Opposition Brief — Beck v. Manufacturers Hanover Trust Co.

*

No. 87-616 Supreme Court, U.S,

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cme”

In the EC 14887

Supreme Court of the Uvited Peete F. SPANIOL, JR,

OcTOBER TERM, 1987

HUBERT PARK BECK, DOROTHY FAHS BECK,

RoBERT J. BECK and OTTO WEINMANN,

Petitioners,

vs.

MANUFACTURERS HANOVER TRUST COMPANY;

MILBANK, TWEED, HADLEY & MCCLOoy;

KELLEY DryE & WARREN; DONALD B. HERTERICH;

ISAAC SHAPIRO; and EDWARD Roserts, III,

Respondents.

OPPOSITION TO PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

ADLAI S. HARDIN, JR.

| Chase Manhattan Plaza

New York, NY 10005

(212) 530-5000

Attorney for Respondents

Of Counsel:

ANDREW CITRON

JOANN CRISPI

MILBANK, TWEED, HADLEY & MCCLOY

| Chase Manhattan Plaza

New York, NY 10005

(212) 530-5000

QUESTIONS PRESENTED

(1) Should this Court review the Second Circuit’s

unexceptional application of United States v. Turkette in con-

cluding that an alleged association with one straightforward,

short-lived goal lacks sufficient continuity to be a RICO enter-

prise?

(2) Should this Court review the Second Circuit’s appli-

cation of RICO’s pattern requirement, where review of this

issue could not change the result below?

TABLE OF CONTENTS

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REASONS FOR DENYING THE WRIT..............cccccccccssesessseseeee

I, This case is inappropriate for Supreme Court

review because it does not involve any clearly

definable criminal CONdUCE o.oo. cecececceccececeececeeeee

II. The alleged conflict among the circuits on “pat-

tern” does not merit review at this time, or in

NS CONE icin c di cencadtiniln cae eee

Ill. The Second Circuit ruling on “enterprise” does

not conflict with other circuits, Sedima or the

RIN vcisissisictzisisicnstcacedincetdancomee eee

IV. There are currently pending before Congress

amendments to RICO which would render

moot any conflict on the pattern requirement...

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TABLE OF AUTHORITIES

PAGE

Cases

Bank of America v. Touche Ross & Co., 782 F.2d

I ID iv cck rs saccsanaphnsannasvcenasdvedensisexses 5

Barticheck v. Fidelity Union Bank/ First National

eee, ae © oe 20 (30 Cif. 1967)..........0...:0cccrs000 5.6

Beck v. Manufacturers Hanover Trust Co., Nos.

12896/83, 15145/85 (Sup. Ct. N.Y. Co.) ..5........ 1,7, 11

Community Services, tne. v. United States, 342 U.S.

ic tedadseicemasiatséicsavsasapncncssstsssescsencs 12

Condict v. Condict, 815 F.2d 579 ( 10th Cir. 1987) .. 5

H.J. Inc. v. Northwestern Bell Telephone Co., 829

NINE, DOMED DP csccesncsscsesessssesséossosssasenteess 5

International Data Bank, Ltd. v. Zepkin, 812 F.2d

si ancuvitiossninstatenvardaescossiescees 5

Madden v. Gluck, 815 F.2d 1163 (8th Cir.), cert.

I OU 0 BUD Doo ccacnccccccsccnccnananecceases

McCray v. New York, 461 U.S. 961 (1983) .....00000....

Montesano ». Seafirst Commercial Corp., 818 F.2d

Me Nils BED Picccecencssnscssessees sidiamacesiadkanidesoean 10

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

Nee cial cs ccctevnscisssasnceecesessansacvaros 5

R.A.G.S. Couture, Inc. v. Hyatt, 744 F.2d 1350

ESSE EE RT a 5

Roeder v. Alpha Industries, Inc., 814 F.2d 22 (Ist

eS ieiicacinaiathsbuisuehaiacarssesensenesscees 5

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

6 ace ssisinsansinnacononsancos 4, 5, 6,

8,9, 12

Sokol Bros. Furniture Co. v. Commissioner, 340

acc... cadcinatnneneunsiehoninasavanda 12

Sommerville v. United States, 376 U.S. 909 (1964). 7

Sun Savings & Loan Association v. Dierdorff, 825

eM OE Dn ccs scenanctvavaxcnsnasasegenssces 5

Torwest DBC, Inc. v. Dick, 810 F.2d 925 (10th Cir.

ees circndsacessskbechexasevainsacivennsseces 5

United States v. Abrams, 344 U.S. 855 (1952 )..0...... 12

United States v. Beal, 340 U.S. 852 (1950) ...00...... 12

United States v. Bledsoe, 674 F.2d 647 (8th Cir. ).

cert. denied sub nom. Phillips v. United States,

is NE ED econ csaaiiidasccscchcdatatatibdateiss

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

1986), cert. denied, 107 S. Ct. 3230 (1987) .0........

United States v. Lemm, 680 F.2d 1193 (8th Cir.

1982), cert. denied, 459 U.S. 1110 (1983) 000000...

United States v. Neapolitan, 791 F.2d 489 (7th

Cir. ), cert. denied, 107S. Ct. 422 (1986)..............

United States v. Riccobene, 709 F.2d 214 (3d Cir. ).

cert. denied sub nom. Ciancaglini v. United

SN, SGT. DOr © BOSD vores cratbad tees

United States Rubber Co. v. Commissioner, 274

F.2d 307 (2d Cir.). cert. denied, 363 U.S. 827

NIE O ricicatepceakancasncnedetaskastccucdn eens toasladies

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

weeee

United States v. Wilkinson, 355 U.S. 839 (1957)

United States v. Zang, 703 F.2d 1186 (10th Cir.

1982), cert. denied sub nom. Porter v. United

States, 464 U.S. 828 (1983)

Statutes

18 U.S.C. §§ 1961-1968 (1984)

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Rules

Fed. R. Civ. P. 9(b)

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ee 8 SERS int ee Tree

Other Authorities

116 Cong. Rec. 585-86, 601, 819, 844, 35,193,

35,196-97, 35,199, 35,201 (1970)

ee eee ee eee eee eee

aa acuntaiep ecaecisis

United States Attorney’s Manual, Title 9— Criminal

Division, Guideline No. 9-110.360

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BRR E HEHEHE OEE E HEHEHE EEE SESE HEHEHE EEE EEE EEEE

PAGE

7,11

8,9, 11

STATEMENT OF THE CASE

This action under the Racketeer Influenced and Corrupt

Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968 (1984),

is petitioners’ third lawsuit alleging substantially the same

factual claims. The first two were brought in the New York

state court under the caption Beck, et al. v. Manufacturers

Hanover Trust Company, Nos. 12896/83 and 15145/85 (Sup.

Ct. N.Y. Co.) and are still pending. The facts, set forth in the

District and Circuit Court opinions (1A and 27A),' may be

summarized.

Petitioners held $1,500 and $150,500 principal amount of

two series of bonds issued in 1902 by a Utah corporation which

operated railway properties primarily located in Mexico. In

1908 the assets and liabilities of the Utah corporation were

taken over by Ferrocarriles Nacionales de Mexico, which

operated Mexico’s railroads. Both bond issues have been in

default since 1914. Over the years the Government of Mexico

acquired approximately 96% of both bond tissues, leaving less

than 5% of the bonds (referred to as “non-assenting” bonds ) in

the hands of members of the public such as the petitioners.

Respondent Manufacturers Hanover Trust Company

(‘‘Manufacturers’’) is the successor trustee for both bond issues.

As trustee Manufacturers held certain raiiway properties and

related assets located in the United States and therefore not

subject to the 1908 takeover by Ferrocarriles. This property,

referred to as the “U.S. collateral”, generated a small amount

of income which was paid out to holders of the bonds in a series

of distributions between 1942 and December 1981, seven of

which were made after petitioners acquired their bonds.

The bond indentures permitted holders of 75% or more of

the bonds to direct the trustee to liquidate the collateral. In

accordance with this provision and the instruction of the

Mexican Government, Manufacturers sold the U.S. collateral in

a public auction in December 1982 pursuant to a widely

published notice which stated that the minimum price that

1 References are to the Appendices to the Petition and Petition-

ers’ Supplemental and Second Supplemental Briefs.

would be accepted at the auction was $31 million. The

indentures also provided that the purchase price at such a sale

could be paid by tendering a proportionate face amount of the

bonds. The Mexican Government assigned the approximately

96% of the bonds which it owned to a company called Mexrail,

Inc., and that corporation, being the only bidder, purchased the

U.S. collateral for the upset price of $31 million and paid the

purchase price by tendering the bonds assigned by the Mexican

Government and cash proportionate to the approximately 4%

of “‘non-assenting™” bonds. The cash was then distributed by

Manufacturers to the non-assenting bondholders, including

petitioners.

In the state court actions petitioners assert two basic

claims. First, with respect to the seven distributions of income

prior to the public auction, petitioners contend that Manufac-

turers was wrong in treating the Government of Mexico as a

holder of the bonds which it held; they argue that the bonds

acquired by Mexico should have been treated as redeemed and

cancelled, and that 100% of the amounts distributed should

have been paid to the holders of the approximately 4% of non-

assenting bonds. Second, with respect to the public auction of

the U.S. collateral in 1982, petitioners claim (1) that the US.

collateral was worth far more than $31 million and should have

been sold at a higher price, and (11) that 100% of the proceeds

of the sale should have been distributed in cash to the holders

of the approximately 4% of the non-assenting bonds.

None of the claims in the state court actions is based on

fraud. Petitioners allege breach of fiduciary duty and negli-

gence, and there is no allegation of any sort of fraud or

deception.

Factually, the RICO claims in this action are virtually

identical to the state court claims. The state court claim with

respect to the seven interim distributions ts alleged in this action

as ‘Phase I’; the state claims with respect to the sale of the U.S.

collateral are realleged here as “Phase II”. Aside from a welter

of technical RICO allegations, the only substantive difference ts

that in the federal complaint petitioners have changed their tort

theory from breach of fiduciary duty to fraud by repeatedly

using the words “fraudulent” or “fraudulently”, but without

alleging a single fact demonstrating that Manufacturers

committed any misrepresentation, false or misleading state-

ment, material omission or other deceptive act evidencing

fraud.

— The only other substantive difference between the state

and federal complaints is the addition of a “Phase III”, which

alleges that the Government and people of Mexico were

somehow defrauded with respect to the public auction. Peti-

tioners do not represent or act as ombudsmen for the Mexican

Government or people. They have no standing to maintain the

Phase III] claim and the federal courts have no jurisdiction to

entertain it.

REASONS FOR DENYING THE WRIT

I. This case is inappropriate for Supreme Court review

because it does not involve any clearly definable criminal

conduct.

Before turning to the alleged conflicts between the circuits,

it should be observed that this action presents an unlikely

vehicle for this Court to clarify the statutory terms “pattern of

racketeering activity” and “enterprise”, because the amended

complaint does not allege any racketeering activity. There is no

clearly identifiable allegation of any predicate act constituting

criminal conduct by any of the defendants. This is evident from

the treatment of the fraud question by the District and Circuit

Courts.

The District Court dismissed petitioners’ fraud claims as to

all three phases for failure to comply with Fed. R. Civ. P. 9(b)

(13A), in that petitioners ~

have not stated facts that support their claim that defend-

ants’ acis, in essence alleged breaches of fiduciary duty,

were done with the requisite scienter .... The facts

alleged point to a breach of fiduciary duty rather than

fraud. (ISA)

4

The Second Circuit agreed with the District Court's dis

missal of Phase I for failure to plead scienter (34A ). but held as

to Phases II and III, that “plaintiffs have adequately pled

scienter” having alleged “two sets of unusual circumstances

surrounding the sale of the U.S. collateral that give rise to a

strong inference of scienter” (34A). But the alleged presence

of these two “sets of unusual circumstances” hardiy provides a

paradigm case of fraud for review.

As stated repeatedly by this Court and in the legislative

history, RICO is a criminal statute designed to strike at the

economic roots of organized crime. Essential to any criminal or

civil charge based on RICO is an allegation that the defendants

engaged in two or more predicate acts of “racketeering activity”

as defined in section 1961(1). The alleged “racketeering

activity” here is mail and wire fraud. But neither of the lower

courts was able to identify any comprehensible factual allega-

tion of fraud in the amended complaint, because petitioners’

claims, in reality, are based on breach of fiduciary duty.

If the evolving interpretations of “pattern” and “enter-

prise” merit reexamination at this time, this case is not an

appropriate vehicle for such a review because it does not

invelve any discernible criminal conduct. The precedential

value of a decision analysing “pattern of racketeering activity”

must be clouded, at best, in a case where no one can define

what the “racketeering activity” is. If the concepts of “pattern”

and “enterprise” are to be reevaluated in light of the decisions

subsequent to Sedima, S.P.R.L. v. Imrex Co., 473 US. 479

(1985), it is respectfully submitted that such analysis should

proceed in the context of clearly articulated allegations of

racketeering activity, rather than in a factual context involving

the administration of a trust where no criminal conduct is

readily apparent.

Il. The alleged conflict among the circuits on “pattern” does

not merit review at this time, or in this case.

Petitioners’ claims of conflict among the circuits and

portents of chaos respecting the “pattern” requirement are

highly exaggerated. The circuit courts are in agreement on the

“relatedness and continuity” test for pattern discussed by this

Court in footnote 14 of Sedima. Moreover, in determining

whether a pattern exists the courts all apply the same set of

factors mentioned in Sedima — the number of participants, the

number of victims, methods of commission, purposes of the

conduct, extent of the results and injuries and the inter-

relationship between the predicate acts.2

Petitioners suggest two areas of divergence. The first is

whether a RICO pattern requires more than one scheme. The

circuits, with the exception of the Eighth Circuit, uniformly hold

that it does not. The Eighth Circuit alone requires that the

predicate acts be committed in the course of multiple schemes

in order for a pattern of racketeering activity to be alleged.

However, in the most recent Eighth Circuit decision, H.J. Inc.

v. Northwestern Bell Telephone Co., 829 F.2d 648 (8th Cir.

1987) (reproduced at 123A), two judges indicated that the

“multiple schemes” rule should be reexamined by that Court en

banc, stating:

The Second and Seventh Circuits, and now the Ninth

Circuit, as well as numerous district courts and a respected

scholar in this field, have criticized our position.

2 Insofar as the Second Circuit takes a more liberal view of

pattern, of course, petitioners have been the beneficiary of that view

below.

3 See Roeder v. Alpha Industries, Inc., 814 F.2d 22, 31 (Ast Cir.

1987): United States v. lanniello, 808 F.2d 184, 192 (2d Cir. 1986);

Barticheck v. Fidelity Union Bank/ First National, 83? F.2d 36 (3d

Cir. 1987); International Data Bank, Ltd. v. Zepkin, 612 F.2d 149,

155 (4th Cir. 1987); R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350

(Sth Cir. 1985); Morgan v. Bank of Waukegan, 804 F.2d 970, 975

(7th Cir. 1986); Sun Savings & Loan Association v. Dierdorff, 825

F.2d 187, 193 (9th Cir. 1987): Torwest DBC, Inc. v. Dick, 810 F.2d

925, 929 (10th Cir. 1987) (declining to formulate a bright-line test,

but not ruling out that a single scheme may constitute a pattern);

accord, Condict v. Condict, 815 F.2d 579, 584-85 (10th Cir. 1987);

Bank of America v. Touche Ross & Co., 782 F.2d 966, 97! (11th Cir.

1986).

6

I believe, as stated in my separate concurrence in

Henning, that when a proper case arises the multiple

scheme requirement should be examined by the court en

banc (127A-128A).

Thus, it appears that the circuits are moving towards uniformity

~-on their own, and intervention by this Court at this time is

unnecessary and premature.

Petitioners also argue that “whether a single-purpose

scheme must be open-ended to constitute a ‘pattern’ has

recently been considered by the Third, Fourth and Tenth

Circuits, with totally irreconcilable results” (Second Supp.

Brief 4). But the three circuit court decisions cited by petition-

ers (reproduced at 138A, 144A and 154A) provide no evidence

of a real conflict even on this issue. The Third Circuit in

Barticheck v. Fidelity Union Bank/First National State, 832

F.2d 36 (3d Cir. 1987), expressly rejected “the view that

racketeering acts committed pursuant to a single scheme can

constitute a RICO pattern only if the scheme is potentially

ongoing or open-ended” (162A). No conflicting statement of

law appears in either the Fourth or Tenth Circuit opinions cited

by petitioners. Both Circuits have stated that they have not

formulated a hard and fast test for determining a RICO pattern

(141A, 1S1A) and have only stated that “discreet” or “limited”

schemes do not constitute a “pattern”. This is entirely harmo-

nious with the Third Circuit’s approach, which focuses on the

“extent” of the racketeering activity and likewise eschews a

general formulation in favor of an inquiry into continuity and

relationship based on the facts of each case (162A).

In short, the law on the “pattern” requirement is evolving

as the circuit courts seek to apply the precepts articulated in

Sedima footnote 14 to the facts of particular cases. Analysis of

the decisions reveals that apparent differences often are more a

matter of nomenclature than substance,‘ and to the extent that

there is & real dichotomy reflected in the Eighth Circuit’s

multiple schemes rule, at least two judges on that court are

prepared to reconsider the issue en banc in an appropriate case.

Certiorari has been denied in the past to permit “further study”

in the lower courts. McCray v. New York, 461 U.S. 961, 963

(1983).

Certiorari is also inappropriate in a case, such as this,

where resolution of a conflict between the circuits could not

change the result reached below. See Sommerville v. United

States, 376 U.S. 909 (1964). Petitioners prevailed below on

the pattern requirement, and they do not stand to gain anything

by further review of that issue. In short, petitioners have no

standing to complain about a conflict in the circuits on the issue

of pattern, because they were not harmed by that conflict

below.

If this Court viewed the Eighth Circuit’s “multiple

schemes” rule as meriting review at this time, surely the Court

would have granted certiorari in Madden v. Gluck, 815 F.2d

1163 (8th Cir.), cert. denied, 108 S. Ct. 86 (1987) where the

Eighth Circuit reaffirmed its multiple schemes position on the

pattern requirement. But certiorari was denied in Madden v.

Gluck on October 6, 1987.5

4 For example, the criminal activities in United States v. lan-

niello, 808 F.2d 184 (2d Cir. 1986) involving skimming profits from

several different restaurants and bars owned by different corporate

entities, which the Second Circuit characterized as a single “scheme”’,

might well have been regarded by another court as “multiple

schemes”. Regardless of the characterization, the facts clearly met the

“continuity” test, and the result would be the same in any circuit. As

the Second Circuit said in Beck, citing Janniello: “whether one looks

for the requisite continuity and relatedness by examining the pattern

or the enterprise is really a matter of form,-not substance” (37A).

5In light of this denial, petitioners appear to have abandoned

their theory that any potential conflict with the Eighth Circuit decision

on pattern provides a basis for review, instead reformulating the

question to be whether the Second Circuit’s enterprise holding

“comports with the statutory definition of ‘enterprise’ in § 1961(4),

and is within the ambit of footnote 14” (Supp. Brief 2).

Ill. The Second Circuit ruling on “enterprise” does not con-

flict with other circuits, Sedima or the statute.

Petitioners complain that “the rules of the Second and

Fifth Circuits, in which ‘pattern’ litigation has segued into

‘pattern/enterprise’ litigation are grossly violative of the RICO

statute and substantially transcend the possible limits of any

mandate on the interpretation of ‘pattern’ suggested by this

Court in [ Sedima] footnote 14” (Petition 7).

Before turning to petitioners’ substantive contentions on

“enterprise”, two preliminary points should be made. First,

there is no conflict among the circuits on the interpretation of

“enterprise”. Petitioners repeatedly acknowledge ( Petition 7,

15; Second Supp. Brief 2, 4, 6) that the Second and Fifth

Circuits have taken the same approach on the enterprise

question, and no circuit has expressed a conflicting view.

Second, petitioners’ frequent references to “pattern/enterprise

litigation” is misleading, because-pattern and enterprise are

separate and different statutory elements and must be treated

independently. As this Court said in United States v. Turkette,

452 U.S. 576, 583 (1981):

While the proof used to establish these separate elements

may in particular cases coalesce, proof of one does not

necessarily establish the other. The “enterprise” is not the

“pattern of racketeering activity”; it is an entity separate

and apart fromthe pattern of activity in which it engages.

The existence of an enterprise at all times remains a

separate element which must be proved by the Govern-

ment.

Petitioners’ substantive objection to the Second Circuit’s

decision in this case is that the lower court “violated the RICO

statute and transcended the limits of footnote 14 of Sedima by

appending to the concept of ‘enterprise’ Sedima’s continuity

considerations regarding ‘pattern’ (Petition 15). The argu-

ment is without merit.

The Second Circuit’s requirement of continuity as an

element of “enterprise” is fully consistent with this Court’s

9

decision in United States v. Turkette, supra, where the Court

said that enterprise is “proved by evidence of an on-going

organization, formal or informal, and by evidence that the

various associates function as a continuing unit” (452 U.S. at

583; emphasis supplied). There is no inconsistency whatever

between the requirement of continuity for an enterprise, recog-

nized in Turkette and in the decisions of the Second and Fifth

Circuits, and the requirement of continuity in pattern, recog-

nized in Sedima footnote 14 and in all of the decisions

following Sedima.

Other circuits have reached similar holdings on the require-

ment of continuity for an enterprise. See, e.g., United States v.

Neapolitan, 791 F.2d 489, 499-500 (7th Cir. ), cert. denied, 107

S. Ct. 422 (1986) (following Turkette, the enterprise must be a

distinct entity with a structure which is more than a group of

people who get together to commit a pattern of racketeering

activity ); United States v. Bledsoe, 674 F.2d 647, 660-67 (8th

Cir.), cert. denied sub nom. Phillips v. United States, 459 US.

1040 (1982) (holding that it is fundamental that the enterprise

function as a continuing unit, requiring some continuity of

structure and personnel); United States v. Lemm, 680 F.2d

1193, 1201 (8th Cir. 1982), cert. denied, 459 U.S. 1110 (1983)

(sporadic and temporary criminal alliance to commit RICO

crimes not sufficient to constitute an enterprise ); United States

v. Riccobene, 709 F.2d 214, 221-24 (3d Cir.), cert. denied sub

nom. Ciancaglini v. United States, 464 U.S. 849 (1983)

(ongoing organization required); United States v. Zang, 703

F.2d 1186, 1193-94 (10th Cir. 1982), cert. denied sub nom.

Porter v. United States, 464 U.S. 828 (1983) (same).

The legislative history of RICO reveals that the continuity

and relationship tests are not solely confined to the pattern

requirement, and are integral to the enterprise requirement.

For example, Rep. Poffs comment, quoted in Sedima, that

RICO “is not aimed at the isolated offender” is addressed to the

entire RICO statute, not just to the pattern requirement. 116

Cong. Rec. 35,193 (1970). Senator McClellan, one of the bill’s

sponsors, made clear that the prime focus of the bill was

10

enterprises with a coherent structure. /.e., “organized crime

groups”, with defined “internal organization[s]” including

“chieftains” and a “leadership structure” akin to a “private

government”. He said that the groups’ operating methods had

evolved “during several decades” of this century. 116 Cong.

Rec. 585-86 (1970). Senator Hruska, the bill’s co-sponsor,

confirmed that “racket enterprises” were closely akin to the

major organized crime families. /d. at 601. He stated that their

actions are “the result of intricate conspiracies carried on over

many years”. Jd. Likewise, Senator Scott stated that the bill

was aimed at “syndicated crime” — which “involves thousands

of criminals in structures as complex and large as any corpo-

ration with laws rigidly enforced through terror... [il]ts

operations are national and international.” Jd. at 819. See also

id. at 844. Throughout the debate, the legislators used “‘enter-

prise” to mean an organized structure such as a business. 116

Cong. Rec. 35,196-97 (1970). See also id. at 35,199, 35,201;

Senate Report at 78-82.

The existing policy of the United States Attorney’s Office

also has incorporated considerations of continuity into the

enterprise requirement. The United States Attorney’s Manual

instructs:

No RICO count of an indictment shall charge the enterp-

rise as a group associated in fact, unless the association-in-

fact has an ascertainable structure which exists for the

purpose of maintaining operations directed toward an

economic goal, that has an existence that can be defined

apart from the commission of the predicate acts con-

Stituting the patterns of racketeering activity.

United States Attorney’s Manual, Titlke 9—Criminal Division,

Guideline No. 9-110.360. See Montesano v. Seafirst Com-

mercial Corp., 818 F.2d 423, 427 n.1 (Sth Cir. 1987).

In their Second Supplemental Brief, having revised their

statement of the grounds on which certiorari should be granted

for the third time, petitioners now seek summary reversal under

Supreme Court Rule 23.1. No basis exists on the record of this

a nce a A

1]

case for such an extraordinary measure. Nor do petitioners,

apart from their bald assertion that the decision of the Second

Circuit is “judicial interpretation run amok” (Second Supp.

Brief 4) offer a single credible ground upon which such a

request could be granted.

~

Petitioners’ contention that the group of law firms, individ-

uals and a bank in this case whose common activity related to

the public auction of certain trust assets — ‘one straight-

forward, short-lived goal” (37A) — constituted an “enterprise”

finds no support in logic, the statute or the case law. The

holdings of this Court in Turkette and of the Second Circuit and

other circuits in numerous decisions al! demonstrate that the

element of continuity is essential to the statutory term “enter-

prise”.

Finally, since petitioners attribute the Second Circuit’s

error of “engrafting” pattern considerations into the concept of

enterprise to the decision in United States v. lanniello, 808 F.2d

184 (2d Cir. 1986), cert. denied, 107 S. Ct. 3230 (1987), one

might consider that case a more appropriate candidate for

review by this Court than Beck. But this Court denied certiorari

in Janniello. :

IV. There are currently pending before Congress amendments

to RICO which would render-moot any conflict on the

pattern requirement.

The proposed amendment to the RICO statute’s definition

of pattern currently before Congress (H.R. 3240),® the most

6 The text of the amended definition of pattern proposed in H.R.

3240 is as follows:

Sec. 3-DEFINLTION OF PATTERN.

Paragraph (6) of section 1961 of title 18, United States

Code, as redesignated by section 2(b) of this Act, is amended to

read as follows:

(6) ‘pattern’ means at least two acts of racketeering

activity or fraudulent activity, or both, one of which occurred

after the effective date of this chapter and the last of which

occurred within ten years (excluding any period of imprison-

ment) after the commission of a prior act of racketeering

activity or fraudulent activity, or both, that are—

12

recent in a series of legislative proposals since this Court’s

decision in Sedima, provides an additional basis upon which

certiorari should be denied. Even in the face of a square

conflict, certiorari is inappropriate where the statute upon

which the controversy rests may be amended in a manner

which will prevent the problem from arising in future cases.

United States v. Abrams, 344 U.S. 855 (1952): Community

Services, Inc. v. United States, 342 U.S. 932 (1952); Sokol

Bros. Furniture Co. v. Commissioner, 340 U.S. 952 (1951);

United States v. Beal, 340 U.S. 852 (1950); United States v.

Wilkinson, 355 U.S. 839 (1957); United States Rubber Co. v.

Commissioner, 274 F.2d 307 (2d CGir.). cert. denied, 363 US.

827 (1960).

“( A) under subsection 1962(c) of this chapter, related

to the affairs of an enterprise;

“(B) not isolated, but they need not be part of a

common scheme or plan; and

“(C) except under section 1962(b) of this chapter, not

so closely related to each other and connected in point of

time and place that the acts constitute a single episode

involving only one victim so that they do not in themselves,

in light of the purpose for which they were committed, with

reference to the enterprise, or otherwise, give rise to an

inference of the possibility of continuity of activity;”.

—

13

CONCLUSION

The Second Circuit’s decision in this case presents no issue

worthy of review by this Court. Accordingly, respondents

respectfully request this Court to deny the petition for a writ of

certiorari.

Dated: December I 1, 1987

Respectfully submitted,

ADLAI S. HARDIN, JR.

| Chase Manhattan Plaza

New York, N.Y. 10005

(212) 530-5000

Attorney for Respondents

Of Counsel:

ANDREW CITRON

JOANN CRISPI

MILBANK, TWEED, HADLEY & MCCLoy

| Chase Manhattan Plaza

New York, N.Y. 10005

(212) 530-5000