# Reply Brief — Townley v. Clark > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0086%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Reply Brief - **Published:** January 1, 1986 - **Citation:** 479 U.S. 924 ## Text Gitice - Supreme Court, U.S. FILED (4 eal er ) WeG ALEXANDER i. STEVAS. CLERK * No. 84-604 | i IN THE Supreme Court of the United States Octoser Term, 1984 Martin J. JoEL, JR., Harvey Suet, Everarp M. C. Stamm, Rosert C. Stamm, Petitioners, v. JoHN Crrrito, Harotp 8. Coteman, Joun A. MILueEr, Franots G. Rea, Perer M. Tocozex, A. J. Yorks, Respondents. REPLY BRIEF IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SEYMouR SHAINSWIT (Counsel of Record) KronisH, Lies, SHAINSWIT, Werner & HELLMAN 1345 Avenue of the Americas New York, New York 10105 (212) 841-6000 Attorneys for Petitioners BEST AVAILABLE COPY TABLE OF CONTENTS PAGE pT gg SOA ke RRR ATW RIERA SAS Teh CME il The Conflict Concededly Generated by the /laroco RR bly REDS ALR Lee nko aah, REISS a PgR NESTE TC SE 1 li TABLE OF AUTHORITIES I. Cases: Il. Alexander v. Gardner-Denver Co., 415 U.S. 36 ERIEI inccidiscpicpasttdssidgannialiaestisticuRiceiestenee sande a American Safety Equipment Corp. v. J. P. Ma- guire & Co., 391 F.2d 821 (2d Cir. 1968) _........ Bankers Trust Co. v. Rhoades, 741 F.2d 511 (2d et | Recent RCENGRNENN Worn ee Sane e CTH ARP Beckman Instruments, Inc. v. Technical Develop- ment Corp., 483 F.2d 55 (7th Cir. 1970), cert. demoed, 401 US. GIG (UGTT) nn... cnccsvsesceescscsese. Diematic Mfg. Corp. v. Packaging Industries, Inc., 381 F. Supp. 1057 (S.D.N.Y. 1974), ap- peal dismissed, 516 F.2d 975 (2d Cir. 1975), cert. dented, 423 U.S. 913 (1975) 000. Furman v. Cirrito, 741 F.2d 524 (2d Cir. 1984) .... Hanes Corp. v. Millard, 531 F.2d 585 (D.C. Cir. III hid nid clgcnsciins acces atdiseieiig acaba aaae lacs Haroco, Inc. v. American National Bank and Trust Co. of Chicago, No. 83-2529 (7th Cir. UNE Githicesicieetikennaddanaiakaaien ae eee einen Hunt v. Mobil Oil Corp., 444 F. Supp. 68 (S.D. aaa ED sores tat scicusigcihaeailsaiammalcabbaabtane aac les ag S. A. Mineracao Da Trindade-Samitri v. Utah In- ternational, Inc., Nos. 1370, 1504 (2d Cir. 1984) Sedima S.P.R.L. v. Imrex Co., Inc., 741 F.2d 482 Be * Seen ee re ern Nee NYT! Gomnnes Wertheim & Co. v. Halpert, 48 N.Y.2d 681 (1979) Legislative History: Congressional Record: 130 Cong. Ree. $13349-50 (October 5, 1984) .... PAGE | 2,3 ili Ill. Articles: PAGE Note, Sovereign Immunity in the Supreme Court: Using the Certiorari Process to Avoid Decision Making, 16 Va. J. Int’] L. 908 (1976) .....000........ 3 Sterk, Enforceability of Agreement to Arbitrate: An Examination of the Public Policy Defense, 2 Cardozo L. Rev. 481 (1981) ........00..00 4 <™ wy + a or ‘ ive tg : : m 2 * : = “ 2 . 4 . cam | . in ‘ : \ ’ ae he i Supreme Court of the United States Octoser ‘T'erm, 1984 No. 84-604 Martin J. JoEL, Jk., Harvey SHerp, Everarp M. C. Stamm, Rosert C. StamM, Petitioners, v. JoHN Crrrito, Harotp 8. CotemMan, JoHN A. MILLER, Franois G. Rea, Peter M. Toczex, A. J. Yorke, Respondents. REPLY BRIEF IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT The Conflict Concededly Generated by the Haroco Case Our Petition for Writ of Certiorari was filed on October 15, 1984. Four days later, on October 19, 1984, the Court of Appeals for the Seventh Circuit decided Haroco, Inc. v. American National Bank and Trust Co. of Chicago, No. 83-2529. That decision unmistakably, unambiguously and emphatically rejected and contradicted every salient point on which were based the Second UCireuit’s trilogy of Sedima S.P.R.L. v. Imrex Co., Inc., 741 F.2d 482 (2d Cir. 1984) ; Bankers Trust Co. v. Rhoades, 741 F.2d 511 (2d Cir. 1984), and Furman v. Cirrito, 741 F.2d 524 (2d Cir. 1984). We thus have a conflict among the Circuits which cannot be swept away by any semantic obfuscation. The respondents in our case have acknowledged this conflict (Respondents’ Brief, p. 7), but have tried to dilute the significance of this 2 conflict by submitting a melange of “reasons” for denying ° the writ (Respondents’ Brief, p. 7, et seq.). Each “reason” is spurious. And, compounding the in- sufficiency of the “reasons”, respondents have miscited or misused authorities, or omitted those that they should have cited. Thus: 1, Respondents urge that this Court should leave the Cireuit Courts and the District Courts in a welter of con- fusion and chaos because, at some remote time, in some re- mote fashion, Congress might re-examine the RICO statute. And, after hearings in the unknown future, a Committee of the Congress might decide to recommend that the RICO statute should be modified, clarified or left unchanged. The respondents have built a thesis, based on wholesale un- certainty, that this Court should not resolve a question of first impression and of undeniable importance to literally hundreds of courts and to the public at large. It is self- evident that to have years elapse, while we await con- jectural legislative action which might solve nothing, would be only to perpetuate the existing confusion among the courts which cries out for an authoritative resolution by our Highest Court. Respondents, at page 8 of their Brief, purport to quote from the Congressional Record. However, they have de- leted with asterisks the portions of 130 Cong. Rec. S13349- 50 (October 5, 1984) which reveal the existence of the split in the Circuits in requiring a condition precedent for standing to sue under civil RICO. In the portion omitted by respondents, Senator Thurmond emphasized: “as a re- sult of the varying judicial interpretations of RICO,... [t]hese questions and uncertainties have undermined the effectiveness of this weapon and must be resolved.” In its entire context, it is aggressive advocacy for respondents to imply that the congressional action that they envisage would per force eviscerate civil RICO. Quite the contrary, civil RICO might even be strengtliened. Or, civil RICO might remain unchanged. Indeed, immediately after Sena- —— S= 3 tor Thurmond’s remarks, Senator DeConcini, at 130 Cong. Rec. $13350, contributed his own observations of the range of possible congressional action, saying: These hearings will provide the forum to determine whether or not the Civil RICO language needs to be modified, clarified or left unchanged. Against this backdrop of speculation and conjecture, re- spondents then go on to assert that this Court has de- clined to review “even important questions of state in the expectation of congressional or executive action. See Note, Sovereign Immunity in the Supreme Court: Using the Certiorart Process to Avoid Decision Making, 16 Va. J. Int’! L. 908, 922-23 (1976).” (Respondents’ Brief, pp. 8-9). The Virginia Journal of International Law says the direct opposite for what it is cited: [T]he relative inflexibility of any statutory approach and the confusion which resulted from the Court’s in- action support the position that an earlier Supreme Court resolution of the problem would have been pref- erable to the belated congressional action. In any event, the Court has never indicated that its certiorari decisions were dictated by a deference to the legislative branch. The decision in Duniill, for example, evi- denced disagreement about the sovereign immunity doctrine but no desire to leave the resolution of that disagreement to Congress. Note, Sovereign Immunity in the Supreme Court: Using the Certtorart Process to Avoid Decision Making, 16 Va. J. Int'l L. 903, 922-23 (1976) (footnote omitted). 2. Respondents have also interlarded their brief with sporadic commentary that this Court should deny Cer- tiorari because the RICO claim can be arbitrated. The arbitrability of a RICO claim is not a question presented in our Petition for Certiorari. Furthermore, in throwing up their smokescreen, candor should have at least com- 4 pelled the respondents to disclose to the Court that on October 1, 1984, the Court of Appeals for the Second Cir- cuit, in S. A. Mineracao Da Trindade-Samitri v. Utah In- ternational, Inc., Nos. 1370, 1504, squarely indicated that a RICO claim is not arbitrable.. Decisions to preclude arbitration based on public concern have come in a wide variety of other areas: antitrust claims (see, e.g., Amert- can Safety Equipment Corp. v. J. P. Maguire & Co., 391 F.2d 821, 826-27 (2d Cir. 1968); Hunt v. Mobil Oi Corp., 444 F’. Supp. 68, 69 (S.D.N.Y. 1977)); patent validity and infringement claims (see, e.g., Hanes Corp. v. Millard, 531 F.2d 585, 593-95 (D.C. Cir. 1976); Beckman Instruments, Inc. v. Technical Development Corp., 433 F.2d 55, 62-63 (7th Cir. 1970), cert. denied, 401 U.S. 976 (1971) ; Diemattc Mfg. Corp. v. Packaging Industries, Inc., 381 F. Supp. 1057, 1061-62 (S.D.N.Y. 1974), appeal dismissed, 516 F.2d 975 (2d Cir. 1975), cert. denied, 423 U.S. 913 (1975)); and civil rights discrimination cases (see, e.g., Alexander v. Gardner-Denver Co., 415 U.S. 36, 56-59 (1974); Wertheim & Co. v. Halpert, 48 N.Y.2d 681, 683 (1979)). See generally, Sterk, Enforceability of Agreements to Arbitrate: An Examination of the Public Policy Defense, 2 Cardozo L. Rev. 481 (1981). Given the broad purposes of RICO and that the enforce- ment of civil RICO involves concerns touching upon vital national interests, it cannot be seriously argued that Con- gress intended to entrust the enforeement of RICO to ar- bitrators. The overriding public policy in favor of judicial resolution of RICO claims makes unnecessary any inquiry into whether the parties had actually agreed to arbitrate the fraudulent scheme underlying the RICO count. We have made these observations solely for the purpose of dispelling the confusion which respondents have sought to generate with their tangential reference to the irrele- vant subject of arbitration. 3. Respondents persist in seeking to trade upon the Justice Department’s RICO guidelines for criminal prose- 4) cution. (Respondents’ Brief, p. 15). As we did below, we once again point out that these guidelines create no safety hatch for respondents; they do not construe the RICO statute. They were not published under any regulatory authority. They have no force of law, nor could a defen- dant rely on them to preclude prosecution. And, capping everything, they “provide only internal Department of Justice Guidelines. They are not intended, do not, and may not be relied upon to create any rights, substantive or procedural, enforceable at law by any party in any mat- ter civil or criminal.” (Appellees’ Brief below, Addendum B, pp. B-1 to B-2) (emphasis supplied). And, if more need be said, RICO’s private remedy is specifically de- signed as an additional enforcement tool—to supplement its criminal enforcement provisions. To use these guide- lines to limit actions brought by private attorneys-general would actually defeat one of the major purposes of the civil RICO remedy. All in all, respondents’ brief, and their headlong flight from the Petitioners’ reasons for granting the Writ, have corroborated the compelling need for this Court to review the basis for the Judgment below, which has made civil RICO an empty shell. CONCLUSION For the foregoing reasons, it is respectfully submitted that the Petition for a Writ of Certiorari should be granted. SEYMOUR SHAINSWIT Attorney for Petitioners Martin J. Jcel, Jr.. Harvey Sheid, Everard M.C. Stamm and Robert C. Stamm November 30, 1984 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0086%3A3. Public record. Not legal advice.