.,
741 F.2d 482 (2d Grr. 1984)........ passim

State Farm Fire & Cas. Co.

Sutliff, Inc. v. Donovan Cos.
727 F. 2d 648 (7th Cir.

United States v. Cappetto, 502

F.2d 1351 (7th Cir. 1974),

cert. denied, 420 U.S.

925 1975 SSCOSSOSOSESEESEEEEOSESESEESEE SES x
United States v. One Assortment

of 89 Firear 52 U.S.L.W.
4228 (Feb. Bile BOE Dicccccccccceceess ll, 12

United States v. Turkette, 452
> UW Clee iicccesscccccccscascecccce 10, 16, 17

United States v. Ward, 448
< e 1l, 12

USACO Coa! Corp. v.
Carbomin =ne
T 689 F.2d a

ne,
(6th Cir, 1982)......ccccccsssesesceeeee 8

Cases:

Van Schaick v. Church of
ciento 935 F.Supp.

1125 (D. Mass, 1982)..........e0000

Statutes:

The Racketeer Influenced and
Corrupt Organizations Act,

18 U.S.C, §§1961-1968.............

City of Philadelphia Home Rule

Charter $4-400.........ccccccccocsees

1970 Illinois Constitution, Art.

Waly Wensesetnnndicesnenineninteniniiemaneniiessanes
New York City Charter, §394.............

Other Authorities:

Note, Government Corruption and
Civil RICO: Providing
Compensation for Intangible
Losses 58 N.Y.U. L. i.
15

Page

I Clee Pascrsasensccessscsscesesccccees 3

Tannenbaum & Molo, State and
Local Governments’ Use of

the Treble Dam es

Rem Under Civil RICO:
eans of Redressing the

Economic Effects ~

Unlawful Conduc
35 Baylor L. Rev. 1 (1983).........

116 Cong. Rec. 18,945 (1970).............
116 Cong. Rec. 35,344 (1970)..........00.

-vi-

17
16

No. 84-648

IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 1984

SEDIMA, S.P.R.L.,
Petitioner,
- V. —
IMREX COMPANY, INC.,, et aL,
Respondents.

BRIEF OF THE CITIES OF NEW YORK, CHICAGO,
AND PHILADELPHIA, AMICI CURIAE

INTEREST OF AMICI CURIAE
The Cities of New York, Chicago and

Philadelphia ("the Cities") submit this amici curiae

brief in support of the positions of the petitioner in
Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482 (1984).

This decision threatens the vitality and
effectiveness of a statutory remedy used by the
Cities and other local or state governments to
combat systematic fraud and governmental

corruption.
Local law charges each of the Cities with the

responsibility of representing and protecting the
public interest and the rights of its citizens. Each
of the Cities is also charged with the institutional
responsibility of protecting its capability for
delivering honest, efficient, impartial and effective
governmental services to all its citizens, See New .
York City Charter § 394; 1970 Illinois Constitution,
Art. VII, § 6; City of Philadelphia Home Rule
Charter § 4-400.

In fulfilling its obligations, each of the Cities,
as well as other localities, must confront the
persistent challenges and dangers, as well as the
corrupting influence, posed by Systematic criminal
frauds. Tax evasion or public contractor frauds
cause massive economic loss to cities. Bribery and
kickback schemes injure the public fise and impair
the integrity of government. Public benefits
programs are repeatedly targeted by malefactors
who defraud the government and the intended
beneficiaries. Organized drug trafficking and arson
for profit schemes create extraordinary demands on

police and other governmental services and diminish

the quality of life in cities.

These criminal activities are often
accomplished through sophisticated means, by
criminal enterprises which systematically commit
multiple criminal acts. Ordinary civil and criminal
remedies available to penalize specific criminal acts
and offer recompense to cities are insufficient to
eradicate the widespread problems caused by the
Systematic misconduct of criminal enterprises,
Extraordinary remedies are needed.

The Cities have found that the civil remedy
provision in the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. §§ 196 1-1968
("RICO"), is an effective weapon for deterring these
various criminal schemes and protecting the public
interest, the public fise and the institutions of local

government. * Specifically, the Cities have

° The Cities’ view is shared by commentators.
See Note, Government C tion and Civil RICO:
Providing Compensation Tor Tntangib le Losses, 58

-2.U. L. Rev. 1530 (1983); Tannenbaum & Molo,
State and Local Governments’ Use of the Treble
Damages Remedy Under Civil RICO: A Means of

edr the Economic ects of Unlawful
Conduct, 35 Baylor L. Rev. | (1983).

3

employed the civil remedy provision in RICO to
attack fraudulent tax evasion, bribery and illegal

bidding schemes.* In City of New York v. Arnmart

° Civil RICO actions have also been employed
by or on behalf of state or other local governments
to recover the loss flowing from complex and far-
reaching frauds, often accompanied by bribery or
some other form of corruption. See New York v.
O'Hara, 83 Civ. 1440 (W.D.N.Y., filed December 21,
1983) (bribery and overcharges in connection with
toxie waste disposal contract); County of Suffolk v.
Walsh, 81 Civ. 0257 (E.D.N.Y., filed Jan. 27,
1981) (bribery and bid rigging in connection with
sewer construction project); Moore v. Margiotta. 83
Civ. 2036 (E.D.N.Y., filed May 19, 1983) iad
civil RICO action arising from political slush fund
payoffs, kickbacks, and money laundering scheme);
Alcorn County v. U.S. Interstate Supplies Inc.. 731
F.2d 1160 (5th Cir. 1984) (bribery and fraudulent
billing by office supply company); Gerace v. Utica
Veal __Co, 980 F.Supp. 1465 (N.D.N.Y.
1984) (fraudulent underreporting by stockyard of

weight and grade of ranchers' livestock, causing
higher reimbursement payments to ranchers by

State); County of Cook v. Lynch, 560 F.Supp. 136
(N.D. IIL 1982) (bribery in return for real estate tax
assessment reductions); Muncipality of Anchorage v.
Hitachi Cable, Ltd., 547 Supp. 533 (D. Alaska

1982) (bribery and bid rigging in connection with

telephone cable contracts); Maryland v. Buzz Be
Wrecking Co., 496 F.Supp. 245 (D.Md. 1980) (bid

rigging and bribery in connection with demolition
work for urban renewal project).

Wholesale Beer Distributors, Ine., 83 Civ. 9263

(S.D.N.Y., filed Dee. 21, 1983), New York sued
eleven beer cistributors and their principal officers
for their participation in an elaborate series of
schemes — described in greater detail, infra — to
evade the City's beer excise and general corporation

taxes. In City of New York v. Liberman, Index No.

40339/85 (Supreme Court of New York, filed
February 8, 1985), the City of New York sued its
former chief lease negotiator due to his
participation in a scheme to defraud the City in
connection with the City's leases of various

properties. In City of New York v. Sitzer, 81 Civ.

7116 (S.D.N.Y., settled March 12, 1984), New York
sued the operators of a group of massage parlors
who systematically laundered their revenues,
committed bribery and evaded City taxes. In City
of New York v. Bandolene Fuels, Inc., 81 Civ. 1240

(E.D.N.Y., filed April 24, 1981), New York sued a

fuel oil company and its principal officer for the

damages flowing from a fraudulent bidding and
overbilling scheme. In City of Chicago v. North

Austin Revitalization Corp., No. 85C-0441 (N.D. IL,

filed Jan. 18, 1985), the City of Chicago sued one of
its former attorneys for using his position in the
City Law Department to allow a corporation in
which he was an officer and employee to reap
excess profits from participation in a public housing
program which funded the purchase, rehabititation
and sale of abandoned buildings. In City of
Philadelphia y._ Modern Transportation, Inc., 84 Civ.

2052 (E.D.Pa., settled Feb. 13, 1985), the City of
Philadelphia sued eleven corporations due to their
participation in an intricate scheme to defraud the
City in connection with sludge removal contracts.
In addition, the Cities have explored the possibility
of civil RICO actions to recover the losses arising
from extraordinary demands on local governmental
services and diminution of the quality of life caused

by the systematic misconduct vf criminal

enterprises, *

SUMMARY OF ARGUMENT

The Second Circuit departs from principled
analysis of the RICO statute in creating the prior
conviction and racketeering injury requirements in
Sedima.** There is no basis in the language or the
policy of the statute for the prior conviction and
racketeering injury requirements created by the
Second Circuit. The Second Circuit read into the
Statute requirements which simply do not appear

there,

e : : .

Compare City of Milwaukee v. Hansen, Civ.
No. 77-246, slip op. at 3-4 (E.D. Wis. Jan. 13,
1981) (arsonists liable for treble the cost of fighting
fires).

** The Second Circuit followed this inappropriate
course apparently because of its dissatisfaction that
RICO has "led to claims against such respected
‘enterprises’ as the American Express Company, E.F.
Hutton & Co., Lloyd's of London, Bear Stearns &
Co., and Merrill Lynch." Sedima, supra, 741 F.2d at
487.

POINT I
THE PRIOR CONVICTION REQUIRE-
MENT SHOULD BE REJECTED.
The prior conviction requirement created in

Sedima, supra, 741 F.2d at 496-504, has no basis in

the RICO statute. There is no ambiguity in the
Statute — it plainly and clearly does not require
prior convictions. In light of this clear language,
virtually every court which has considered the issue
has rejected the argument that prior convictions are

required. * The Second Circuit's criticism in

* See Bunker Ramo Corp. v. United Business
Forms, Ine., 713 F.2d 1272, 1286-87 (7th Cir. 1983);
USACO Coal Corp. v. Carbomin Ene Inc., 689
-2d 94, 95 n.1 (6th Cir. 1982); United States v.

Cappetto, 502 F.2d 1351, 1356-57 (7th Cir. 1974),
- cert, denied, 420 U.S. 925 (1975); In re Longhorn
Securities Litigation, 573 F.Supp. 255, 270-71 Gib,
Okla. 198 F Barker v. Underwriters at Llovd'
London, 564 F.Supp. 352, 356 (E.D. Mich. TOF
auriber v. Shearson /American Expr Inc., 546
F.Supp. 391, 396 (S.D.N.Y. 1982); State Farm Fire &

Cas, Co, v. Estate of Caton, 540 F. upp. 673, 675-76
(N.D. Ind. 1982); Parnes v. Heinold Commoditie
Inc., 487 F.Supp. 645, 646-47 (N.D. IIL 980}
Farmers Bank v. Bell Mor e Corp., 452 F.Supp.
1278, 1280 (D. Del. 1978). Se also Moss v. Morgan
Stanley, Inc., 719 F.2d 5, 19 n.15 (2d Cir. 1983),

cert, denied, sub nom. Moss v. Newman, 104 S.Ct.
oonote continues on next page)

Sedima, supra, 741 F.2d at 496-98, that these
decisions are poorly reasoned because they contain
little discussion of this argument, ignores the
obvious explanation that little discussion is
necessary — no requirement of prior convictions
appears in the statute,

The analysis by which the Second Circuit
imposed a prior conviction requirement in civil
RICO actions is flawed. There is no ambiguity in
the definition of the predicate acts as certain acts
"indictable" under federal law, "chargeable" under
State law, or constituting "offense[s]" under federal
securities, bankruptcy or drug laws. See 18 U.S.C.
$ 1961(1). This language means only that the
elements of these state or federal crimes are the

elements of the predicate acts in a civil RICO

(footnote from previous page)
1280 (1984),

Only two known reported opinions uphold (in
dicta) such a requirement. See Van Schaick v.

Church of Scientology, 535 F.Supp. 1125, 1137 n.12
D. Mass. 1982) and Kleiner v. First Nat'l Bank, 526
F.Supp. 1019, 1022 n.2 (N.D. Ga. 198 » Overruled

on other Morosani v. First Nat'l Bank. 703
F.2d 1220 Tiith Cir. 1983).

action. There is nothing in the Statutory language
which requires a conviction for the predicate acts.
Similarly, there is no ambiguity in the fact that the
RICO civil remedy may only be invoked where a
"violation" of RICO has occurred. See 18 U.S.C,
§ 1964(c). There is nothing in the word "violation"
necessarily or even implicitly incorporating a prior
conviction requirement.

This straightforward analysis of the language
of the statute should be Sufficient to require
rejection of the prior conviction argument, since the
RICO statute, like any Statute, should be
interpreted according to its plain meaning. Russello
v._United States, 104 S. Ct. 296, 299 (1983); United
States v. Turkette, 452 U.S. 576, 580 (1981). Only
in a limited class of cases, where there is "clear
evidence" of a contrary legislative intent, will this

rule not be applied. United States v. Apfelbaum,

445 U.S. 115, 121 (1980).

There is no legislative history regarding a
doctrine which Congress neither considered nor
adopted as part of the statute. The Second Circuit

10

filled this void by Stating a "plausible" view — its
view — of the intent Congress would have had and
of the language Congress would have used had it
considered the issue. See Sedima, Supra, 741 F.2d at

498, 500-01, 503.* The very least of the criticisms
which may be made of this result-oriented analysis
is that it most certainly is not "clear evidence" of a
legislative intent inconsistent with the plain
language of RICO — which contains no prior

conviction requirement. **

a The Second Circuit Suggested that since the
predicate acts "speek along criminal rather than
civil lines," the civil RICO remedy applies only to
conduct already determined to be criminal. See
Sedima, supra, 741 F.2d at 499-501. This analysis
ignored that "Congress may impose both a criminal
and civil sanction in respect to the same act or
omission," United States v. One Assortment of 89
Firearms, 52 U.S.L.W. 4228, 423 eb. 22, 1984);
United States v. W 448 U.S. 242, 250 (1980), and
create a statutory scheme in which either sanction
may be pursued completely independently of the
other.

** The Second Circuit justified its creation of a
prior conviction requirement by its view that such a
holding avoided the necessity of determining
whether the constitutional protections of the
criminal law are applicable in a civil RICO action.
(footnote continues on next page)

11

The prior conviction requirement will bar
many actions contemplated by Congress when it
enacted the civil remedy provision in RICO. The
prior conviction requirement makes local and state
government civil RICO suits subject both to a

prosecutor's prior exercise of discretion to

(footnote from previous page)

See Sedima, supra, 741 F.2d at 500 n.49. This
justification is wed in two crucial respects,
First, enhanced procedural protections, such as
those available to criminal defendants, are not
required in proceedings in connection with a statute
expressly denominated as civil unless the statute is
So punitive in purpose or effect as to negate the
appropriateness of the "civil" label. See United

States_v. One Assortment of 89 Firearms, 52
U.S.L.W. 4228, 4230-31 (Feb. 22, 1984); United
States v. Ward, 448 U.S. 242, 248-49 (1980). The
civil treble damages remedy created in the RICO
Statute is primarily remedial and compensatory, as
demonstrated by Judge Cardamone in his dissenting
opinion in Sedima, 741 F.2d at 506-08;
therefore, civil RICO” defendants have no
constitutional entitlement to the enhanced
procedural protections of the criminal law.
Moreover, the Second Circuit's perceived need to
avoid this question is simply inconsistent with the
analysis of the Supreme Court in 89 Firearms, War
and other similar cases in which the Supreme Court
has chosen not a course of "avoidance" thr
Strained statutory construction, but instead has
forthrightly determined whether or not the claimed
constitutio:ial procedural protections are applicable.

12

commence a criminal action, and to the prosecutor's
prior success in the criminal action. Thus, the prior
conviction requirement deprives local and state
governments of independent use of an effective civil
remedy against corruption, large-scale frauds and
other broad-based criminal schemes,

It is unfortunately all too easy to chart the
disastrous effect which the prior conviction
requirement will have on meritorious civil RICO

Suits. For example, in City of New York v. Arnmart

Wholesale Beer Distributors, Inc., Supra, eleven beer
distributing companies evaded excise taxes on

wholesale beer purchased in New York City by
fraudulently representing sales of beer to be sales of
soda; laundering beer sales through fictitious
purchasers residing outside the City; engaging in
off-the-books cash transactions; filing fraudulent
tax returns; and failing to file tax returns. This is
the kind of systematic criminal scheme which RICO
was designed to eliminate. The City of New York
decided to bring a civil RICO treble damages action

since treble damages would be most effective as a

13

deterrent and as a means of recovering losses,* Five
of the companies settled their liability with New
York City. Because there were ne prior convictions,
however, the remaining perpetrators of these
schemes will totally escape civil liability under
RICO — if the prior conviction requirement created
in Sedima is not overruled.

Similarly, the prior conviction requirement has
created an artificial and anomalous obstacle to the
City of New York's full employment of the civil
remedy in RICO in City of New York v. Liberman,

Supra. In that case, New York City's former chief
lease negotiator and ‘i number of landlords were
involved in a bribery scheme which defrauded New
York City in connection with the lease of space for
public agencies, The federal government decided to

focus a criminal prosecution on Mr. Liberman, and

. Referring a case to a criminal prosecutor does
not guarantee that there will be a criminal
prosecution, since the decision to do so is then
within the prosecutor's discretion, Prosecutorial
priorities may differ from a city’s priorities, and
prosecutorial resources are limited,

14

obtained a guilty plea from Mr. Liberman to a
criminal RICO violation based on, inter alia, bribe

receiving. The City of New York decided to target
not only Mr. Liberman, but also his fellow
wrongdoers — the landlords and various persons who
acted as intermediaries to launder the payoffs —and
sued all of them in state court under various
common law theories less far-reaching and effective
than RICO, The City of New York also included 4
civil RICO claim against Mr. Liberman in this
action. But the landlords could not be sued under
the civil RICO statute due to the Sedima prior
conviction requirement. Such a result is anomaious
— the City could sue the bribe-taker under civil
RICO, but not the bribe-giver.

These illustrations demonstrate that the prior
conviction requirement created in Sedima destroys
the efficacy of the civil remedy provision in RICO
and consequently the ability of local and state
governments to vindicate the public interest by

means of that statute.

15

POINT I
THE RACKETEERING INJURY

REQUIREMENT SHOULD BE REJECTED.

There is no basis in the RICO statute for a
special "racketeering injury" requirement. A fair
reading of Section 1964(c) of RICO, which gives
proper attention to Congress’ purpose in enacting
RICO, is inconsistent with the Second Circuit's

opinion in Sedima, supra, 741 F.2d at 494-96, in

which just such a requirement was created.

The purpose of RICO—the elimination of

organized criminalty, see United States v.
Turkette, supra, 452 U.S. at 591 — mandates a broad
construction of Section 1964(c), unfettered by any
"racketeering injury" requirement. Congress
prohibited the commission of organized criminality,
as defined in RICO, rather than proscribe "organized
crime" per se because "organized crime" is a
functional concept which cannot be defined in any
principled, legally satisfactory way. See 116
Cong. Rec. 35,344 (1970) (remarks of Congressman
Poff). Thus, Congress created a broad remedy

16

addressed to the kind of misconduct most often
engaged in by o-ganized criminals, but which would
reach beyond the shadowy boundaries of the
organized crime community and apply to anyone
engaging in the misconduct. See id.; 116 Cong. Rec.
18,945 (1970)(remarks of Senator McClellan);

United States v. Turkette, supra, 452 U.S. at 588-90;

Sutliff, Inc. v. Donovan Cos., 727 F.2d 648, 654 (7th

Cir. 1984).’

The Second Circuit undermined Congress’
purpose by imposing on the civil remedy provision a
racketeering injury requirement. The showing
necessary to demonstrate a racketeering injury,
which according to the Second Circuit consists of an
"injury different in kind from that occurring as a
result of the predicate acts themselves," Sedima,

Supra, 741 F.2d at 496, is a practical impossibility

17

except in rare cases.* See In re Catanella, 583

F.Supp. 1388, 1436-37 (E.D.Pa. 1984); Ralston v.

Capper, 569 F.Supp. 1575, 1580 (E.D. Mich. 1983).
Moreover, the Second Circuit's limitation of

the kind of activity which RICO was designed to

. The Second Circuit's analysis in Bankers Trust
Co. v. Rhoades, 741 F.2d 511 (1984), a companion
ease to Sedima, of how the civil remedy provision in
RICO would apply in a case of arson for profit
demonstrates that the "distinct RICO injury"
requirement deprives the civil remedy provision in
RICO of any practical significance. In Bankers
Trust, supra, 741 F.2d at 517, the Second Circuit
Stated that an example of a "distinct RICO injury"
could be found where a victim of multiple arsons
was denied fire insurance and thereafter was unable
to obtain reimbursement for innocent fire damage
(e.g., destruction caused by lightning). In contrast,
the Second Circuit seemed to indicate that the
victim of repeated arsons could not sue the arsonist
for fire damage directly resulting from fires set by
the arsonist. Plainly, such analysis destroys the
effectiveness of the civil remedy provision in RICO
as a method for combatting crime, and erodes the
doctrine established in City of Milwaukee v. Hansen,
=apta. that the damage directly resulting from arson
— in that case, municipal fire-fighting costs — is
compensable in a civil RICO suit. The Bankers
Trust analysis undermines the purposes of the civil
remedy provision in RICO — _ augmented
compensation to the victim for all of its losses
resulting from the criminal scheme, and the
economic destruction of the criminal enterprise.

18

deter to "systemic harm to competition and the
market" caused by "mobsters", Sedima, supra, 741
F.2d at 495-96, is not supported by reasoned or
principled analysis. The "mobster" requirement is a
resurrection of the discredited "organized crime"
requirement rejected by most courts which have

considered it, see, e.g., Bennett v. Berg, 685 F.2d

/ 1053, 1063, aff'd en banc in pertinent part, 710 F.2d

1361, 1364 (8th Cir. 1982), cert. denied, 104 S. Ct.

527 (1983), including a panel of the Second Circuit

in a recent decision, Moss v. Morgan Stanley, Inc.,

Supra, 719 F.2d at 21 & n.17. The mobster

requirement is either so vague or so limited as to
impose an insuperable obstacle to success in a civil
RICO suit. For example, the intricate tax-evasion

schemes of the beer distributors in City of New

York v. Arnmart Wholesale Beer Distributors, Inc.,

Supra, certainly constituted organized criminality;
but it is not so clear that the beer distributors were
"mobsters," as that term is used in common

parlance. The vagueness of the term "mobster" — if

19

it is a required element in a civil RICO action —
would make proof of this element a practical
impossibility, and would eliminate RICO liability for
categories of malefactors certainly intended by

Congress to fall within the reach of RICO.

20

CONCLUSION
FOR ALL THE FOREGOING REASONS, THE
DECISION OF THE COURT OF APPEALS SHOULD
BE REVERSED.
February 28, 1985.
Respectfully submitted,
FREDERICK A.O, SCHWARZ, JR.

Corporation Counsel of the
City of New York, Amicus Curiae.

LEONARD KOERNER,

MICHAEL D, YOUNG,

WALTER A, KRETZ, JR.,

MARTIN C, ARONCHICK,
Of Counsel.

JAMES D. MONTGOMERY
Corporation Counsel of the
City of Chicago, Amicus Curiae.

MATTHEW J. PIERS,
WILLIAM JAEGER,
Of Counsel,

BARBARA W. MATHER
City Solicitor, City -f
Philadelphia, Amicus Curiae.

HANDSEL B, MIN YARD,
DENISE COLLIERS,
Of Counsel.

21

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0347%3A08. Public record. Not legal advice.