Amicus Curiae Brief — Hj Inc. v. Northwestern Bell Telephone Co.

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Text

*” Byreome Court, U.S.

Fit &D

MAY 18 1968

_ SPAMIGL, &

CLERK

No. 87-1252

In The

Supreme Court of the United States

October Term, 1987

H.J., INC., a Minnesota corporation, KIRK DAHL, LAR-

RY KRUGEN and MARY KRUGEN, individually and

d/b/a PHOTO IMAGES, SUSAN DAVIS, ROBERT

NEAL, ISAAC F. WARD, RICHARD L. ANDERSON,

THOMAS J. MOTT, and all others similarly situated,

Petitioners,

NORTHWESTERN BELL TELEPHONE COMPANY,

a subsidiary of US. WEST, A. B. C. individually and

D. EK. F. as corporations, and other unnamed Co-con-

spirators,

Respondents.

ray

On Writ of Certiorari to the Court of Appeals

for tue Eighth Circuit

a * J

BRIEF FOR AMICI CURIAE

IN SUPPORT OF RESPONDENT

-O

Rosert K. Corps

Attorney General

State of Arizona

1275 West Washington

Phoenix, Arizona 85007

602-255-4256

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call collect (402) 342-2831

HONORABLE JOHN STEVEN CLARK

Attorney General of the State of California

HONORABLE JOHN J. KELLY

Chief State’s Attorney, Connecticut

HONORABLE JIM JONES

Attorney General of the State of Idaho

HONORABLE FRANK J. KELLEY

Attorney General of the State of Michigan

HONORABLE W. CARY EDWARDS

Attorney General of the State of New Jersey

HONORABLE HAL STRATTON

Attorney General of the State of New Mexico

HONORABLE LACY HH. THORNBURG

Attorney General of the State of North Carolina

HONORABLE JEAN A. BENOY

Senior Deputy Attorney General of North Carolina

HONORABLE DAVE FROHNMAYER

Attorney General of the State of Oregon

HONORABLE JIM MATTON

Attorney General of the State of Texas

HONORABLE KENNETIL ©. EIKENBERRY

Attorney General of the State of Washington

HONORABLE CHARLIE BROWN

Attorney General of the State of West Virginia

HONORABLE DONALD J. HANAWAY

Attorney General of the State of Wiseonsin

HONORABLE JOSEPH B. MEYER

Attorney General of the State of Wyoming

TABLE OF CONTENTS

SUMMARY OF ARGUMENT C'S

ARGUMENT

1. “PATTERN” IS ESTABLISHED WHERE

ACTS ARE RELATED AND MANIFEST OR

POSE A THREAT OF CONTINUITY WITH-

OUT REGARD TO THE PRESENCE OF MUL-

ee 6

Il. PATTERN UNDER STATE LAW IS AN IN-

DEPENDENT QUESTION 15

APPENDIX

TABLE OF AUTHORITIES

Page(s)

Unitep States Supreme Court CasEs:

Detroit Trust Co. v. The Thomas Barlum, 293

US. 21 (1984) 4

Fedorenko v. United States, 449 U.S. 490 (1981) ........ 4

Helvering v. Morgan’s Inc., 293 U.S. 121 (1934) 9

Indian Towing Co. v. United States, 350 U.S. 61

|; ) eee 24

Nash v. United States, 229 U.S. 373 (1913) ..cccccccceceeoeenee 10

Oklahoma City v. Tuttle, 471 U.S. 808 (1985) 00... 15

Patsy v. Florida Board of Regents, 457 U.S. 496

CO renee nico 23

Pillow v. Roberts, 54 U.S. (13 How.) 472 (1851)... 4

Russello v. United States, 464 U.S. 16 (1983) .... 6,9, 10, 12

Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) passim

United States v. Bailey, 444 U.S. 394 (1980) . wae 13

United States v. Turkette, 452 U.S. 576 (1981) ........6, 9,10,

12,18

Oruer Freprerat CAsEs:

Bank of American National Trust & Savings Ass’n

v. Touche Ross Co., 782 F.2d 966 (11th Cir. 1986) ... 8

Bartecheck v. Fidelity Union Bank/First National

State Bank, 832 F.2d 36 (3d Cir. 1987) ccc 8

Beck v. Manufacturers Hanover Trust Co., 820

F.2d 46 (2d Cir. 1987) . eerste cee a.

Behunin v. Dow Chemical Co., 650 F. peat 1387

CTS Cai, TD aie chicane 4,17,18

Cabbell v. United States, 636 F.2d 246 (8th Cir.

ee EF Nt

ill

TABLE OF AUTHORITIES—Continued

Page(s)

California Architectural Bldg. Products, Ine. v.

Franciscan Ceramics, Inc., 818 F.2d 1466 (9th

einem HN ie 4 ds Ae ohn 8

City of New York v. Joseph L. Balkan, Ine., 656

F. cape. S56 (E.DN.Y. 1967) 14

Cook v. Zions First Nat’ used 645 F. Supp. 423

(D.C. Utah 1986) oo ol SE

Elliott v. c te Motor Club Ins., 809 F.2d 347

(7th Cir. 1987) . IIE nitro tmemehaicieisian anne

Furman vy. Cirrito, 828 F.2d 898 (2d ( Cir. 1987) Ro 8

Garbade v. Great Divide a & Millin

e g Corp.,

831 F.2d 212 (10th Cir. 1987) . eeu , ae

Henry v. Farmers City State Bank, 808 F.2d 1228

(7th Cir. 1986) . lecanad elsesintedemeind(- ae

HMK Corp. v. W wee 28 F.2d 1071 coh Cir.

In Re Dow Co. SaraBond Products Liability,

666 I’. Supp. 1466 (D.C. Colo. 1987) | " 18

J.G. Williams v. Regeney a Ltd., 672

F. Supp. 1436 (N.D. Ga. 1987) . eiemldinialeminimation:

Lipin Enterprises, Ine. v. _— 803 F.2d 322 bites

2 ee LR

Liquid Air sain v. Rogers 834 F.2d 1297 (7th

Cir. 1987) . dae oe 2 aT eh 14

Louisiana Power & Light Co. v. United Gas Pipe

Line Co., 642 I. Supp. 781 (E.D. La. 1986) .. —_ oe

Madden v. Gluek, 815 F.2d 116 (8th Cir. 1987) 8

Marshall-Silver Construction Co., Ine. v. Mend

835 F.2d 63 (3d Cir. 1987) Gateckahiednentied —_ oneieiathe 14

TABLE OF AUTHORITIES—Continned

Page(s)

Michelson v. Merrill Lynch Pierce Fenner & Smith,

669 F. Supp. 1244 (S.DIN.LY. D987) centers +

Montesano v. SeaFirst Commercial Corp., 818 F.2d

QDS (Btn Cire, 1987) icc.ccecceccncennenseevncoeevecneenernernenernensonnnnonnnnn 8,21

Morgan v. Bank of Waukegan, 804 F.2d 970 (7th

| i 8,10, 11,13

Paul S. Mullin & Assoc., Inc. v. Bassett, 632 F.

Supp. 582 (D. Del. 1986) ee a

Plains Resources, Ine. v. Gable, 782 F.2d 883 (10th

Oe ac eecieeeencteerseeicevenseinionnenre preteen 4

Plains Resources, Ine. v. Gable, Civil No. 83-JM-

2145 (D. Colo. 1984) . ae

Poling v. Morgan, 829 F.2d 882 (9th Cir. 1987) .................. 16

Roeder v. Alpha Indus., Inc., 814 F.2d 2 vse

| ae ' ee a

Saine v. A.LA., Ine., 582 F. ee 1299 9 (D.C. Colo.

an ai anne ER aN ane ee Ea rem nO 19

Schnitzer v. Oppenheimer, 633 F. ee 92 — C.

Ore. 1985) 0. ee “ iti 6

Schreiber Distrib. Co. v. Serv-Well Furniture

(o.. Ine., 806 F.2d 1393 (Oth Cir. 1986) essen 11

Sun Savings & Loan Ass’n v. Dierdorff, 825 F.2d

EN ED. | eae See ee 8,14

Superior Oil v. Fulmer, 785 F.2d 252 (8th Cir. 1986) .....8, 12

Tarrant v. Ponte, 751 F.2d 459 (1st Cir. 1985) 19

Thomas v. Myers-Diekson Furniture Co., 479 F.2d

740 (5th Cir. 1979) .. i aukimaandamaid se aakaaeas ae

United States v. Calabrese, 645 F.2d 1379 (10th

TABLE OF AUTHORITIES—Continued

Page(s)

United States v. © 706 F.2d 1322

1983) ; ( (5th Cir.

United States v. Elliott, 571 F.2d 880 (5th Cir. 1978) 17

United States v. Ianniello, 808 F.2d 184 (2d Cir.

I cee et) Peat taki ee ee 8,11, 12, 13

United States v. lLron Workers Local 86, 443 F.2

544 (9th Cir.) ceoosaian

ES Fae antven i a Ah a ae ) 15

United States v. Joseph, 781 F.2d 549 (6th Cir.

Ee A ele ec ae Oe Sheol 13

United States v. Moeller, 402 F. tl 49 (D.C.

RII Siete Bt ee Te 17, 20

United States v. Parness, 503 F.2d 430 (2d Cir. 1974). 17

United States v. Qaond, 777 F.2d 1

=ron “a r 105 (6th Cir.

United States v. Starnes, 644 F.2d 673 (7th Cir.) ......... 17

United States v. Stofsky, 409 F. S 609 {

auY. tor) upp. 609 (D.C.

ERAN PME I, 2 i ise nler e 17

United States v. Weathersno 581 F.2d A 7

ae cancel oe on 17

United States v. Weisman, 624 F.2 a

Cir. 1980) _.. ee ischial cm 17

STATE CAsEs:

Arizona ex rel. Corbin v. Pickrell, 186 Ari

667 P.2d 1304 (1983) ee 2, 3, 23

Baines v. Superior Court, 688 P.2d 10

Ct. App. 1984) ianiesintun

Banderas v. Banco Central del Eeuado

if ’ yi rT. 46 1 S.2

265 (Fla. Dist. Ct. App. 1985) :

TABLE OF AUTHORITIES—Continued

Page(s)

Boise-Payette Lumber Co. v. Siac 295 P.2d

791 (Colo. 1930) . catalan

Carlson v. State, 405 S.2d 173 (Fla. 1981) ...

Dombalion v. Fox, 88 Cal.App.3d 763, 765-67, 152

Cal. Rptr. 86, 87-88 (Ct. App., Div. 1, 1979) ......... 21

Dorsey v. State, 402 S.2d 1178 (Fla. 1981) 2

Hoen v. District Court in and for the County of

Arap, 412 P.2d 428 (Colo. 1966) nn. .ccccennnneennnenenmmnnnn 3

In Re args < Estate, 170 Wash. 280, 16 P.2d 433

Jensen v. Intermountain Health Care, Inec., 679

P.2d 903 (Utah 1984) . Pot CME, re Oe eT

Moorehead v. State, 383 S.2d 629 (Fla. 1980) 2000. 2,8

People v. Wahl, 716 P.2d 123 (Colo. 1986) 3

People v. W — Poker Club, 509 P.2d 324

I SIT > cscscamsysasilociiimsintainis or Sw

Roash v. State, 413 S.2d 15 5 (Fle. ees as RE ae 2

State v. Whiddon, 384 S.2d 1269 (Fla. 1980) .0000. 2

. Feperat STATUTES AND REGULATIONS:

ke a Le

CI IIIS, cicunticesinallsinsiSahiaen

TCE Ler 9, 29

IIIT, SIR, snconcinnnislalssienies me

18 U.S.C. § 1962(b) : 9, 12

OE Se ees ne ee 9,12

18 U.S.C. § 1962(d) . 12

vii

TABLE OF AUTHORITIES—Continued

Page(s)

Svs... tae tttststsSS . 7

42 U.S.C. § 1983 (1982) Od

84 Stat. 947 (1970) i (sis?

FrperaL Leaisative History:

110 Cong. Ree. 14270 (1970) -

116 Cong. Ree. 35,204 (1970) detainee cata 18

S. Rep. No. 91-617, 91st Cong., Ist Sess. 158 (1964) 11, 12,13

State Statutes anp Recu.ations:

18 Pa. Cons. Stat. 6 911(h) (Pardon 1983) 16, 20, 22

Colo. Rev. Stat. § 18-17-103 (Supp. 1984) 18, 19, 22, 23

Conn. Gen. Stat. Ann. § 53-394 (West Supp. 1984) _.22, 23

Del. Code Ann., Title 11, § 1502 STUIIIID cenininsianeeenendesiata 21, 23

Fla. Stat. Ann., § 772.02(4) (1986) 21

Fla. Stat. Ann., § 772.02 (1986)

slaeeadibeiebdeaisieebbatetasieeed se , BB

Ga. Code Ann, § 16-14-3 (1983) 0 si

Hawaii Rev. Stat. §842 (1976) 16

Idaho Code § 18-7803 (1981) 23

ag a 56-Y2 oo _— on om

Ind. Code Ann. § 35-45-6-1 isin Supp. 1982) .. | _s

La. Rey. Stat. § 15-1351 (West 1985) 23

Miss. Code Ann. § 97-43-1-3 (Lawyers Co-op 1986):

N.C. Gen. Stat. §75 D-3 (1986). 23

Vill

TABLE OF AUTHORITIES—Continued

Page(s)

N.D. Century Code § 12.1-06.1 (Smith Supp. 1983) ....... 16

N.J. Stat. Ann. § 2C :416.2 (West Supp. 1982) ............. 16, 23

N.M. Stat. Ann. § 30-42-1-3 (Michie Supp. 1980) ..... 21, 23

N.Y. Crim. Proc., § 40.10(2) (1985) nenccnccxcccoeerceeeee 21, 22, 23

N.Y. Penal Cocde, § 460.10 (1986) nn eneceeeeenceersnennennennnnnen 20, 21

Nev. Rev. Stat. 6 207.380 (1963) —_—_________- 16, 23

Ohio Rev. C —, § en ee 16, 21, 23

Ore. Rev. Code Ann, § 166.715 (1983) nn ccenenenenennrnn 22

Utah Code Ann. § 76-10-1602 (Smith Supp. 1985) ........ 20, 23

Wash. Rev. Code Ann., names 82.010 sao — i

SUED’ stansncteeenendalae 20, 22, 23

Wis. Stat. Ann. § 946.82 (West ilies 1984-85) 16, 21, 22, 23

Books aNxp OTHER Sources:

1 E. Livingston, Complete Works on Criminal -

Jurisprudence 231 (1873 ede) nn ncnec.ccncnnnnnnennnnnmennnn

A.B.A. Criminal Justice Section, Comprehensive

Perspective on Civil and Criminal RICO Leg-

islation and Litigation: A Report of the RICO

Cases Cornmmittec BO-B7 ( UGGB) nnnnnnncaanenan ccc csceece sesesesevnncenennees 11

‘ivil

Blakey and Cessar, Equitable Relief under Civi .

RICO, 62 Notre Dame L. Rev. 526 (1987) —........ 2,8

Blakey and Gettings, Racketeer Influenced and

Corrupt Organizations (RICO): Basie Concepts

Criminal and Civil Remedies, 53 Temple L. e.

0 ees a eel ee ee nonin i

Blakey, The RICO Civil Action in Context, 58

Notre Dame L. Rev. 237 (1982) —...... pa ee a ae 4)

TABLE OF AUTHORITIES—Continued

Page(s)

C. Wright & A. nil Federal Practice and Pro-

cedure § 104 (1969) | hckaeniodih aah oe

D. Wigdor, Roscoe Pound: Philosopher o of Law

174 (1974) .. i aaieaaaene Gpiieiinemiaees: ae

E. Patterson, Sarigpraence: Men and Ideas of

the Law 421 (1953) ne Ae Le Se

Goldsmith, RICO and aii, ea gnepciens lt 88

oS Re ee 7

Horn, Judicial Plague Sweeps United States Re-

sultorientitis’ Infects Civil RICO ee 5

Nat'l L. J. May 23, 1983 . ec edieniaseioeniemnanaihaddcas 20 a

Il R. Pound, iliaieiliniea 124-29 (1959) _..._._.._.10, 24

III The Oxford English Dictionary 315 ( 1933) caaidiaiens 10

J. Hurst, The Growth of American Law 186 (1950)

L. Wittgenstein, shcsundectauanasin Inv isn casera 20 (2d

RN GR cette 10

Reconsideration of Pattern in Civil RICO Of-

fenses, 62 Notre Dame L. Rev. 99 er 8

RICO Revisited: An Advanced Seminar on the

Latest Techniques in Civil Suits, 157 (1987) 10

The Code of Criminal Procedure of the State of

New York 470-71 (1850 ed) See 18

The Code of Penal Law 5 (1865 ed.) - ceasiinmeinadiaiilis?

United States Attorney’s Manual, Title 9—Crijp.

inal Division § 9.110.340 Sekdemdaie ae 17, 20

V The Oxford English Dictionary 152 (19383) 20

VII The Oxford English Dictionary 565-66 ( 1933)... 10

XI The Oxford English Dictionary 251 (1933) 21

No. 87-1252

In The

Supreme Court of the United States

October Term, 1987

_—

H.J., INC., a Minnesota corporation, KIRK DAHL, LAR-

RY KRUGEN and MARY KRUGEN, individually and

d/b/a PHOTO IMAGES, SUSAN DAVIS, ROBERT

NEAL, ISAAC F. WARD, RICHARD L. ANDERSON,

THOMAS J. MOTT, and all others similarly situated,

Petitioners,

NORTHWESTERN BELL TELEPHONE COMPANY,

a subsidiary of U.S. WEST, A. B. C. individually and

D. KE. F. as corporations, and other unnamed Co-con-

spirators,

Respondents.

ff.

On Writ of Certiorari to the Court of Appeals

for the Eighth Circuit

tt.

BRIEF FOR AMICI CURIAE

IN SUPPORT OF RESPONDENT

INTEREST OF AMICI CURIAE

This brief is submitted on behalf of the States of

Arizona, California, Connecticut, Idaho, Michigan, New

Jersey, New Mexico, North Carolina, Oregon, Texas, Wash

invton, West Virginia, Wisconsin, and Wyoming.®

In 1970, Congress enacted the Organized Crime Con-

trol Aet, Tithe LX of which is known as “RICO” IS USC.

*« 1961-68 (1982). Since then, twenty-seven states, inelud-

“se Arizona, have followed Congress’ lead by adopting

similar, but not identical legislation.' These states nave

employed this legislation in criminal prosecutions agaist

a wide variety of illegal conduet.? Both state governments

and private plaintiffs have also utilized state RICO legis-

lation in civil litigation.’ Although these states adagtes

levislation analogous to, but different from, Tithe IX, ed-

eral RICO plays a vital role in interpreting the state

statutes.’

, this brief of Pro-

* The assistance in the preparation of

fessor G. Robert Blakey, O'Neill Protessor of Law, Notre ors

Law School, Jenmter Ann Walecki (Notre Dame ‘89) and Josep

P Shannon (Notre Dame '88) is hereby ac knowledged.

‘ror a detailed comparative analysis of the Federal and -—

lecistation, see Blakey and Cessar, Equitable Reliet under Civi

RICO 62 Notre Dame Lt. Rev. 526, 596 (1987) (hereinafter

Equitable Relet)

see, eg, Carlon v. State, 405 S.2d 173, 74 (Fla. =

(house of all tame); Dorsey v State, 402 S.2d 7S, 1180 bt

1O81) (dewes): State vo Whiddon, 384 S 2d 1269, 1270 wats Mee )

(heit. burglary, arson and arson to defraud); Moorehead v.

State. 445.2 629, 630-31 (Fla, 1980) (auto thett),

‘See, eg, Arizona ex rel. Corbin v. Pic krell, 136 Ariz. 589,

591 66” Pld 1304, 1306 (1983) (securities fraud) ; Banderas Vv.

Banco Central del Ecuador, 461 §.2d 265 (Fla. Dist. Ct. App. 1985)

(lorenzn exchange traud).

‘See, @@ Baines v. Superior Court, 688 P.2d 1037, 1040

(Ariz. Ct. App. 1984) (‘film the absence of any Arizona Cases,

we will look to federal decisional law tor guidance’); Roash

(Continued on tollowing page)

Distressingly, however, decisions by lower l'ederal

courts demonstrate a distinct hostility toward the use

of civil RICO! State RICO defendants use the decisions

of the Federal courts to challenge state legislation in an

attempt to narrow improperly the seope of the indepen-

dent state statutes.© In the context of Federal litigation

(Continued from previous page)

v. State, 413 $.2d 15, 20-21 (Fla. 1982) (constitutionality of RICO-

type civil remedies upheld relying on Federal decisions) ; Moore-

head, 383 $.2d at 630-31 (constitutionality of “pattern” in Flori-

da RICO statute upheld relying on Federa! decisions).

The jurisprudence that directs this course of interpretation

is familiar. It is reflected, for example, in the law of Colorado.

When the General Assembly adopts “substantially” the provi-

sions of an act from another jurisdiction, it “is presumed to

have intended that such statute should receive by the |Colorado|

courts . . . the same construction given it by the courts of [the

other jurisdiction] prior to its adoption... .” Hoen v. District

Court in and for the County of Arap, 412 P.2d 428, 431 (Colo.

1966). Subsequent decisions are of “persuasive value only.”

Boise-Payette Lumber Co. v. Longwedel, 295 P.2d 791, 792 (Colo.

1930). Similar language is to be read similarly. People v. Wahl,

716 P.2d 123, 128 (Colo. 1986). But where “the Colorado ap-

proach is significantly different,” limitations found in the “model

act” should not be read into Colorado legislation. People v.

Wheatridge Poker Club, 509 P.2d 324, 327 (Colo. 1977). Colo-

rado’s jurisprudence reflects general jurisprudence. See, e.g.,

Jensen v. Intermountain Health Care, Inc., 679 P.2d 903, 904-05

(Utah 1984); In Re Eaton's Estate, 170 Wash. 280, 281, 16 P.2d

433, 434 (1932).

*See generally, Horn, Judicial Plague Sweeps United States

Resultorientitis’ Infects Civil RICO Decisions, 5 Nat'l J. May

23, 1983, at 31, col. 1. Indeed, prior to this Court’s decision in

Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985), sixty-one per

cent of the reported civil RICO decisions were dismissed on

motions of the defendants. Fquitable Relief at 534. Since Sedima,

the dismissal rate has been fifty-one percent; forty percent of

therm have relied on “pattern” grounds. Id. at 620. See infra

n.29.

*See, e.g, Arizona ex rel. Corbin, 136 Ariz. at 596. 667 P.2d

at 1311 (distinct injury limitation rejected, but urged based on

(Continued on following page)

with pendent state claims, Federal courts are also unjusti-

fiably reading limitations into state legislation not sup-

ported by the text or appropriate policy considerations,

thus frustrating the particular designs of each state’s

statute.’ Equally significant, lower Federal courts are

reading the text of state RICO legislation—despite differ-

ences in language and policy—in a fashion identical to

Federal RICO, most often relying on “pattern” grounds

for dismissal of complaints.* Courts “are not at liberty

to imply . . . condition[{s] which . .. [are] opposed to the

explicit terms of ... [a] statute... To [so] hold... is

not to construe the ... [statute] but to amend it.” Fed-

orenko v. United States, 449 U.S. 490, 513 (1981) (quoting

Detroit Trust Co. v. The Thomas Barlum, 293 U.S. 21, 38

(1934)). Nor should courts fail to recognize the differences

in text and policy between Federal and state legislation.

(Continued from previous page)

Federal decisions); Banderas, 461 $.2d at 270 (organized crime

limitation rejected; “garden variety” fraud exclusion rejected,

but urged, citing Sedima S.P.R.L. v. Imrex, Inc., 741 F.2d 482 (2d

Cir. 1984), rev'd, 473 U.S. 479 (1985)).

See, e.g., Plains Resources, Inc. v. Gable, Civil No. 83-)M-

2145 (D. Colo. 1984) (organized crime limitation read into

Federal and Colorado RICO statutes), rev'd, 782 F.2d 883, 887

(10th Cir. 1986) (relying on Sedima).

*See, e.g., |.G. Williams v. Regency Properties Ltd., 672 F.

Supp. 1436, 1442-43 (N.D. Ga. 1987) (Georgia RICO “pattern”

dismissed, since like Federal RICO); Michelson v. Merrill Lynch

Pierce Fenner & Smith, 669 F. Supp. 1244, 1250 (S.D.N.Y. 1987)

(New Mexico RICO “pattern” not dismissed, since like Federal

RICO): Behunin v. Dow Chemical Co., 650 F. Supp. 1387, 1390

‘DC. Colo. 1986) (Colorado RICO “pattern” dismissed, since

like Federal RICO); Cook v. Zions First Nat’l Bank, 645 F. Supp.

423, 426 (D.C. Utah 1986) (Utah RICO “pattern” dismissed,

since like Federal RICO); Schnitzer v. Oppenheimer, 633 F. Supp.

92. 99 (D.C. Ore. 1985) (Oregon RICO “pattern” dismissed,

since like Federal RICO). See infra n.29.

Accordingly, Amici urge this Court to give to Federal

RICO an appropriate construction on the issue of ‘*nat-

tern’’ and to provide appropriate guidance for the lower

courts to use when undertaking the sensitive task of mak-

ing the required independent analysis of state RICO

statutes.

ra’

STATEMENT

For the statement of the facts and course of the legal

proceedings below, the Court is respectfully directed to the

briefs of the parties.

One issue is presented:

Whether the Petitioners have alleged a ‘‘pattern of

racketeering activity’’ under RICO, 18 U.S.C. ¢§ 1961-68?

Amici urge this Court to answer this issue in the

affirmative.

ray

SUMMARY OF ARGUMENT

In 1970, Congress enacted RICO as Title IX of the

Organized Crime Control Act. In Sedima this Court sug-

gested that the I’ederal courts reexamine ‘‘pattern’’ within

the context of Federal RICO. The result has been a series

of conflicting decisions. An examination of the text, legis-

lative history, and policy of Federal RICO indicates that

**pattern’’ means a ‘‘design’’ that reflects ‘‘relationship’’

and ‘‘continuity.’’ Different ‘‘designs’’ are possible de-

pending on the different uses of the concept of ‘‘pattern’’

within RICO. Nothing in the text, legislative history, or

policy of RICO justifies the adoption of a rigid multiple

scheme limitation.

No matter how Federal RICO is read, the definition

of “pattern” in state legislation is an independent question.

The language of the Federal RICO statute is not identical

with the language used by the twenty-seven states that fol-

lowed Congress’ lead by adopting similar RICO legislation.

The RICO statute of each state has its own legislative his-

tory, text, and jurisprudence. This Court’s explication

of the Federal “pattern” requirement provides guidance

to Federal courts on the interpretation of each state's

RICO statute in cases in which such interpretation is pre-

sented. Although this ease does not directly present such

interpretation, Amici urge this Court to provide guidance

that state RICO statutes must be read on their own merits

and not automatically in a fashion identical to their Fed-

eral counterpart.

—-—_—__ ——_ -Q——_- -—_--:_ -_—_——-

ARGUMENT

‘‘PATTERN’’ IS ESTABLISHED WHERE ACTS ARE

RELATED AND MANIFEST OR POSE A THREAT

OF CONTINUITY WITHOUT REGARD TO THE

PRESENCE OF MULTIPLE SCHEMES.

In 1970, Congress enacted RICO as Title IX of the

Organized Crime Control Act. 18 U.S.C. §§ 1961-68

(1982). It was designed to provide a new weapon for the

assault on organized crime. Russello v. United States, 464

U.S. 16, 26 (1983). The statute targeted but was not limit-

ed to, the infiltration of legitimate businesses by organized

crime figures. United States v. Turkette, 452 U.S. 576,

590-91 (1981); Russello, 464 U.S. at 26, 28; Sedima S.P.R.L.

v. Imrex Co. Inc., 473 U.S. 479, 495 (1985). Indeed,

18 U.S.C. §1962 made it unlawful for “any person”

to violate its substantive provisions by engaging in a ** nat-

tern of racketeering activity’’ by, through, or against any

‘‘enterprise.’” If a person violates RICO’s provisions by

engaging in the prohibited ‘pattern of racketeering ac-

tivity,’ he has, in effect, engaged in ‘‘organized crime,’’

and is appropriately subject to RICO’s criminal and civil

sanctions.''’ RICO is to be liberally construed. 84 Stat.

947 (1970). Its sanctions were designed to supplement,

but not supersede, other Federal and state criminal and

civil remedies. Id.

This Court’s opinion in Sedima contained the now

often cited footnote number 14, which stated, ‘‘the failure

of Congress and the courts to develop a meaningful con-

cept of ‘pattern’... resulted in the extraordinary uses

to which civil RICO... [had] been put .. .’’ 473 U.S. at

200. Ignoring the general teachings of this Court in

*Sedima, 473 U.S. at 495. See generally, United States v.

Cauble, 706 F.2d 1322, 1330 (5th Cir. 1983) (“enterprise crim-

inality’’ consists of “all types of organized criminal behavior

. . . [ranging] from single political corruption to sophisticated

white-collar crime schemes to traditional Mafia-type endeavor”)

(quoting, Blakey and Gettings, Racketeer Influenced and Cor-

rupt Organizations (RICO): Basic Concepts Criminal and Civil

Remedies, 53 Temple L. Q. 1009, 1013-14 (1980), cert. denied,

465 U.S. 1005 (1984); Goldsmith, RICO and Enterprise Crim-

inality, 88 Col. L. Rev. (1988).

Racketeering activity” is defined in 18 U.S.C. § 1961(1)

to mean various forms of conduct in violation of listed Federal

and state criminal statutes. It is not necessary, however, that a

person be previously convicted of one of the listed offenses be-

fore the person can be found responsible under the criminal or

civil provisions of RICO. Sedima, 473 U.S. at 490 n.8, 500 n.14.

"RiCO’s criminal sanctions include imprisonment, fine and

forfeiture. 18 U.S.C. § 1963 (1982). RICO’s civil sanctions in-

clude injunctions and treble damages. 18 U.S.C. § 1964 (1982).

Sedima, and narrowly focusing on footnote 14, the lower

courts have continued to dismiss the majority of civil RICO

eases filed, most often relying on ‘‘nattern’’ grounds.

Conflicting cireuit court decisions employ diverse and con-

fusing uses of the concept of ‘pattern.’ This jurispru-

dential confusion has been aptly termed **sheer bedlam.’*!

12Compare Bartecheck v. Fidelity Union Bank/First National

State Bank, 832 F.2d 36, 38-40 (3rd Cir. 1987) (multiple scheme

test rejected; need not be open ended; multiple factors); Cali-

fornia Architectural Bldg. Products, Inc. v. Franciscan Ceramics,

Inc., 818 F.2d 1466, 1469 (9th Cir. 1987) (single episode limita-

tion rejected); Roeder v. Alpha Indus., Inc., 814 F.2d 22, 31 (1st

Cir. 1987) (multiple scheme or episode limitation rejected; mul-

tiple factors must be considered) ; United States v. lanniello, 808

F.2d 184, 189-93 (2d Cir. 1986) (multiple scheme limitation re-

jected; continuity for “pattern” may be found from continuing

character of enterprise and open-ended nature of scheme);

Morgan v. Bank of Waukegan, 804 F.2d 970, 974-77 (7th Cir.

1986) (multiple scheme limitation rejected; “pattern’” may be

found where series of discrete harms inflicted) and Bank of

American National Trust & Savings Ass’n v. Touche Ross Co.,

782 F.2d 966, 987 (11th Cir. 1986) (different criminal episodes

test rejected); with Garbade v. Great Divide Mining & Milling

Corp., 831 F.2d 212, 214 (10th Cir. 1987) (single discrete scheme

not “pattern”); HMK Corp. v. Walsey, 828 F.2d 1071, 1073-74

(9th Cir. 1987) (single development scheme not “pattern”’), cert.

denied, 107 S. Ct. 706 (1988); Superior Oil v. Fulmer, 785 F.2d

252, 255-58 (8th Cir. 1986) (single scheme established relation-

ship, but negates continuity for “pattern’’) and Madden v. Gluck,

815 F.2d 116 n.1 (8th Cir. 1987) (Fulmer “adhere[d] to” despite

lanniello). For an excellent analysis of “pattern” that precedes,

but anticipates the holdings of Bartecheck, etc., see Note, Re-

consideration of Pattern in Civil RICO Offenses, 62 Notre Dame

L. Rev. 92 (1986) (cited with approval in Sun Savings & Loan

Ass’n v. Dierdorff, 825 F.2d 187, 192 (9th Cir. 1987)). See also

Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46, 50 (2nd

Cir. 1987) (enterprise must have continuity); Montesano v. Sea

First Commercial Corp., 818 F.2d 423, 426 (Sth Cir. 1987) (Beck

followed).

B3Furman v. Cirrito, 828 F.2d 898, 909 (2nd Cir. 1987) (Pratt,

' in dissent). For a detailed critique of “pattern,” see Equitable

Relief at 535 n.37.

Amici urge this Court to avoid the narrow approach of the

lower courts and to adopt a straightforward definition of

‘*nattern’’ within RICO.

Any effort to develop a meaningful definition of ‘‘pat-

tern’’ ought to begin with the language of the statute.

Sedima, 473 U.S. at 495 n.13; Russello, 464 U.S. at 20;

Turkette, 452 U.S. at 580." The statute says ‘‘activity.’’

18 U.S.C. § 1961(1) (1982). It does not say ‘‘schemes’’ or

‘‘episodes.’’ The statute ‘‘requires’’ that the ‘‘activity”’’

be composed of ‘‘at least two acts.’’ 18 U.S.C. § 1961(5)

(1982). RICO’s text, therefore, limits, but does not define

“pattern.” Sedima, 473 U.S. at 496, n.14 (“while two

acts are necessary, they may not be sufficient’’).. Accord-

ingly, ‘‘pattern’’ should be read in its ordinary or plain

“The definition of “pattern” must serve six functions:

1. The definition of criminality (when an indictment may

be returned);

2. A statement of a claim for relief (when an action may

be brought);

3. The principal of claim preclusion (when an action must

be brought);

4. The application of the statute of limitation (when, in

whole or in part, it is too late to bring an action);

5. The scope of discovery before trial; and,

6. The admissibility of evidence at trial.

Any definition of “pattern’’ must be faithfu! to the text of the

statute, its legislative history, and its purpose. In addition, the

definition ought to meet two tesis: it ought to work equally

well on the civil and crimina! sides of the statute, and it ought

to work equally well in §§ 1962(a), (b) and (c).

'SSee generally Helvering v. Morgan’s, Inc., 293 U.S. 121, 125

n.1 (1934) (discussion of difference between “means” and “in-

cludes”); Blakey, The RICO Civil Action in Context, 58 Notre

Dame L. Rev. 237, 241 n.16 (1982) (hereinafter Civil Action).

meaning, yet viewed within the context of the entire stat-

ute. Sedima, 473 U.S. at 489, 495 n.13; Russello, 464 U.S.

at 21, 22-23; Turkette, 452 U.S. at 580, 582, 587. The or-

dinary or plain meaning of ‘‘pattern’’ is ‘‘design.’’" Ob-

viously, a single kind of ‘‘design’’ is not required for

all usstions or all uses of the concept within each section."”

Thus, the requirement of ‘‘pattern’’ is a standard, not

a rule.'*

The legislative history of the statute should also be

examined. Sedima, 473 U.S. at 486; Turkette, 452 U.S. at

586. Neither the text nor the legislative history requires

a ‘‘single scheme’? or ‘‘multiple schemes’? for a showing

‘The Oxford English Dictionary paraphrases “pattern” as

Atuitaa or “discernible form.”” See Vil The Oxford English

Dictionary 565-66 (1933) (thirteen uses are noted; number eight

refers to “design’”); Ill the Oxford English Dictionary 315 (1933)

(definition number 8C: “An arrangement or order of things or

activity in abstract sense; order or form discernible in things,

actions, idea, situations, etc. Freq. with of, as pattern of be-

havior . . . and as second element with defining word.”) (em-

phasis in original).

See RICO Revisited: An Advanced Seminar on the Latest

Techniques in Civil Suits, 157 (1987) (“Pattern may be used in

RICO violation in at least 240 different contexts [3 (sections) x

5 (kinds of enterprises) x 4 (kinds of predicate offenses) x 4 (roles

in violations) = 240].”); See L. Wittgenstein, Philosophical In-

vestigation 20 (2d ed. 1953) (‘For a large class of cepa

not for all—in which we employ the word ‘meaning’ it can De

defined thus: the meaning of a word is its use in the language.”’)

(emphasis in original).

Morgan, 804 F.2d at 976 (The doctrinal requirement of

pattern of racketeering activity is a standard, not a rule, and as

such its determination depends on the facts and circumstances

of the particular use with no one factor being necessarily deter-

minative.”’); 11 R. Pound, Jurisprudence 124-29 (1959). See also

Nash v. United States, 229 U.S. 373, 376 (1913) (“restraint of

trade’) (Holmes, |.) (“{T}he law is full of instances where a man’s

fate depends on. . . some matter of degree.”’)

of ‘‘pattern.’" ‘‘Schemes”’ or ‘“‘episodes’’ are aot men-

tioned either.” In facet, the legislative hiswory materials

specifically point to only two goals that any definition of

the concept of ‘pattern’? ought to reflect: **relationship”’

and ‘‘continuity.”’ See, e.g., S. Rep. No. 91-617, 91st

Cong., Ist Sess. 158 (1964). Their inclusion in the concept

reflects a desire to target more than mere **sporadie ac-

tivity.”’ Td.

If such concepts as ‘*scheme”’ or **episode’’ are rele-

vant to a text-based approach to the concept of **pattern”’

that reflects the notion of ‘‘design,’’ the concepts would

have validity solely as fests for the presence of congres-

sionally-mandated goals. For example, a single ‘‘episode”’

(defined to mean several acts, so closely related in time

and placed that they may be fairly described as producing

but a single harm will not carry with it the reality or the

threat of continuity. See, e.g., Schreiber Distrib. Co. v.

Serv-Well Furniture Co., Inc.. 806 F.2d 1393, 1399 (9th

Cir. 1986) (diversion of single shipment of product not

pattern). As such, no pattern will be present. Yet a

‘multiple scheme’’ or ‘‘multiple episode’’ test ought not

to be elevated to a judicially imposed requirement that

"Compare United States v. Qaoud, 777 F.2d 1105, 1106

(6th Cir. 1985) (single scheme not required: acts need only be

related by enterprise), cert. denied, 106 S. Ct. 1499 (1986) and

A.B.A. Criminal Justice Section, Comprehensive Perspective on

Civil and Criminal RICO Legislation and Litigation: A Report of

the RICO Cases Committee 36-37 (1985) (common scheme lim-

italion rejected, since it would frustrate the application of RICO

to conglomerates of crime); Morgan, 804 F.2d at 975 (single

scheme not precluded; “otherwise... a single scheme would

automatically escape RICO liability . . . untenable result.”’).

*Janniello, 808 F.2d at 192 n.16 (no “clear legislative his-

tory” mandating multiple schemes).

would be inflexibly applied as a substitute for congres-

sionally mandated elements.

The point is most clearly seen in the context of See-

tions 1962(b) and (d) of RICO. In construing ‘*pattern,”’

most of the lower courts have concentrated on Section

1962(c). See, e.g., Superior Oil, 785 F.2d at 255; but see

id. at 255 and n.1 (6§ 1962(a), (b), and (c) ‘*share in com-

mon’’ the ‘‘pattern’’ concept). Suppose, however, that

the multiple scheme limitation were applied to Section

1962(b), which deals with the takeover of an enterprise,

and which, all concede, represents the principal, albeit not

exclusive, purpose of RICO, See Russello, 464 U.S. at

28: Turkette, 452 U.S. at 590-91. Should no pattern be

found where the racketeering activity was engaged in pur-

suant to a single scheme, then Section 1962(b) will have

been read out of the statute—or at least rewritten to pro-

hibit only the acquisition of multiple enterprises. /anniel-

lo, 808 F.2d at 192 (*‘requiring two schemes to establish

pattern would effectively eleminate’’ § 1962(b))2' Such

a result would be both ‘“‘absurd’’ and ‘‘surprising.’’ Tur-

kette, 452 U.S. at 587. It is not what Congress intended.

S. Rep. No, 91-617, 91.1 Cong., Ist Sess. 158 (1969) (‘*The

infiltration of legitimate business normally requires more

than one ‘racketeering activity’ and the threat of contin-

uing activity to be effective. It is this factor of continuity

plus relationship which combines to produce a pattern.’*)

21See also Paul S. Mullin & Assoc., Inc. v. Bassett, 632 F.

Supp. 532, 541 (D. Del. 1986) (“[A]n attempt by a racketeering

enterprise to infiltrate General Motors could involve countless

acts... . One could argue, however, that [no pattern was] in-

volved because only one company was subverted. Under this

view, a ‘pattern’ would come into existence only after the same

enterprise began to infiltrate Chrysler or Ford.”).

Thus, to be successful, the takeover of a legitimate

business—even though accomplished in the context of a

‘‘single scheme’’ or ‘‘single episode’’—would ‘“‘normally’’

require not only the act of takeover, but also a ‘‘threat”’

of continuing criminal activity to maintain its objective.

Otherwise, the business could be reclaimed at any time.

See Morgan, 804 F.2d at 975. (**To foeus excessively on

either continuity or relationship alone effectively negates

the remaining prong.’’)

Similarly, requiring multiple schemes for ‘‘pattern’’

potentially conflicts with Section 1962(d) (conspiracy).

A requirement of multiple schemes might defeat a single

conspiracy charge. Conversely, a showing of a single

conspiracy might preclude a finding a multiple schemes

for ‘**pattern.’’

One act does not make a pattern. United States rv.

Joseph, 781 F.2d 549, 554 (6th Cir. 1986). Nor do isolated

acts. S. Rep. No. 91-617, 91st Cong., Ist Sess. 158 (1969)

(*[O)|ne ‘isolated racketeering’ activity . .. [is] insuf-

ficient ....’’) Nothing in the text or the legislative his-

tory of the statute indicates that continuity (or its threat)

may only be found in, or inferred from, the racketeering

activity itself. It is wholly consistent with the text and

legislative history of the statute to find continuity in any

aspect of a violation that relates to the racketeering ae-

tivity. lanniello, 808 F.2d at 190-91 (threat of continuity

found from ongoing character of organized group). Con-

tinnity, too, should be tested during the ‘‘pattern,’’ not

after its termination.”

RICO is part of Title 18, the Federal criminal code.

As such, ‘‘act”’ is best understood in tie traditional sense

of actus reus and mens rea, United States v. Bailey, 444

U.S. 394, 415 n.11 (1980) (**Congiess in enacting criminal

statutes legislates against a bac!:ground of Anglo-Saxon

common law... .’’). When examining the ‘‘acts’’ that

make up an alleged *‘pattern,’’ no reason exists for focus-

ing on a purely jurisdictional ‘‘act,’? that is, a mailing, a

use of wire communication, or interstate or foreign trans-

portation. Sce e.g., Elliott v. Chicago Motor Club Lus.,

809 F.2d 347, 350 (7th Cir. 1987) (mailings relating to

same fraud not distinct for purpose of determining pat-

tern); cf. Cabbell v. United States, 636 F.2d 246, 248-49

(Sth Cir. 1980) (proper prosecutorial unit under 4 2314

may ignore jurisdictional elements).

While ‘‘pattern’’ must be read consistently in erim-

inal and civil litigation, the ‘‘aets’’ that constitute the

‘pattern’? may differ. Elliott, 809 F.2d at 350 (quoting

Lipin Enterprises, Inc. v. Lee, 808 F.2d 322, 325 (ith Cir,

1986) (Cudahy, J., coneurring) (‘‘a multiplicity of mail-

ings does not reasonably translate directly into a ‘pat-

2Marshall-Silver Construction Co., Inc. v. Mendel, 835 F.2d

63, 66 (3rd Cir. 1987) (“poses or posed”); Liquid Air Corp. v.

Rogers, 834 F.2d 1297, 1309 (7th Cir. 1987) (“duration ot the

predicate acts”); Sun Savings, 825 F.2d 194 n.5 (9th Cir. 1987);

City of New York v. Joseph L. Balkan, Inc., 656 F. Supp. 536, 545

(E.D.N.Y. 1987) (continuity measured between acts not at ter-

mination); Louisiana Power & Light Co. v. United Gas Pipe Line

Co., 642 F. Supp. 781, 810 (E.D. La. 1986) (would have continued

if not caught).

tern’ ’’)). Compare Lipin Enterprises, 803 F.2d at 325

(Cudahy, J.) (‘‘It is not clear that the same analysis

would be appropriate in cases involving other kinds of

predicate acts [such as] arson.’’). The cause should

focus on ‘‘act’’—the actus reus—that inflicts discrete

harm. Morgan, 804 F.2d at 975. Using this approach,

a ‘*pattern’’ may exist when at least two acts, which are

‘designed’? or have ‘‘discernible form’’ in reference to

themselves or to the enterprise occur, and which reflect

continuity (or its threat), either by looking at the acts

themselves (¢.g., many bribes paid over a period of time),

the purpose for which they were committed (e.g., obtaining,

on a continuing basis, valuable rate consideration) or the

enterprise itself (e.g., a corporation, a publie commission,

or an on-going association of persons ard entities). Under

this approach, little doubt exists that the Petitioners in this

appeal stated a “pattern”™ in their complaint. The judg-

ment of the Court of Appeals should be reversed.

PATTERN UNDER STATE LAW IS AN

INDEPENDENT QUESTION

No matter how Federal RICO may be interpreted, cru-

cial differences exist between Title IX and the definitions of

**For parallel concepts, seé Henry v. Farmer City State Bank,

808 F.2d 1228, 1237 (7th Cir. 1986) (municipal liability under 42

U.S.C. § 1983 (1982) (“{A] plaintiff must allege [under Oklahoma

City v. Tuttle, 471 U.S. 808, 814 (1985)} a specific pattern or

series of incidents that support the general allegations of

custom or policy .. . .”); United States v. Iron Workers Local 86,

443 F.2d 544, 551-52 (9th Cir.) (“pattern or practice” prerequi-

site for an attorney general suit under Title Vil: defined as

“more than an isolated, sporadic incident, but is repeated rou-

tine of a generalized nature’) (quoting 110 Cong. Rec. 14270

(1970)) (remarks of Sen. Hubert H. Humphrey), cert. denied,

404 U.S. 984 (1971).

‘*pattern’’ found in the individual state statutes that have

pattern requirements. Althongh some states do not use

‘‘nattern’’ at all in their statutes, but instead rely on the

more general concept of ‘racketeering activity,’ all

state RICO statutes are vulnerable to unwarranted limi-

tations imposed in Federal courts interpreting them, Anal-

ysis of state RICO statutes requires independent exami-

nation of their particular words and histories consistent

with their rich variety and with the principles of federal-

ism.

The selection of a limitation or a definition of the

pattern concept differs among the states, New Jersey?

follows Federal RICO, creating only a limitation, while

Pennsylvania” says ‘‘refers.”’ The statutes of the re-

maining states that require patterns say ‘‘means,’”’ thus

providing an exact definition of ‘“‘pattern.’”* It is, there-

fore, inappropriate to read Federal concepts (i.e,

‘*scheme’* or ‘‘episode’’) into these definitions, especially

4See, e.g., Poling v. Morgan, 829 F.2d 882, 887 (9th Cir.

1987) (Arizona RICO). See also, Hawaii Rev. Stat. § 842 (1976);

N.D. Century Code § 12:1-06.1 (Smith Supp. 1985).

23N J. Stat. Ann. § 2C:41-1 (d) (1), (2) (West Supp. 1982)

(“Pattern of racketeering activity” requires. . .).

218 Pa. Cons. Stat. §911(h) (Pardon 1983) (‘Pattern of

racketeering activity” refers. . .).

"See, e.g., Nev. Rev. Stat. § 207.390 (1983) (“Racketeering

activity” means .. .); Ohio Rev. Code § 2923.31 (1986) (‘Pattern

of Corrupt Activity” means . . .); Wis. Stat. Aan. § 946.82 (West

Supp. 1984-85) (“Pattern of racketeering activity’ means . . .).

**See supra n. 15.

where the Federal concepts do not have textual support

in the state statutes,” and particularly where these state

%It is particularly inappropriate to use Federal jurisprudence

on “multiple schemes” or “multiple episodes” developed after

the effective date of a state statute to narrow a state statute.

See, e.g., Behunin v. Dow Chemical Co., 650 F. Supp. 1390 (D.C.

Colo. 1986) (Kane, |.) (“pattern’’ under Colorado RICO “coin-

cide|s] with the meaning of its Federal counterpart.”’)

In fact, before 1981, the effective date of the Colorado

statute, RICO defense counsel made a major effort to exclude

a “single episode” from Federal RICO. Asa matter of law, it did

not succeed. See, e.g., United States v. Moeller, 402 F. Supp. 49,

57-58 (D.C. Conn. 1975) (single episode limitation advocated

under § (c) but rejected as inconsistent with precedent under

§ (b) thought to be controlling). As a matter of prosecutorial

discretion, it did. United States Attorney's Manual, Title 9—

Criminal Division § 9.110.340 (RICO prosecution not to be

brought where only a single episode). In addition, the uniform

holding in the Federal decisions prior to 1981 was that “two

acts,” not “two schemes,” were all that was required to estab-

lish a “pattern.” See, e.g., United States v. Parness, 503 F.2d

430, 441-42 (2nd Cir. 1974) (“pattern” requires “two acts,” not

“two schemes”) cert. denied, 419 U.S. 1105 (1975)); United

States v. Weatherspoon, 581 F.2d 595, 602 (7th Cir. 1978) (same);

United States v. Starnes, 644 F.2d 673, 677-78 (7th Cir.), cert.

denied, 454 U.S. 826 (1982) (same); United States v. Calabrese,

oa a 1379, 1389 (10th Cir.) (same), cert. denied, 454 US.

831 (1981).

Prior to 1981 the Federal courts had held that if the prose-

cution could show a “common scheme or plan” involving mul-

tiple acts, a “pattern” was present. United States v. Stofsky, 409

F. Supp. 609, 614 (D.C. S.N.Y. 1973), aff'd, 527 F.2d 237 (2d Cir.

1975), cert. denied, 429 U.S. 819 (1976). Some interpreted this

holding to mean that a “pattern” could only be found if there

were a “common scheme or plan” linking the “acts.” Later

decisions definitively establi that as long as the “acts” were

related to the affairs of an enterprise, a “pattern” was present,

regardless of whether a “common scheme or plan” existed.

United States v. Weisman, 624 F.2d 1118, 1122 (2d Cir.), cert.

denied, 449 U.S. 871 (1980) (citing United States v. Filiott, 571

F.2d 880 (5th Cir), cert. denied, 439 U.S. 953 (1978)). Thus, at

(Continued on following page)

statutes, like their Federal counterpart, are to be liberally

construed.”

‘Continued from previous page)

the time Colorado RICO was passed in 1981, it was possible to

show “relationship” under Federal RICO solely through the

enterprise concept. The Federal courts, in short, had neither

imposed a requirement that the “acts” be related to one an-

other, nor adopted a narrow concept of continuity requiring

multiple schemes. Even a cursory examination of the

used to detine “pattern” under the Colorado statute e

made it clear that its definition was “significantly difterent

from that of Federal RICO. See Colo. Rev. Stat. § 18-17-103

(Supp. 1984). As such, limitations on RICO judicially crafted

in the Federal courts since 1981 should not have been read into

the Colorado statute. See supra n.4.

The author of the Behunin opinion has been unusually

candid about his personal feelings toward RICO. “RICO is just

-_ . a rather sloppily thought out kind of way to get the Mafia

that every body jumps on so that they can have more fun with

fraud.” In Re Dow Co. SaraBond Products Liability, 666 F. Supp.

1466, 1470 (D.C. Colo. 1987) (Kane, }.). As such, “policy con-

siderations” warrant the statute being “put to rest.” Id. Com-

pare 116 Cong. Rec. 35,204 (1970) (statements of Cong. Poff)

(‘no single measure [had] received more thorough considera-

tion’): lannelli v. United States, 420 U.S. 770, 789 (1975) (“care-

fully crafted piece of legislation”) with United States v. Turkette,

452 US. 576, 587 (1981) (“there is no argument that Congress

acted bevond its power . . . that being the case, the courts are

without authority to restrict the applications of the statute.”).

*The presence of a liberal construction clause is not un-

usual in state law. Such clauses had their origin in the codifi-

cation movement of the 19th century. Edward Livingston sug-

gested the rejection of the old common law rule of strict con-

struction in the farsighted code he drafted for Louisiana between

1820 and 1825. 1 E. Livingston, Complete Works on Criminal

jurisprudence 231 (1873 ed); 1 E. Livingston, supra, at 14.

(“{A} penal laws whatever are to be construed according to

the plain import of their words. . . .”). Livingston's suggestion

for Louisiana was followed by David Dudley Field in his influ-

ential draft of codes of penal law and criminal procedure for

New York. The Code of Penal Law 5 (1865 ed.) (“fair import’);

The Code of Criminal Procedure of the State of New York 470-

(Continued on following page)

Federal RICO uses ‘‘acts’’ as its unit for counting

for ‘‘continuity.’’ 18 U.S.C. § 1961(1) (1982). The states,

on the other hand, utilize a variety of concepts in their

attempt to establish a similar ‘‘continuity’’ prong for

(Continued from previous page)

71 (1850 ed.) (revised code to be given “liberal construction”

as the old rule had no support in any “principle of substantial

justice, and . . . [its] highest aim, practically considered, seem|ed]

to be, to render that law inconsistent with its spirit and as a

consequence, absurd and ridiculous”). Ultimately, Livingston’s

and Field’s work formed the intellectual basis for the Federal

Rules of Civil and Criminal Procedure. C. Wright & A. Miller,

Federal Practice and Procedure § 104 (1969).

judicial hostility to change through legislation was com-

mon in the 19th century. See J. Hurst, The Growth of American

Law 186 (1950):

[Wihere [judges] were not ready boldly to declare [it] un-

constitutional, [they were ready] to interpret it so restric-

tively as to narrow its effect.

These factors found expression in the abstract canons of

statutory interpretation . . . : strict construction of stat-

utes in derogation of the common law; strict construction

of penal statutes, or of legislation that imposed ‘drastic’

burdens, or of legislation that imposed special damages... .

The effect was to put a primarily obstructive, if not de-

structive connotation on the process of statutory inter-

pretation.

Legislatures reacted. “{I]t became standard practice in drafting

statutes to insert a preamble stating broadly the purpose of the

act and to close with a provision declaring that the statute should

be liberally construed.” D. Wigdor, Roscoe Pound: Philosopher

of Law 174 (1974); see E. Patterson, Jurisprudence: Men and

Ideas of the Law 421 (1953). In fact ,a majority of states have

abolished the common law rule. Civil Action, at 237, 245, n.25

(1982). Judicial hostility, however, continues into the 20th cen-

tury. See, e.g. Sedima, 473 U.S. at 529 (Powell, J.) (liberal con-

struction applies only to criminal provisions); Saine v. ALA,

Inc., 582 F. Supp. 1299, 1305 (D.C. Colo. 1984) (same) (Kane,

J). Courts have recognized that strict construction is not of

constitutional dimension. See, e.g., Tarrant v. Ponte, 751 F.2d

459, 466 (1st Cir. 1985).

‘*nattern.’’ Colorado," Illinois? New York, Pennsyl-

vania** and Washington*® follow Federal RICO by count-

ing ‘‘acts.’’ The remainder of ‘*pattern’’ states expressly

count ‘incidents,’ ‘*episodes’*’ or ‘‘events,’"> each of

which is synonymous with ‘‘oceurrence.’*? They reflect

the position advocated by Judge Newman in United States

v. Moeller® and codified by the guidelines of the Depart-

ment of Justice’! that more than one occurrence is re-

quired. This intent is most evident in the more recently

Colo. Rev. Stat. § 18-17-103 (Supp. 1984) (‘Pattern of

racketeering activity means engaging in at least two acts... .”).

37/1, Rey. Stat. ch. 56-Y2 § 1653(b) (Smith Hurd Supp. 1984-

85) (‘Pattern of narcotics activity means two or more acts... .”).

3NY Penal Code § 460.10 (1986) (‘Pattern of criminal ac-

tivity means conduct engaged in by persons . . . constituting

three or more criminal acts.”).

418 Pa. Cons. Stat. §911(h) (Pardon 1983) (‘pattern of

racketeering activity refers to a course of conduct requiring

two or more acts. .. .’’).

Wash. Rev. Code Ann., §9A.82.010 (West Supp. 1986)

(“Pattern of criminal profiteering activity means engaging in at

least three acts... .”’).

See, e.g., Fla. Stat. Ann., § 772.02 (1986) (‘Pattern of crim-

inal activity means engaging in at least two incidents. . . .”’).

Utah Code Ann. § 76-10-1602 (Smith Supp. 1985) (“Pattern

of racketeering activity means engaging in at least two episodes

of racketeering conduct.”’).

See, e.g., Wash. Rev. Code Ann. § 9A.82.010 (West Supp.

1986) (’ .. . not be isolated events. . .”’).

%V Oxford English Dictionary 152 (1933) (incident-French);

Il id. 245 (episode-Greek), 338-39 (event-Latin).

402 F. Supp. 49, 57-58 (D.C. Conn. 1975), cert. denied,

429 U.S. 1039 (1977). See supra n.29.

“United States Attorney’s Manual, Title 9—Criminal Divi-

sion § 9-110.340 (‘single criminal episode”). See supra n.29.

enacted statutes, which specifically preclude counting as

separate occurrences those that are too closely related in

point of time and place.” None of these states, however,

exclude from ‘‘pattern’’ a ‘‘single scheme.’*? As in Fed-

eral RICO, the focus is on the conduct of people, not their

state of mind, and these definitions do not lend them-

selves to a ‘‘semantical game of generalizing the illegal

objective.’’ Montesano v. SeaFirst Commercial Corp.,

818 F.2d 423, 426 (5th Cir. 1987) (Higginbothan, J.).

Federal RICO has included the ‘‘relationship’’ re-

quirement in ‘‘pattern’’ through its legislative history.

The states, on the other hand, use a variety of methods

to deal with the factor of ‘‘relationship.’’ New Mexico

relates ‘‘ineidents’’ solely by intent.4 Pennsylvania re-

“See, e.g., Del. Code Ann., Title 11, § 1502 (1986); N.Y.

Penal Code, § 460.10 (1986); Ohio Rev. Code § 2923.31 (1986);

Wis. Stat. Ann., § 946.82 (West Supp. 1984-85).

#80On the other hand, New York (N.Y. Crim. Proc., § 40.10(2)

(1985) (“Criminal transaction” means conduct which established

at least one offense, and which is comprised of two or more of

a group of acts either (a) so closely related in point of time and

circumstances of commission as to constitute a single criminal

incident, or (b) constitute elements or integra! parts of a single

criminal venture’’)) and Florida (Fla. Stat. Ann., § 772.02(4) (1986)

(For the purposes of this chapter, the term ‘pattern of criminal

activity’ shall not include two or more incidents of fraudulent

conduct arising out of a single contract or transaction against

one or more related persons’’)) preclude a single “transaction”

from constituting a “pattern.’” “Transactions’’ may be _ para-

phrased as “the carrying on or completion of an action or

course of action.”” XI Oxford English Dictionary 251 (1933) (em-

phasis added). It can, therefore, be read either narrowly or

broadly. Compare, Thomas v. Myers-Dickson Furniture Co., 479

F.2d 740, 746 (5th Cir. 1979), with Dombalion v. Fox, 88 Cal.App.

3rd 763, 765-67, 152 Cal.Rptr. 86, 87-88 (Ct. App., Div. 1 1979).

4N.M. Stat. Ann. § 30-42-1-3 (Michie Supp. 1980).

quires a ‘‘course of conduct.’ Where the enterprise is

a legitimate one, New York requires a common scheme

or plan; if the enterprise is illegitimate, state of mind and

association with the enterprise suffice.“ Colorado, Dela-

ware, and Ohio specify that any relationship to the affairs

of the enterprise is enough to establish the ‘‘relationship”’

prong of ‘‘pattern.’’ The remaining ‘*nattern’’ states

require that the occurrences be interrelated,* yet none

provide a definition of ‘‘interrelated.’’ Connecticut, Ore-

von and Washington explicitly resolve this ambiguity by

expressly including a ‘‘nexus’’ to the affairs of the en-

terprise as a form of ‘‘interrelation.’?

Federal RICO requires ‘‘at least two acts’? committed

‘‘within ten years’’ of one another. 18 U.S.C. § 1961(5)

(1984). New York, Washington, and Wisconsin require

three acts” while Pennsylvania imposes no time limita-

tion.’ Tennessee requires that the acts be committed

within two vears of one another; Connecticut, Florida,

4518 Pa. Cons. Stat. § 911(h) (Pardon 1983).

46N.Y. Crim. Proc. § 40.10 (1985).

4738 Colo. Rev. Stat. § 17-18-103 (Supp. 1984); Del. Code

Ann. Title 11, § 1502 (1986); Ohio Rev. Code § 2923.31 (1986).

48See, e.g., Ill, Rev. Stat. ch 56'/2 § 1653 (Smith Hurd Supp.

1984-1985).

Conn. Gen. Stat. Ann. § 53-394 (West Supp. 1984); Ore.

Rev. Code Ann. § 166.715 (1983); Wash. Rev. Code Ann § 9A.

82.010 (West Supp. 1986).

SONY. Crim. Proc. § 40.10 (1985); Wash. Rev. Code Ann.

§ 9A.82.010 (West Supp. 1986); Wis. Stat. Ann. § 946.82 (West

Supp. 1984-85).

$118 Pa. Cons. Stat. § 911(h) (Pardon 1983).

Tenn. Code Ann. § 93-1-1003 (1986).

Idaho, Georgia and North Carolina, four years ;* Illinois,

Indiana, Louisiana, Mississippi, Nevada, New Mexico, Ore-

gon, Utah and Washington, five years; Ohio, six years ;*5

and Wisconsin, seven years.*© The rest follow the Federal

statute.”

Since the various state statutes substantially differ

from their Federal counterpart, Federal courts interpret-

ing the state statutes must pay close attention to the texts

of the state statutes when faced with a state RICO claim.

Neither crowded court dockets nor considerations of Fed-

eralism ought to play a role in the Federal judiciary’s

reading of state RICO legislation, whatever role such con-

siderations may properly play in reading Federal stat-

utes. Compare, Patsy v. Florida Board of Regents, 457

U.S. 496, 512 n.13 (1982) (burden on Federal courts ‘‘not

sufficient to justify a judicial decision to alter [a] con-

eressionally [drafted scheme]’’) with Arizona ex rel.

Corbin, v. Pickrell, 136 Ariz. at 591, 667 P.2d at 1306

See, Conn. Gen. Stat. Ann. § 53-394 (West Supp. 1984);

Fla. Stat. Ann. § 772.02 (1986); Idaho Code § 18-7803 (1981);

Ga. Code Ann. § 16-14-3 (1983), N.C. Gen. Stat. § 75 D-3 (1986).

“See, Ill. Rev. Stat. ch 56'/2 § 1653(b) (Smith Hurd Supp.

1984-85); Ind. Code Ann. § 35-45-6-1 (Burns Supp. 1982); La.

Rev. Stat. § 15-1351 (West 1985); Miss. Code Ann. § 97-43-1-3

(Lawyers Co-op 1986); Nev. Rev. Stat. § 207.390 (1983); N.M.

Stat. Ann. § 30-42-1-3 (Michie Supp. 1980); Ore. Rev. Code Ann.

§ 166.715 (1983); Utah Code Ann. § 76-10-1602 (Smith Supp.

1985); Wash. Rev. Code Ann. § 9A.82.010 (West Supp. 1986).

SOhio Rev. Code § 2923.31 (1986).

‘6Wis. Stat. Ann. § 946.82 (West Supp. 1984-85).

See, e.g., N.J. Stat. Ann. § 2C:41-1(d)(1) (West Supp. 1982);

Del. Code Ann. Title 11, § 1502 (1986); Colo. Rev. Stat. § 18-17-

103 (Supp. 1984).

(concern for federalization of state cases is not a con-

sideration in interpretation of Arizona RICO).

oOo

CONCLUSION

Under a proper construction of ‘‘pattern,’’ the Peti-

tioners stated a claim for relief under Federal RICO.

This Court ought, therefore, to reject the jurisprudence

of the lower courts, which seems more intent on frustrat-

ing RICO than implementing it** The judgment of the

Court of Appeals should be reversed and the Petitioners’

complaint reinstated.

Respectfully submitted,

Ropert K. Corsix

Attorney General

State of Arizona

S88More than 100 years ago, this Court noted, ‘‘it is easy, by

very ingenious and astute construction, to evade the force of

almost any statute, where a court is so disposed . . . [By such]

a construction [it is possibie to! annul [it] and render{] it super-

fluous and useless.” Pillow v. Roberts, 54 U.S. (13 How.) 472, 476

(1851) (Grier, J.). See also, Indian Towing Co. v. United States,

350 U.S. 61, 68 (1955) (Tort Claims Act) (rejecting “distinctions

so fine spun and capricious as to be almost incapable of bein

held in the mind for adequate formulation’). Such an Ptinon

to statutory construction, however, carries with it a heavy price.

After a lifetime of study of the law, Dean Roscoe Pound con-

cluded that such construction (1) “tend/ed] to bring the law into

disrespect; (2) . . . subjectfed] the courts to political pressure;

[and] (3) . . . invite{d] an arbitrary personal element in judicial

administration.” 3 Jurisprudence 488 (1959). It threatened, he

found, to make “laws . . . worth little’ and to “break down’

the “legal order” itself. Id. at 490.

APPENDIX

App. 1

Racketeer Influenced And Corrupt Organizations Statute

(18 U.S.C. 1961-1968)

§ 1961. Definitions

As used in this chapter—

(1) ‘‘racketeering activity’? means (A) any act

or threat involving murder, kidnapping, gambling,

arson, robbery, bribery, extortion, dealing in obscene

matter, or dealing in narcotic or other dangerous

druvs, which is chargeable under State law and pun-

ishable by imprisonment for more than one year; (B)

any act which is indictable under any of the following

provisions of title 18, United States Code: Seetion 201

(relating to bribery), section 224 (relating to sports

bribery), sections 471, 472, and 478 (relating to coun-

terfeiting), section 659 (relating to theft from inter-

state shipment) if the act indictable under section 659

is felonious, section 664 (reltaing to embezzlement

from pension and welfare funds), sections 891-894

(relating to extortionate credit transactions), section

1084 (relating to the transmission of gambling infor-

mation), section 1341 (relating to mail fraud), section

1348 (relating to wire fraud, sections 1461-1465 (re-

latine to obscene matter), section 1508 (relating to ob-

struction of justice), section 1510 (relating to obstrue-

tion of criminal investigations), section 1511 (relating

to the obstruction of State or local law enforcement),

section 1512 (relating to tampering with a witness, vie-

tim, or an informant), section 1513 (relating to re-

taliating against a witness, victim, or an informant),

section 1951 (relating to interference with commerce,

robbery, or extortion), seetion 1952 (relating te racke-

App. 2

teering), section 1953 (relating to interstate transpor-

tation of wagering paraphernalia), section 1954 (re-

lating to unlawful welfare fund payments), section

1955 (relating to the prohibition of illegal cambling

businesses), section 1956 (relating to the laundering

of monetary instruments), section 1957 (relating to

engaging in monetary transactions in property derived

from specified unlawful activity), seetions 2512 and

2313 (relating to interstate transportation of motor

vehicles), sections 2314 and 2315 (relating to interstate

transportation of stolen property), section 2820 (relat-

ing to white slave traffic), (C) any act whiel: is indict-

vehicle parts), sections 2341-2346 (relating to traffick-

ing in contraband cigarettes), sections 2421-24 (relat-

ing to whiteslave traffic), (C) any aet which is indict-

able under title 29, United States Code, section 186

(dealing with restrictions on payments and loans to

labor organizations) or section 501(¢) (relating to em-

bezzlement from union funds), (I)) any offense involv-

ing fraud connected with a case under title 11, fraud in

the sale of securities, or the felonious manufacture, im-

portation, receiving, concealment, buying, selling, or

otherwise dealing in narcotic or other dangerous drugs,

punishable under any law of the United States, or (EB)

any act which is indictable under the Curreney and

Foreign Transactions Reporting Act;

(2) ‘*State’’ means any State of the United

States, the District of Columbia, the Commonwealth

of Puerto Rico, any territory or possession of the

United States, any political subdivision, or any de-

partment, ageney, or instrumentality thereof;

App. 3

(3) ‘‘person’’ includes any individual or entity

capable of holding a legal or beneficial interest in

property ;

(4) ‘‘enterprise’’ includes any individual, part-

nership, corporation, association, or other legal entity,

and any union or group of individuals associated in

fact althongh not a legal entity;

(5) ‘pattern of racketeering activity’’ requires

at least two acts of racketeering activity, one of which

oceurred after the effective date of this chapter and

the last of which occurred within ten years (excluding

any period of imprisonment) after the commission of

a prior act of racketeering activity ;

(6) ‘‘unlawful debt’? means a debt (A) ineurred

or contracted in gambling activity which was in viola-

tion of the law of the United States, a State or politi-

cal subdivision thereof, or which is unenforceable un-

der State or Federal law in whole or in part as to

prineipal or interest beeause of the laws relating to

usury, and (B) which was incurred in connection with

the business of gambling in violation of the law of

the United States, a State or political subdivision

thereof, or the business of lending money or a thing

of value at a rate usurious under State or Federal

law, where the usurions rate is at least twice the en-

foreeable rate;

(7) ‘‘racketeering investigator’’ means any at-

torney or investigator so designated by the Attorney

General and charged with the duty of enforcing or

carrying into effect this chapter:

App. 4

(8) ‘racketeering investigation’’ means any in-

quiry conducted by any racketeering investigator for

the purpose of ascertaining whether any person has

been involved in any violation of this chapter or of

any final order, judgment, or decree of any court of

the United States, duly entered in any ease or pro-

ceeding arising under this chapter;

(9) ‘documentary material’? ineludes any book,

paper, document, reeord, recording, or other material;

and

(10) ‘*Attorney General’ ineludes the Attorney

General of the United States, the Deputy Attorney

General of the United States, any Assistant Attorney

General of the United States, or any employee of the

Department of Justice or any employee of any de-

partment or agency of the United States so designated

by the Attorney General to carry out the powers con-

ferred on the Attorney General by this chapter. Any

department or agency so designated may use in in-

vestigations authorized by this chapter either the in-

vestigative provisions of this chapter or the investiga-

tive power of such department or ageney otherwise

conferred by law.

$1962. Prohibited activities

(a) It shall be unlawful for any person who has re-

ceived any income derived, direetly or indireetly, from a

pattern of racketeering activity or through collection of

an unlawful debt in whieh such person has participated as

a principal within the meaning of section 2, tithe 18, United

States Code, to use or invest, ‘lireetly or indireetly, any

App. 5

part of such income, or the proceeds of such income, in

acquisition of any interest in, or the establishment or

operation of, any enterprise which is engaged in, or the

activities of which affect, interstate or foreign commerce.

A purchase of securities on the open market for pur-

poses of investment, and without the intention of con-

trolling or participating in the control of the issuer, or

of assisting another to do so, shall not be unlawful under

this subsection if the securities of the issuer held by the

purchaser, the members of his immediate family, and his

or their accomplices in any pattern or racketeering activity

or the collection of an unlawful debt after such purchase

do not amount in the aggregate to one percent of the out-

standing securities of any one class, and do not confer,

either in law or in fact, the power to elect one or more

directors of the issuer.

(b) It shall be unlawful for any person through a pat-

tern of racketeering activity or through collection of an

unlawful debt to acquire or maintain, direetly or indireet-

ly, any interest in or control of any enterprise which is

engaged in, or the activities of which affect, interstate or

foreign commerce.

or associated with any enterprise engaged in, or the ae-

tivities of which affect, interstate or foreign commerce,

to conduet or_ participate, directly or indirectly, in the con-

duct «f such enterprise’s affairs through a pattern of

racketeering activity or collection of unlawful debt.

(d) It shall be unlawful for any person to conspire

to violate any of the provisions of subsections (a), (b), or

(ce) of this seetion.

App. 6

(a) Whoever violates any provision of section 1962

of this chapter shall be fined not more than $25,000 or

imprisoned not more than twenty years, or both, and shall

forfeit to the United States, irrespective of any provision

of State law—

(1) any interest the person has acquired or

maintained in violation of section 1962;

(2) any—

(A) interest in;

(B) security of;

(D) property or contractual right of any

kind affording a source of influence over:

any enterprise which the person has established, op-

erated, controlled, conducted, or participated in the

conduct of in violation of section 1962; and

(3) any property constituting, or derived from,

any proceeds which the person obtained, direetly or

indirectly, from racketeering activity or unlawful debt

collection in violation of section 1962.

The court, in imposing sentence on such person shall order,

in addition to any other sentence imposed pursuant to this

section, that the person forfeit to the United States all

property deseribed in this subsection. In lien of a fine

otherwise authorized by this seetion, a defendant who de-

rives profits or other proceeds from an offense may be

fined not more than twice the gross profits or other pro-

ceeds.

’

{

App. 7

(b) Property subject to criminal forfeiture under

this section includes—

(1) real property, including things growing on,

affixed to, and found in land; and

(2) tangible and intangible personal property,

ineluding rights, privileges, interests, claims and se-

curities.

(ec) All right, title, and interest in property described

in subsection (a) vests in the United States upon the com-

mission of the act giving rise to forfeiture under this sec-

tion. Any such property that is subsequently transferred

to a person other than the defendant may be the subject

of a special verdiet of forfeiture and thereafter shall be

forfeited to the united States, unless the transferree es-

tablishes in a hearing pursuant to subsection (/) that he

is a bona fide purchaser for value of such property who

at the time of purchase was reasonably without cause to

believe that the property was subject to forfeiture under

this section.

(d)(1) Upon application of the United States, the

court may enter a restraining order or injunction, require

the execution of a satisfactory performance bond, or take

any other action to preserve the availability of property

deseribed in subsection (a) for forfeiture under this see-

tion —

(A) upon the filing of an indictment or informa-

tion charging a violation of section 1962 of this chapter

and alleging that the property with respect to which

the order is sought, would, in the event of conviction,

he subject to forfeiture under this section; or

App. 8

(B) prior to the filing of such an indictment or

information, if, after notice to persons appearing to

have an interest in the property and opportunity for

a hearing, the court determines that—

(i) there is a substantial probability that

the United States will prevail on the issue of for-

feiture and that failure to enter the order will

result in the property being destroyed, removed

from the jurisdiction of the court, or otherwise

made unavailable for forfeiture; and

(ii) the need to preserve the availability of

the property through the entry of the requested

order outweighs the hardship on any party

against whom the order is to be entered:

Provided, however, That an order entered pursuant to

subparagraph (B) shall be effective for not more than

ninety days, unless extended by the court for good cause

shown or unless an indictment or information described

in subparagraph (A) has been filed.

(2) A temporary restraining order under this snb-

section may be entered upon application of the United

States without notice or opportunity for a hearing when

an information or indictment has not yet been filed with

respect to the property, if the United States demonstrates

that there is probable cause to believe that the property

with respect to which the order is sought would, in the

event of conviction, be subject to forfeiture under this see-

tion and that provision of notice will jeopardize the avail-

ability of the property for forfeiture. Such a temporary

order shall expire not more than ten days after the date on

App. 9

which it is entered, unless extended for good cause shown

or unless the party against whom it is entered consents to

an extension for a longer period. A hearing requested con-

cerning an order entered under this paragraph shall be

held at the earliest possible time, and prior to the expira-

tion of the temporary order.

(3) The court may receive and consider, at a hear-

ing held pursuant to this subsection, evidence and informa-

tion that would be inadmissible under the Federal Rules

of Evidence.

(e) Upon conviction of a person under this section,

the court shall enter a judgment of forfeiture of the prop-

erty to the United States and shall also authorize the At-

torney General to seize all property ordered forfeited

upon such terms and conditions as the court shall deem

proper. Following the entry of an order declaring the

property forfeited, the court may, upon application of

the United States, enter such appropriate restraining or-

ders or injunctions, require the execution of satisfactory

performance bonds, appoint receivers, conservators, ap-

praisers, accountants, or trustees, or take any other action

to protect the interest of the United States in the proper-

ty ordered forfeited. Any income accruing to, or derived

from, an enterprise or an interest in an enterprise which

has been ordered forfeited under this seetion may be used

to offset ordinary and necessary expenses to the enter-

prise which are required by law, or which are necessary

to protect the interests of the United States or third

parties.

(f) Following the seizure of property ordered for-

feited under this section, the Attorney General shall di-

App. 10

rect the disposition of the property by sale or any other

commercially feasible means, making due provision for the

rights of any innocent persons. Any property right or

interest not exercisable by, or transferable for value to,

the United States shall expire and shall not revert to the

defendant, nor shall the defendant or any person acting

in concert with or on behalf of the defendant be eligible

to purchase forfeited property at any sale held by the

United States. Upon application of a person, other than

the defendant or a person acting in concert with or on be-

half of the defendant, the court may restrain or stay the

sale or disposition of the property pending the conclusion

of any appeal of the criminal case giving rise to the for-

feiture, if the applicant demonstrates that proceeding

with the sale or disposition of the property will result

in irreparable injury, harm or loss to him. Notwithstand-

ing 31 U.S.C. 3302(b), the proceeds of any sale or other

disposition of property forfeited under this section and

any moneys forfeited shall be used to pay all proper ex-

penses for the forfeiture and the sale, including expenses

of seizure, maintenance and custody of the property

pending its disposition, advertising and court costs. The

Attorney General shall deposit in the Treasury any

amounts of such proceeds or moneys remaining after the

payment of such expenses.

(g) With respect to property ordered forfeited un-

der this section, the Attorney General is authorized to—

(1) grant petitions for mitigation or remission

of forfeiture, restore forfeited property to victims of

a violation of this chapter, or take any other action

to protect the rights of innocent persons which is in

App. 11

the interest of justice and which is not inconsistent

with the provisions of this chapter;

(2) compromise claims arising under this sec-

tion;

(3) award compensation to persons providing

information resulting in a forfeiture under this sec-

tion;

(4) direct the disposition by the United States

of all property ordered forfeited under this section

by public sale or any other commercially feasible

means, making due provision for the rights of inno-

cent persons; and

(5) take appropriate measures necessary to

safeguard and maintain property ordered forfeited

under this section pending its disposition.

(h) The Attorney General may promulgate regula-

tions with respect to—

(1) making reasonable efforts to provide notice

to persons who may have an interest in property or-

dered forfeited under this section;

(2) granting petitions for remission or mitiga-

tion of forfeiture;

(3) the restitution of property to victims of an

offense petitioning for remission or mitigation of

forfeiture under this chapter;

(4) the disposition by the United States of for-

feited property by public sale or other commercially

feasible means;

App. 12

(5) the maintenance and safekeeping of any

property forfeited under this section pending its dis-

position; and

(6) the compromise of claims arising under this

chapter.

Pending the promulgation of such regulations, all pro-

visions of law relating to the disposition of property, or

the proceeds from the sale thereof, or the remission or

mitigation of forfeitures for violation of the customs

laws, and the compromise of claims and the award of

compensation to informers in respect of such forfeitures

shall apply to forfeitures incurred, or alleged to have been

incurred, under the provisions of this section, insofar as

applicable and not inconsistent with the provisions hereof.

Such duties as are imposed upon the Customs Service or

any person with respect to the disposition of property

under the customs law shall be performed under this

chapter by the Attorney General.

(i) Exeept as provided in subsection (/), no party

claiming an interest in property subject to forfeiture under

this section may—

(1) intervene in a trial or appeal of a criminal

case involving the forfeiture of such property under

this section; or

(2) commence an action at law or equity against

the United States concerning the validity of his al-

leged interest in the property subsequent to the filing

of an indictment or information alleging that the prop-

erty is subject to forfeiture under this section.

App. 15

(j) The district courts of the United States shall

have jurisdiction to enter orders as provided in this see-

tion without regard to the location of any property which

may be subject to forfeiture under this section or which

has been ordered forfeited under this section.

(k) In order to facilitate the identification or loca-

tion of property declared forfeited and to facilitate the

disposition of petitions for remission or mitigation of

forfeiture, after the entry of an order declaring property

forfeited to the United States the court may, upon appli-

cation of the United States, order that the testimony of

any witness relating to the property forfeited be taken

by deposition and that any designated book, paper, doeu-

ment, record, recording, or other material not privileged

be produced at the same time and place, in the same man-

ner as provided for the taking of depositions under Rule

15 of the Federal Rules of Criminal Procedure.

(/)(1) Following the entry of an order of forfeiture

under this section, the United States shall publish notice

of the order and of its intent to dispose of the property

in such manner as the Attorney General may direct. The

Government may also, to the extent practicable, provide

direct written notice to any person known to have alleged

an interest in the property that is the subject of the or-

der of forfeiture as a substitute for published notice as

to those persons so notified.

(2) Any person, other than the defendant, asserting

a legal interest in property which has been ordered fer-

feited to the United States pursuant to this section may,

within thirty days of the final publication of notice or

his receipt of notice under paragraph (1), whichever is

App. 14

earlier, petition the court for a hearing to adjudicate the

validity of his alleged interest in the property. The he r-

ing shall be held before the court alone, without a jury.

(3) The petition shall be signed by the petitioner

under penalty of perjury and shall set forth the nature

and extent of the petitioner’s right, title, or imterest in

the property, the time and circumstances of the petitioner’s

acquisition of the right, title, or interest in the property,

any additional facts supporting the petitioner’s claim, and

the relief sought.

(4) The hearing on the petition shall, to the extent

practicable and consistent with the interests of justice,

be held within thirty days of the filing of the petition. The

court may consolidate the hearing on the petition with a

hearing on any other petition filed by a person other than

the defendant under this subsection.

(5) At the hearing, the petitioner may testify and

present evidence and witnesses on his own behalf, and

cross-examine witnesses who appear at the hearing. The

United States may present evidence and witnesses in re-

buttal and in defense of its claim to the property and

cross-examine witnesses who appear at the hearing. In

addition to testimony and evidence presented at the hear-

ing, the court shall consider the relevant portions of the

record of the criminal case which resulted in the order of

forfeiture.

(6) If, after the hearing, the court determines that

the petitioner has established by a preponderance of the

evidence that—

App. 15

(A) the petitioner has a legal right, title, or in-

terest in the property, and such right, title, or in-

terest renders the order of forfeiture invalid in whole

or in part because the right, title, or interest was

vested in the petitioner rather than the defendant or

was superior to any right, title, or interest of the

defendant at the time of the commission of the acts

which give rise to the forfeiture of the property un-

der this section; or

(B) the petitioner is a bona fide purchaser for

value of the right, title, or interest in the property

and was at the time of purchase reasonably without

cause to believe that the property was subject to

forfeiture under this section;

the court shall amend the order of forfeiture in accordance

with its determination.

(7) Following the court’s disposition of all petitions

filed under this subsection, or if no such petitions are filed

following the expiration of the period provided in para-

graph (2) for the filing of such petitions, the United States

shall have clear title to property that is the subject of

the order of forfeiture and may warrant good title to any

subsequent purchaser or transferee.

(n) If any of the property described in subsection

(a), as a result of any act or omission of the defendant—

(1) cannot be located upon the exercise of due

diligence ;

(2) has been transferred or sold to, or deposited

with, a third party;

App. 16

(3) has been placed beyond the jurisdiction of

the court;

(4) has been substantially diminished in value;

(5) has been commingled with other property

which cannot be divided without difficulty;

the court shall order the forfeiture of any other property

of the defendant up to the value of any property described

in paragraphs (1) through (5).

(a) The district courts of the United States shall

have jurisdiction to prevent and restrain violations of

section 1962 of this chapter by issuing appropriate orders,

ineluding, but not limited to: ordering any person to di-

vest himself of any interest, direct or indirect, in any en-

terprise; imposing reasonable restrictions on the future

activities or investments of any person, including, but not

limited to, prohibiting any person from engaging in the

same type of endeavor as the enterprise engaged in, the

activities of which affect interstate or foreign commerce ;

or ordering dissolution or reorganization of any enterprise,

making due provision for the rights of innocent persons.

(b) The Attorney General may institute proceedings

under this seetion. Pending final determination thereof,

the court may at any time enter such restraining orders

or prohibitions, or take such other actions, including the

acceptance of satisfactory performance bonds, as it shall

deem proper.

(ec) Any person injured in his business or property

by reason of a violation of section 1962 of this chapter

App. 17

may sue therefor in any appropriate United States district

court and shall recover threefold the damages he sustains

and the cost of the suit, including a reasonable attorney's

fee.

(d) <A final judgment or decree rendered in favor

of the United States in any criminal proceeding brought

by the United States under this chapter shall estop the

defendant from denying the essential allegations of the

criminal offense in any subsequent civil! proceeding brought

by the United States.

Venue and process

(a) Any civil action or proceeding under this chapter

against any person may be instituted in the distriet court

of the United States for any district in which such person

resides, is found, has an agent, or transacts his affairs.

(b) In any action under section 1964 of this chapter

in any district court of the United States in which it is

shown that the ends of justice require that other parties

residing in any other district be brought before the court,

the court may cause such parties to be summoned, and

process for that purpose may be served in any judicial

distriet of the United States by the marshal thereof.

stituted by the United States under this chapter in the

district court of the United States for any judicial district,

subpoenas issued by such court to compel the attendance

of witnesses may be served in any other judicial district,

except that in any civil action or proceeding no such

subpena shall be issued for service upon any individual

who resides in another district at a place more than one

App. 18

hundred miles from the place at which such court is held

without approval given by a judge of such court upon a

showing of good cause.

(d) All other process in any action or proceeding

under this chapter may be served on any person in any

judicial district in which such person resides, is found,

has an agent, or transacts his affairs.

In any civil action instituted under this chapter by

the United States in any district court of the United

States, the Attorney General may file with the clerk of

such court a certificate stating that in his opinion the case

is of general public importance. A copy of that certificate

shall be furnished immediately by such clerk to the chief

judge or in his absence to the presiding district judge of

the district in which such action is pending. Upon receipt

of such copy, such judge shall designate immediately a

judge of that distriet to hear and determine action.

§ 1967. Evidence

In any proceeding ancillary to or in any civil action

instituted by the United States under this chapter the

proceedings may be open or closed to the public at the

discretion of the court after consideration of the rights of

affected persons.

§ 1968. Civil investigative demand

(a) Whenever the Attorney General has reason to

believe that any person or enterprise may be in possession,

custody, or control of any documentary materials relevant

to a racketeering investigation, he may, prior to the in-

stitution of a civil or criminal proceeding thereon, issue

in writing, and cause to be served upon such person, a

App. 19

civil investigative demand requiring such person to pro-

duee such material for examination.

(b) Each such demand shall—

(1) state the nature of the conduct constituting

the alleged racketeering violation which is under in-

vestigation and the provision of law applicable thereto;

(2) deseribe the class or classes of documentary

material produced thereunder with such definiteness

and certainty as to permit such material to be fairly

identified.

(3) state that the demand is returnable forth-

with or preseribe a return date which will provide a

reasonable period of time within which the material

so demanded may be assembled and made available

for inspection and copying or reproduction; and

(4) identify the eustodian to whom such ma-

terial shall be made available.

(1) contain any requirement which would be

held to be unreasonable if contained in a subpoena

duces teeum issued by a court of the United States

in aid of a grand jury investigation of such alleged

racketeering violation; or

(2) require the production of any documentary

evidence which would be privileged from disclosure

if demanded by a subpena duces teeum issued by a

court of the United States in aid of a grand jury in-

vestigation of such alleged racketeering violation.

App. 20

(d) Service of any such demand or any petition filed

under this section may be made upon a person by—

(1) delivering a duly executed copy thereof to

any partner, executive officer, managing agent, or

general agent thereof, or to any agent thereof an-

thorized by appointment or by law to receive service

of process on behalf of such person, or upon any in-

dividual person ;

(2) delivering a duly exeented copy thereof to

the principal office or place of business of the per-

son to be served: or

(3) depositing such copy in the United States

mail, by registered or certified mail duly addressed

to such person at its principal office or place of busi-

hess.

(ec) A verified return by the individual serving any

such demand or petition setting forth the manner of such

serviee shall be prima facie proof of such service. In the

case of service by registered or certified mail, such re-

turn shall be accompanied by the return post office receipt

of delivery of such demand.

(f) (1) The Attorney General shall designate a

racketeering investigator to serve as racketeer document

custodian, and such additional racketeering investigators

as he shall determine from time to time to be necessary

to serve as deputies to such officer.

(2) Any person upon whom any demand issued this

section has been duly served shall make such material

available for inspection and copying or reproduction to

the custodian designated therein at the principle place

App. 21

of business of such person, or at such other place as such

eustodian and such person thereafter may agree and

prescribe in writing or as the court may direct, pursuant

to this section on the return date specified in such de-

mand, or on such later date as such custodian may pre-

seribe in writing. Such person may upon written agree-

ment between such person and the eustodian substitute

for copies of all or any part of such material originals

thereof.

(3) The custodan to whom any documentary material

is so delivered shall take physical possession thereof, and

shall be responsible for the use made thereof and for the

return thereof pursuant to this chapter. The custodian

may cause the preparation of such copies of such docu-

mentary material as may be required for offical use under

regulations which shall be promulgated by the Attorney

General. While in the possession of the custodian, no ma-

terial so produced shall be available for examination, with-

out the consent of the person who produced such material,

by any individual other than the Attorney General. Under

such reasonable terms and conditions as the Attorney Gen-

eral shall prescribe, documentary material while in the

possession of the custodian shall be available for examina-

tion by the person who produced such material or any

duly authorized representatives of such person.

(4) Whenever any attorney has been designated to

appear on behalf of the United States before any court

or grand jury in any case or proceeding involving any

alleged violation of this chapter, the custodian may de-

liver to such attorney such documentary material in the

possession of the custodian as such attorney determines

to be required for use in the presentation of such case

App. 22

or proceeding on behalf of the United States. Upon the

conclusion of any such case or proceeding, such attorney

shall return to the custodian any documentary material so

withdrawn which has not passed into the control of such

court or grand jury through the introduction thereof into

the record of such case or proceeding.

(5) Upon the completion of—

(i) the racketeering investigation for which any

documentary material was produced under this chap-

ter, and

(ii) any case proceeding arising from such in-

vestigation,

the custodian shall return to the person who produced such

material all such material other than copies thereof made

by the Attorney General pursuant to this subsection which

has not passed into the control of any court or grand jury

through the introduction thereof into the record of such

case or proceeding.

(6) When any documentary material has been pro-

duced by any person under this section for use in any

racketeering investigation, and no such case or proceeding

arising therefrom has been instituted within a reasonable

time after completion of the examination and analysis of

all evidence assembled in the course of such investigation,

such person shall be entitled, upon written demand made

upon the Attorney General, to the return of all documen-

tary material other than copies thereof made pursuant to

this subsection so produced by such person.

(7) In the event of the death, disability, or separa-

tion from service of the custodian of any documentary

App. 23

material produced under any demand issued under this

seetion or the official relief of such custodian from re-

sponsibility for the custody and control of such material,

the Attorney General shall promptly—

(i) designate another racketeering investigator

to serve as custodian thereof, and

(ii) transmit notice in writing to the person who

produced such material as to the identity and address

of the successor so designated.

Any successor so designated shall have with regard to

such materials all duties and responsibilities imposed by

this section upon his predecessor in office with regard

thereto, except that he shall not be held responsible for

any default or dereliction which occurred before his desig-

nation as custodian.

(g) Whenever any person fails to comply with any

civil investigative demand duly served upon him under this

section or whenever satisfactory copying or reproduction

of any such material cannot be done and such person re-

fuses to surrender such material, the Attorney General

may file, in the district court of the United States for any

judicial district in which such person resides, is found,

or transacts business, and serve upon such person a peti-

tion for an order of such court for the enforcement of this

section, except that if such person transacts business in

more than one such district such petition shall be filed in

which such person maintains his principal place of busi-

ness, or in such other district in which such person trans-

acts business as may be agreed upon by the parties to

such petition.

App. 24

(h) Within twenty days after the service of any

such demand upon any person, or at any time before the

return date specified in the demand, whichever period is

shorter, such person may file, in the district court of the

United States for the judicial district within which such

person resides, is found, or transacts business, and serve

upon such custodian a petition for an order of such court

modifying or setting aside such demand. The time allowed

for compliance with the demand in whole or in part as

deemed proper and ordered by the court shall not run

during the pendency of such petition in the court. Such

petition shall specify each ground upon which the peti-

tioner relies in seeking such relief, and may be based upon

any failure of such demand to comply with the provisions

of this section or upon any constitutional or other legal

right or privilege of such person.

(i) At any time during which any custodian is in

custody or control of any documentary material delivered

by any person in compliance with any such demand, such

person may file, in the district court of the United States

for the judicial district within which the office of such

custodian is situated, and serve upon such eustodian a

petition for an order of such court requiring the perform-

ance by such custodian of any duty imposed upon him by

this section.

(j) Whenever any petition is filed in any district

court of the United States under this section, such court

shall have jurisdiction to hear and determine the matter

so presented, and to enter such order or orders as may

be required to carry into effect the provisions of this see-

tion.

See eee eg Eee ae oe Oe

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.