# Opposition Brief — Beck v. Manufacturers Hanover Trust Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1988
- **Citation:** 484 U.S. 1005

## Text

*

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

CPST AONE TROIIN CID asistencia nae
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SEATON OF TBE CA oo ocvtsivsiciiexernasn
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...
CE AIIIIIN isos ssecesncececcanscaskcdcdtnn cen

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1003%3A3. Public record. Not legal advice.