Amicus Curiae Brief — Beck v. Prupis

_~ Supreme Cevrt, BO.

on FILED

L SEP 27 1999

Be OF THE QLERM

No. 98-1480

IN THE

Supreme Court of the United States

ROBERT A. BECK, II,

Petitioner,

v.

RONALD M. PRUPIS, ef al.,

Respondents.

On Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

MOTION FOR LEAVE TO FILE BRIEF AMICI

CURIAE AND BRIEF AMICI CURIAE

OF WASHINGTON LEGAL FOUNDATION AND

ALLIED EDUCATIONAL FOUNDATION

IN SUPPORT OF RESPONDENTS

DANIEL J. POPEO F. JOSEPH WARIN

PAUL D. KAMENAR Counsel of Record

WASHINGTON LEGAL ANDREW S. TULUMELLO

FOUNDATION GIBSON, DUNN & CRUTCHER LLP

2009 Massachusetts Ave.. NW _—_—1050 Connecticut Ave., NW

Washington, D.C. 20036 Washington, D.C. 20036

(202) 588-0302 (202) 955-8500

Counsel for Amici Curiae

September 17, 1999

\ j

IN THE

Supreme Court of the United States

ROBERT A. BECK, II,

Petitioner,

Vv.

RONALD M. PRUPIS, ef ai.,

Respondents.

On Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

MOTION FOR LEAVE TO FILE BRIEF AMICI

CURIAE IN SUPPORT OF RESPONDENTS

Pursuant to Rule 37.3(b) of the Rules of this Court,

Washington Legal Foundation and Allied Educational

Foundation respectfully move this Court for leave to file

the attached brief as amici curiae in support of the re-

spondents. The petitioner has consented to the filing of

this brief as has each of the respondents except for re-

spondent Ronald M. Prupis. Mr. Prupis, who is in bank-

ruptcy proceedings, has indicated that, on advice of his

bankruptcy counsel, he will not participate in this case.

Mr. Prupis’s withholding of consent necessitates the fil-

ing of this motion.

INTERESTS OF AMICI CURIAE

The Washington Legal Foundation (WLF) is a non-

profit public interest law and policy center based in

2

Washington, D.C., with supporters nationwide. WLF

devotes substantial resources to litigating cases and pub-

lishing educational materials the. promote, inter alia, a

limited and accountable government, the proper role of

the judiciary, civil justice reform, and reasonable gov-

ernment regulation.

To that end, WLF has appeared before this Court as

well as other federal and state courts to argue against

overly expansive theories of tort liability, excessive

punitive damages, and imposition of unwarranted attor-

ney fee awards. Of particular relevance to this case,

WLF has appeared as amicus in this Court arguing

against an overly expansive interpretation of the Racket-

eer Influenced and Corrupt Organizations Act (RICO),

18 U.S.C. § 1961, et seq. See, e.g., HJ. Inc. v. North-

western Bell Tel. Co., 492 U.S. 229 (1989); Rotella v.

Wood, 147 F.3d 438 (Sth Cir. 1998), cert. granted, 67

U.S.L.W. 3559 (U.S. Mar. 8, 1999) (No. 98-896).

The Allied Educational Foundation (AEF) is a non-

profit charitable and educational foundation based in

Englewood, New Jersey. Founded in 1964, AEF is

dedicated to promoting education in diverse areas of

study, such as law and public policy, and has appeared

as amicus curiae along with WLF in numerous cases be-

fore this Court, including Rotella v. Wood.

WLF and AEF are concerned that the reflexive invo-

cation of RICO by civil litigants engaged in otherwise

garden-variety commercial disputes does violence to the

original purpose of RICO and unnecessarily burdens our

federal judicial system. While Congress adopted RICO

as a tool to fight organized crime, civil RICO is now in-

voked primarily in “everyday fraud cases brought

against respected and legitimate enterprises.” Sedima,

S.P.R.L. v. Imrex Co., 473 U.S. 479, 499 (1985). The

instant case presents another example of the attempt by

litigants to stretch the application of RICO further than

what Congress intended. WLF and AEF believe that

——— <a ”

3

their participation in this case as amici curiae will assist

the Court in resolving the issues presented.

Accordingly, WLF and AEF respectfully request that

they be granted leave to file the annexed brief.

Respectfully submitted.

DANIEL J. POPEO F. }OSEPH WARIN

PAUL D. KAMENAR Counsel of Record

WASHINGTON LEGAL ANDREW S. TULUMELLO

FOUNDATION GIBSON, DUNN & CRUTCHER LLP

2009 Massachusetts Ave., NW 1050 Connecticut Ave., NW

Washi , D.C. 20036 Washington, D.C. 20036

(202) 588-0302 (202) 955 -8500

Counsel for Amici Curiae

September 17, 1999

QUESTION PRESENTED

Whether 18 U.S.C. § 1964(c), which gives a civil

cause of action to persons “injured” by a “violation” of

the criminal provisions of the Racketeer Influenced and

Corrupt izations Act (RICO), 18 USC.

§§ 1962(a)-(d), authorizes civil suits for a “violation” of

the RICO conspiracy statute, 18 U.S.C. § 1962(d), even

though “violation[{s]” of that criminal statute harm only

the public at large and do not “injure” any particular in-

dividual.

TABLE OF CONTENTS

Page

QUESTION PRESENTED. ........::.:sscessesssecssesssessesseessesees

Te Ce iietnistnesiiiiicirtttisecnbeciistniad ii

TABLE OF AUTHORITIES ...........:::s:-sesssesssssssessessneeses iii

INTEREST OF THE AMICI CURIAE ..........c0ss00-se0000000: I

LEM LE AIS IIS Pe Ea, I

SUMMARY OF ARGUMENT .........:c::sssssesssesseesseesseenes 3

PO RRR I ILL IC oe OO TPN 5

RICO DOES NOT CREATE A CAUSE OF AC-

TION FOR CIVIL CONSPIRACY .........sscsseessesssesseessees 5

A. The Plain Language Of Section 1964(c)

Affords A Cause Of Action Only To Per-

sons “Injured” By Reason Of A

“Violation” Of RICO’s Criminal Provi-

B. Conventional Rules Of Statutory Inter-

pretation Establish That Section 1964(c)

Does Not Create A Private Right Of Ac-

tion For Civil Conspiracy .................sscceeeeeeees 11

C. The Plain Meaning Of The Statute Does

Not Render Any Portion Of The Statute

Mere Surplusage Or Produce An Absurd

IEE snsrccenenciciasniontniceisernnnnightnienntieninineiane 17

D. Summary Judgment Was Appropriately

Entered Against Petitioner................sseeseeees 19

FE ee Gicrneressatenpinmnentsiniivabestiniamnstiininaninngeninin 20

ili

TABLE OF AUTHORITIES

Page(s)

CASES

Anderson v. Liberty Lobby, Inc., 477 U.S.

|RSS EEE RENE SES ae BPR 19

Arrow Air, Inc. v. Walsh, 645 So. 2d 422

I I a eet at ak 15

Astoria Federal Sav. & Loan Ass'n v.

Solimino, 501 U.S. 104 (1991) cooccccccccccccecececeeeeeees 13

Beck v. Prupis, 162 F.3d 1090 (11th Cir.

SEAR SE Ee IANS AES Ne eee 2

Beechley v. Mulville, 70 N.W. 107 (lowa

BRERA NNN 0st ETOCS ANE Ee nS OO aN 13

Bowman v. Western Auto Supply Co., 985

I, I ictal 11

Braverman v. United States, 317 U.S. 49

RRP A Te PIE OP RURAL SR LONE ee 6

Callanan v. United States, 364 U.S. 587

I aia a a ci a 11

Celotex Corp. v. Catrett, 477 U.S. 317

RS EES SERA Sr een Se OER 19

City of Boston v. Simmons, 23 N.E. 210

I i itl aii aieciatanmtncis 14

Delz v. Winfree, 16 S.W. 111 (Tex. 1891) ................. 13

Demarco v. Publix Markets, Inc., 384

& fees 15

iV

Diver v. Miller, 148 A. 291 (Del. Super. Ct.

ER ets Pe ew nee 13

Domchick v. Greenbelt Consumer Servs.,

Inc., 87 A.2d 831 (Md. Ct. App. 1952) 00.0... 13

Dunn v. Commodity Futures Trading

Comm 'n, 519 U.S. 465 (1997) ........cccccccccsseseseseneees 17

Hecht v. Commerce Clearing House, Inc.,

pe pity ls 3, Fe 11

Holmes v. Securities Investor Protection

Corp... S03 U.S. 258 (1992) ...ccrrccccscoescescvecsssessonevsees )

lannelli v. United States, 420 U.S.770 -

CO UON - cisevatinstaiatiinnetidnmaieneautintaeiipiien 11, 12,15

James v. Evans, 149 F. 136 (3d Cir. 1906) .............06 14

Jayne v. Drorbaugh, 17 N.W. 433 (lowa

SD ccovensceseniscnnstensintunaiaitinnhsnmenitnniiacnecinnnniins 13

Khurana v. Innovative Health Care Sys.,

Inc., 130 F.3d 143 (Sth Cir. 1997), rev'd

on other grounds, 119 S. Ct 442 (1998) 0.0... S

Nash v. United States, 229 U.S. 373 (1913) .......ccccec0 15

Paul v. Davis, 424 U.S. 693 (1975) ........ccccccceereeeeeeeees 16

Pinkerton v. United States, 528 U.S. 640

CRDGED cecccosocscnesssonsncnsecnssosnvenssoseunentunsesonevsnasnsenensctens 12

Porter v. Mack, 40 S.E. 459 (W. Va. 1901) 0... 14

Ratzlaf v. United States, 510 U.S. 135

CIID cccsecsssssvinssnesssenpnenstdtnennientnvenmennenevnnsnastetonenias 17

Vv

Reddy v. Litton Indus., Inc., 912 F.2d 291

RE EES A a Se ee a &

Reves v. Ernst & Young, 507 U.S. 170

RRR REY Su EER Se a ee ee ee 5

Richardson v. United States, 119 S. Ct. 1707

TRE AI 7 SURI Ae ae 7

Robinson v. Parks, 24 A. 411 (Md. Ct. App.

RESALES 5 IOS ame ean BCP aL I 14

Robinson v. Van Hooser, 196 F. 620 (6th

RR Res Se REE ae Ce 14

Root v. Rose, 72 N.W. 1022 (N.D. 1897) c..ccccccccccceeee 13

Salinas v. United States, 522 U.S. 52

BREST ST hE RE ag aS passim

Schiffels v. Kemper Fin. Servs., 978 F.2d 344

i 8 Serene ee passim

Scott v. Otis Elevator Co., 572 So. 2d 902

RBIS RR Ne Ee eee 15

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

EEE IEED : calevitidiitabsipbaldsenedinieteneninanisitenibiieennentere passim

Shearin v. E.F. Hutton Group, Inc., 885 F.2d

ENR SE 8

Smith v. Peizo Tech. & Prof'l Admrs.,427.

I es 15

United States v. Culbert, 435 U.S. 371

(ERIS ERE SRE SEES SSCA tS a a 15

vi

United States v. O'Brien, 972 F.2d 47 (3d

Cer FIED. <ctussereidahinnisaticlstnitintiaahiihatiinipieaianntebiiiaies 16

United States v. Rabinowich, 238 U.S. 78

CUO OD incnssniocisuinniiisnnbebinentiatuanéilienidadaipmibiaiibisiginds 12, 15

United States v. Shabani, 513 U.S. 10 (1994) ............ 6,7

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

CODE D ovcecermesanitsasiciinneupmnenboubsevécndteisiesomaceassonsite passim

United States v. Wells, 519 U.S. 482 (1997) «0... 11

Van Horn v. Van Horn, 28 A. 669 (N.J.

PO cncseesiccaitetinastitisebeinncenglasseiniaidaniaduhiuiaadaniiieaidintd 14

Von Au v. Magenheimer, 110 N.Y.S. 629

GG FF TR. CIID ttrssecessctrssersnensocenreeasteontnptivensi 14

Williams v. Hall, 683 F. Supp. 639 (E.D. Ky

FRI ericienesnnipitactniindtiniensenesicivtinstaastsaneiionntecieiinntinnvintaios 9

Yates v. United States, 354 U.S. 298 (1957) «0.0.0.0... 7

FEDERAL AND STATE STATUTES

SG SAE. © FE certnstnrtetnnctancsnseneinnecnnsnstinnncigennininiions 16

BD Bris BRD csececacensccseiesssnsicniniesuscinetimmseubisnennsetiionse 3

BE EEA. © BOD vcecccincioestensntictionvsensciinncnsessdvedmanouninevasints 3

OO CITA. © FERRIED ccecsecsresccesssnsnesirenserennsetasnsenmnbensenniniia 5

BB TGA; © TED sensccenicctncicncsinnsincceanenennedatinian passim

OS SEE B PRD ccmstictesinticitaserstnesuincintinndshudetagia passim

BS ULB... & TSI scccncessosicnscrecescensenininnvcseneeetonnt passim

vii

SD Sees CED sncrcincintiptinnininenicinianicisiiphietensi passim

DE cairn: UF EEE spnesitacevsiassuiphetinindatnnenenenninpiiamisinabiaiinin 6

Se rey Ue PIED diiitinennicsiciihineeciticcspemabilsadiatiniiiuns passim

Bee Cees BR sitcntsnivisiniintsacininicnniinesnnsanninsdaviiiiibaaiab 7

ONE EG: Se ISAT - ictecosescchintessosntnitsttzanenaiatninsiacnaananitiel 16

MISCELLANEOUS

Wayne R. LaFave & Austin W. Scott,

CRIMINAL LAW 549 (2d ed. 1986) ........cccccccseeeeees 17

BRIEF AMICI CURIAE OF

WASHINGTON LEGAL FOUNDATION AND

ALLIED EDUCATIONAL FOUNDATION IN

SUPPORT OF RESPONDENTS

Washington Legal Foundation and Allied Educa-

tional Foundation respectfully submit this brief amici

curiae in support of the respondents.

INTERESTS OF AMICI CURIAE'

The interests of amici curiae Washington Legal

Foundation and Allied Educational Foundation are set

forth in the preceding Motion for Leave To File Brief

Amici Curiae.

STATEMENT

This case arises out of the bankruptcy proceedings of

Southeastern Insurance Group (SIG), a Florida-based

holding company that owned various subsidiary busi-

nesses, including subsidiaries that issued surety bonds to

construction contractors. Respondents are former direc-

tors of SIG. Petitioner, a former president of SIG, sued

respondents under the Racketeer Influenced and Corrupt

Organizations Act (RICO), 18 U.S.C. § 1961 ef. seq.,

alleging, inter alia, that respondents conspired to violate

RICO, see 18 U.S.C. §§ 1962(d) & 1964. The United

States District Court for the Southern District of Florida

entered summary judgment against petitioner. The court

! Pursuant to Sup. Ct. R. 37.6, no counsel for a party in this

case authored this brief in whole or in part, and no persons or

entities other than amicus Washington Legal Foundation, its

supporters, or counsel, contributed financially to the prepara-

tion or submission of this brief.

2

of appeals affirmed. See Beck v. Prupis, 162 F.3d 1090

(11th Cir. 1998).

1. In 1983, petitioner was hired to serve as SIG’s

president. He also became a member of SIG’s board of

directors. Petitioner claims that for the first five years of

his tenure, unbeknownst to him, several of SIG’s officers

were committing a series of unlawful acts, including

embezzling corporate funds, violating promises to in-

demnify contractors, and giving deliberately falsified fi-

nancial statements to SIG’s creditors and shareholders.

In 1988, petitioner purportedly became aware of this

alleged misconduct and informed insurance regulators

about improprieties in SIG’s financial statements. Ac-

cording to petitioner, the other directors, afraid that he

might expose their misdeeds, engaged an outside con-

sulting firm to criticize his performance as CEO so as to

furnish an excuse for firing him. The consulting firm’s

report recommended that much of senior management be

fired for poor performance. In May 1988, petitioner and

other officers of SIG were fired.

2. One year later, petitioner sued SIG’s directors in

Florida state court alleging claims under that state’s

RICO statute and under Florida common law. That case

was eventually dismissed. Meanwhile, the New Jersey

State Insurance Commissioner had brought a shareholder

derivative action against SIG and its officers—including

petitioner—in New Jersey federal court. Petitioner filed

a cross-claim, naming as defendants SIG and respon-

dents. The cross-claim alleged four counts under the

federal RICO statute and six state law claims. After SIG

filed for bankruptcy protection, petitioner’s cross-claim

was transferred to the United States District Court for

the Southern District of Florida.

Petitioner’s cross-claim alleges that SIG’s officers

fraudulently induced him to make a series of harmful fi-

nancial decisions by neglecting to inform him about their

misdeeds or his imminent dismissal. Those decisions

-_—w

3

included: purchasing $75,000 worth of SIG stock, mak-

ing SIG an unsecured personal loan of $150,000, and

joining other directors in personally guaranteeing SIG’s

$7.5 million bank loan. Petitioner claimed that those in-

ducements, as well as the creation of fictitious reasons

for his firing, constitute mail fraud, see 18 U.S.C.

§ 1341, and wire fraud, see 18 U.S.C. § 1343, on the part

of the respondents, and that the combination of these of-

fenses constituted a “pattern of racketeering” under the

federal RICO statute.

Relying on 18 U.S.C. § 1964(c), petitioner asserted a

private cause of action for a violation of RICO’s crimi-

nal conspiracy provision, 18 U.S.C. § 1962(d), alleging

damages on the theory that his refusal to participate in

and partial disclosure of respondents’ alleged activities

resulted in his termination.

3. The district court granted respondents’ motion for

summary judgment, holding, in part, that petitioner

could not maintain an action under RICO, because the

injury he alleged did not stem from a predicate act of

racketeering. The Eleventh Circuit affirmed, holding

that a civil RICO conspiracy plaintiff must allege that he

was injured by a predicate act of racketeering, not

merely by any overt act in furtherance of the RICO con-

spiracy.

SUMMARY OF ARGUMENT

The court of appeals correctly dismissed petitioner’s

RICO conspiracy claim. RICO’s civil suit provision, 18

U.S.C. § 1964(c), affords a cause of action only to per-

sons “injured” in their business or property by reason of

a criminal “violation” of section 1962. 18 U.S.C.

§ 1964(c).

Petitioner contends that he was “injured” by reason

of a “violation” of RICO’s criminal conspiracy provi-

sion, 18 U.S.C. § 1962(d). That claim is meritless. Pe-

titioner has not been injured by any conduct constituting

the “violation” of § 1962(d)—i.e., an unlawful agree-

4

ment—but by something altogether different: an overt

act purportedly taken to further that alleged conspiracy.

In Salinas v. United States, 522 U.S. 52 (1997), this

Court held that a section 1962(d) offense consists of a

conspiracy simpliciter, and that an overt act is neither an

element of the offense of conspiracy nor conduct consti-

tuting that offense. /d. at 63-65. Accordingly, peti-

tioner’s injury, which allegedly flows from an act in

furtherance of the conspiracy, but not from the conspir-

acy itself, did not result from a “violation” of RICO’s

criminal conspiracy provision, 18 U.S.C. § 1962(d).

To put it another way, 7 attempt to dress up

his run-of-the-mill wrongful termination claim as a civil

RICO cause of action fails because he has not suffered

any harm by reason of a violation of section 1962(d).

Respondents’ purported “conspiracy”—assuming there

was one—did not harm petitioner. Instead, petitioner

seeks damages from his wrongful termination, an act

separate from the unlawful agreement that constitutes

the “violation” of section 1962 for which petitioner pur-

portedly has brought suit.

The conclusion that section 1964(c) creates no cause

of action for the bare criminal agreement that this Court

has held to be the essence of a section 1962(d)

“violation” is in accord with Congress’s intent in enact-

ing section 1964(c): to provide a remedy for businesses

that have suffered concrete harm from racketeering of-

fenses—i.e., for conduct that violates the substantive

provisions of the criminal statute, 18 U.S.C. §§ 1962(a)-

(c). Congress plainly did not intend to effect a funda-

mental departure from the common law by providing a

theretofore unknown federal cause of action for civil

conspiracy.

In sum, the plain language of the statute, its legisla-

tive history, ah traditional modes of statutory interpre-

tation all point to the conclusion that petitioner failed to

state a cause of action for civil conspiracy under RICO.

Petitioner’s claim was properly dismissed.

5

ARGUMENT

RICO DOES NOT CREATE A CAUSE OF AC-

TION FOR CIVIL CONSPIRACY

RICO’s civil suit provision, 18 U.S.C. § 1964(c), af-

fords a cause of action only to persons who have been

“injured” by “violation[s]” of the criminal provisions of

RICO. The only conduct proscribed by 18 U.S.C.

§ 1962(d) is a bare agreement to commit substantive

crimes. That “violation” of law is entirely inchoate and

could not cause petitioner or any other specific individ-

ual—as distinct from the public at large—any “injury.”

Because the plain language of the statute demonstrates

that petitioner does not have a cause of action for civil

conspiracy on the basis of his alleged wrongful termina-

tion, petitioner's claim must fail.

A. The Plain Language Of Section 1964(c) Af-

fords A Cause Of Action Only To Persons

“Injured” By Reason Of A “Violation” Of

RICO’s Criminal Provisions

In construing RICO, this Court has consistently em-

phasized that the statutory language “must ordinarily be

regarded as conclusive.” United States v. Turkette, 452

U.S. 576, 580 (1981); see also Reves v. Ernst & Young,

507 U.S. 170, 176 (1993). That principle governs this

case. RICO’s civil suit provision states that “[a]ny per-

son injured in his person or property by reason of a vio-

lation of section 1962 . . . may sue therefor.” 18 U.S.C.

§ 1964(c). Petitioner’s claim fails because, under the

plain terms of the statute, he has not alleged an injury

that proximately resulted from any violation of section

1962(d).

1. RICO targets “racketeering activity,” which it

defines as any act “c ble” u several generically

described state criminal laws and any act “indictable”

under numerous specific federal criminal provisions, in-

cluding mail and wire fraud. See 18 U.S.C. § 1961(1).

6

Section 1962 of Title 18, entitled “Prohibited activities,”

defines four distinct crimes. Section 1962(a) prohibits

using income derived from a “pattern of racketeering

activity” to acquire an interest in or establish an enter-

prise engaged in or affecting interstate commerce. Sec-

tion 1962(b) prohibits the acquisition or maintenance of

any interest in an enterprise “through” a pattern of rack-

eteering activity. Section 1962(c) outlaws participation

in the conduct of an enterprise through a pattern of

racketeering activity. Finally, section 1962(d) makes it

unlawful “to conspire” to violate any of sections

1962(a)-(c).

Congress provided criminal penalties of imprison-

ment, fines, and forfeiture for violation of these criminal

prohibitions. See 18 U.S.C. § 1963. In addition, Con-

s set out a civil enforcement scheme, 18 U.S.C.

§ 1964, which sets forth in section 1964(c) a private

right of action for persons “injured . . . by reason of a

violation of section 1962.”

2. Section 1962(d), the criminal provision at issue in

this case, makes it unlawful “to conspire to violate any

of the provisions of subsection (a), (b) or (c) of this sec-

tion.” 18 U.S.C. § 1962(d). In Salinas v. United States,

522 U.S. 52 (1997), this Court held that the phrase “to

conspire” bears its “ordinary meaning and definition,”

accordingly, the Court held that a RICO conspiracy of-

fense is fully accomplished when the conspirators reach

agreement to further a criminal endeavor. /d. at 63, 65.

Under section 1962(d), as at common law, “[t}here is no

requirement of some overt act or specific act in the stat-

ute which requires that at least one of the irators

have committed an act to effect the object of the con-

spiracy.” /d. at 63 (citations omitted). The “criminal

agreement itself is the actus reus” of the crime. United

States v. Shabani, 513 U.S. 10, 16 (1994); see also

Braverman v. United States, 317 U.S. 49, 53 (1942)

(overt acts do not constitute “part of the crime which the

statute defines and makes punishable”).

7

Salinas recognized that RICO embodies the common

law rule that, while overt acts may function as “an indis-

pensable mode of corroborating the existence of the con-

spiracy,” Yates v. United States, 354 U.S. 298, 334

(1957), those acts do not “meaningfully establish an es-

sential element of the conspiracy,” where, as is true of

RICO, “there is no overt act requirement in the . . . stat-

ute.” United States v. Felix, 503 U.S. 378, 392 (1992)

(Stevens, J., concurring); see also Shabani, 513 U.S. at

12 (evidence of overt acts is “offered not to prove overt

acts qua overt acts, but to prove the existence of the con-

spiracy”); Yates, 354 U.S. at 334 (“[t}he function of the

overt act . . . is simply to manifest that the ‘conspiracy is

at work,’ and is neither a project still resting solely in the

minds of the conspirators nor a fully completed opera-

tion no longer in existence”) (citation omitted).

3. The RICO civil suit provision, section 1964(c),

affords a cause of action to persons “injured” by a

“violation” of section 1962. The term “violation” in

section 1964(c) has a precise meaning. In Sedima,

S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985), this Court

construed the term to mean “a failure to adhere to legal

recuirements.” /d. at 489. That definition is consistent

with the definition of “violation” in other statutes, such

as the Continuing Criminal Enterprise Act, 21 U.S.C.

§ 848(a).. As this Court recently recognized in that con-

text, a “violation” is “an act or conduct that is contrary to

law.” Richardson v. United States, 119 S. Ct. 1707,

1710 (1999).

Because section 1964(c) affords a cause of action

only to persons injured by a “violation,” a plaintiff must,

at a minimum, allege that his injury flowed from the “act

or conduct that is contrary to” the statute. Richardson,

119 S. Ct. at 1710 (emphasis added); Sedima, 473 U.S.

at 489. Indeed, this Court ized as much in

Sedima, in which this Court held a “plaintiff only

has > sue [under section 1964(c)] if he has

been inj in his business or property by the conduct

constituting the violation.” Sedima, 473 U.S. at 496

(emphasis added).

4. Petitioner contends that he was “injured” by rea-

son of a “violation” of the RICO conspiracy provision,

section 1962(d). That claim is without merit. Petitioner

has not been injured by the conduct constituting the

violation of section 1962(d)—a mere agreement to vio-

late the substantive provisions of 18 U.S.C. §§ 1962(a)-

(c)}—but by something altogether different: an overt act

purportedly taken to further that agreement.

An overt act done in furtherance of a conspiracy is

not “conduct constituting [a] violation” of section

1962(d). See Sedima, 473 U.S. at 496. As set forth in

Salinas, the conduct constituting the offense of conspir-

acy is the act of agreement itself—nothing more. The

damage that petitioner sustained as a result of his pur-

portedly wrongful termination is not, therefore, injury

suffered by reason of a “violation” of section 1962(d).

Petitioner’s injury occurred by reason of an overt act in

furtherance of the conspiracy, but not by reason of the

conspiracy itself.

The courts that have granted standing to plaintiffs

injured by an “overt act” fail to appreciate the signifi-

cance of that distinction, frequently collapsing the cru-

cial difference between injury that results by reason of

an overt act and injury that results by reason of a con-

spiracy. Some courts purport to gloss that distinction by

ay aw ee that the particular overt act was “essential”

to or “closely intertwined” with the conspiracy’s object.

Whether- an overt act was expressly done “in further-

ance” of the conspiracy, Shearin v. E.F. Hutton Group,

Inc., 885 F.2d 1162, 1169 (3d Cir. 1989), “essential” to

the conspiracy, Reddy v. Litton Indus., Inc., 912 F.2d

291, 295 (9th Cir. 1990) (citation omitted), “critical” to

the conspiracy, Khurana v. Innovative Health Care Sys.,

Inc., 130 F.3d 143, 153 (Sth Cir. 1997), rev'd on other

grounds, 119 S. Ct. 442 (1998), “directly related’’ to the

conspiracy’s goals, Schiffels v. Kemper Fin. Servs., Inc.,

9

978 F.2d 344, 351 (7th Cir. 1992), or “not outside the

scope of [the] conspiracy,” Williams v. Hall, 683 F.

Supp. 639, 643 (E.D. Ky. 1988), is irrelevant, however,

because even if the overt act would not have occurred

but for the existence of the conspiracy, and even if the

causal nexus between the conspiracy and overt act is

immediate and direct, the overt act is not itself a

“violation” of section 1962(d).

Put another way, section 1964(c) does not give a

cause of action to persons injured “by reason of conduct

in furtherance” of a RICO violation; it gives a cause of

action to persons injured by the “conduct constituting the

violation.” Sedima, 473 U.S. at 496 (emphasis added).

A section 1962(d) “violation” is constituted by the

agreement of the parties to further a criminal endeavor,

see Salinas, 552 U.S. at 63—nothing more. The plain

language of the statute gives a cause of action only to

persons injured by reason of that conduct.

5. Petitioner’s claim that the proximate cause re-

quirement announced in Holmes v. Securities Investor

Protection Corp., 503 U.S. 258 (1992), is the

“appropriate limiting factor,” Pet. Br. at 27, for deter-

mining whether a person has been “injured” under

RICO, misses the point.

Petitioner’s argument conflates two distinct statutory

uirements: section 1964(c)’s command that a plain-

tiffs injury result from (“by reason of”) a proscribed act,

which is properly examined under principles of proxi-

mate causation, and section 1964(c)’s threshold re-

quirement that a “violation” of the criminal provisions of

RICO must be shown as the indispensable predicate for

any of causation analysis, ximate” or other-

wise. ximate causation that there be “some

direct relation between the injury asserted and the injuri-

ous conduct alleged.” Holmes, 503 U.S. at 268. No

principle of proximate causation, however, —— pe-

titioner’s attempt to disregard the limits that the legisla-

10

ture has established as the threshold condition to civil li-

ability.

Thus, although the proximate causation requirement

limits the extent to which a wrongdoer may be held re-

sponsible for the consequences of his wrongful conduct,

titioner may not trigger that analysis by claiming to

— been injured by just any act. The “injurious con-

duct” that serves as the starting point in the analysis

must be conduct that the law otherwise makes action-

able. Only after that conduct is identified may causation

analysis properly proceed.”

Here, the statute identifies the conduct to which the

directness of the plaintiff's injury must be assessed.

That conduct is a “violation” of section 1962(d)—an

agreement to further a criminal endeavor. Petitioner

does not purport to have suffered damage as a result of

that conduct, but rather he claims an injury resulting

from conduct “in furtherance” of it. No proximate cau-

sation analysis is necessary in this case, because peti-

tioner has attributed injury to conduct that is not action-

able under the statute. Indeed, petitioner’s analysis reads

the word “violation” out of section 1962(d).

2 The doctrine of proximate causation does not determine in

the first instance whether conduct is wrongful. It is possible,

for example, to assess whether X is the proximate cause of

consequences A and B without making a jud t that X is

contrary to law. Put another way, a proximal relati aione

between conduct and harm does not ipso facto render that

conduct wrongful (i.e., that X is a proximate cause of conse-

quences A and B does not necessarily make X wrongful).

Proximate cause determines only whether a person whose

conduct is otherwise wrongful should be held liable for the

consequences of his conduct. The doctrine presupposes that

the first link in the chain of causation—the starting point

from which the causation measurement is taken—is a wrong-

ful act.

— Pi

In sum, petitioner’s embrace of “proximate causa-

tion” does not avail petitioner much, use the con-

duct constituting the violation of section 1962(d)—the

conduct which must be the first link in the chain of cau-

sation—is not the proximate cause of petitioner’s injury.

Indeed, no one is injured by a confederation or agree-

ment alone. See, e.g., Bowman v. Western Auto Supply

Co., 985 F.2d 383, 386 (8th Cir. 1993) (“A nonconspira-

tor cannot be injured in his or her business or property

by a mere agreement to violate RICO”); Schiffels, 978

F.2d at 348 (“[A]n agreement to violate RICO, standing

alone, cannot harm anybody”); Hecht v. Commerce

Clearing House, Inc., 897 F.2d 21, 25 (2d Cir. 1990)

(same). A conspiracy simpliciter simply does not cause

private injury.

Accordingly, the plain language of the statute estab-

lishes that petitioner’s wrongful termination claim is not

cognizable under RICO. RICO does not authorize suits

for civil conspiracy.

B. Conventional Rules Of Statutory Interpreta-

tion Establish That Section 1964(c) Does Not

Create A Private Right Of Action For Civil

Conspiracy

The conclusion that section 1964(c) never confers a

cause of action for conspiracy per se is inescapable

when three traditional canons of statutory interpretation

‘are upplied to the text.

1. First, Congress “expects its statutes to be read in

conformity with this Court’s precedents.” United States

v. Wells, 519 U.S. 482, 495 (1997). Long before RICO

was enacted, it was well understood that the criminal law

takes aim at conspiracy because it “poses distinct dan-

gers quite apart from those of the substantive offense.”

lannelli v. United States, 420 U.S. 770, 778 (1975).

Those dangers derive from the fact that conspiracy is a

“partnership in crime.” Callanan v. United States, 364

U.S. 587, 593 (1961). Concerted action makes more

12

likely the completion of the substantive offense and the

commission of crimes unrelated to the original purpose

for which the group was formed, and it “educat[es] and

prepar[es] the conspirators for further and habitual

criminal practices.” United States v. Rabinowich, 238

U.S. 78, 88 (1915); see also Pinkerton v. United States,

328 U.S. 640, 644 (1946). Thus, although conspiracy is,

at its core, an “inchoate offense,” /annelli, 420 U.S. at

777, it is considered to be “an offense of the gravest

character” because of its potential for inflicting severe

“injury to the public.” Rabinowich, 238 U.S. at 88

(emphasis added).

A civil cause of action, by contrast, is invariably

given to victims of actual harm. Had Congress intended

to create a new cause of action for the act of reaching

agreement—an act which itself causes no particularized

injury to any individual—it may be presumed that “there

would have been at least some mention of it in the legis-

lative history.” Sedima, 473 U.S. at 490. There is

nothing in the legislative history, however, to suggest

that Congress in enacting RICO understood itself to be

creating a new cause of action for unlawful agreement.

Instead, the legislative history of the statute is replete

with references to the actual harm that racketeering con-

duct—the target of the substantive offenses set forth at

18 U.S.C. § § 1962(a)-(c)—inflicts upon legitimate

businesses. That legislative history was painstakingly

reviewed both by the majority and dissenters in Sedima,

see 473 U.S. at 486-88, 510-20, and it is not necessary to

rehash that history here except to note that both the ma-

jority and dissent agreed that the civil suit provision was

motivated by the notion that “[t]hose who have been

wronged by organized crime should at least be given ac-

cess to a legal remedy,” id. at 487, 515-16, and that

Senator Hruska, a principal sponsor of the bill, thought

the civil remedy necessary because “the honest busi-

nessman who has been damaged by unfair competition

from the racketeering businessman ... does not have

13

adequate civil remedies” to gain him recompense for his

injuries. /d. at 516 (citation and quotation omitted).

That legislative history, while not conclusive, evinces

preoccupation with actual harm suffered by legitimate

businesspeople by virtue of the racketeering activity pro-

scribed in sections 1962(a), (b), and (c). Nothing in the

legislative history suggests that Congress contemplated

the interplay between section 1964(c) and section

1962(d), much less intended to create out of whole cloth

a theretofore unknown civil cause of action for conspir-

acy.

2. Congress also must be understood to have legis-

lated against the background of the common law “except

when a statutory purpose to the contrary is evident.”

Astoria Federal Sav. & Loan Ass'n v. Solimino, 501 U.S.

104, 108 (1991) (quotation and citation omitted). At

comm n law, civil conspiracy was not, by itself, an in-

dependent cause of action.3 “Being a civil remedy, the

3 Robinson v. Parks, 24 A. 411, 413 (Md. Ct. App. 1892)

(“[T]he simple act of conspiracy does not furnish a substan-

tive ground of action”); Domchick v. Greenbelt Cons. Servs.,

Inc., 87 A.2d 831, 834 (Md. Ct. App. 1952) (“No action in

tort lies for conspiracy to do something unless the acts actu-

ally done, if done by one person, would constitute a tort”);

Beechley v. Mulville, 70 N.W. 107, 110 (lowa 1897) (“The

general rule is that a conspiracy cannot be made the subject

of a civil action unless something is done which without the

conspiracy would give the right of action’’) (quotation marks

and citation omitted); Root v. Rose, 72 N.W. 1022, 1023

(N.D. 1897) (“The charge of conspiracy adds nothing to the

case. A conspiracy, if proved, might augment the damages;

but it would not of itself transmute nonactionable into action-

able facts”); Delz v. Winfree, 16 S.W. 111, 111 (Tex. 1891)

(“[A] Ny ee cannot be made the subject of a civil action,

although ages result, unless something is done which,

without the conspiracy, would give a right of action”); Jayne

v. Drorbaugh, 17 N.W. 433, 437 (lowa 1883) (same); Diver

14

gist of the action is not the conspiracy charged, but the

tort working damage to the plaintiff.” James v. Evans,

149 F. 136, 140 (3d Cir. 1906).4 The doctrine was no

more than a “convenient and proper mode of alleging [a]

combination and [united] action” on the part of multiple

tortfeascrs. City of Boston v. Simmons, 23 N.E. 210, 211

(Mass. 1890).°9

v. Miller, 148 A. 291, 292 (Del. Super. Ct. 1929) (“If, how-

ever, there be no right of action in the plaintiff against the de-

fendants, or either of them, independent of the conspiracy,

there can be no recovery though a conspiracy be alleged”).

4 See also Porter v. Mack, 40 S.E. 459, 460 (W. Va. 1901)

(“The gist of the action is the injury produced”); Van Horn vy.

Van Horn, 28 A. 669, 670 (N.J. 1894) (“{I}n an action on the

case for conspiracy, the gist of the action is not the conspir-

acy, but the damage done to the plaintiff. . .. [C]onspiracy is

not the groundwork of the action, but the damages done to

the party”); City of Boston, 23 N.E. at 211 (“The gist of the

action is not the conspiracy alleged, but the tort committed

against the plaintiff, and the damage thereby done it wrong-

fully”); Von Au v. Magenheimer, 110 N.Y.S. 629, 632 (App.

Div. 1908) (“In a civil action for conspiracy the gist of the

action is the damage, not the conspiracy”).

5 See also Robinson v. Van Hooser, 196 F. 620, 623 (6th

Cir. 1912) (“Since to hold defendants liable in actions like

this it is necessary to prove a combination and united action

on their part, the conspiracy averments afford a convenient

means of alleging such combination and action”); Von Au,

110 N.Y.S. at 632 (“[T]he averment and proof of conspiracy

is only important to join all the defendants and hold them re-

sponsible for the acts and declarations of each”); Robinson v.

Parks, 24 A. 411, 413 (Md. Ct. . 1892) (“The party

wronged [by a tort] may look beyond the actual participants

in committing the injury, and join with them as defendants all

who conspired to accomplish it”).

ene jg

15

It would be wholly incongruous for Congress to have

enacted section 1962(d) on “the common-law footing,”

Nash v. United States, 229 U.S. 373, 378 (1913)—that

is, by defining the offense as a conspiracy simpliciter,

Salinas, 552 U.S. at 63—and, at the same time, to have

effected a radical transformation of the common law by

creating a novel and unprecedented cause of action for

civil conspiracy. That result is all the more anomalous

given that the crime of conspiracy has been targeted

historically because it is an inchoate offense inherently

dangerous to the public, and not a crime that in and of it-

self causes ascertainable private injury to anyone. J/an-

nelli, 420 U.S. at 770; Rabinowich, 238 U.S. at 88.

3. Congress “will not be deemed to have signifi-

cantly changed the federal-state balance” absent a clear

sign of legislative intent. United States v. Culbert, 435

U.S. 371, 379 (1978) (citing United States v. Bass, 404

U.S. 336, 349 (1971)). Petitioner’s view would sanction

the proposition that Congress intended to federalize an

enormous range of conduct historically regulated by the

states and to impose liability on an unimaginably broad

range of conduct—the universe of “overt acts”—

heretofore thought to have been the proper concern of

state law enforcement, if not wholly innocuous.

That petitioner has brought a claim for “wrongful

termination” under RICO illustrates this danger per-

fectly. Florida common law does not recognize the tort

of wrongful termination. See Scott v. Otis Elevator Co.,

572 So. 2d 902, 903 (Fla. 1990); Smith v. Peizo Tech. &

Prof'l Admrs., 427 So. 2d 182, 184 (Fla. 1993); De-

Marco v. Publix Super Markets, Inc., 384 So. 2d 1253

(Fla. 1980).6 By dressing up his wrongful termination

6 In 1991, Florida enacted the Whistle Blower’s Act, Fla.

Stat. §§ 448.101-05, prohibiting retaliatory termination in the

private sector. The Supreme Court of Florida has held that

the statute does not apply retroactively. See Arrow Air, Inc.

16

claim as an “overt act” in furtherance of a section

1962(d) conspiracy, however, petitioner has effectively

bypassed that State’s decision not to protect against the

type of injury he purports to have suffered.

Many other examples abound. At common law, as

well as under the federal conspiracy statute, 18 U.S.C.

§ 371, overt acts can be wholly innocuous. See Wayne

R. LaFave & Austin W. Scott, CRIMINAL LAW 549 (2d

ed. 1986) (“[V]irtually any act will satisfy the overt act

requirement”); see also United States v. O Brien, 972

F.2d 47, 52-53 (3d Cir. 1992) (citations omitted) (“an

interview with a lawyer, attending a lawful meeting, and

making a phone call, have all been held to be overt acts

sufficient to support a conspiracy conviction’) (citations

omitted).’? The gloss on section 1964(c) urged by peti-

tioner effectively would subject such acts to civil liabil-

ity provided they were “essential to” or “directly related”

to a conspiracy, rendering RICO a “font of tort law,

Paul v. Davis, 424 U.S. 693, 717 (1976), unrivaled by

any other federal statute or constitutional provision.

v. Walsh, 645 So. 2d 422, 425 (Fla. 1994). Accordingly, the

statute would not provide a cause of action to petitioner, who

was terminated in 1988. Petitioner, however, is free to assert

available contract claims, if any, in state court.

7 That notion is reflected in the Department of Justice RICO

manual, which explicitly distinguishes “racketeering acts,

which “must be violations of the offenses listed in 18 U.S.C.

§ 1961,” and overt acts, which “should be ordinary actions,

such as meetings, conversations, and other general activi-

ties.” THE DEPARTMENT OF JUSTICE MANUAL § 9-110A.1 00

at 99-100 (1991-1 Supp.). The Manual instructs prosecutors

that “[aJ]lthough they may be criminal in nature, the overt

acts, unlike the racketeering acts, should not be alleged as

criminal offenses. It is extremely important to avoid confus-

ing these two concepts.” /d.

17

Congress could not possibly have intended such an

anomalous result.

C. The Plain Meaning Of The Statute Does Not

Render Any Portion Of The Statute Mere

Surplusage Or Produce An Absurd Result

1. Petitioner’s principal objection to according the

statute its plain meaning is that such a construction pur-

portedly would render section 1962(d) “superfluous” in

the civil setting. Because a plaintiff is never “injured”

by reason of a “conspiracy” alone, to have a cause of

action under section 1964(c) a plaintiff would be re-

quired to demonstrate injury by reason of a violation of

one of sections 1962(a)-(c). According to petitioner, this

would render section 1962(d) “superfluous” for civil

plaintiffs. See Pet. Br. at 19.

That objection is not persuasive. Although this Court

does not construe statutes in a manner that “render{s]

their provisions mere surplusage,” Dunn v. Commodity

Futures Trading Comm'n, 519 U.S. 465, 472 (1997),

that principle operates to bar interpretations that render

statutory words “of no consequence” in all of the stat-

ute’s applications. See Ratzlaf v. United States, 510 U.S.

135, 141 (1994). This Court has never endorsed the

sweeping proposition that courts must construe each

provision in a legislative enactment in a manner that will

render that provision pertinent to each conceivable ap-

plication of the act.

That principle would be especially unwarranted and

unworkable if applied to RICO, the text and structure of

which mandate substantial interplay between the civil

remedies provision in section 1964, the statutory viola-

tions enumerated in 1962, and the predicate acts and op-

erative terms defined in section 1961. Complete inte-

gration and complementarity of one provision to another

under such a complex statutory scheme is neither practi-

cable nor expected.

18

Indeed, this Court already has rejected a similar ar-

gument in the RICO context. In United States v. Tur-

kette, 452 U.S. 576 (1981), this Court held that the term

“enterprise” as defined in section 1961(4) refers to both

legitimate and illegitimate enterprises, rejecting the

claim, similar to that raised by petitioner here, that the

plain meaning would “create several internal inconsis-

tencies in the Act.” 452 U.S. at 582. The court of ap-

peals had held that the term refers only to “legitimate

enterprises,” reasoning:

[Since] a “pattern of racketeering” can itself be an

“enterprise” for purposes of section 1962(c), then

the two phrases “employed by or associated with

any enterprise” and “the conduct of such enter-

prise’s affairs through [a pattern of racketeering

activity]” add nothing to the meaning of the sec=

tion. The words of the statute are coherent and

logical only if they are read as applying to legiti-

mate enterprises.

452 U.S. at 582 (quoting United States v. Turkette, 632

F.2d 896, 899 (1st Cir. 1980)). The Court dismissed that

argument as resting on the faulty premise that a “pattern

of racketeering” is an “enterprise.” Jd. at 583. Moreo-

ver, the Court pointedly observed, “even if that were not

the case, the Court of Appeals’ position on this point is

of little force. Language in a statute is not rendered su-

perfluous merely because in some contexts that language

may not be pertinent.” 452 U.S. at 583 n.5 (emphasis

added).

That principle applies to this case. The plain mean-

ing of the statute establishes only that a criminal con-

spiracy cannot be the predicate “violation” for a cause of

action under section 1964(c). Section te is hardly

“surplusage” under that interpretation. powerful

sweep operates will full force, and to full o Ang in the

criminal setting.

19

Indeed, Turkette explicitly rejected the notion that the

existence of the civil remedies bears on the scope of the

criminal provisions of section 1962. The First Circuit

supported its “legitimate enterprise” requirement in that

case in part on the ground that various civil remedies

were provided by section 1964, including divestiture,

dissolution, reorganization, restrictions on future activi-

ties by violators of RICO, and treble damages, and that

these remedies would only have utility with respect to

legitimate enterprises. 452 U.S. at 585. This Court

concluded that “[e]ven if one or more of the civil reme-

dies might be inapplicable to a particular criminal enter-

prise, this fact would not serve to limit the enterprise

concept.” /d. “Congress has provided civil remedies,”

the Court observed, “for use when the circumstances so

warrant. It is untenable to argue that their existence

limits the scope of the criminal provisions.” /d.

(emphasis added).

Turkette thus soundly rejects the interpretive direc-

tive that petitioner asserts to be dispositive here. Con-

has provided a cause of action in section 1964(c)

_sytne s injured by reason of a “violation” of the

RICO O criminal provisions. That section, however, in no

way alters “the scope of the criminal provisions.” 7ur-

este, 452 U.S. at 585. The scope of RICO conspiracy

under section 1962(d) was settled in Salinas, and neither

the existe..ce of section 1964(c), nor petitioner’s faulty

“surplusage” argument, alter the fact that petitioner has

not been injured by a “violation” of that provision.

D. Summary Judgment Was Appropriately En-

tered Against Petitioner

Summary judgment was appropriately entered

against petitioner. Summary judgment is proper where

the record “show(s] that there is no genuine issue as to

any material fact and that the moving party entitled to

j t as a matter of law.” Fed. R. Civ. P. 56(c); see

also Anderson v. Liberty Lobby, Inc., 477 U. S. 242, 248

(1986); Celotex Corp. v. Catrett, 477 US. 317, 322-23

20

(1986). That is the case here. Petitioner has adduced no

evidence that he has been injured by reason of a

“violation” of the RICO criminal conspiracy provision.

Petitioner seeks dam for injury he claims to have in-

curred as a result of his purportedly wrongful termina-

tion; he seeks no damages irur’ed by reason of the re-

spondents’ purportedly unlawful agreement, which is

what section 1962(d) prohibits. Petitioner therefore

states no cause of action under section 1964(c), and

judgment was properly entered against him.

CONCLUSION

The judgment of the court of appeals should be af-

firmed.

Respectfully submitted.

DANIEL J. POPEO F. JOSEPH WARIN

PAUL D. KAMENAR Counsel of Record

WASHINGTON LEGAL ANDREW S. TULUMELLO

FOUNDATION GIBSON, DUNN & CRUTCHER LLP

2009 Massachusetts Ave., NW 1050 Connecticut Ave., NW

Washington, D.C. 20036 Washi D.C. 20036

(202) 588-0302 (202) 955-8500

Counsel for Amici Curiae

September 17, 1999